Angola Aircraft Acquisitions Fly in the Face of Mounting Burdens (by Pedro Agosto)

by Pedro Agosto

Saddledwith a growing debt burden and struggling toeradicate poverty, Angola still has the luxury of splurging millions inforeign currency under the state carrier’s fleet restructuring andmodernisation programme.

This is the latest in a series of deviations by President Joao Lourencofrom his pledges to deal with the mismanagement of public funds since hesucceeded Jose Eduardo dos Santos, in power for 38 years until September2017.

Lourenco recently approved the plan by national airline, TAAG to negotiatethe supply of new aircraft with Boeing and Bombardier, under its fleetrenewal process.

The president has subsequently ordered his Ministers of Finance andTransport -Archer Mangueira and Ricardo de Abreu respectively - as well asTAAG executives to start negotiations with the “different fundersavailable” for the purchase of the new aircraft.

The order also authorizes the Minister of Transport to “unleash theinstruments to structure and set up the financing operation for theacquisition of aircraft” and “negotiate the refinancing of two Boeing777-300 ER aircraft” TAAG acquired in recent years.

Amounts are not specified in the document but research suggests someaircraft the parastatal intends to purchase cost US$23 million each.

TAAG, despite having received new fleet between 2014 and 2016, intends topurchase 11 aircraft.

However, critics raised concern this would be tantamount to wastefulexpenditure considering TAGG’s current fleet of 13 Boeing aircraft, threeof which are 777-300 ERs, were modern.

The company also has five 777-200 and another five 737-700 used fordomestic and regional connections.

“TAGG’s so-called fleet modernisation at this stage is unnecessary as itsfleet was acquired in recent years,” said analyst Dominique Jordao.

“To be spending so much yet there is severe poverty and to be seeking morefunders despite our trap in debt reflects misplaced priorities,” Jordaoadded.

The Southern African country is grappling with a debt burden.

It secured $2 billion in Chinese financing late last year duringLourenço’s first visit to Beijing.

Before then, government projected its debt to rise to $77,3 billion-over78 percent of gross domestic product (GDP)- by the end of 2018. Over $21billion was already owed to China before Lourenco’s visit.

Alongside debt, poverty is another serious issue in Angola, Africa’ssecond-biggest oil producer (after Nigeria), which is bearing the brunt ofthe decline in the sector over recent years.

According to Borgen Project, the anti-poverty think-tank, unequaldistribution of wealth is among other factors contributing to poverty,with 55 percent of Angola’s population of over 30 million living on lessthan $1 a day.

Government struggles to provide basics such as running water.

A fifth of the employable population is out of work.

“Oil and diamond extraction bring a lot of revenue to Angola, but much ofthe wealth stays with large companies and elite individuals, likepoliticians,” the project stated.

Maka Angola, the anti-corruption and pro-democracy organisation, pointedout Lourenço’s own behavior during his first year in office contradictshis narrative.

It started with lavish spending during a state visit to Europe, where theAngolan delegation went on a spending spree, chartering at least threeaircraft, including a Boeing 787 VIP private airliner, a Boeing 737 and aGulfstream business jet.

It contradicted Lourenço’s pledges his narrative of being a modest person.

“Today, after 18 months in office, the impetus (to fight corruption andlavish spending) seems to have loosened and few results are in sight,”Maka Angola’s Moiani Matondo stated.

Lourenco justified TAAG’s plans to acquire new aircraft, saying it would“boost its business policy and achieve its strategic objectives.”

– CAJ News

Distributed by APO Group on behalf of CAJ News Africa.

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Media Contact: Pedro Agosto CAJ News Africa +27 72 126 2434