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The economic consequences in Angola of the Ukraine war

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It is a fact that the war in Ukraine is affecting the entire world economy, and, certainly, this impact will also have political consequences[1], as the International Monetary Fund (IMF) immediately recognized.

The question that will be addressed in this report is about the specific impact of the war on the Angolan economy, which, as we know, is undergoing a demanding reform period and is about to emerge from a deep crisis. It will also superficially assess whether the economic impacts will have political influence.

The two faces of the impact of the oil price in Angola

Naturally, the first impact in Angola refers to the price of oil. The rise in the price of oil was a trend that had been going on for some time and was accentuated with the outbreak of the war. To some extent, it is not a novelty brought about by the Ukrainian crisis, but a direction that has been underway for months.

 On January 31, 2022, the price of a barrel of Brent was USD 89.9, on February 14, 2022, the value was USD 99.2. It is a fact that with the beginning of the war it reached USD 129.3 on March 8. At this point (March 16), it stabilized at USD 99.11. It seems that the equilibrium price of oil in the near future will be between USD 95-100, with, obviously, the possibility of shocks that make it rise or fall abruptly.

Fig. nº 1- Daily Chart of the Price of a Barrel of Brent (May 2021-March 2022)

Source: Trading Economics.com

In relation to Angola, we have to start from the budgeted forecast for 2022, which calculated the price of a barrel at USD 59. Therefore, there will be an added value since the beginning of the year corresponding to a minimum of 50% more. In this sense, as the budget was balanced, it means that there will be a financial surplus, which is obviously good news.

This rise in the price of oil therefore has, in the first place, two positive effects for Angola.

The first is at the level of extraordinary Treasury revenue, which will naturally increase. In simple terms, it can be said that there will be more money available from the state.

The second effect, which is already being felt, is the so-called “feel good factor” (or confidence index). Entrepreneurs and families are rethinking their expectations in a more positive direction, hoping for better signs from the economy. According to the Angolan National Statistics Institute, businesspeople are finally optimistic about the short-term prospects of the national economy, after remaining pessimistic for more than 6 years[2]. The rise in the price of oil is not the only reason for the optimism revealed, but it helps.

Note, however, that oil price gains do not translate directly into a positive budget balance. There are several constraints in translating the rise in oil prices into direct budgetary benefits for Angola.

The first of these is the type of relationship with China. China is the main buyer of Angolan oil. We do not know how the contracts are made and whether they automatically reflect price fluctuations. In the past, some intermediaries in the purchases and sales of oil to China even entered into fixed-price contracts that greatly harmed the Angolan Treasury[3]. It is imagined that such “schemes” no longer exist, but there are no certainties. What is certain is that, probably, the contracts between Angola and China regarding oil will contain some type of “dampers” that will imply that there is no direct impact on prices. Furthermore, some oil experts, such as those at Chatham House, believe that the fact that China buys around 2/3 of Angolan oil (actually 70%[4]) allows it a certain monopolistic control of the price, meaning that Chinese purchases are made in order to lessen price rises, undermining Angolan advantages[5].

Second, we have debt service. Apparently, there are contractual mechanisms that imply that a higher price of oil implies an increase in debt service, that is, in payments to be made. The Minister of Finance, Vera Daves, has already acknowledged that “what results from the price increase cannot be made an arithmetic account with production” and that the price of a barrel of oil, above one hundred dollars, forces Angola to pay more to their international creditors[6].

Furthermore, the rise in the price of oil also has a possible negative effect on the Angolan budget, which refers to the price of fuel sold to the public. As is well known, this price is subsidized by the State; to that extent, if the cost of oil increases and the government does not increase fuel, it means that it will have to bear more subsidies and spend more to maintain fuel prices. If you don’t, you could be fueling inflation, which is no longer low in Angola, and creating social problems and discontent.

There are four factors here: price increase, relations with China, increase in debt payment obligations and increase in fuel subsidy that have to be taken into account to assess the real impact of the rise in oil prices on the accounts and the Angolan economy.

