Angola's Wealth: A Rich Country's Story

Angola is a country rich in natural resources, particularly oil, which has been the primary driver of its economy and growth. Angola's economy is heavily concentrated in the oil sector, which has resulted in high inequality and a perception of corruption. Despite its natural wealth, Angola's output per capita is among the lowest in the world, with a large portion of the population relying on subsistence agriculture. The country has experienced rapid economic growth, with a booming oil industry, but this wealth has not been evenly distributed, and connections are seen as more important than hard work for economic success. Angola's capital, Luanda, was ranked as the most expensive city in the world, despite the country's low GDP per capita, highlighting the disparity between the cost of living for locals and expats.

Angola's oil economy

Angola's economy is heavily reliant on its oil industry, which accounts for about a third of its GDP and almost all of its exports. The country is the second-largest oil producer in Africa and a member of OPEC, with an output of approximately 1.37 million barrels of oil per day. Angola's oil reserves are estimated at 9 billion barrels, with 11 trillion cubic feet of natural gas reserves.

The country's oil sector has faced challenges in recent years due to declining production, lack of investment, and the impact of the COVID-19 pandemic, which led to a sharp drop in oil prices and global demand. To address these issues, the Angolan government has implemented various measures, including strategic plans, tax incentives, regulatory reforms, and privatisation of the state oil firm, Sonangol.

Sonangol, the national oil company, is crucial to Angola's economic success and sustainability. The company has identified maintaining crude oil production and exploration levels as strategic projects for the future. Sonangol is also involved in the development of the Angola Liquefied Natural Gas project, which monetises the country's natural gas reserves and ensures consistent energy supplies for the regional market.

To reduce its dependence on imported refined petroleum, Angola has planned to construct and expand national refineries. The country currently imports 80% of its refined petroleum products, with only 20% sourced locally. The government aims to increase its refining capacity to meet domestic demand and reduce costs.

The Angolan government has also introduced legal reforms and created the National Agency for Petroleum, Gas and Biofuels (ANPG) to regulate upstream operations and award concessions. The ANPG has planned a six-year licensing round to auction 50 new blocks for exploration and production.

Despite being a leading oil producer, Angola faces challenges due to its high production costs, which average $40 per barrel. The country's oil and gas sector is also difficult to navigate due to industry barriers, macroeconomic threats, and restrictions on foreign exchange.

Overall, Angola's oil economy is vital to the country's growth and development, but it faces challenges that need to be addressed to ensure long-term sustainability and competitiveness in the global market.

Angola's GDP

Angola's economy has been heavily influenced by the effects of four decades of conflict in the 20th century, including the war for independence from Portugal (1961-1975) and the subsequent civil war (1975-2002). Since 2002, Angola has made significant progress in reducing poverty and rebuilding infrastructure. During the first decade of the 21st century, Angola's economy was one of the fastest-growing in the world, with an average annual GDP growth rate of 11.1% from 2001 to 2010. This growth was driven by high international oil prices and increasing oil production, although it was accompanied by high inequality.

Angola's economy remains heavily dependent on the oil sector, which accounted for over 90% of exports by value and 64% of government revenue in 2017. Oil production and related activities are vital to the economy, contributing about 45% to GDP. Angola is the largest producer of petroleum in sub-Saharan Africa, and oil exports make up over 90% of the country's total exports. The country joined the Organization of the Petroleum Exporting Countries (OPEC) in 2007 but left in 2023 to expand its oil production.

Despite its abundant natural resources, Angola's output per capita is among the lowest in the world. The country's economic growth is driven by the oil industry, with rising oil production surpassing 1.4 million barrels per day in late 2005 and expected to continue increasing. The government has implemented ambitious development programs with revenues from oil exports, focusing on building roads and other basic infrastructure.

Angola's housing market

The Angolan government has recognised the importance of the private sector in driving post-war development, particularly in the housing sector. However, Angola remains a challenging country to do business, especially in the sale and transfer of property. The government has committed to providing fiscal incentives, reforming the credit system for housing, and fostering public-private partnerships. Still, the private sector's growth has been hindered by historical factors such as a highly centralised extractive industry-based economy and a lack of decentralisation reforms.

