Angola Economy

By | October 16, 2021

Business

Due to its wealth of natural resources and the fertile land, Angola was able to partly overcome the devastating consequences of the decades-long civil war in the recent past. But despite the rapid economic growth (average annual increase in gross domestic product [GDP] 2003-09: 13.5%; 2015: 3.0%), large parts of the population were excluded from improving their living conditions. The beneficiaries of the boom were almost exclusively the Angolan ruling class in the capital and foreign corporations. The gross national income (GNI) per resident is (2017) US $ 3,330 (2003: US $ 740). Over a third of Angolans live below the poverty line; the unemployment rate is around 28% (2015) and is also accompanied by high underemployment. The informal sector is particularly pronounced in the cities. According to threergroup, the rural population lives from subsistence farming and is partly dependent on international aid. Despite the export surpluses achieved, foreign debt also remains at a high level (2015: US $ 38.3 billion).

Foreign trade: Thanks to oil revenues, the trade balance has been positive for decades (2015: imports US $ 16.8 billion, exports US $ 33.0 billion). Well over 90% of the export income comes from the oil industry, the second most important export good are diamonds. The main imports are vehicles, food, consumer goods and machines. The main supplier countries are Portugal, China, the USA and South Korea; the most important customer countries are China, India and Spain.

Agriculture

Due to the favorable climate and large areas of potential fertile arable and grazing land, Angola could be one of the most prosperous agricultural countries in Africa. So far, however, only 4% of the total area is used as arable land and for permanent crops; around 47.5% are used for cattle breeding. Although the agricultural sector only (2014) contributes 9.4% to GDP, around 70% of the workforce work in this sector. The majority of the rural population lives from subsistence farming and mainly grows cassava, beans, corn, bananas and sweet potatoes. The displacement of many rural residents by the civil war, especially from the provinces of Huambo and Bié in the center of Angola, formerly known as the granaries, has led to a considerable reduction in the area under cultivation and a reduction in yields per hectare. Angola was once a net exporter of food, but today a large part is imported. Cattle farming is concentrated in the Huíla Province in the south-west of the country.

Forestry: Around 47% of the country’s area is covered by forest; Angola has considerable timber reserves in the tropical rainforest of Cabindas. Added to this are the eucalyptus, pine and cypress plantations that have been planted since the 19th century. Overall, forestry is of little importance. Over three quarters of the logs are used as firewood.

Fishing: There are favorable conditions for fishing due to the cold Benguela Current with its abundance of plankton. Due to the war, however, the catches fell sharply. The catch was (2012) 277 450 t. Since foreign fishing fleets have acquired fishing rights from Angola, some of the waters are heavily overfished.

Natural resources

Oil production and processing are the main branches of the Angolan economy. The lower world market price for oil is causing Angola considerable problems. In 1955 the first oil field was discovered near Luanda. Today most of the oil comes from the offshore area off the Cabinda enclave, the rest is produced off the north coast of the country. Angola, member of OPEC since 2007, is the largest oil producer in sub-Saharan Africa after Nigeria. The output is (2015) 88.7 million t. The deposits explored so far comprise around 1.7 billion t. In 2015, crude oil and its processing generated around 37% of GDP, 98% of export earnings and around 69% of all government revenues. The production of natural gas has so far been almost insignificant. In addition to the oil deposits, Angola has deposits of diamonds; the largest mines are in the province of Lunda Norte in the north-west of the country. Much of the gemstones were smuggled abroad during the civil war. The illegal diamond trade is still flourishing today. In 2014, 8.79 million carats were mined, the reserves are estimated at 450 million carats. The mining of other raw materials (iron ore, manganese, copper, phosphate, bauxite, gold, uranium) was largely stopped or not yet started because of the war.

Energy industry

The rivers represent a great energy potential, which is mainly used to generate electricity. Electricity generation amounts to 9.2 billion kWh (2014), about half each from oil and half from hydropower. The joint use of the hydropower reserves of the border river Kunene was decided with Namibia.

Industry

The manufacturing industry had largely collapsed as a result of the war. Its contribution to GDP is now 8.6% again. Important sectors are the processing of crude oil, the food and textile industry and the building materials industry. They focus on the capital Luanda and others. larger port cities.

Tourism

The tourism is poorly developed (2013: 536,000 foreign guests), but has the natural conditions – beaches and natural parks (u a Kissama National Park south of Luanda; Iona- and Cameia National Park..) – great opportunities. The precarious security situation (e.g. landmines that have not yet been cleared, etc.) are currently preventing a rapid expansion of tourism.

Transportation

The structure of the transport network has been shaped to this day by the requirements of the export-oriented economy during the colonial era, when raw materials were transported from extraction areas to the export ports. Almost all traffic connections have been destroyed by the civil war; reconstruction is hampered by mines. The railway network consists of three main lines that end in the port cities of Luanda, Lobito and Namibe. The most important line is the Benguela Railway, built in 1932, which connects Lobito with the copper belt of the Democratic Republic of the Congo and with Zambia. The road network has a length of around 54,000 km, of which around 8,000 km are paved. The main sea ports are those of Luanda, Lobito, Namibe and Cabinda (oil port). The inland waterway network covers around 1,300 km. The international airport is located near the capital Luanda; there are also around 30 small airports and 145 runways.

Angola Economy