In fact, we do not have precise figures on these impacts, only ideas of magnitude, and in view of these, the conclusion that can be drawn is that a 50% increase in the price of oil in relation to what is foreseen in the Budget leaves a treasury slack that is still accentuated after the increase in debt service payments and support for the rise in fuel prices, and it is undoubted that a financial “cushion” will be created.

The question of food prices

Alongside the price of oil, many other commodity classes are rising in price. One of them is cereals, namely wheat.

Ukraine and Russia together account for a quarter of all world wheat exports. The conflict is dramatically driving up wheat prices. With the start of the war, the price of a bushel of wheat rose to $12.94, 50% more expensive than at the beginning of 2022.

In the midst of a war, it is unclear whether Ukraine’s farmers will be willing to spend whatever capital they have to plant the next harvest, or even if they will be in a position to do so. What is certain is that Ukraine has announced a ban on all exports of wheat, oats and other staple foods to avoid a massive food emergency within its borders. Therefore, wheat exports from Ukraine, even if there is production, are compromised.

Unlike oil, which affects prices almost immediately, grain prices take weeks, if not months, to reach consumers. In reality, raw grain needs to be shipped to processing facilities to make bread and other staples – and that takes time. In this sense, possibly, it will not be an immediate crisis for Angola, but it will reach the country.

According to government sources, Angola is self-sufficient in six basic agricultural products: cassava, sweet potato, banana, pineapple, eggs and goat meat. However, wheat is the most imported commodity, accounting for 11%[7]. Let us recall that wheat is an essential element in the diet of Angolans, which a few months ago led the Minister of Industry and Commerce to suggest replacing bread with cassava, sweet potatoes, roasted bananas and “ginguba” (peanuts). This statement has generated much criticism. However, from the strict point of economic self-sufficiency it may make sense, since possibly the price of bread will rise and eventually the price of national goods may fall, if there is an adequate competitive market.

What is certain is that Angola could be in the same danger as Egypt, an extremely wheat-based crop that suffers social upheaval when the price of wheat rises.

When grain prices soared in 2007-2008, bread prices in Egypt rose by 37%. With unemployment on the rise, more people became dependent on subsidized bread – but the government didn’t react. Annual food inflation in Egypt continued and reached 18.9% before the fall of President Mubarak.

Most of the poor in these countries do not have access to social safety nets. Bread images became central to the Egyptian protests that led to Mubarak’s downfall. Although the Arab revolutions were united under the slogan “the people want to overthrow the regime” and not “the people want more bread”, food was a catalyst. Incidentally, it should be noted that “bread riots” have been occurring regularly since the mid-1980s, usually after the implementation of policies “advised” by the World Bank and the International Monetary Fund.

Angola is not Egypt, but it is essential that the government pay close attention to the evolution of wheat and bread price to avoid social unrest, at a stage when it begins to emerge from the prolonged crisis.

However, as in the case of oil, there is another side, and in this case it is positive. The crisis in agricultural production resulting from the war could be a turning point for foreign investors to invest in agriculture in Angola. Angola is one of the countries in the world with the most potential, as we have already mentioned in a previous report[8], so this may be the time of opportunity for investors to see Angola’s agricultural capacity and take advantage of it. One of the most promising sectors with the most potential is agriculture. There is currently a combination of factors that make it one of the most profitable bets for investment in Angola.

Conclusions and recommendations

The war in Ukraine has several impacts on the Angolan economy.

The rise in the price of oil, not bringing directly proportional revenues, creates a “cushion” in the Treasury and a “feel good factor” in the business community, which could be a growth booster.

The rise in the price of cereals, especially wheat, can create serious inflationary pressures and discontent among the population, a situation for which the government must be aware. At the same time, it will draw attention to the enormous investment potential that Angola has as an agricultural country.

The government should create a special reserve derived from the gains from oil to guarantee the supply of cereals to the poorer sections of the population and also to promote agricultural investment in Angola.

