Angola a gateway to wealth
JOHANNESBURG - After surviving over a dozen assassination attempts and having been reported dead a bout 15 times, Jonas Malheiro Savimbi was killed on February 22, 2002 in a battle with Angolan government troops on a riverbank in the province of Moxico, his birthplace.
Savimbi was an anti-communist and anti-colonialist Angolan political and military leader who founded and led the National Union for the Total Independence of Angola (Unita).
Unita waged a guerrilla war against Portuguese colonial rule from 1966 to 1974, then confronted the People’s Movement for the Liberation of Angola (MPLA), a civil war lasting nearly three decades that ended in 2002.
The Republic of Angola, a former Portuguese colony, got its independence in 1975 with a current estimated population of 31 million (2018) and a gross domestic product (GDP) of $106 billion (R1.6 trillion). The capital, Luanda, is one of the most expensive cities in the world, known as the “Paris of Africa”, a title it gets from the city's sophisticated culture.
Angola has been characterised by years of civil war, drought from erratic rainfall and inadequate infrastructure to support economic growth thus the reliance on oil, which contributes about 47 percent of its total GDP and 90 percent of exports. The decline of oil prices in 2014 destroyed the Angolan economy, due to its dependency on oil exports.
Its revenues declined by 50 percent from 2014 to 2017.
The shortage of foreign currency reduced growth in the non-oil sectors. And the recession led to foreign exchange depreciation of more than 40 percent, while inflation increased to 31.7 percent in 2017.
Despite significant progress in macroeconomic stability and structural reforms, Angola is still suffering the effects of lower oil prices and production levels, with an estimated GDP contraction around 1.5 percent in 2018. Economic growth is expected to remain subdued in 2019 because of a lower oil price forecast, and production limitations set by Opec.
The country is fighting poverty, as seen in the declining poverty incidence from 68 percent in 2000 to 37 percent in 2018 ( African Development Bank).
President João Manuel Gonçalves Lourenço, who came into office in 2017, has embraced reforms on several fronts to achieve macroeconomic stability and create a favourable environment for economic growth.
Two new laws that are essential to enhance private sector-led growth and competitiveness have been approved: the private investment law and the antitrust law, followed by the creation of a competition authority. This has been welcomed by foreign investors, allowing them repatriation of capital.
Like many African countries, Angola could benefit from more inclusive development policies which can assist in reducing its dependency on oil and diversifying the economy; rebuilding its infrastructure;improving institutional capacity; governance; public financial management systems; human development indicators; and the population's living conditions.
On the Neil economic scale, a can of Coca-Cola costs 600 kwanza (R25.42) and a litre of petrol costs 162 kwanza (R6.86), so in essence petrol is cheaper than a can of Coke, acceptable to a country that produces nearly 1.8 million barrels of oil a day, only second to Nigeria on the African continent.
Angola, with its history of war and strife, has now released itself from a past ruling legacy of the Da Santos era of corruption. A new leadership, with new ideals of democracy and development is hoped for. This nation of oil, gold, diamonds and agricultural wealth has enormous potential.
De Beer is president of IFA and advises African states on economic development. Visit www.ifa.africa or [email protected]