Economic Problems and the Implementation of Socialist Policies
One of the priorities of the Neto regime after independence was to repair the country's infrastructure, which had been shattered by the liberation struggle and the civil war. There had been extensive damage to bridges, roads, and transport vehicles, and most undamaged vehicles had been taken out of the country by the Portuguese. With no means of transporting food and other essential supplies to many areas of the country, the distribution system collapsed. Furthermore, a good part of the economy disintegrated when most of the Portuguese settlers, including skilled workers and government and economic development administrators, left the country at independence.
Perhaps more in response to the economic emergency than as a result of the party's long-term commitment to a planned socialist economy, the government created a large state sector as stipulated in a resolution passed during the October 1976 party plenum. Earlier that year, the government allowed state intervention in the management of private companies that had suffered most from the Portuguese withdrawal and passed the Law on State Intervention in March 1976, which provided for the formal nationalization of private companies. As a result, a large part of the economy, including abandoned commercial farms, the mining industry, and the banking sector, became publicly owned. The government, however, acknowledging the massive reconstruction task it faced, continued to encourage and support the private sector and to welcome foreign investment.
The MPLA leadership gave urgent priority to the revival of the agricultural sector, which employed about 75 percent of the economically active population. But the government's rejection of market incentives, the massive dislocations caused by warfare, the disorganization of the new bureaucracy, and hostility among the peasants to imposed collectivization of their land doomed most government efforts. Once a food exporter, Angola was forced to import an ever-increasing amount of food.
Although the agricultural sector barely continued to produce, the Angolan economy survived because of the oil produced by and sold to Western private enterprise. The honest and straightforward approach of the Angolan government toward its Western investors earned it the admiration of its partners and resulted in the inflow of capital not only in the oil industry but also in mining and fishing.
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