[1] https://www.imf.org/en/News/Articles/2022/03/05/pr2261-imf-staff-statement-on-the-economic-impact-of-war-in-ukraine

[2] https://www.angonoticias.com/Artigos/item/70611/optimismo-regressa-no-seio-dos-empresarios-seis-anos-depois

[3] Rui Verde, Angola at the Crossroads. Between Kleptocracy and Development (2021), p. 24.

[4] https://www.forumchinaplp.org.mo/pt/china-foi-o-destino-de-71-do-petroleo-exportado-por-angola-em-2020/

[5] Explanations given at a Chatham House meeting that we replicate here, respecting the house rules.

[6] https://rna.ao/rna.ao/2022/03/03/preco-do-petroleo-a-cima-dos-cem-dolares-obriga-governo-angolano-a-pagar-mais-aos-credores/

[7] https://www.expansao.co.ao/economia/interior/grupo-carrinho-destaca-se-nas-importacoes-e-exportacoes-do-pais-106709.html

[8] https://www.cedesa.pt/2020/06/15/plano-agro-pecuario-de-angola-diversificar-para-o-novo-petroleo-de-angola/

Angola’s new strategic partners and Portugal’s position

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Angola’s new strategic partners: Spain and Turkey

Two recent intense diplomatic exchanges at the highest level point to the emergence of new strategic partnerships for Angola. In a previous report, we warned of realignments in Angola’s foreign policy[1]. Now, what happens is that this realignment continues, and at an intense pace. The President of the Republic João Lourenço is clearly giving a new dynamic to Angola’s foreign affairs, which is not seen to be affected by some internal unrest on the way to the 2022 electoral process.

The most recent examples of the President’s diplomatic activity are Spain and Turkey. The important thing in relations with these countries, is not whether or not there is a visit at the highest level, it is about having an intensity of visits by both parties and clear objectives designed. It can be said that from a mutual perspective, Spain and Turkey are becoming Angola’s strategic partners.

Let’s start with Spain. Last April, the prime minister of Spain, Pedro Sanchez, who barely left the country during the Covid-19 pandemic, visited Angola. The visit was seen as marking a new era in bilateral cooperation between the two countries and led to the signing of four memoranda on Agriculture and Fisheries, Transport, Industry and Trade. The agreement regarding the development of agribusiness was particularly relevant, in order to build an industry that transforms raw material into finished product in the future, relying on the experience of Spanish businessmen. As is well known, agriculture is one of the Angolan government’s areas of investment in relaunching and diversifying the economy[2]. Therefore, this agreement is dedicated to a fundamental vector of Angolan economic policy.

More recently, at the end of September 2021, the President of the Republic of Angola visited Spain where he was received by the King and the Prime Minister. On that visit, João Lourenço clearly stated that he was in Spain in search of a “strategic partnership” that went beyond the merely economic and business sphere[3]. In turn, the Spanish authorities consider Angola as a “priority country”[4].

Now it will be seen how these broad intentions will materialize in practice, but what is certain is that both countries are clearly betting on an increase in both economic and political relations and their declarations and goals seem to have a direction and meaning.

The same kind of intensified relationship is being established with Turkey. Last July, João Lourenço visited Turkey, where he was extremely well received. From then on, it was agreed that Turkish Airlines would fly twice a week from Turkey to Luanda. It was also announced that Turkey has opened a credit line on its Exxim Bank to boost bilateral economic relationship. This means that the Turkish financial system will finance Turkish businessmen to invest in Angola. As early as October 2021, Turkish President Erdogan visited Angola. This visit was surrounded by all the pomp and circumstance and expressed an excellent relationship between the two countries. Like Spain, Turkey has an aggressive strategy for Africa, where it wants to gain space for its economy and political influence. The agreements signed by Erdogan and João Lourenço were seven, namely, an agreement on mutual assistance in customs matters; a cooperation agreement in the field of agriculture; an agreement for cooperation in the field of industry; a joint declaration for the establishment of the joint economic and trade commission; a memorandum of understanding in the field of tourism and a cooperation protocol between the National Radio of Angola and the Radio and Television Corporation of Turkey[5].

