Angola has a rich subsoil heritage, from diamonds, oil, gold, copper and a rich wildlife (dramatically impoverished during the civil war), forest and fossils. Since independence, oil and diamonds have been the most important economic resource. Smallholder and plantation agriculture have dramatically dropped because of the Angolan Civil War, but have begun to recover after 2002. The transformation industry that had come into existence in the late colonial period collapsed at independence, because of the exodus of most of the ethnic Portuguese population, but has begun to reemerge with updated technologies, partly because of the influx of new Portuguese entrepreneurs. Similar developments can be verified in the service sector.
Overall, Angola’s economy has in recent years moved on from the disarray caused by a quarter-century of civil war to become the fastest-growing economy in Africa and one of the fastest in the world, with an average GDP growth of 20 percent between 2005 and 2007. In the period 2001–10, Angola had the world’s highest annual average GDP growth, at 11.1 percent. In 2004, the Exim Bank of China approved a $2 billion line of credit to Angola. The loan was to be used to rebuild Angola’s infrastructure, and also to limited the influence of the International Monetary Fund in the country. China is Angola’s biggest trade partner and export destination as well as the fourth-largest importer. Bilateral trade reached $27.67 billion in 2011, up 11.5% year-on-year. China’s imports, mainly crude oil and diamonds, increased 9.1% to $24.89 billion while China’s exports, including mechanical and electrical products, machinery parts and construction materials, surged 38.8%. The oil glut led to a local unleaded gasoline “pricetag” of £0.37 per gallon.
The Economist reported in 2008 that diamonds and oil make up 60% of Angola’s economy, almost all of the country’s revenue and are its dominant exports. Growth is almost entirely driven by rising oil production which surpassed 1.4 million barrels per day (220,000 m3/d) in late 2005 and was expected to grow to 2 million barrels per day (320,000 m3/d) by 2007. Control of the oil industry is consolidated in Sonangol Group, a conglomerate owned by the Angolan government. In December 2006, Angola was admitted as a member of OPEC. However, operations in diamond mines include partnerships between state-run Endiama and mining companies such as ALROSA which continue operations in Angola. The economy grew 18% in 2005, 26% in 2006 and 17.6% in 2007. However, due to the global recession the economy contracted an estimated −0.3% in 2009. The security brought about by the 2002 peace settlement has led to the resettlement of 4 million displaced persons, thus resulting in large-scale increases in agriculture production.
Although the country’s economy has developed significantly since it achieved political stability in 2002, mainly thanks to the fast-rising earnings of the oil sector, Angola faces huge social and economic problems. These are in part a result of the almost continual state of conflict from 1961 onwards, although the highest level of destruction and socio-economic damage took place after the 1975 independence, during the long years of civil war. However, high poverty rates and blatant social inequality are chiefly the outcome of a combination of a persistent political authoritarianism, of “neo-patrimonial” practices at all levels of the political, administrative, armed forces and economic apparatuses, and of a pervasive corruption. The main beneficiary of this situation is a social segment constituted during the last decades, around the political, administrative, economic and military power holders, which has accumulated (and continues accumulating) enormous wealth. “Secondary beneficiaries” are the middle strata which are about to become social classes. However, overall almost half the population has to be considered as poor, but in this respect there are dramatic differences between the countryside and the cities (where by now slightly more than 50% of the people live).
An inquiry carried out in 2008 by the Angolan Instituto Nacional de Estatística has it that in the rural areas roughly 58% must be classified as “poor”, according to UN norms, but in the urban areas only 19%, while the overall rate is 37%. In the cities, a majority of families, well beyond those officially classified as poor, have to adopt a variety of survival strategies. At the same time, in urban areas social inequality is most evident and assumes extreme forms in the capital, Luanda. In the Human Development Index Angola constantly ranks in the bottom group.