The recession in the last few years has depressed the real estate sector, resulting in decreased demand, increased supply, and lower prices. The dollar-denominated prices of apartments and offices in Luanda's centre have dropped by almost 30% since 2014, while rental market prices have also fallen due to the departure of expatriates. However, prices in the private market and new prime areas of the capital have increased significantly.

The National Urbanisation and Housing Programme aimed to deliver one million houses as part of the country's post-war reconstruction, but it has faced challenges. While the government has invested in new town housing, some of these remain unoccupied, leading to illegal occupation and vandalism. The informal sector plays a significant role in providing land, labour, and building materials for self-built homes, which make up a large portion of Angola's housing stock.

Overall, Angola's housing market is characterised by limited investment, economic challenges, and a struggle to attract private and foreign investment specifically to the housing sector. The government has implemented various measures to stimulate the market and provide housing for its citizens, but there are still significant challenges to be addressed.

Angola's inequality

The economy of Angola is heavily influenced by its history of conflict and colonial rule. The war for independence from Portugal and the subsequent civil war left lasting impacts, with the country's economy still heavily dependent on the oil sector. Oil production and supporting activities contribute significantly to Angola's gross domestic product (GDP) and government revenue. However, the oil industry employs just 1% of Angolan workers, contributing to a high unemployment rate of 26%.

The country's economy is also affected by its reliance on raw materials and cheap labour, a legacy of European rule. While Angola has one of the world's fastest-growing economies, this growth has not translated into improved living standards for most of its citizens. Infrastructure remains poor, and basic services like electricity and safe drinking water are lacking in many areas. The International Monetary Fund (IMF) characterises Angola as a "post-conflict country that produces a lot of oil and faces the challenges that come with it."

Diversification of the economy is crucial to addressing inequality in Angola. The country's dependence on oil revenue makes it vulnerable to price fluctuations, and the lack of a diversified job market means limited investment and job opportunities. Experts recommend that Angola invest in skills and infrastructure development and improve governance to reduce inequality and improve the lives of its citizens.

Angola's agricultural sector, which accounts for 70% of total employment, has the potential to be a valuable industry due to the country's high-quality soil and water resources. Increasing government spending in this sector could lead to self-sufficiency and provide a lifeline to many Angolans.

Angola's corruption

Angola has been plagued by corruption, with the country's government and public institutions riddled by institutional corruption. The country's economy is heavily influenced by the effects of four decades of conflict, including the war for independence from Portugal and the subsequent civil war. As a result, Angola's economy has been heavily dependent on the oil sector, which has led to a centralised government with authoritarian tendencies. This has allowed the president and those associated with them to exert control over the nation's resources and exploit the economy for personal gain through legal and extra-legal means.

Angola's former president, José Eduardo dos Santos, has been accused of creating one of the most corrupt countries in Africa. While the country's people live in poverty, the president's children, leading government officials, and military officers have become incredibly wealthy. Corruption strategies have evolved over time, from direct embezzlement of oil revenues to a variety of schemes involving companies controlled by the party elite. Angola's business environment has been described as one of the most difficult in the world due to pervasive corruption and cumbersome bureaucratic procedures.

The country's first elections since the civil war were held in 2008, but they were marred by allegations of irregularities and violence. The media in Angola is also heavily controlled by the state and used for propaganda, with competitors repressed. Despite calls for a zero-tolerance" approach to corruption in recent years, domestic enforcement of anti-corruption laws remains minimal, and the investigative capacity of control agencies is weak. However, there are some prospects for change with the election of João Lourenço as president in 2017. He has pledged to combat corruption and improve governance and has taken steps to remove corrupt actors from power.

International institutions and foreign legal systems can also play a role in mitigating Angolan corruption. Their policies focus on ensuring that their loans are not appropriated and that multinational corporations are not involved in bribery. Legal action can be taken when individuals or companies violate foreign law. Additionally, international treaties have mandated the creation of anti-corruption laws and institutions in Angola, providing a framework for future reform.

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