The approach with Turkey, like that of Spain, has as an immediate and structuring objective “that [the Turks] bring above all know-how that allows us to quickly and efficiently diversify and increase our internal production of goods and services”, using the words of João Lourenço[6].

In these two challenges by João Lourenço there is an obvious determination, or rather two.

First, seek new sources of investment that support the fundamental diversification of the Angolan economy. This is extremely important, and the Turkish and Spanish economies are properly diverse to be able to correspond to the model intended by Angola.

The second aspect refers to the need Lourenço feels to detach Angola from an excessive relationship with China and Russia, without harassing them, but looking for new partners. The geopolitical weight of the Cold War and the subsequent implementation of the Chinese model in Africa, with which Angola is identified, weigh heavily in the evaluations of foreign ministries and investors. Thus, Angola is looking for new openings and a “detachment” from that previous brand, not least because Russia does not have the financial muscle to make large investments in Angola, and China is in the middle of an economic turmoil. As we already know, “the Chinese economy grew 4.9% in the third quarter of this year, the lowest rate in a year, reflecting not only the problems it is facing with the indebtedness of the real estate sector, but also the effects of the energy crisis.”[7] This means that China needs a lot of Angolan oil, but it will not have financial resources for large investments in Angola.

In fact, the relations between China and Angola and the need for a reassessment of the same, especially in terms of oil supply and the opacity of the arrangements, will have to be a theme for an autonomous report that we will produce in the near future.

Portugal’s position. The ongoing deberlinization

Having established that the importance of the intensification of Angola’s relations with Spain and Turkey is established, an obvious question arises: and Portugal?

Portugal has tried to be Angola’s partner par excellence, and for this it has accommodated itself, in the past, to the several impulses of Angolan governance.

Currently, there are good political relations between Angola and Portugal. Just recently, João Lourenço said: “I was fortunate that during my first term in office we were able to maintain a very high level of friendship and cooperation between our two countries.” He also added that “personal relationships also help. Therefore, over the years, we have been able to build that same relationship with President Marcelo Rebelo de Sousa and Prime Minister António Costa”.[8] There is no doubt that favorable relations are established between Angola and Portugal. It also helps that Portugal has three ties that are felt every day; historical ties, cultural ties, especially linguistic ties, and emotional ties.

However, despite the satisfaction expressed by the Angolan President regarding the good relations between the two countries, there are structural issues that cast shadows on the relationship and make Portugal’s position less relevant to Angola than in the past, generating some caution on the part of Angola in relation to excessive involvement with Portugal. Actually, there is a decline in the Portuguese position in Angola, vis-à-vis Spain or Turkey, or Germany, France or the United Kingdom. There is an ongoing de-Berlinization of Angola’s foreign policy. João Lourenço sees Portugal as an ally in the CPLP, but not as a gateway or platform to Europe. There, he wants to relate directly to each of the specific European countries. The old idea that pervaded in some European chancelleries that Angolan topics were specific to Portugal and should be dealt with from, or at least, with the Lisbon competition (which we call Berlinization), ended. Each of the European countries now deals with Angola without Portuguese intermediation and vice versa.

This fact results essentially from three factors. One of an economic nature, and two of a political nature.

In the first place, Angola seeks, in its foray around the world, countries with the potential and capital to invest. It is searching for capital to develop its economy. Now Portugal, jumping from crisis to crisis and having a clear lack of capital for its development, will have much less means to move to Angola. And in the famous Portuguese Recovery and Resilience Plan there is nothing specific for investment in Africa or Angola in particular. Consequently, with no provisions highlighted for Angola in the Portuguese Plan, it is clear that the African country will have to go looking for massive investments elsewhere.

However, we believe that this is not the main cause for the relative decline of the Portuguese position in Angolan foreign policy priorities. There are two other reasons, which are interlinked.

