Angola's Industry: European Influence And Impact

Angola is a country in Southern Africa with a population of around 35 million people and a GDP of US$106 billion. Angola's economy is heavily reliant on the oil sector, which accounts for about 50% of its GDP and more than 90% of its exports. Angola is the third-largest producer of diamonds in Africa and has significant proven gas reserves and extensive mineral resources. While Angola's economy is growing, with a focus on rebuilding infrastructure and strengthening political and social institutions, it remains vulnerable to fluctuations in the world market due to its dependence on the oil sector. Angola's exports to Europe consist primarily of petroleum, with smaller shipments of diamonds, wood, and agricultural products.

Angola's economy and its dependence on oil

Angola's economy is heavily dependent on its oil sector, which has historically accounted for a large proportion of the country's exports and government revenue. In 2017, for instance, the oil industry made up over 90% of exports by value and 64% of government revenue. Oil production and supporting activities are vital to the economy, contributing about 45% to GDP.

The country's economy has been influenced by the effects of conflict in the last part of the 20th century, namely the war for independence from Portugal (1961-1975) and the subsequent civil war (1975-2002). Since the end of the civil war, Angola's economy has been one of the fastest-growing in the world, with an average GDP growth of 11.1% between 2001 and 2010. However, economic growth is highly uneven, with most of the nation's wealth concentrated in a disproportionately small part of the population.

Angola's economy has traditionally been dominated by the production of raw materials and the use of cheap labour. The country has vast mineral and petroleum reserves, and is committed to diversifying its economy, increasing the export value of its non-oil/extractive industries, and integrating into the global market. The country's other exports include diamonds, gold, forest products, fisheries, iron ore, coffee, and fruits.

The construction industry is taking advantage of the growing economy, with various housing projects stimulated by the government. However, not all public construction projects are functional. For example, Kilamba Kiaxi, a new satellite town of Luanda, was completely uninhabited for over four years due to skyrocketing prices.

Angola's economy faces several challenges, including corruption, human rights violations, and diamond smuggling. The country is also heavily dependent on imported refined petroleum, spending over $2 billion annually. To address this, the government is prioritising refinery development, with upgrades to the country's only operating facility in Luanda and three new projects in the pipeline.

Angola's exports and trade partners

Angola's exports are primarily commodity-based, with oil and related products making up the majority. Diamonds, liquefied natural gas, coffee, sisal, and fish are also among the country's significant exports. Angola's exports are heavily concentrated in the oil sector, with over 90% of exports by value attributed to petroleum products.

Angola's main export partners are China, the United States, India, France, the Netherlands, and the United Arab Emirates. China is Angola's biggest trade partner, receiving over 40% of its total exports. Angola's exports to the United States consist primarily of petroleum, with smaller amounts of diamonds, wood, and other goods.

Angola is a member of the Southern African Development Community (SADC) and the Economic Community of Central African States (ECCAS). It has also signed the African Continental Free Trade Agreement, reflecting its commitment to diversifying its economy and increasing the export value of non-oil industries.

Angola's history of European rule

In the 16th century, Portuguese colonists began trading and established a settlement at Luanda, which became the capital of Portuguese Angola. The Portuguese also founded Benguela in 1587, which became a township in 1617. The Portuguese gained control of the coast thanks to their superior weaponry, but they struggled against the kingdoms of Kongo, Ndongo, and Matamba to gain control of the interior.

The slave trade was a central aspect of the relationship between the Portuguese and the kingdoms of Kongo and Ndongo. The kingdoms exported slaves to the Portuguese, who shipped them to their Atlantic island colonies and to Portuguese Brazil. The slave trade devastated Angolan communities and agriculture and caused the migration of entire villages.

In the 17th century, the Portuguese and the Kingdom of Kongo engaged in military conflict, with the Portuguese suffering a major defeat at the Battle of Kitombo in 1670. The Portuguese gradually managed to colonise the interior highlands in the 18th century, and full control of the territory was achieved in the early 20th century. During this period, the Portuguese established settlements, forts, and trading posts, and developed infrastructure, including railways and ports.

In the 19th century, the slave trade was abolished, and the Portuguese began to focus on other industries, such as agriculture and the export of raw materials. However, slavery and forced labour continued in Angola, with the forced labour system providing the basis for the development of a plantation economy and a mining sector.

