Many of the difficult economic conditions existing in Angola's cities and towns were the result of the UNITA insurgency, including the almost total disruption of the transportation system necessary to carry produce from rural to urban areas. However, by the late 1980s the government had recognized that much could be blamed on the cumbersome and ineffective mechanisms of the centralized economy (see Role of the Government , ch. 3). In 1988 the government, faced with the continuing decline of the manufacturing sector, began to move away from state-controlled companies and promised to enact new laws that would make private ownership possible.

The impact of the changes in economic policy were not immediately apparent in Luanda in 1988. The only two sources of goods for the capital's population were rationed and poorly stocked state stores and the parallel market, where the local currency was accepted at only a fraction of its face value. Many foreign businesses were giving their Angolan employees credit at a government supermarket where they could buy food. Some foreign businesses set up their own stores in which their employees could shop. The largest parallel market operation in Luanda, Roque Santeiro, was only one of many that depended on European shipments for products such as clothing, watches, medicine, and tape players, as well as food. There was some indication that goods were also bought by insiders at state stores and resold at many times the price in the parallel market. Despite official rhetoric, the government recognized its inability to provide basic goods to the population and seldom interfered with parallel market activities.

Physical living conditions in Luanda were deplorable in 1988. The elegant marble apartment buildings that lined the city's downtown streets during the colonial era had become slums with neither running water nor electricity. Even most of those able to afford luxuries were living without basic conveniences or amenities evening activities, such as cultural events or dining out, were rare. And because of a lack of spare parts, there were few taxis or other means of transportation.

Data as of February 1989