In this sense, there is na element that has caused the disquiet of the current Angolan leadership towards Portugal. This element entails in the fact that in the near past, Portugal constituted what the Financial Times of October 19th[9] described as the place where Angola’s rich (and corrupt) elite collected trophies in assets, a kind of playground for the President’s sons José Eduardo dos Santos and other members of the oligarchy. Now, the Angolan government, apparently, looks with some suspicion at Portugal because of this, specially considering the intervention that banks, lawyers, consultants and a whole myriad of Portuguese service providers had in the laundering and concealment of assets acquired with illicitly withdrawn money of Angola. There is a danger that all these entities are making efforts to undermine the famous fight against corruption launched by João Lourenço.

What happened during the years of inspiring growth in Angola, between 2004 and 2014, significantly, is that Portugal acted as a magnet for Angolans’ savings and income. The Angolan ruling elites, instead of investing the money in their country, went to invest it, or merely park it in Portugal, with disastrous consequences for Angola, which found itself without the necessary capital to make its growth sustainable. The reasoning that can be attributed to the Angolan government is that Portugal allowed the Angolan money obtained illicitly to be laundered in its economic and financial system with such depth that it is now very difficult to recover. Ana Gomes, wisely, always warned about this. In fact, if we look at the assets recovered by Angola, with great significance, there has not yet been public news that any of them came from Portugal. There was the 500 million dollars that came from England, but in Portugal, EFACEC was nationalized by the Portuguese government – and that’s okay from the Lisbon’s national interest point of view- but it was realized that Angola would not receive anything from there, as well as one can’t regard a clear path of receiving from other situations.

To this phenomenon is added a second that is presently noted. Lisbon is serving as a platform for the more or less concealed articulation of strong opposition attacks on the Angolan government. Whether through consultants, press or law firms. In this case, unlike possibly in the case of investments and possible money laundering, these activities will take place in accordance with the law and adequate protections of fundamental rights. However, it will create discomfort in the Angolan leadership, which will possibly see a link between the two phenomena, that is, between the fact that Portugal was a safe heaven for Angolan assets obtained illicitly in the past, and now it has become a local of opposition and conspiracy, above all, to the so-called fight against corruption. It is noticed that many of the movements take place in Portugal and its elites continue to help those who were dubbed by João Lourenço as “hornets”, either judicially or in the search for new places to hide their money.

In concrete terms, the episode of EFACEC nationalization combined with the recent judicial decision to “unfreeze” the accounts of Tchizé dos Santos in Portugal, and the generalization of an anti João Lourenço current in large spaces of the Portuguese media, although they constitute decisions or attitudes that are justified in political, legal or ethical terms in Portugal, they are events that reinforce some Angolan distrust of the Portuguese attitude, which can see the former colonial power in a kind of shadow play.

These situations, which have broadened in recent months, are causing some discomfort in Angola, which may consider Portugal as a kind of safe haven for activities that harm the country. Gradually, conspiracies from Portuguese territory abound, such as meetings and other events

It is precisely the reasons mentioned above that lead us to identify some attempt at political distance between the Angolan government and Portugal. There are no easy answers to these equations, although its enunciation has to be made for reflection by all those involved.

[1] CEDESA, 2021, https://www.cedesa.pt/2021/05/18/os-realinhamentos-da-politica-externa-de-angola/

[2] See report CEDESA, 2020, https://www.cedesa.pt/2020/06/15/plano-agro-pecuario-de-angola-diversificar-para-o-novo-petroleo-de-angola/

[3] Deutsche Welle, 2021, https://www.dw.com/pt-002/jo%C3%A3o-louren%C3%A7o-em-espanha-em-busca-de-parceria-estrat%C3%A9gica/a-59344760

[4] Idem note 3.

[5] Presidência da República de Angola, 2021, https://www.facebook.com/PresidedaRepublica

[6] Idem, note 5.

