Social life in Angola is very alive and, at this moment, political and judicial matters dominate the country’s agenda. However, it is in the domain of the economy that there is an extremely significant evolution on which it is important to reflect and proceed to a careful analysis.
The recent (February 2023) International Monetary Fund (IMF) report on the country underlines the favorable advances of the Angolan economy and also the necessary reforms. It is based on this report that we will enunciate Angola’s main trends in the economic field and the neuralgic points to avoid relapses such as the last long recession that began in the presidency of José Eduardo dos Santos.
Angola’s economy is in full recovery after the five-year recession (2016-2020). By 2022, supported by higher oil prices and resilient non-oil activity, it has already reached growth of more than 3%, estimating the IMF that by 2023 the country continues to see the GDP increase in the order of 3.5%.
Therefore, we see growths of over 3% per year, which by our calculations, maintaining the price of oil and accelerating the liberalization of Angolan markets and foreign investment, could accelerate to numbers of 4% or 5%, adopted that are the right policies.
The optimism we share here results from the fact that non-oil growth has been widespread, despite a difficult external environment, as it means that the non-oil sector is reviving, as well as the attention that several developed countries with market economies are providing Angola, as is the case of US, Spain, France and Germany. Mentions should be made to recent visits to Angola of the King of Spain and the President of the French Republic, Emmanuel Macron (February and March 2023).
It should be noted that the debt that the public debt/GDP ratio has dropped about 17.5 percentage points of GDP, for an estimated 66.1% of GDP, aided by a stronger exchange rate. It is estimated that the checking account remained with a large surplus in 2022, while coverage of foreign currency reserves remained adequate (IMF data).
The fact is that the Angolan government has, according to the IMF, to adopt and maintain solid macroeconomic policies and maintained a commitment to structural reforms that are vital to Angola’s economy.
We understand that it is in the verification of fundamental structural reforms that resides the future of the Angolan economy. We highlight some reforms that are necessary to take and/or continue.
1-First renovation, with impact on the medium and long term, is to foster training for the economy of young people. Training not only means, and perhaps not in most, university education, but solid training in basic education and in professional aspects. We argue, therefore, that there must be an effective bet on vocational and technical education in Angola, before any other. A real bet on professional and technical schools and institutes, which are seen as valuable alternatives to academism and not mere university imitations (tragic error of Portuguese polytechnics).
2-Second renovation entails the creation of more conditions for investment, no longer at the legal level, where there is a modern framing and updated twice during the presidency of João Lourenço, but at the judicial, administrative and good practices level. The investor must feel safe to arrive in Angola and apply his money. One should not be afraid of being without the money due to any interference from an oligarch, or see any process dragging on in court. The speed and impartiality of justice is linked to good investment.
3-Third reform is dedicated to the financial sector, there is a special emphasis on increase credit to private persons and and the resolution of banking weaknesses. Quickly we must merge and capitalize banks, creating a banking sector not dependent on the state, clientelism or mere public debt management.
Finally, among other reforms, we highlight the true imperative of making more progress in strengthening governance and transparency, to improve the business environment and promote private investment.
Of course, continuing and accelerating anti-corruption strategy is also important.
National Employment Plan
All these news should be framed with the well-being of the population and the serious problems still pending. The one we highlight is unemployment, which although noting a slight descent, is still very high, about 30% . This is an area in which we advocate direct state intervention. It is evident that the increase in GDP corresponds to an unemployment decrease, however, we believe that in the face of such high unemployment, in the short term the immediate action of the government is fundamental.
In this sense, the recent announcement of the World Bank of US $ 300 million for a project to accelerate economic diversification and job creation is to greet. Not knowing in detail the design of this acceleration program, its existence should be underlined, as well as the previous announcement of the Angolan Labor Minister of the creation of a National Employment Program, with the aim of creating more opportunities for insertion of young people in job market. Also, in this case, the data are scarce about the design of the plan, and it is certain that the President of the Republic had declared in the discourse of the State of the Nation of 2022, the creation of the referred plan.
