Colin McClelland Luanda
ANGOLA could ease inequality by diverting 10 percent of petroleum revenue to the poor, a World Bank official said last week.
Payments in Africa’s second-largest crude oil producer would amount to $326 (about R3 540) a person a year for those living on less than $1.25 a day, Francisco Ferreira, the multilateral lender’s chief economist for Africa, said in a presentation to the Catholic University of Angola in Luanda on Friday.
The concept had not been discussed with the government, Ferreira said in an interview.
“Countries that generate as much revenue from oil as Angola should consider some kind of redistribution, whether they make it conditional or not,” Ferreira said in comments he described as personal. “Some version of oil-to-cash could very well find a place within the portfolio of things to be done.”
Angola pumped 1.69 million barrels of oil last month, second to Nigeria on the continent. The International Monetary Fund (IMF) forecasts the country will earn $68.4 billion this year from petroleum exports based on a Brent crude price of $100 a barrel. More than half of the 21 million population live in poverty as the country recovers from a 27-year civil war that ended in 2002.
There are several versions of the oil-to-cash concept, including one featured in an article in Foreign Affairs magazine last year that suggested distributing revenue to all residents and taxing it as income. Ferreira said he preferred to target the poor, although the article’s model had merits.
“It’s citizenship-building because they’ll learn oil money is their money if they have a constitutional right to it.”
Companies including Total, Exxon Mobil, Chevron and BP operate mostly offshore oil fields as Angola attempts to diversify its economy away from the commodity that accounts for about 80 percent of tax revenue and 40 percent of gross domestic product.
The IMF forecast the country’s $122bn economy would expand by 5.3 percent this year, and by 5.5 percent and 5.9 percent in the following two years before slowing to 3.3 percent in 2017 because oil output was likely to decline. – Bloomberg