[7] Helena Garrido, 2021, https://observador.pt/opiniao/o-choque-energetico-e-o-orcamento-em-duodecimos/

[8] Observador, 2021, https://observador.pt/2021/10/22/pr-de-angola-ve-relacoes-de-amizade-e-cooperacao-com-portugal-em-nivel-bastante-alto/

[9] Financial Times, 2021, https://www.ft.com/content/4652e15a-f7ba-4d21-9788-41db251c5a76

An industrialization project for Angola

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I-Introduction. The revival of interest in industrialization

The industrialization of Angola has become one of the objectives of the current government under the leadership of the President of the Republic João Lourenço. In fact, either at the International Summit on Sustainable Development “The Future of Africa” held in Abu Dhabi in 2019, or at the third edition of the Global Summit on Manufacturing and Industrialization, promoted by the United Nations Industrial Development Organization (UNIDO) in 2020, Lourenço always emphasized that industrialization was a pressing need with a view to creating wealth and well-being for citizens and employment as the main source for all opportunities.

In fact, since Angola does not have staff and skills with sufficient critical mass in terms of services, and having recently seen the strategic weaknesses of economies that are too much based on services, it is normal for any economic start-up in the country to be also based on industry.

The industrialization of Angola must be thought based on three assumptions.

The first is that it will be based on strong agriculture. It is not a question of replacing agriculture with industry, but simultaneously developing agriculture and livestock as the basis for a renewed industrial start-up.

The second assumption is that what is called industrialization today will be different from what was considered at the beginning of the 20th century when such a movement was linked to the so-called heavy industries: steel, cement, etc. Furthermore, industrialization is not just manufacturing, but a set of transformative processes.

Finally, the vectors of industrialization in Angola will have to be linked to specific factors that bring added value to the economy or where it has competitive advantages. Therefore, it is not a matter of making mere copies of industrial models, but of realizing where Angola has benefits in industrializing.

II- Industry in the Angolan economy

As Nuno Valério and Maria Paula Fontoura write “in 1975, [when] Angola became an independent state, (…) the economy was prosperous, whether due to the existence of considerable exports of agricultural products (coffee, cotton, sugar, sisal) and others from plantations; corn from traditional farms) and minerals (diamonds, iron and oil) and even services (particularly through transit to Shaba, formerly Catanga, via the Benguela railway), either due to the beginning of an industrialization process.[1]“

The Angolan industrial start-up began in the 1960s, still under colonial rule. In fact, from that time, framed in the general liberalization and pro-European measures that Portugal took, in the creation of a Portuguese free trade zone and in the expansion of the internal market through the troops and families displaced with the overseas war “between 1960 and 1970, the gross value of manufacturing industry production grew at an average annual rate of 17.8% and GDP 10% in nominal terms.[2] “

In fact, on the eve of independence (1973) the Angolan industry (excluding civil construction) represented 41% of GDP. The important industries were the food industry, with 36% of the gross value of production in the manufacturing sector; followed by the textile industry, with 32%, beverages, with 11%, chemistry, non-metallic mineral products and tobacco, with 5%, petroleum derivatives and metallic products, with 4%, pulp, paper and derivatives, with 3%.[3]

Fig. 1- The main industries in Angola in 1973 (% gross value of production in the manufacturing sector):

Food36%
Textile32%
Beverages11%
Chemistry, non-metallic mineral products and tobacco 5%
Petroleum products and metal products 4%
Pulp, paper and derivatives  3%
Oil30%
Coffee27%
Diamonds10%

Source: Nuno Valério and Maria Paula Fontoura, op.cit.

It should be noted, however, that by this time, the “evil” of the Angolan economy was already present, i.e., the excessive dependence on raw materials for export. In reality, the manufacturing industry only contributed to around 20% of Angolan exports, with the main products exported in 1973 being: oil (30%), coffee (27%), diamonds (10%).