So far, these initiatives related to unemployment, although positive, seem uncoordinated and poorly implemented. Therefore, the truth is that Angola would win to see a comprehensive national employment plan, specific and directly coordinated by the President of the Republic, without the risk of not properly implemented a plan, which in the short term is fundamental to the economy and Angolan population.
https://www.cedesa.pt/wp-content/uploads/2023/03/econ2.jpg6581006CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2023-03-17 13:53:002023-03-13 18:59:13Angolan Economy trends, necessary reforms and national employment plan
Constitutions do not solve problems, but give powerful signs. It is of these powerful signs that Angola’s economy needs at this time.
If we look at the great macroeconomic data, we come across an encouraging picture. Inflation since March 2022 slowed from 27.66% to 13.86% in December 2022, an impressive data, Kwanza, the national currency, oscillates freely in the international market, the State General Budget has a surplus, public debt came down markedly, for a value close to 60% of GDP. The economy grew again in the orbit of 3% by 2022, predicting an increase of 2.7% in 2023. However, oil continues to rise, 86.27 the barrel/brent (25-01-2023).
Therefore, those who can be considered the “fundamental” of the Angolan economy are healthy after a long shortage which began in 2015/2016.
However, the international investment that should flow to Angola is not reality yet, and the threat of instability is latent, as the interview of opposition leader Adalberto da Costa Júnior demonstrates to a Portuguese newspaper  last week, not recognizing Electoral results, courts and, therefore, and from what one apprehends any institution of the State; in practice, assuming as possible a power outlet by force.
Consequently, we have a work of meritorious economic stabilization that for political reasons, as well as those that Keynes called “Animal Spirits” (emotions that determine human behaviour), does not produce the desired effects and usually described on economics manuals.
Now, it is precisely this need to unleash the “animal spirit” that does not move in the Angolan economy and the threats of political instability that gives rise to the urgency of discussing a new Constitution to Angola.
It is well known that the Angolan Constitution approved in 2010 is not consensual and was designed in a legal tailoring taking into account the figure of José Eduardo dos Santos, introducing, what Jorge Miranda, the famous Portuguese constitutionalist, dubbed “simple representative government system, to which, diverse configurations were reappointed the French Cesarian Monarchy of Bonaparte, the Corporate Republic of Salazar according to the 1933 Constitution, the Brazilian Military Government according to the 1967-1969 Constitution, several African authoritarian regimes.”
Although having suffered a review in a more democratizing and open sense in 2021, in which the autonomization of the Central Bank stands out and the creation of a constitutional system of supervision of the executive branch by the legislature, it is certain that the constitutional genesis prevents always whenever this is a symbol of an open society and a free economy and on the other hand, it contains no mechanisms of constitutional protection as proposed by Karl Loewenstein and adopted in the German Basic Postwar Law. These mechanisms protect the constitution of internal threats to the constitution itself and are a fundamental element for political stability.
In addition, it is important to reinforce the mechanisms of defense of private and foreign investment. If we notice, private investment is only mentioned once in the Constitution in Article 38, and the history of opportunism and true “theft” of foreign investors in Angola was a reality that requires special normative attention. Also the provisions on the land (article 15) must be updated and rationalized, as well as the guarantee of justice with rapid and impartial judgments.
Justice is admittedly one of the essential aspects of a proper functioning of the economy, expecting predictable and timely decisions. There is no doubt that the Angolan judicial system needs a large “aggiornamento” that would be introduced by a new constitution.
In a mere economic perspective, it is clear that a new constitution would be a sign, a symbol of a new time that would attract investors and give hopes of political and legal stability.
As mentioned at the beginning, a new constitution does not solve all problems, its role is to announce a new time open to investment, market economy and progress and development of the country. It would be the culmination of economic reforms recently enclosed.
