Angola Has Reached A Global Crossroad — Is This African Giant Ready To Seize Its Chance?

Since the beginning of João Lourenço’s presidency in 2017, Angola has undergone a drastic change both domestically and internationally. Especially, as the nation is charting its own course in the fast emerging multipolar world.

For instance, October 2024, Angola officially joined the International Organisation of La Francophine Organisation as an observe member. Moreover, the nation has also sent applications to join both the Commonwealth and BRICS (Brazil, Russia, India, China and South Africa). In addition, Angola will play host to the next upcoming US-Africa Summit in Luanda later this year.

Angola has a population of 38 million people and the 8th largest economy in Africa (nation’s GDP currently stands at $118 billion)

Key Definitions:

The key attributes of neo-liberalism can be listed here: low-tax, de-regulation, privatisation, free trade, patent laws, specialisation, no industrial policies and free inward and outward capital flows (Washington Consensus).

In comparison, neo-statism involves a market-conforming but state-sponsored approach to economic and social development, whereby the state seeks to guide market forces in support of a national economic strategy. These attributes can be listed here: public-private partnerships, regulation, industrial policies, tax subsidiaries, tax policy, subsidisation, banking regulations, labour control and interest-rate management.

Domestic Economy:

                                      Figure 1 - Angola's GDP Nominal Growth between 1980 - 2024 (IMF, 2024)

Recently, the nation’s GDP grew at a modest 1% growth in 2023. This was due to a few factors: lower oil production, exchange rate depreciation, and fuel price hikes. The real nation’s GDP grew by 4.1% year-on-year in the first quarter of 2024. This marks the most significant annual expansion in the past nine years (Figure 1).

This recovery was driven by an increase in oil production and a robust performance in the tertiary sector (particularly in domestic trade and transport and storage). Higher global oil prices and production boosted Angola’s current account surplus during the 1st half of 2024. Despite increased oil revenues, the fiscal situation remains challenging. Oil export prices averaged $84.2 per barrel over January-August and domestic production reached 1.13 million barrels per day between January-July, surpassing the 2024 budget assumptions of $65 per barrel and 1.06 million barrels per day.

This has driven a rebound in government revenue following a decline in 2023. However, the -40% currency depreciation in May-June 2023 increased debt service and fuel subsidies. Consequently, public spending has been constrained, leading to cuts in capital spending and the acceleration of the fuel subsidy reform, despite an escrow agreement with a Chinese creditor that helped alleviate debt service pressure.

                                                 Figure 2 - Angola's GDP Per Capita between 1980 - 2024 (IMF, 2024)

It is important to stress that economic growth has lagged behind population growth, resulting in negative per capita growth for nine consecutive years (Figure 2). Despite a slight improvement in employment indicators in 2022, conditions deteriorated in 2023 and early 2024, leading to an increase in broadly defined unemployment of more than 5 percent to 32.4 percent since the first quarter of 2022.

Additionally, tight monetary policy and conservative fiscal stance are expected to help contain inflation, though it is still projected to exceed 10% by 2026. High inflation and limited fiscal space are likely to keep poverty rates high, around 36% by 2026.

Presidential reforms (which have helped bring new foreign investors into the country), as well as the country’s largest-ever privatisation reforms (known as Propiv) since launching in 2019. These reforms have raised more than $1bn (Kz832.95bn). Propiv’s recent extension means that it will run for another three years. These efforts are aimed at diversifying the nation away from its heavy reliance on the oil sector. The government has placed priority on its: energy sector, establishing free-trade zones and rail infrastructure.

• Energy Sector — 19th August 2024: Energy access in Angola is limited to less than 48% of the population, with a lower access in rural areas where wood and charcoal remain the main source of energy and livelihood.
• These rural communities are predominantly part of the two-thirds of the population who rely on agriculture for food, income, and employment, with women contributing to the majority of the labour force in harvesting and selling as well as seeking and making use of alternate cooking fuels, often with health risks.
• With its core resources, UNDP partnered with the Provincial Government of Huila and local NGO, ADRA, to scale up off-grid electrification at the community level.

• The installation of 93 home solar systems to assist agricultural activities, including at the agricultural product transformation center, has provided more than access to clean energy to the 235 families in the village of Palanca II (Humpata) but also facilitated water access and establishment of basic irrigation systems, with an immediate impact on agricultural productivity, food security and income generation.

   

• Free Trade Zones — 14th July 2023: The 4,717-hectare Luanda-Bengo Special Economic Zone (ZEE), which is currently home to 7,712 workers. Founded more than a decade ago and located in the capital Luanda, it is the country’s biggest dedicated area for industrial projects, although it also boasts a commercial hub, housing projects, and other services and non-industrial investments. ZEE is in the process of a major, and hitherto successful, transformation.
• As a free trade zone, the ZEE will be endowed with a specific and subsidised tax regime. This will help the ZEE further cement its status as the central platform for business regionally and internationally. A change in status will also improve the ZEE’s relations in the future common market, the African Continental Free Trade Area, which encompasses more than one billion potential consumers. Free trade zone status will also significantly increase the ZEE’s international credibility and the confidence of potential investors.
• The ZEE has attracted FDI from countries such as China, Eritrea, India, Lebanon, Portugal and Turkey. Investors from these countries have set up industrial units in the ZEE and they manufacture products in diverse industrial sectors.