This liberalizing start-up in the Angolan industry was subject to some criticism, and in the 1970s, the government of Lisbon began to impose a protectionist perspective on Angolan industrial development. This did not affect the healthy growth of the industry. In fact, as noted by Nuno Valério and Maria Paula Fontoura: “the manufacturing industry’s VBP grew at an average annual rate of 21% between 1970 and 1973.[4]”

It is known that the situation of prosperity was interrupted by the civil war and it was only after 2002 that there was a strong revival of the economy. However, this restart was based on crude oil exploration and not on any sustained industrialization process. Even when it comes to oil, there was no concern about integrating it into an industrialization process and making Angola a country that bet on the transformation of its raw material instead of exporting it raw. This meant investing in refining, in petrochemicals, in the production of fertilizers, which did not happen[5].

Arriving in the second decade of the 21st century, the situation of the economy becomes worrying when oil exploration is no longer satisfactory due to the drop in its price. In this context, we start talking about the diversification of the economy and looking at the industry, but the scenario is not encouraging in terms of the strength of the industry within the scope of the Angolan Gross Domestic Product (GDP), so it is essential to mix and actively promote a project to launch industrial activity.

The most recent data referring to the weight of the manufacturing industry (except crude oil refining), dated from the second quarter of 2020, point to a 4.8% contribution to GDP. This contribution was 3.69% in 2002, and 4% in 2017 and 2018. On the same date, the year-on-year change in the manufacturing industry had been negative by 4%. The Gross Added Value was also negligible[6].

Fig. 2 – Weight of the manufacturing industry in Angola (2nd quarter of 2020)

Contribution to GDP (%)4,8
Year-on-year change (%)-4

Source:Banco Nacional de Angola. Contas Nacionais (bna.ao)

III. Industry relaunch project in Angola

Any project to relaunch the industry should start by having the right context. This context is a free economy with a social climate conducive to investment. The social climate is based on six necessary assumptions:

i) Absence of massive corruption. Corruption distorts the rules of economic competition and prevents free access to markets, fundamental conditions for industrial development;

ii) No barriers to accessing markets. Entrepreneurs should be free to obtain their production factors and settle in to produce;

iii) Functional Justice System. The justice system should not be seen as corrupt, slow and incompetent, but as applying the rules, punishing those who do not fulfill contracts and having legal and normal forms of debt collection;

iv) Reasonable taxes. Taxes should tend to be moderate and not stifle productive activity;

v) Less red tape. Public administration should be pro-business and not create administrative bureaucratic obstacles to the installation and operation of companies.

vi) Pro-business state. The State should have a fomenting and proactive role in industrialization, pointing and framing paths, building infrastructures, qualifying the workforce and establishing partnerships.

Fig. No. 3- Context for the industrial relaunch

In view of the necessary context, the important thing is to point out the axes through which the efforts of industrial growth should be channeled.

We see four axes of industrialization in Angola. These axes are chosen taking into account the economic history of Angola, its wealth and potential, the experiences of global industrialization and the possible trends of the markets in the coming decades.

Thus, we propose an industrial development according to the following points that can be interconnected or complementary:

1-Agriculture;

2-Basic needs industries;

3-Industries of development of natural wealth;

4-Future: renewable energies and digitalization.

Fig. N. º4 – Axes of the Industrial Relaunch Project

1-Agriculture

The agricultural industry represents the natural development of the Angolan potential already in operation and which was the subject of our previous report[7].

This a small example to gauge the potential. Recently, it was reported that Angola has been the main banana producer in Africa for six consecutive years. According to the Food and Agriculture Organization of the United Nations (FAO) Angola is the largest African banana producer and the seventh in the world with an offer of 4.4 million tons[8].

It will be elementary that it will be easy and possible to create an industrial line based on bananas: fruit juices (beverage industry), medicinal exploitation of banana / potassium (chemical / pharmaceutical industry), etc., are some of the possibilities in the refrigeration or pharmaceutical industry regarding banana.

The same type of reasoning can be applied to products and natural resources that Angola has or exploits in abundance. By internally transforming its natural resources and products, the country adds value to them, ceasing to be dependent on the mere evolution of the world price of raw materials.