According to the Heritage Foundation, a conservative American think tank, oil production from Angola has increased so significantly that Angola now is China’s biggest supplier of oil. “China has extended three multibillion dollar lines of credit to the Angolan government; two loans of $2 billion from China Exim Bank, one in 2004, the second in 2007, as well as one loan in 2005 of $2.9 billion from China International Fund Ltd.” Growing oil revenues have also created opportunities for corruption: according to a recent Human Rights Watch report, 32 billion US dollars disappeared from government accounts from 2007 to 2010. Furthermore, Sonangol, the state run oil company, has control of 51% of Cabinda’s oil. Due to this market control the company ends up determining the profit given to the government and the taxes paid. The council of foreign affairs states that the World Bank mentioned that Sonangol ” is a taxpayer, it carries out quasi-fiscal activities, it invests public funds, and, as concessionaire, it is a sector regulator. This multifarious work programme creates conflicts of interest and characterises a complex relationship between Sonangol and the government that weakens the formal budgetary process and creates uncertainty as regards the actual fiscal stance of the state.”
Before independence in 1975, Angola was a breadbasket of southern Africa and a major exporter of bananas, coffee and sisal, but three decades of civil war (1975–2002) destroyed fertile countryside, left it littered with landmines and drove millions into the cities. The country now depends on expensive food imports, mainly from South Africa and Portugal, while more than 90% of farming is done at the family and subsistence level. Thousands of Angolan small-scale farmers are trapped in poverty.
The enormous differences between the regions pose a serious structural problem for the Angolan economy, illustrated by the fact that about one third of economic activities are concentrated in Luanda and neighbouring Bengo province, while several areas of the interior suffer economic stagnation and even regression.
One of the economic consequences of the social and regional disparities is a sharp increase in Angolan private investments abroad. The small fringe of Angolan society where most of the accumulation takes place seeks to spread its assets, for reasons of security and profit. For the time being, the biggest share of these investments is concentrated in Portugal where the Angolan presence (including that of the family of the state president) in banks as well as in the domains of energy, telecommunications, and mass media has become notable, as has the acquisition of vineyards and orchards as well as of touristic enterprises.
Sub-Saharan Africa nations are globally achieving impressive improvements in well-being, according to a report by Tony Blair Africa Governance Initiative and the Boston Consulting Group. Angola has upgraded critical infrastructure, an investment made possible by funds from the nation’s development of oil resources. According to this report, just slightly more than ten years after the end of the civil war Angola’s standard of living has overall greatly improved. Life expectancy, which was just 46 years in 2002, reached 51 in 2011. Mortality rates for children fell from 25 percent in 2001 to 19 percent in 2010 and the number of students enrolled in primary school has tripled since 2001. However, at the same time the social and economic inequality that has characterised the country since long has not diminished, but on the contrary deepened in all respects.
With a stock of assets corresponding to 70 billion Kz (6.8 billion USD), Angola is now the third largest financial market in sub-Saharan Africa, surpassed only by Nigeria and South Africa. According to the Angolan Minister of Economy, Abraão Gourgel, the financial market of the country grew modestly from 2002 and now lies in third place at the level of sub-Saharan Africa.
Angola’s economy is expected to grow by 3.9 percent in 2014 said the International Monetary Fund (IMF). According to the Fund, robust growth in the non-oil economy, mainly driven by a very good performance in the agricultural sector, is expected to offset a temporary drop in oil production.
Angola’s financial system is maintained by the National Bank of Angola and managed by governor Jose de Lima Massano. According to a study on the banking sector, carried out by Deloitte, the monetary policy led by Banco Nacional de Angola (BNA), the Angolan national bank, allowed a decrease in the inflation rate put at 7.96% in December 2013, which contributed to the sector’s growth trend. According to estimates released by Angola’s central bank, the country’s economy should grow at an annual average rate of 5 percent over the next four years, boosted by the increasing participation of the private sector.
On 19 December 2014, the Capital Market in Angola started. BODIVA (Angola Securities and Debt Stock Exchange, in English) received the secondary public debt market, and it is expected to start the corporate debt market by 2015, but the stock market should be a reality only in 2016.