In the 20th century, Angola became an overseas province of Portugal in 1951 and gained independence as the People's Republic of Angola in 1975 following a protracted anti-colonial struggle.

Angola's efforts to diversify its economy

Angola is a country in Southern Africa with a fast-growing economy, largely driven by its oil sector. However, the country is committed to diversifying its economy and reducing its dependence on oil and other extractive industries. Here are some of Angolas's efforts to achieve economic diversification:

• Support for local entrepreneurship: Angola's government has implemented policies to foster a dynamic local entrepreneurial sector. This includes converting entrepreneurs' risk-averse mindsets to a risk-ready approach, prioritising entrepreneurs who can innovate and fast-track structural transformation, and providing support to small and medium-sized enterprises.
• Economic reforms: Since 2017, the government of President João Lourenço has made fighting corruption a key priority. This has been recognised by foreign diplomats, although some skeptics see these efforts as politically motivated. The government has also worked to improve governance, reduce fiscal mismanagement, and attract foreign investment.
• Agricultural development: Angola has significant agricultural potential, with vast fertile land that can be utilised for food production. The country aims to increase food security and reduce its reliance on food imports.
• Renewable energy and clean technology: Angola is focusing on developing its renewable energy sector, including solar and wind power. This not only helps reduce its dependence on oil but also contributes to climate resilience and sustainability.
• Trade integration: Angola is working towards greater integration with the global market, particularly through its accession to the EU SADC Economic Partnership Agreement and the implementation of the Sustainable Investment Facilitation Agreement (SIFA) with the EU.
• Transport infrastructure: Angola is investing in strategic regional transport corridors, such as the Lobito Corridor, to enhance trade connectivity and facilitate economic development.
• Education and skill development: Angola recognises the importance of improving education and skills to support economic diversification. Initiatives like the Technical and Vocational Education and Training (TVET) programme aim to equip Angolan workers with relevant skills and qualifications to contribute to the diversification efforts.
• Private sector development: Angola is strengthening the development of the private sector, including small and medium-sized enterprises, to promote economic growth, innovation, and job creation.
• Climate resilience: As climate change impacts threaten the country's economy and livelihoods, Angola is encouraged to invest in climate resilience. This includes managing water resources effectively and transitioning to a clean and efficient energy system.
• Good governance: Angola is committed to promoting good governance, tackling corruption, and improving transparency and accountability in its institutions. This is crucial for attracting investments and fostering sustainable economic growth.

Angola's agricultural sector

Agricultural History

Before its independence from Portugal in 1975, Angola had a thriving family-based farming tradition and was self-sufficient in all major food crops except wheat. The country exported coffee, maize, sisal, bananas, tobacco, and cassava. However, by the 1990s, production had decreased significantly, with coffee output falling to less than 1% of its previous volume. The civil war and the resulting deterioration of the rural economy dealt a significant blow to agricultural productivity.

Current Agricultural Landscape

Currently, Angola's agricultural sector provides food, income, and employment for two-thirds of the country's population, with women making up the majority of the labour force. The main agricultural crops include cassava, corn, beans, potatoes, sweet potatoes, soy, bananas, coffee, rice, and various other fruits and vegetables. Angola's southern provinces, particularly the hills and valleys, are the most productive regions. The rainy season, from October to May, is ideal for vegetable cultivation, while tomatoes are grown during the dry season from June to September.

Challenges and Initiatives

Despite its potential, Angola's agricultural sector faces challenges such as limited infrastructure, lack of investment, and the lingering effects of the civil war. Large areas of land remain uncultivated due to landmines, and rural infrastructure is limited. Additionally, small-scale farmers, who make up about 80% of the country's farmers, face challenges in accessing markets and proper agricultural inputs like seeds and fertilisers.

To address these issues, the Angolan government has implemented various initiatives. The National Development Plan for 2018-2022 aims to diversify the economy and boost domestic food production, reducing the country's dependence on food imports. The government has also established specific targets for increasing beef and corn production to meet domestic demand. Additionally, multilateral development banks, including the World Bank and the African Development Bank, are providing support for agricultural development projects.

International Trade

Angola is a significant importer of food and agricultural goods, spending over $2.75 billion on imports from more than 60 countries in 2022. The country imports over half of its food, with the EU, Brazil, and the United States being the top three suppliers. In 2022, the United States exported $237 million worth of agricultural products to Angola, with poultry and poultry products accounting for over $232 million.

Future Prospects

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