Angola's Foreign Aid Debt: How Much Is Owed?

Angola is a lower-middle-income country in southern Africa with a GDP of USD 124.5 billion, a per capita income of USD 4,418, and a population of 29.3 million, according to 2018 IMF estimates. The country has a low level of human development, which is surprising given its potential for economic prosperity, particularly in the oil and agriculture sectors.

In 2018, the U.S. Agency for International Development (USAID) provided more than $87 million in assistance to Angola, with a focus on democracy and governance, economic opportunity, and health. The Centers for Disease Control and Prevention (CDC) also plays a role in funding HIV/AIDS prevention and malaria control programs, while the U.S. Embassy supports humanitarian demining and weapons abatement programs.

However, one source raises concerns about Angola's relationship with China and the potential implications for its foreign debt and relations with the U.S. Angola owes a staggering $21 billion to China, which is about 40% of its entire public foreign debt. This has raised questions about the nature of Chinese loans and their impact on Angola's ability to service its debt and maintain relations with the U.S.

Angola's debt to China

Angola is China's biggest African client and owes a staggering $21 billion to Beijing, some 40% of its entire public foreign debt stock. Servicing this debt swallows up nearly half of Angola's annual budget. This is a huge burden, with every dollar required to service the debt with China being a dollar Luanda cannot spend on urgent reforms for health, education, public administration, or justice.

In addition to corruption, there are also concerns about the nature of Chinese loans and the potential risks to national security and human rights. Many of China's telecommunications infrastructure projects in Africa have enabled the creation of surveillance systems and facilitated access to critical user data. There is a potential threat to Angola's national security if its advanced telecommunications structure turns out to be under Chinese control.

Despite these concerns, Angola continues to accept new loans from China. In January 2023, Angola's finance minister, Vera Daves, announced a new $250 million loan from China to help expand high-speed broadband in the country. Daves assured the public that the new loan was under more favourable terms than previous loans, but she did not address whether the loan required the use of Chinese companies or the potential risks to national security and human rights.

Given Angola's history of corruption and the controversial nature of Chinese loans, there are calls for a forensic audit of existing obligations and a renegotiation of repayment terms. This would allow for a haircut or reduction in unfair debt burdens, especially for loans that are suspect or corrupt. As a major creditor, China has an obligation to join other Western nations in agreeing to renegotiate distressed debt and set a worldwide precedent for loans to developing countries.

Corruption in Angola

Angola has a serious problem with corruption, which has negatively impacted its international image and investment opportunities. The country has a score of 33 on the Corruption Perceptions Index, ranking 121 out of 180 countries.

Angola's legal and institutional anti-corruption framework is inadequate, and there is a lack of political will to effectively combat corruption. The country has introduced some important reforms in recent years, such as increased revenue and budget transparency, and President João Lourenço has made anti-corruption a priority. However, critics argue that corruption complaints involving high-ranking officials are not investigated, and many Angolans believe that the government is doing a poor job of fighting corruption.

A survey by Afrobarometer found that more than one in three Angolans believe the level of corruption in the country increased in the past year, and more than six in 10 citizens believe that people who report acts of corruption to the authorities risk retaliation. The survey also revealed that four in 10 citizens had paid a bribe to the police or other government officials to obtain assistance, documents, or avoid problems.

Angola's high level of corruption has had a detrimental effect on its economy and investment climate. The country's business environment is challenging due to pervasive corruption, an underdeveloped financial system, and inefficient bureaucracy.

The country's foreign debt, particularly to China, is also linked to corruption. Angola owes a staggering $21 billion to China, which is about 40% of its entire public foreign debt stock. This debt is linked to corrupt schemes that diverted public funds into private pockets, with unscrupulous officials and businessmen in both countries involved. There is a need for a forensic audit of this debt, and possibly a renegotiation of repayment terms, as it is unfair for the current government to bear the burden of servicing odious debt incurred by the previous corrupt regime.

Overall, corruption in Angola remains a significant challenge, hindering economic growth, development, and the country's international relations.