 Adalberto da Costa Júnior, 2023, Nascer do Sol, https://sol.sapo.pt/artigo/790625/houve-muita-pressao-para-tomar-as-instituicoes
 Jorge Miranda, A Constituição de Angola de 2010, CJP-CIDP, p. 42
https://www.cedesa.pt/wp-content/uploads/2023/02/constiy.jpg446665CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2023-02-03 13:24:452023-02-03 13:25:09The Angolan economy and the need for a new constitution
It is a fact that the war in Ukraine is affecting the entire world economy, and, certainly, this impact will also have political consequences, 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. 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. 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%) allows it a certain monopolistic control of the price, meaning that Chinese purchases are made in order to lessen price rises, undermining Angolan advantages.
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.
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%. 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, 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.
https://www.cedesa.pt/wp-content/uploads/2022/03/ucrania-war-scaled.jpg17962560CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2022-03-21 09:04:002022-03-21 09:37:03The economic consequences in Angola of the Ukraine war
Many countries don’t need a robust youth policy, either because the youth population is not significant, with most socio-economic problems being in the elderly, or because they have healthy economies and societies that easily encourage and incorporate young people.
This is not the case in Angola. The numbers on Angolan youth demand special attention from the political power to this age group. With reference to July 2021, it is estimated that 47.83% of the Angolan population is between 0-14 years old and 18.64% between 15-24 years old; therefore, 66.47% of the population is up to 24 years old, or in other words, about 2/3 of the Angolan population is young. It is an immense and impressive mass of babies, teenagers and young adults that constitute the immensity of the Angolan people.
Fig. 1- Angola population pyramid (2021)
This impressive demographic is joined by unemployment figures. According to the most recent data available, unemployment affects 59.2% of the young population (here considered to be aged 15-24) in the third quarter of 2021, with a year-on-year increase in this situation of 2.8%. It is clear that this number does not reflect those who were somehow absorbed by the informal economy, however, its magnitude will always be remarkable.
In fact, from a sociopolitical point of view, it has been verified that the demonstrations against the government policy in Angola, and the activism in social networks, is carried out, in large part, by young people.
Youth is, therefore, a huge force in the Angolan economy and societies, which is on the boil.
These various factors: extremely relevant number of young people in the total population, youth unemployment and socio-political discontent that force the consideration of a transversal and encompassing youth policy for Angola.
Youth policy is defined as the government’s commitment and practice to guarantee good living conditions and opportunities for a country’s young population. Youth policy is a strategy implemented by public authorities to provide young people with opportunities and experiences that support their successful integration into society and allow them to be active and responsible members of society and agents of change.
In these terms, a youth policy seeks to create opportunities for young people, promoting their participation, inclusion, autonomy, solidarity, in addition to well-being, learning, leisure, employment.
The government’s role will be to launch policies with these goals in relation to youth and to work together with the various actors involved in the information, development and implementation of youth policies, such as: youth councils, youth NGOs, interest groups, groups of young people, young workers, researchers, schools, teachers, employers, medical personnel, social workers, religious groups, media.
The model we developed attributes three axes to youth policies:
a) The axis of employment;
b) The axis of sport and leisure;
c) The axis of culture and training.
We understand that a youth policy must translate into measures in these three axes in order to provide young people with an integral and complete personal development.
In Angola there is a Ministry of Youth and Sports (Minjud) whose main function is to assist the President of the Republic in the elaboration and execution of the State’s youth policy (Article 2 of the Organic Statute of the Ministry of Youth and Sports, Presidential Decree no. 228/20, of September 7th).
However, in addition to advertisements or programs with a rhetorical value, there is no vision of a transversal and active youth policy such as is needed in Angola. And such a policy is essential. The relevant news that is noted about the activity of Minjud focus essentially on football and football stadiums.
It is therefore urgent to go further and launch a youth policy that will necessarily cover several ministries and will have to be coherent and consistent. As we mentioned, this youth policy would unfold along three axes, paying attention to employment, sports and culture.
It is proposed to adopt a youth policy for Angola described in the following terms.
The youth policy would be transversal to several ministries, not dependent only on one ministry, and therefore necessarily coordinated directly by the President of the Republic. As mentioned, it would have three axes that would complement each other.
