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Cablegate: Chiquita Becomes Largest U.S. Non-Oil Partner In

VZCZCXRO7951
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLU #0191/01 0670615
ZNR UUUUU ZZH
P 070615Z MAR 08
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC PRIORITY 4641
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS SECTION 01 OF 02 LUANDA 000191

SIPDIS

SIPDIS

STATE PASS TO USTR, GABORONE FOR TRADE HUB

E.O. 12958: N/A
TAGS: ECON ETRD PREL AO
SUBJECT: CHIQUITA BECOMES LARGEST U.S. NON-OIL PARTNER IN
ANGOLA

REF: LUANDA 0026

1. Summary: U.S.-based banana giant, Chiquita Brands
International, signed March 4 a 15-year agreement with
Angolan partners to purchase an estimated 7.7 million boxes
of bananas per year from a soon-to-be established 3000
hectare industrial banana plantation in Benguela province.
The well-respected Portuguese Espirito Santo Investment Group
(ESCOM) and its local partner (with a 20 percent share), the
MPLA-funded HiperGesta, provide the USD 60.6 million
investment to establish the banana plantation. In addition
to creating over 3000 direct jobs and an estimated 8,000 more
indirectly, this investment will become an anchor for
infrastructure development along the corridor between
Lobito/Benguela and the production site. The Chiquita/ESCOM
partnership represents the largest non-extractive sector
participation by a U.S. firm in the Angolan economy since
independence. Mitigating possible negative externalities
(like crowding out small scale banana producers and the
displacement of current farmers on the concession's lands)
and improving the overall investment climate are among the
challenges facing Chiquita and its partners. Doing business
is hard in Angola, but ESCOM's political connections and
intimate knowledge of the Angolan economic landscape made
this deal possible. End Summary.

----------------
Not Small at All
----------------

2. On March 5, representatives of the Espirito Santo
Investment Group (ESCOM) and Chiquita briefed Ambassador
Mozena on their recently signed agreement to restart
industrial banana production for export in Angola. (Note:
Before independence in 1975, Angola was a major banana
exporter. End Note) ESCOM and its partner, HiperGesta
(backed by the ruling MPLA's social development foundation),
will provide a USD 60.6 million investment to operate a 3000
hectare industrial banana plantation in Benguela province to
produce 7.7 million boxes of bananas per year for export to
Europe by Chiquita, beginning in late 2009 or early 2010.
Under the 15-year contract, Chiquita will provide technical
assistance to train the managers and employees in production
methods that will allow the Angolans to produce the quantity
and quality of bananas required to meet Chiquita's needs in
the European market. The project will employ over 3000
full-time employees on a year-round basis and provide 2.5
times that number of jobs in supporting/dependent economic
activity, according to Chiquita projections.

-------------------------
What This Means to Angola
-------------------------

3. The return of industrial banana production for export is
an important step for Angola. The government recognizes the
key role agriculture plays in providing secure employment and
economic development across the social spectrum. ESCOM
appropriately pointed out that their investment represents
the largest single agricultural investment in Angola since
independence in 1975. That a well-respected U.S. company,
Chiquita, is involved as a partner in the project will play
well with the GRA, including President Dos Santos, who had
urged Ambassador Mozena to encourage increased U.S.
participation in the non-extractive sectors of Angola's
economy (reftel).

4. In addition to the 11,000 direct and indirect jobs
created by the project, the infrastructure improvements
around the plantation and the port of Lobito will enhance
Angola's competitiveness as a destination for even more
foreign and domestic investment. Chiquita officials told the
Ambassador the banana plantation will likley become an
"anchor" around which other projects can take root. Carton
and pallet production was mentioned as a good example, as was
agriculture or backhaul imports that could take advantage of
the weekly containerized cargo service and cold chain
availability associated with the project.

------------------------
Mitigating Externalities
------------------------

5. The ESCOM partners were sensitive to the potential effect
their low-cost, high-productivity plantation might have on
established (small-scale) local banana producers. Some local
farmers may apply for foreman jobs or other employment at the

LUANDA 00000191 002 OF 002


plantation; for those who want to remain in banana
production, ESCOM and Chiquita will provide training and
technical assistance to help these farmers produce for local
or regional markets. Perhaps of more immediate concern is
the potential displacement of current farmers or landholders
(not owners under the Angolan system) located on the ESCOM
concession site. According to ESCOM, the parties have
consulted extensively with local leaders to ensure the
plantation is a welcome member of the community. On the
margins of the presentation, Chiquita officials expressed
concern with their difficulty in securing visas to enter
Angola. We will work together with them to address this and
other potential areas of concern related to the general
business climate for foreign investors.

-------
Comment
-------

6. The Chiquita/ESCOM partnership is an excellent example of
the benefits of a U.S. firm's working with an established
Angolan company to identify a market and mobilize the needed
technical and human capital resources available in Angola to
mount a successful venture. It is an unfortunate reality in
this still-developing economy that the heavy political
lifting orchestrated by ESCOM (and its MPLA-funded partner,
HiperGesta) was needed to negotiate government approval for
the project. We are working with reform-minded elements in
the GRA so someday other investors will find it easier to
invest in Angola without needing to rely on political
insiders like Espirito Santo and HiperGesta.
MOZENA

© Scoop Media

 
 
 
 
 
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