US-Angolan relations

Since then, US-Angolan relations have focused on strengthening bilateral economic ties and promoting and strengthening Angola's democratic institutions, economic prosperity, health systems, and peace and security. Angola is the US's third-largest trading partner in sub-Saharan Africa, mainly due to its petroleum exports. American oil companies have significant investments in the country, and the US is Angola's primary source of official development assistance. In recent years, regional security partnership, particularly in the Gulf of Guinea, has also been a focal point of bilateral relations.

However, there have been some tensions in the relationship. In 2022, Angola welcomed official visits from the foreign ministers of both Russia and China, and the US Treasury Secretary skipped Angola during a trip to Africa, possibly due to its checkered history with Chinese development assistance. Angola owes a significant amount of debt to China, and there have been concerns about the nature of Chinese loans and infrastructure aid to the country, as well as the potential impact on its relations with the US. There have also been concerns about corruption in Angola, with the US aligning with the country to impose sanctions on two former generals for their role in a Chinese affair.

Angola's foreign policy objectives

• Improving relationships with Western countries, particularly the US, and cultivating links with other Portuguese-speaking countries.
• Strengthening democratic institutions, promoting economic prosperity, improving health, and consolidating peace and security, including maritime security.
• Removing landmines, promoting environmental conservation, and helping war refugees and internally displaced people return to their homes.
• Developing its military and asserting its national interests in Central Africa through military and diplomatic intervention.
• Supporting the revival of the Community of Portuguese-Speaking Countries (CPLP) as a forum for cultural exchange and expanding ties with Portugal and Brazil.
• Joining international organisations such as the Southern African Development Community, the Partnership for Atlantic Cooperation, and the Port Management Association of Eastern and Southern Africa (PMAESA).
• Strengthening its position in the Southern African region by intervening in conflicts in the Democratic Republic of the Congo, the Republic of the Congo (Brazzaville), and Zimbabwe.
• Working with the UN Security Council to impose and carry out sanctions on UNITA and controls on conflict diamonds.
• Promoting economic prosperity and regional security, and increasing energy security in Africa and the Atlantic.
• Supporting global food security through increased agricultural trade and investment in Angola's agriculture development and economic diversification.
• Promoting rule of law, strengthening judicial independence, making citizens more aware of their legal rights, and building the capacity of courts.
• Supporting Angola's efforts to fight corruption, enhance accountability, advance democratic governance, and protect human rights and fundamental freedoms.
• Assisting Angola in reducing its debt vulnerabilities, improving its economy, and implementing economic reforms.
• Investing in Angola's digital architecture and supporting reliable telecommunication networks.
• Supporting Angola's transition to clean energy sources and generating 73% of its energy from clean sources by 2027.

Angola's relationship with China

Angola and China have a long history of diplomatic relations, which began before Angola's independence. China supported Angola's nationalist movements during its war of independence against Portugal in the 1960s and 1970s. However, China's relationship with Angola weakened as its relationship with the Soviet Union strengthened, and China pulled its support. In 1983, China and Angola officially established relations, and since then, China has been a key investor in Angola, particularly in infrastructure and the oil industry. Angola is now China's third-largest trading partner in Africa, and China has provided significant loans to Angola, often in exchange for reduced-price oil.

In 2024, Angola and China upgraded their bilateral relationship to a comprehensive strategic partnership. Angola's President João Lourenço visited China, and the two countries announced a $250 million loan from China to Angola to help expand high-speed broadband. Angola is China's biggest African client and owes Beijing a staggering $21 billion, around 40% of its entire public foreign debt stock. This debt has had a significant impact on Angola's economy and has affected its relations with other countries, particularly the US.

China has also been involved in several development projects in Angola, including building roads, hospitals, and public housing. Many of these projects were completed by Chinese companies, and some have been criticized for their poor quality. Despite this, China's investment has triggered growth in some domestic sectors of Angola's economy, and the two countries continue to have a close relationship, with China supporting Angola's economic development and providing financial assistance.

There is also a significant Chinese diaspora in Angola, with an estimated 53,000 Chinese citizens living and working in the country as of 2016. These individuals, particularly young professionals, have played an important role in shaping people-to-people relations between the two countries.

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