Developing Angola: Strategies For Economic Growth And Prosperity

Angola is a country on the west-central coast of Southern Africa with a population of over 33 million. It is the second-largest Lusophone (Portuguese-speaking) country in the world and the seventh-largest country in Africa. Angola's economy is heavily dependent on oil, which accounts for 90% of its exports. However, the country also has vast mineral and petroleum reserves and one of the fastest-growing economies in the world.

Despite its economic growth, Angola continues to face significant social and economic challenges, with most of the nation's wealth concentrated in the hands of a small portion of the population. The country also suffers from high levels of poverty and inequality, with a low standard of living and low life expectancy.

To address these issues, Angola has implemented various economic reforms and development strategies. The government has prioritised improving macroeconomic stability, reducing corruption, and promoting economic diversification. Angola has also opened up its telecoms market to attract foreign investment and is working to improve its agricultural sector, which has the potential to drive economic diversification.

In addition, Angola has a stable political environment and is committed to peace and stability in Africa, particularly in the Democratic Republic of Congo. The country operates under a multi-party system, with general elections held every five years. The Popular Movement for the Liberation of Angola (MPLA) has been in power since the country gained independence in 1975.

Reduce poverty and inequality

Angola has a low standard of living, with high levels of poverty and inequality. The country's economic growth is highly uneven, with most of the nation's wealth concentrated in a disproportionately small part of the population.

• Economic diversification: Angola's economy is heavily dependent on the oil sector, which has made the country vulnerable to external shocks and undermined macroeconomic stability. Angola should invest in other sectors, such as agriculture, to promote economic diversification, job creation, and poverty reduction. With its abundant agricultural and arable land, favourable climatic conditions, and access to water, Angola has the potential to develop a strong agricultural sector.
• Education: Angola has a low adult literacy rate compared to other countries, and surveys indicate that it is difficult to pinpoint the educational needs of the population. Improving access to quality education and training can help Angolans develop the skills needed to secure better job opportunities, promoting social mobility and reducing income inequality.
• Employment: Angola needs to create more jobs to keep up with its growing working-age population. Efforts should be made to support small and medium-sized enterprises, remove barriers to private sector investment, and promote entrepreneurship, particularly in the agricultural sector.
• Social protection: Angola should implement a strong social protection program to improve the quality of life of its citizens, especially those living in poverty. This could include initiatives such as cash transfer programs, access to healthcare and education, and support for smallholder farmers.
• Infrastructure development: Angola should continue to invest in infrastructure development, including transportation, energy, and water supply, to promote economic growth and improve access to basic services for its citizens.
• Good governance: Angola has a history of corruption and income inequality, with profits concentrated in the hands of a small elite. The government should continue its efforts to fight corruption, improve transparency, and reduce nepotism to ensure that the benefits of economic growth are distributed more evenly among the population.

Improve education and literacy

Angola's adult literacy rate is low compared to other countries, with surveys indicating that it is difficult to pinpoint the educational needs of the population. Current UNICEF figures suggest that Angola's adult literacy rate stands at just over 70%.

To improve education and literacy in Angola, the following steps could be taken:

• Increase investment in education: Angola's budget for education could be increased by allocating more funds from the country's vast mineral and petroleum reserves. This could include building more schools, improving existing school infrastructure, and providing more educational resources and materials for students.
• Improve access to education: Efforts could be made to ensure that all children have equal access to education, regardless of their location or socioeconomic status. This could involve providing transportation to and from school, offering scholarships or financial aid, and ensuring that schools are equipped with the necessary resources and trained teachers.
• Promote literacy initiatives: Literacy campaigns and programs could be implemented to encourage reading and writing among both children and adults. This could include providing access to books and literacy resources, offering literacy classes or tutoring, and promoting a culture of lifelong learning.
• Train and support teachers: Investing in teacher training and professional development can help ensure that educators are equipped with the necessary skills and knowledge to effectively teach their students. This includes providing ongoing support and resources for teachers, especially in rural or underserved areas.
• Develop a culturally relevant curriculum: The curriculum should be relevant to the cultural and social context of Angola, incorporating the history, traditions, and values of the country. This can help students connect with their learning and make it more meaningful to their lives.
• Encourage community involvement: Engaging parents, caregivers, and community members in the education process can help improve educational outcomes. This could include hosting community events, offering parent-teacher conferences, and providing resources or training for parents to support their children's learning at home.
• Utilize technology: Technology can be leveraged to enhance the learning experience and improve access to educational resources. This could include providing computers or tablets to students, offering online courses or resources, and utilizing digital tools for teaching and learning.

Develop agriculture and food security

Angola has the potential to become an agricultural powerhouse on the African continent. It has an abundance of arable land and a diversity of climatic conditions that are suitable for producing a variety of agricultural products. However, the country's agricultural potential has remained untapped since the civil war (1975-2002), which led to the collapse of commercial agricultural production.