• In the first axis, referring to employment, a program to guarantee full employment would be launched for all those aged between 22 and 23 years old and having completed a degree. The State would assume the responsibility to employ them in its structure or to subsidize for a period of time not less than 2 years a workplace in the private sector. Therefore, the State would either ensure employment in its several administrations, institutes or public companies, or it would subsidize private companies for the creation and hiring of jobs for young people. All young graduates aged 22-23, in addition to receiving training and assistance to find work, would have guaranteed paid work, with the State having to pay 100% of their salary in a private company or employ participants in the public sector or support creation of a microenterprise. All participants would receive at least a minimum wage fixed in accordance with the Presidential Decree that regulates the subject adequate to a life with dignity. In a second phase, the guarantee of employment for all young people aged 22-23, regardless of their qualification, would also be studied, although those without formal qualifications should attend training to acquire some ability in art or craft.
• In the second axis referring to sports, an integrated sports project in school and in the community would be promoted. In this context, a proposal should not be developed to do everything everywhere, or as referred to in connection with a previous plan “to involve sport modalities of handball, athletics, basketball, football, volleyball, gymnastics and chess” in all schools.
The plan would aim at the rational use of scarce resources and with the search for specialization. Thus, each school would be required to dedicate itself to only one sport and to develop it freely within its midst. They would not aim for national championships, nor for large structures, but they would bet on focus and specialization. Each school with its sport. Only one, but open to all young people. At the same time and in competition with schools, each municipality would also promote a sport open to all young people. We would thus have a sport project for everyone with a specialization from each institution and with no other initial ambition other than to put young people in sport.
• Finally, the third axis dedicated to culture would also have to be based on specialization. Here, efforts would be made to concentrate resources on promoting reading by young people. We would start by adopting a project launched by the Gulbenkian Foundation in Portugal in the middle of the last century and already sporadically adopted in Angola in provincial initiatives, such as the “Giro do Saber” promoted by the Provincial Library of Malanje.
Reading for youth based on traveling libraries and street readings would be a project aimed at encouraging young people’s taste and reading habits. The traveling libraries will consist of vans that would travel across the country with volunteers and books offered and would stop at each location allowing the reading of these books and explaining some of them. At the same time, these volunteers would perform street readings of books appealing to youth in a mixed spectacle of reading and music, thus attracting target audiences.
One would look for this reading project to be financed by the penal system. That is, it would give rise to a change in the law that would allow all prison sentences of up to two years for economic and financial crimes to be exchanged for donations of vans, books and volunteer support.
Fig. 2- Description of a transversal youth policy
With these measures in the field of employment, sport sand culture, a youth policy that is so necessary for Angola would be launched.
There is nothing like taking advantage of the present party Congresses to promote and discuss these proposals.
https://www.cedesa.pt/wp-content/uploads/2021/12/juventude-angolana.jpg6081080CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2021-12-08 12:00:002021-12-02 17:25:39Proposal for a transversal youth policy in Angola
1-Introduction: IMF, sound economic policies and capital accumulation
Contrary to what some economic studies and forecasts currently carried out by some more or less unknown consultants, the current Angolan economic policy has solid foundations. This is demonstrated by the recent assessment by the International Monetary Fund regarding the agreement between the fund and Angola. The IMF administration is clear in declaring: “The authorities [from Angola government] have supported the [economic] recovery through sound policies that aim to further stabilize the economy, create opportunities for inclusive growth and protect the most vulnerable in Angolan society.”
It would be difficult to have a better endorsement of government economic policy.
However, macroeconomic stabilization and the resumption of economic growth are different realities. There is need of a certain engine to ensure economic growth. It is known that the essential growth model was presented by Robert Solow (Nobel Prize for Economics in 1987), that explains that growth depends essentially on the accumulation of capital, with the increase in GDP resulting from the increase in the capital stock.
It is known that the latest Angolan GDP figures for the first quarter of 2021 are negative by 3.4%. So the question that now arises is: how to transform sound economic policies into capital accumulation and promote GDP growth?
