Angola's Third World Status: A Complex Reality

Angola is a country in Africa with a population of over 33 million people. It is considered a developing country, and its economy is largely dependent on the oil sector. Angola's economic growth has been tied to volatile global oil demand, resulting in high levels of poverty and inequality. The country is also facing challenges in creating enough jobs for its growing working-age population, with unemployment rates surging, particularly among the youth. Angola's dependence on oil makes it vulnerable to external shocks and undermines its macroeconomic stability.

The World Bank and other organizations are supporting Angola's efforts to reduce poverty and promote economic growth. Angola is classified as a lower-middle or low-income country, and it is included in the United Nations list of Least Developed Countries (LDCs). Angola's status as a developing or Third World country is a topic of discussion, and the definition of Third World has evolved over time.

Angola's economic growth and dependence on oil

Angola's economy is heavily dependent on its oil and gas industry. Oil and gas products make up more than 90% of its exports, with crude oil exports alone accounting for US$39.94 billion in 2022. The lion's share of that oil comes from offshore fields, which produce a light, sweet crude oil with low sulphur, used for processing light, refined petroleum products.

Angola's first oil wells were drilled over a century ago, and the country is now consistently one of Africa's top four oil-producing countries. Its first commercial onshore deposits were proven in 1955, followed by its first offshore discovery in 1968. Eight years later, in 1976, Angola established Sonangol U.E.E. to manage the exploitation of the nation's hydrocarbon resources.

In recent years, deep-water reserves have been a major driver of Angola's prominence on the world stage and of the oil industry's transformation of its national economy. Angola's ultra-deep pre-salt reserves, discovered in blocks awarded in 2011, reach depths of more than 5,000 meters below sea level and are today broaching new frontiers in deep-water discoveries.

Angola's dependence on the oil sector has increased its vulnerability to external shocks and undermined macroeconomic stability. The country's economic fortunes have been tied to global oil demand, which has brought volatile growth and left Angola with high levels of poverty and inequality.

In 2021, Angola emerged from half a decade of persistent recession, aided by rising oil production and surging oil prices due to the conflict in Ukraine. This mix of high oil revenues and the implementation of the National Development Plan (2018–2022) provided a much-needed boost to Angola's economic recovery and to investments in other industrial sectors.

Angola has entered an ambitious plan to diversify its economy, but it remains heavily dependent on oil and gas. Hydrocarbon revenues are crucial for funding Angola's commitments under the Paris Agreement and for improving the livelihoods of its citizens. Angola's upstream oil and gas market is expected to record a growth of more than 1.5% during the forecast period 2022-2027.

Angola's oil and gas sector business environment remains one of the most difficult to navigate, with immense industry barriers and macroeconomic threats that hamper even reputable multinationals and local companies. Most international companies find it challenging to conduct business in the sector. As a result, the sector has witnessed substantial downsizing and the withdrawal of service companies, contractors, operators, and investors, with some businesses closing operations.

Angola's high production costs, averaging US$40 per barrel, chase out the entry of new players and limit new investments. Industry players are under increasing pressure to reduce production costs.

Angola's economy is not generating enough jobs to keep up with the country's growing working-age population. While new oil projects could increase oil production in the coming years, it would be difficult for the sector to avoid a long-term decline due to oil depletion and a lack of investment.

Angola's efforts to reduce poverty and inequality

Angola is a country in Southern Africa with a population of over 33 million as of 2022. It is the second-largest oil producer in Sub-Saharan Africa and the fifth-largest economy on the African continent. However, Angola faces significant challenges in reducing poverty and inequality.

Economic Diversification

Angola's economy has historically been heavily dependent on the oil sector, which has led to volatile growth and high levels of poverty and inequality. To address this issue, the country has been working towards economic diversification, particularly in the agricultural sector. Angola has abundant agricultural land and favourable climatic conditions, making agriculture a promising avenue for economic growth and poverty reduction. The government has also been working to remove barriers to private sector investment and promote economic diversification to support growth, job creation, and poverty reduction.

Social Protection and Service Delivery

Angola has implemented a strong social protection program to improve the quality of life of its citizens and empower them to take a more active role in the country's development. The Cash Transfer component of this program has registered and provided financial assistance to over 1 million households, with a focus on supporting women. Additionally, the government has prioritised enhancing the quality of service delivery, particularly in the areas of health and education.

Infrastructure Development

Angola has been investing in improving infrastructure, particularly in energy and transport. These investments are crucial for the country's overall development and job creation, which can help reduce poverty and inequality.

Education

Education has been recognised as a key priority in addressing poverty. The World Bank has pledged $150 million over 10 years to strengthen school governance, teacher training, and education courses across Angola. Additionally, the Girls Empowerment and Learning for All Project (PAT II) aims to empower Angolan youth, especially girls, and improve the quality of education for all.

Health

Angola has made significant strides in improving access to health services, particularly during the COVID-19 pandemic. The Municipal Health Service Strengthening Project has provided assistance to over 200,000 people, including the distribution of personal protective equipment and the screening and treatment of children for malnutrition. Additionally, the country has successfully rolled out a digital platform for COVID-19 vaccine pre-registration, becoming the largest identification database in Angola.

