Angola is once again mired in civil war but life, for the ordinary citizen has to go on. How do they cope? How do they manage to feed themselves and their families? Bram Posthumus travelled through the country recently to see how the real economy ticks.

As civil war flares up once again, Angola's natural resources continue to be sold out to pay for massive arms purchases. Social services are maintained largely by foreign donors and the churches. Most Angolans, meanwhile, have devised their own ways of going about their business. With renewed conflict erupting around them, their economic systems are likely to come under great strain - but they will survive, as they have in the past.

San Pedro in Huambo is a vast, vibrant open air supermarket, department store, chemist, drugstore and DIY. The question is not what you can buy here but rather what you can't; the latter list is likely to be confined to complete cars, guns and ammunition - and chances are that even that can be arranged. You can eat and drink here, have your hair done, your fortune told; you can buy your medicine, modern or traditional. And, of course, you can change your dollars for the ever dwindling kwanza (the street value in Luanda is about one million to the US dollar), with which the market conducts its business.

There is a division of labour among the vendors: all food items and almost anything to do with clothes are the domain of women. They also run the restaurants. Building materials and anything to do with cars and radios are male territory. From dawn till dusk, people steer through the narrow and uneven corridors with their wares. Boys and girls shout their continuous chorus of 'Amigo! Amigo!' and beg for money.

The goods are put on improvised wooden stalls or simply on the floor. Price negotiations are tough and loud but nowhere near as loud as the music that explodes out of ghetto blasters that play pirate cassettes. The smell of cooked meat mingles with the fumes from burning rubbish. When the market draws to a close there can be trouble, especially when the men have been drinking excessively. A famous story relates how a drunk soldier, cornered by irate market people threw a grenade at them to set himself free. Miraculously, no one died.

This is the heart of the real economy of Angola. Food, soft drinks, beer and some clothes and textiles are locally produced; the rest comes from Europe, South Africa, or the Far East. Prices depend on how many people are involved in transporting the goods and how risky it has been to get them there.

Products may have been bought or stolen from the ports, then put on transport that may have had to pass through expensive army or rebel roadblocks, then sold to local distributors who in turn sell to the vendors. There can be up to five links in the chain.

Angola used to be one of Sub-Saharan Africa's most industrialised nations with over 4,000 big and small production firms. Carlos Figuereido works with a community rehabilitation organization called Development Workshop. He recalls, "We had industries (that produced) cattle fodder, flour, bicycles, plastics..." What remains of the once huge industrial park near Huambo is a collection of skeletal buildings.

Figuereido assesses, "We have almost destroyed the entire formal sector. There are few jobs. Markets like San Pedro were always there, but now they flourish. Almost all economic activity revolves around them."

The people's economy rests on two pillars of which buy-and-sell is the first. Fix-and-mend is the other. There are workshops everywhere, both in the town centres and at the markets where you can have the life extended of just about everything: from shoes and clothes to cars, watches and radios. Years of war, poverty and shortages have turned Angolans into past masters in the art of improvisation - in every respect.

Take the distillery in a busy 'bairro' (quarter) of Huambo. It sits in a little shed on a family compound. In the darkness, a small wood fire is burning; the smoke constricts the throat and sears the eyes. But the distiller is in there most of the time, watching production.

A woman who sells the finished product by the glass in her nearby in-house bar, explains how it works, "You start by putting grains of maize in the water for four days. Then you add sugar. You leave it for another three. Once fermentation has truly started, you heat it and then you catch the steam." The finished product is called 'Lambiki' and is hugely popular among her clientele. One small 33cc bottle sells for $0.19 (at November 1998 prices) - and production goes on 24 hours a day.

There is of course another economy; the one that shows up in the international statistics: GDP, trade figures and state budgets. The government and UNITA, seated in Luanda and Bailundo respectively, have some of Africa's most sought after commodities at their disposal. Here's what they do with them: UNITA controls much of the diamond-rich areas in the east of the country, most notably the Cuango valley, where some of the world's richest diamond fields are found. Since 1992, UNITA has earned $3.7bn from its diamond sales.

The precious stones are smuggled through the Democratic Republic of Congo or Zambia to Antwerp. There are UN sanctions in place banning this trade, but Zambian and Belgian authorities allegedly look the other way. The proceeds have been used to stock up on artillery, tanks, landmines and small arms.

John Stewart, a Zimbabwe-based churchman who has been organising peace workshops in Angola, explains, "UNITA has been in the business of finding weapons in the international black markets for decades. They have probably found it easier to supply themselves through Congo, simply because...more people are available to sell than ever before." This goes a long way towards explaining why UNITA was able to beat off the government offensive in December last year.

On the government side it is oil that ensures the wheels of the war machine keep turning. Angola has a proven reserve of 28 years and new finds have outstripped annual production for the last 10 years. Production approaches 800,000bpd and is expected to rise to above one million bpd in 2002. Exploitation is largely off-shore, so oil companies do not need to contend with angry villagers protesting the pollution of their home ground, as is the case in Nigeria.

As a matter of fact, the situation on-shore is of little relevance: during the fiercest fighting in the previous war of 1992-94, Angola remained among the few top destinations in Africa for foreign investment. The government uses its oil revenue to pay the oil companies for their exploration efforts and to service its foreign debt which currently stands at $7bn. It also mortgages future oil revenue to buy arms: artillery, helicopters, jet fighters and tanks.

With the oil price at its lowest level for 12 years, the government budget has been adjusted downwards, a move that will further diminish its capacity to pay its employees their $50 a month, or spend money on health and education. The budget for these two sectors is less than half that of defence, the worst performance in all of Africa, according to the UNDP. About half of Angola's children do not go to school; eight out of 10 Angolans have no access to sanitation and six out of 10 do not have safe drinking water.

The ordinary Angolan has very little to gain from the presence of their masters, whether in peace or in war, and whichever side they are on. Take food: UNITA exacts a food tax, forcing farmers to set aside a certain proportion of their produce for the 'freedom fighters'. On the other side, a large-scale army presence obliges villagers to feed the soldiers who might otherwise go on the rampage. People's living standards have been in steep decline for the past eight years. As John Stewart noted, "The edge of survival that people are sitting next to, is coming closer. You can see it in the markets, where people buy enough for one day. They have no financial reserves. Just enough money to survive - one day.'

The informal economy is a concentration of all the improvisational genius the Angolans have developed in trade, engineering - and maintaining - that fine balance between competition and solidarity that makes markets like San Pedro tick. It might be termed the 'secret' of the Angolan economy. It is worth remembering that this genius has not come about voluntarily: the people have been driven to it by their catastrophic living conditions.

The informal economy also ignores the dividing line between the two warring sides. "We had markets at Vinte Cinco and Villa Novo (both near Huambo) that were like places of exchange from the UNITA-controlled zones to the government-controlled zones," Figuereido remembers. "The women who produce agricultural products in UNITA's zones would bring those products...and they could get salt, soap and (other things) that were coming through from Lobito (a major port)." Before the war recommenced, on 4 December 1998, some of that trade was probably still going on; since then UNITA has sealed off the central towns and turned its own areas into virtual prisons.

Angola continues to attract people with an instinct for a quick buck. Goods must be transported, diamond mines protected - and now a war must again be won. Unsurprisingly, Soldier of Fortune declared Angola fair game again for freelance soldiers. And so the sale of the country continues. As one local observer notes, "You don't have many people who are interested in Angola. Most are only interested in the riches of Angola." The irony is that he is not only referring to foreign predators; but also the local elites who have done so little to improve the lot of most of their fellow country folk.