2-Capital in the Angolan economy
The essential growth model of the Angolan economy, at least from 2021 onwards, was not a model based primarily on investment, but on consumption derived from imports and on the direct benefit of capital gains from the high price of oil. This meant that the investment that existed was induced by oil and not extended to the economy as a whole. It should also be noted that a good part of the savings gains at that time was not transformed into domestic investment, having been transferred abroad from Angola. In a colloquial way, there was a sharp flight of capital from Angola to overseas countries, namely Portugal or off-shore tax havens.
It is public that this model went bankrupt as of 2014, and led to sharp years of recession after 2015. At the same time, it was found that the contribution of gross fixed capital formation (GFCF) to GDP began to decrease from that point on. year (2015). If we look at each year the FCF/GDP was respectively 28.21 %, 26.21 %, 23.24 %, 17.19%. The 2018 number (17.9%) is frightening and makes the discussion about the need to capitalize the Angolan economy more relevant.
Figure 1: Gross Fixed Capital Formation in relation to GDP
“The country has a capital deficit” and this problem has to be resolved so that growth can occur. This aspect has to be one of the guides for future economic policy. A goal must be set to raise the GFCF/GDP rate to higher levels, possibly to the 25/26% that happened in 2007 or 2012, which ensure GDP growth levels (albeit based on oil) of 14% and 8%. Now a new capitalization not only based on oil has to be carried out.
It’s easy to diagnose. Angola lacks capital and needs strong investment. The answers will be the most costly.
3- Increase capital in Angola
What to do to accumulate and increase capital in Angola?
Our answer is divided into two perspectives, the short-term and the medium-term. Let’s focus on the short term, then make a brief reference to the medium term, although it is clear that there is a continuum, as what is done now has repercussions over time.
The executive has already taken some measures, which we have reported in previous reports, such as the Private Investment Law (LIP)-Law no. 10/18, of June 26, which no longer requires partnerships with Angolan citizens or companies from Angolan capital and in its article 14, it guarantees that the State respects and protects the property right of private investors; Article 15 establishes that the Angolan State guarantees all private investors access to the Angolan courts for the defense of their interests, being guaranteed due legal process, protection and security. The range of possibilities for transferring dividends were also expanded. Moreover, in administrative terms, it should be noted that in 2018, all requests for the transfer of dividends above five million dollars (4.3 million euros) were granted to foreign companies operating in the country. And, most importantly, since 2020, the capital import from foreign investors who want to invest in the country in companies or projects in the private sector, as well as the export of income associated with these investments, have been exempted from licensing by the Angolan central bank.
However, this is still not enough, and foreign private investment will take a long time, either because a very turbulent electoral period is starting, or because there is a worldwide distraction with Covid-19. In addition, the executive has not yet communicated with all the worldwide amplification, the opening of Angola for business. Even so, it is essential that the executive maintain the political orientation of openness to foreign direct investment.
More needs to be done in the short term to increase investment in Angola and subsequent economic growth. Below is a list of suggestions.
• The initial suggestion is obvious and is based on strengthening public investment. It is essential that the government becomes an inductor of investment and that the capital gains arising from the rise in oil prices and possible apprehensions in the fight against corruption are applied in reproductive investments with short-term results.
The next two suggestions might be more innovative.
Let us address the first of the most unorthodox suggestions. As mentioned, a good part of the savings obtained by Angolans in Angola was remitted abroad, decapitalizing the country. Now we have to reverse this.
• In this sense, the government should, in the first place, sell the dormant shares and assets or in which there is no very relevant strategic interest, which it has abroad. With the result of this sale, it would constitute an investment fund to be invested within Angola. Thus, the first heterodox proposal to increase the capital available in Angola is to sell what there is abroad that belongs to the State (directly or indirectly) and place it in the Angolan economy. Certainly, Sonangol’s position in Millennium BCP should be sold and transformed into investment capital in Angola, and possibly an indirect stake in Galp, if it is not possible to reach a strategic agreement with the Amorim family to better monetize the Angolan position.
• The second suggestion refers to fighting corruption. It is necessary to get out of a certain delay that entered into and boost the capital recovery.
