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