2-Basic needs industries

Basic needs are understood as food, clothing and housing. This industrial axis represents an industry in which no specific sophistication is required and it is possible to make an import substitution without special losses of competitiveness, in addition to making it possible to create export markets in similar countries. In addition, Angola has already had a powerful industry in the area of ​​food, beverages and textiles. With a market of 30 million people that can easily be extended to many millions more with the developments of the Southern African Community (SADC) and the African Free Trade Area, Angola has enough potential demand for essential products: clothing , shoes, houses (obviously), basic food products from yoghurts to beers. There is no reason not to create its own industry with its own brands, in many cases imitating what has been done successfully in countries in these areas such as Bangladesh and Vietnam.

3-Natural wealth development industries

Another industrial axis, which basically replicates in a more comprehensive way what was mentioned in the first axis, focuses on national wealth, now not agricultural, but the rest. It has all the logic and economic rationality to use and transform what exists in Angola, adding value to it instead of exporting in gross terms, allowing capital gains to be appropriated by others. Here we have the most obvious example, oil. What makes sense is to develop the industry downstream from oil: refining, petrochemicals, plastics, fertilizers, etc. As the United Nations expert Carlos Lopes said, “The question is clear: it is not turning your back on wealth, such as oil, but integrating it in the transformation and making Angola a country that invests in the transformation of its raw material. instead of exporting it gross. This means investing, in addition to refining, petrochemicals, fertilizer production, etc. [9]“

4-Future: renewable and digital energies

The final axis is connected to renewable energies and the digital transition. Today, it is common ground that there is a demand for the replacement of oil by clean and renewable energies. In the United Kingdom, the goal was announced in 10 years to end the circulation of gasoline or diesel cars. Electricity generated by renewable energies seems to be the future. Large oil companies like BP or Aramco are transforming or embracing these areas. Now Angola has excellent natural conditions for this investment in renewable energies. Solar energy from the start. An industrial niche around solar energy and electricity production would be a bet to consider very seriously.

From the point of view of the digital transition, Angola will be able to make an important qualitative leap using digital techniques for the development of applications for the massification of basic and secondary education, for basic health and in the financial area. Here we have an industry of digital applications for teaching, health and banking that could be developed in Angola by Angolans, immediately combining a synergy between betting on health and education alongside digital industrialization.

IV-Coordination of the industrial relaunch project

On the part of the State, there must be a commitment to this project that will essentially be up to the private sector.

However, the State must create the legal and institutional framework, prepare financial and fiscal incentives, build infrastructure, promote the training of agents capable of change and establish partnerships.

For the task of coordinating the activities of the State with a view to industrial relaunch, there should be a coordinator directly dependent on the President of the Republic: a Czar of the Industrial Project.

Fig. No. 5 –  State’s role in relaunching the industry

[1] Nuno Valério e Maria Paula Fontoura, A evolução económica de Angola durante o segundo período colonial — uma tentativa de síntese, Análise Social, Quarta Série, Vol. 29, No. 129 (1994), pp. 1193-1208, p.1193.

[2] idem, p.1203

[3] Ibidem.

[4] [4] Op.cit. p.1207.

[5] Carlos Lopes, Petróleo deve ser utilizado na industrialização de Angola in https://www.dn.pt/lusa/petroleo-deve-ser-utilizado-na-industrializacao-de-angola—economista-carlos-lopes–10905179.html

[6] Dados do Banco Nacional de Angola in https://www.bna.ao/Conteudos/Temas/lista_temas.aspx?idc=841&idsc=15907&idl=1

[7] https://www.cedesa.pt/2020/06/15/plano-agro-pecuario-de-angola-diversificar-para-o-novo-petroleo-de-angola/

[8] https://www.angonoticias.com/Artigos/item/66803/angola-e-o-maior-produtor-de-banana-em-africa-ha-seis-anos

[9] Carlos Lopes, see note 5