To develop agriculture and food security in Angola, the following steps could be taken:

• Increase investment in agriculture: Angola has vast fertile land suitable for agricultural production. However, less than 3% of Angola's arable land is currently being cultivated. The government and private investors can invest in agricultural infrastructure, technology, and irrigation systems to increase agricultural output.
• Promote agricultural diversification: Angola was once a major producer and exporter of agricultural products such as coffee, cotton, and bananas. However, these exports ceased during the civil war. The country can diversify its agricultural production by promoting the cultivation of various crops and promoting agro-processing industries.
• Improve access to markets and agricultural inputs: Smallholder farmers in Angola often lack access to markets and modern agricultural inputs such as seeds and fertilizers. The government can facilitate the development of agricultural value chains and provide subsidies or grants to farmers to help them access necessary inputs.
• Strengthen agricultural extension services: Providing training and extension services to farmers can help improve their technical, organizational, and managerial capacities. The government, in collaboration with international organizations and NGOs, can establish farmer field schools and demonstration plots to promote the adoption of improved agricultural practices and technologies.
• Develop irrigation and climate resilience: Angola is vulnerable to climate change and has been facing severe droughts, which directly impact food security. The government can invest in irrigation infrastructure and promote climate-resilient farming practices to enhance water security and reduce the impact of climate shocks on agricultural production.
• Encourage private sector participation: The private sector can play a crucial role in developing Angola's agriculture sector. The government can offer incentives, such as tax breaks and subsidies, to private companies investing in agriculture. Additionally, the government can facilitate public-private partnerships to leverage the expertise and resources of the private sector.
• Improve food security and reduce food imports: Angola is a significant importer of food and agricultural goods, making foreign purchases totaling more than $1.7 billion from over 60 countries in 2023. By increasing domestic agricultural production and reducing dependence on food imports, Angola can improve its food security and reduce its trade deficit.

Diversify the economy

Angola's economy is heavily dependent on oil, which accounts for 90% of the nation's total merchandise exports. This has made the country vulnerable to external shocks, such as the decline in international oil prices, and hindered its ability to incorporate into global value chains and participate more fully in the export of manufactured goods and value-added services.

To reduce this dependency on oil, significant investment is required in other economic sectors to stimulate growth. Angola has abundant agricultural and arable land, as well as favourable climatic conditions, making agriculture the sector with the highest potential to drive diversification.

The Angola Commercial Agriculture Development Project (PDAC), co-financed by the World Bank and the French Agency for Development, has supported the transition from subsistence to a more market-oriented, competitive agriculture sector. The project incentivises bank lending to agriculture by helping producers and SMEs prepare and finance agriculture investments, providing technical assistance, grants, and de-risking through partial credit guarantees. As of December 2023, PDAC has approved around 268 projects, translating to about $37 million in agriculture investment.

Angola will, however, need to build climate resilience as its exposure to extreme climatic events is expected to increase water scarcity, raise temperatures, and extend dry seasons, which will hurt agricultural productivity.

Other sectors with potential for diversification include precious minerals, tourism, fisheries, and hydropower.

Improve infrastructure

Angola's infrastructure is limited, with roads often in poor condition, power outages common, and water availability unreliable. However, the government is attempting to improve transparency and has made some progress in reducing corruption.

To improve infrastructure in Angola, the following steps could be taken:

• Increase investment in transportation and telecommunications: Angola's transport system consists of three separate railway systems, highways, inland waterways, sea ports, and airports. However, surface transportation is slow and expensive, and the country's roads are often in poor condition. Investing in the development and maintenance of transportation infrastructure can improve connectivity within the country and reduce transportation costs. Additionally, improving telecommunications infrastructure, such as optic fibre cables, can enhance internet connectivity and support economic growth.
• Improve energy infrastructure: Angola has taken steps towards improving its energy infrastructure, such as the creation of the National Gas and Biofuels Agency (ANPG) to regulate oil exploration and production activities. However, power outages are common, indicating a need for further investment in power generation and distribution infrastructure. This can include expanding renewable energy sources, such as hydropower, and improving grid reliability.
• Develop water infrastructure: Water availability is unreliable in Angola, and access to clean water is limited for many Angolans. Investing in water infrastructure, such as water treatment plants, distribution networks, and sanitation facilities, can help improve access to clean water and sanitation services for the population.
• Strengthen institutional capacity: Angola's institutions, including the National Oil and Gas Agency (ANPG) and the National Bank of Angola (BNA), play a crucial role in regulating the country's natural resources and financial sector. Strengthening the capacity of these institutions through training, technology, and knowledge transfer can enhance their effectiveness in managing the country's infrastructure and natural resources.
• Promote public-private partnerships: Public-private partnerships (PPPs) can play a vital role in developing Angola's infrastructure. By collaborating with private companies and international organizations, the government can leverage expertise and funding to develop and maintain infrastructure projects. For example, the Angola Commercial Agriculture Development Project (PDAC), co-financed by the World Bank and the French Agency for Development, supports the transition to a more market-oriented and competitive agriculture sector.

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