• It is worth noting here that the top countries for FDI into Angola, between 2018 and March 2023, were the UAE (with $351.7m through 234 projects), the UK (with $283m through 234 projects), China (with $225m through 24 projects) and Germany (with $93.6m through four projects).

   

• Rail Infrastructure — December 2nd 2024: During former President Biden’s visit to Angola, an $800m US-backed railway project on the Lobito Corridor was one of the main areas of focus. The passage is a strategic trade route which connects the resource-rich Democratic Republic of Congo (DRC) and Zambia to Angola, which hosts the port of Lobito, located on the Atlantic Ocean.
• Funded largely by the US and the European Union, the Lobito Atlantic Railway project will see an existing rail network in the Lobito Corridor upgraded. That would allow for the faster export of cobalt and copper, amongst other minerals, mined from the DRC’s Kolwezi mining town, to the West.

• The rail line is about 1300km (800 miles) long and will likely see extensions into mineral-rich regions in Zambia. Portuguese company Trafigura is leading a three-company consortium that will operate the railway for 30 years under a concession agreement. In August, the company said it shipped the first container of minerals to the US via the Lobito Port. Analysts say the US faces challenges in the corridor.

   

Foreign Policy:

In the case of Angola’s foreign policy, the nation has resumed the chairmanship of the African Union for this year. Moreover, the nation has recently increased its relations with the United States in 2024 and will play host to the upcoming USA — Africa business summit this year.

2025 African Union Chairmanship — 16th February 2025: Angolan President Joao Lourenco on Saturday took over the rotating African Union (AU) chairmanship at the opening of the 38th Ordinary Session of the AU Assembly of the Heads of State and Government in Addis Ababa, the capital of Ethiopia.

• Lourenco replaced the outgoing AU chair, Mauritanian President Mohamed Ould Cheikh Ghazouani, who assumed the chairmanship of the continental bloc in February last year during the 37th session of the AU assembly.
• In his acceptance speech, the Angolan president expressed his strong resolve to expedite the pan-African bloc’s major aspirations through the promotion of continental unity and socio-economic advancement.

• “My vision, on what is essential taking into account the future, is to put an end to conflicts in Africa, address the challenges of unconstitutional changes of government, terrorism, and other challenges related to natural disasters resulting from climate change, as well as diseases and public health threats that are calling upon us to unite our efforts in finding collective solutions,” Lourenco told African leaders in attendance at the AU summit.

   

2025 U.S. — Africa Business Summit, 23rd September 2024: The Republic of Angola has been confirmed as the host of the 2025 U.S.-Africa Business Summit, following the signing of a Memorandum of Agreement between Angola and the Corporate Council on Africa (CCA) in Washington, D.C.

• The agreement, signed by H.E. Ambassador Agostinho Van-Dunem and CCA President Florie Liser, highlights Angola’s pivotal role in advancing U.S.-Africa trade relations.
• The summit will coincide with Angola’s 50th anniversary of independence and its African Union Chairmanship, positioning the country as a key player in promoting economic partnerships across the continent.
• Angola’s hosting of the event reflects its commitment to fostering strong economic ties with the United States, while showcasing growth opportunities in key sectors such as energy, infrastructure, health, and the digital economy.

Culture:

In the case of the cultural aspect of Angola, there has recently been a revival of a traditional martial art called Capoeira Angola in Angola. This martial art has a historical link with its Brazilian counterpart — Capoeira Regional.

Revival of an African Martial Art — July 7th 2021: Since returning back to Angola in 2014, Ngungi officially opened the country’s first Capoeira Angola school, the Escola de Capoeira Angola Okupandula, which means “thank you to you and your ancestors”.

• Capoeira Angola has a ritualistic feel and the movements are predominantly low to the ground, with the focus on precision. This is why the music is slower than in the dominant version, known as Regional.
• The difference between Capoeira Angola and Capoeira Regional is subtle, but Capoeira Angola includes more instruments and its practitioners feel it is more spiritual.
• In the mid-16th Century, while working in the fields, slaves created what later became Brazil’s earliest form of capoeira, disguising fighting techniques as folk dancing. Following the abolition of slavery in Brazil in 1888, the government banned Capoeira, fearing its use could make any revolt by freed slaves more difficult to overcome.
• It went underground, and many black people continued to practise what is now recognised as Capoeira Angola in hidden spaces, using nicknames to protect their identity.

Critique:

Based on all three topics covered in the case of Angola: domestic economy, foreign policy and culture, each section has highlighted how the nation is undergoing some drastic change. First, the government is introducing certain elements of neo-liberalism, whilst, also trying to bring in elements of neo-statism and reduce the legacy of marxism in an economic sense. Second, the nation is expanding bilateral relations to attract more FDIs. Lastly, efforts are being made to renewing its own indigenous culture. This highlights how Angola is firmly beginning to establish itself as a major player in Africa.