Angola's political system and international relations

Angola's political system is a presidential republic, with a multi-party system. The President of Angola is both the head of state and the head of government, and is advised by a Council of Ministers, which together with the President form the national executive power. Legislative power rests with the 220 parliamentarians elected to the National Assembly. The President, together with the parliament, appoints the majority of the members of the two highest bodies of the judiciary, the Constitutional Court and the Supreme Court.

The Angolan government is composed of three branches: executive, legislative and judicial. Political power has been concentrated in the presidency with the People's Movement for the Liberation of Angola (MPLA), which has been in power since the country gained independence in 1975. In August 2022, the MPLA won the fourth post-war elections with 51% of the vote, securing President Joao Lourenço a second and final term in office. The 2010 constitution grants the President almost absolute power.

Angola's international relations are based on its strong support of US foreign policy, as the Angolan economy is dependent on US foreign aid. Angola is a member of the United Nations, African Union, the Community of Portuguese Language Countries, and the Southern African Development Community. Angola has also been elected twice as a non-permanent member of the United Nations Security Council.

From 1975 to 1989, Angola was aligned with the Eastern Bloc, particularly the Soviet Union, Libya, and Cuba. Since then, it has focused on improving relationships with Western countries, cultivating links with other Portuguese-speaking countries, and asserting its own national interests in Central Africa through military and diplomatic intervention. Angola has also been taking a larger leadership role in regional peace and security organizations such as the Southern African Development Community and the African Union.

Angola's social challenges and human development

Economic Challenges

Angola's economy is heavily dependent on the oil sector, which has led to volatile growth and high levels of poverty and inequality. This reliance on oil has also increased the country's vulnerability to external shocks and undermined macroeconomic stability. The country's economic fortunes are closely tied to global oil demand, and when oil production falls short, it affects the entire economy. For instance, in 2023, a major maintenance shutdown led to a revision in economic growth projections. The non-oil sector also faces challenges due to factors like currency depreciation and increasing gasoline prices, which contribute to inflationary pressures.

Unemployment and Underemployment

Angola's economy is not generating enough jobs to keep up with its growing working-age population. Between 2022 and 2023, the labour force grew by over 550,000 new workers, but only 10,000 jobs were added. This has resulted in surging unemployment rates, particularly in urban areas and among youth. The situation is further exacerbated by the informality of employment, with 80% of employed individuals working in the informal sector.

Poverty and Inequality

The challenges in the oil sector and the lack of economic diversification have resulted in persistent poverty and inequality in Angola. Despite economic reforms and expectations of recovery, the risk of poverty remains high, especially with the looming global decarbonization that could further impact the oil industry. It is estimated that in 2024, poverty levels may increase to 36.1%, translating to approximately 13.5 million Angolans living on less than $2.15 per day.

Human Development Index

Angola's Human Development Index (HDI) score, which measures average achievement in key dimensions such as a long and healthy life, knowledge, and a decent standard of living, has shown some improvement over the years. In 2019, Angola's HDI score was 0.58, indicating a medium level of development. This was an improvement from 2000 when the country had a low human development score of 0.4.

Political and Social Issues

Angola has made progress in certain political and social areas. For example, in 2019, the country took steps to respect the rights to freedom of expression and peaceful assembly, allowing several protests and marches. However, there have also been reports of human rights abuses, including the crackdown on peaceful protesters and activists in the oil-rich Cabinda region and the diamond-rich Lunda Norte province. Additionally, a new law limiting religious freedom led to the closure of thousands of places of worship, particularly impacting Muslim communities.

Impact of Civil War

The civil war in Angola, which ended nearly two decades ago, continues to have lingering effects. Landmines and other explosive remnants of war remain a danger, causing injuries and deaths, especially among children.

In summary, Angola faces significant social challenges and human development issues, including economic instability, high unemployment, poverty, and ongoing political and social issues. While there have been some improvements in certain areas, the country continues to strive for greater economic diversification, improved social conditions, and the fulfillment of human rights for its citizens.

Angola's climate and environmental concerns

Angola is located in Southern Africa and has a long coastline along the Atlantic Ocean to the west, with a central plateau that extends inland. The country's climate is tropical and humid, with warm to hot temperatures all year round. The average annual temperature is around 21.5°C, but this can vary across the country, with the north being the warmest and rainiest region, and the south-west the coldest. The rainy season in Angola lasts from October to May (or November to April according to another source), and is hot and humid, with average temperatures ranging from 22°C to 23°C. The dry season, known as "Cacimbo", occurs from June to September and is the coolest period of the year, with average temperatures between 18°C and 20°C.

Angola's climate is heavily influenced by its position along the Atlantic Ocean, and variations in the Benguela Cold Current. The country experiences high humidity and has over 1750 hours of sunshine annually. The amount of rainfall decreases from north to south and from east to west, with the northeast receiving the highest rainfall.

Angola faces several environmental issues, including:

• Overuse of pastures leading to soil erosion, which is exacerbated by population pressures, deforestation, and overgrazing.
• Desertification, which is the spread of desert-like conditions due to overgrazing, loss of agriculturally productive soils, or climate change.
• Deforestation of tropical rainforests to meet international demand for timber and fuelwood, resulting in biodiversity loss, soil erosion, water pollution, and siltation of rivers and dams.
• Inadequate supplies of potable water.
• Exposure to extreme climatic events, which is expected to increase water scarcity, raise temperatures, and prolong dry seasons, negatively impacting agricultural productivity.

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