Thus, the government should directly approach those it calls “hornets” and propose a negotiated solution to their situation. Either they deliver the assets that are abroad for investment in Angola, or they will face long prison terms. In relation to these assets, the method outlined above would be followed: Provided market prices were acceptable, everything would be sold and the capital returned to Angola for investment according to a formula agreed between both parties.
This “negotiation” would not be carried out by common means, but by a specialforce to be set up in Angola and would have short deadlines, not judicial deadlines.
There will have to be a radicalization in both directions in the fight against corruption. More effective punishment or forgiveness with repatriation. Unlike what happened in the previous repatriation law, there would be no waiting, but there would be a proactive attitude on the part of the executive.
By way of an illustration, the participation of Isabel dos Santos in NOS, that of General Kopelipa in the BIG bank and in several hotel developments, the apartments that the former figures have in Estoril, etc., could be sold. The result of these sales would return to Angola where it would be invested in terms to be agreed between the State and the former owners.
These listed measures could give some boost to the Angolan economy and thus promote economic growth immediately.
At the medium-term level, the essential thing is that there is no rampant corruption, good communication infrastructures are created, an investor-friendly legal apparatus and fast, non-corrupt courts, an educated workforce (this does not mean having degree courses but the necessary skills) and reasonable taxes. In short, an inviting political and social climate for investment.
https://www.cedesa.pt/wp-content/uploads/2021/09/capital-angola-1.jpg10801920CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2021-09-17 13:52:002021-09-15 13:53:50The question of capital in Angola
The latest figures available from the National Institute of Statistics on the Angolan economy point to a decrease in GDP in the 1st quarter of 2021 in the order of -3.4%, an unemployment rate in the same quarter of 30.5%, and a annual inflation rate for the month of July 2021 of 25.72%. None of these figures that reflect macroeconomic magnitudes are encouraging in the short term.
However, there are other economic and financial realities to consider in order to have a global view of the movement underway in the Angolan economy, and which allow for a more optimistic perspective.
To begin with, in terms of the budget balance and public debt, essential elements of the support program of the International Monetary Fund (IMF), the expectation is that the 2021 budget balance will be positive, possibly above 2% of GDP (further on we will present our prediction). In relation to public debt, as we had predicted in previous reports, its sustainability is consolidated, as recognized by the IMF representative in Angola very recently (see our forecast below).
In terms of exchange rate with reference to the month of July 2021, the Kwanza has already appreciated 1.8% against the dollar and 6.1% against the euro, since January 2021, breaking a strong period of strong devaluation started in 2018. Furthermore, 3.5 years after exchange rate flexibility, the gap between formal and informal market rates is below the 20% target announced by the central bank at the time of liberalization, between 7% and 8% for the dollar and euro respectively. Note that at the time prior to liberalization, the same gap was 159% and 167%.
Figure 1 – Kwanza Exchange Rate Variation against the Dollar and Euro (July 2021)
Currently, some sectors are already announcing an increase in the profitability of exports due to the favorable exchange rate policy. This is the case of cement, where Pedro Pinto CEO of Nova Cimangola assures that “To boost exports, the devaluation of the currency helped, because all the costs that the company has in national currency, in dollars, were lower and, in this way, the competitiveness of the company to place products on the international market. In other words, all those products that we continue to buy in Kzs and that have not suffered large price variations in dollars were lower and, therefore, allowed the company to have greater profitability with exports. ”
Also a reference to PRODESI (Program to Support Production, Diversification of Exports and Substitution of Imports), which has generated more than USD 29 million since the beginning of the year. As the main exported products, emphasis is placed on cement, beer, glass packaging, bananas, juices and soft drinks and sugar.
These movements are reflected in the trade balance. Angola’s trade balance recorded, in the 1st half of 2021, a surplus of USD 8,381.9 million, an increase of 40.2 % compared to the results recorded in the 2nd half of 2020 (USD 5,978.8 million). Within this framework, there was an increase in exports of 25%, naturally still influenced by the increase in exports from the oil sector of 28.4%.
Figure 2 – Angola’s Trade Balance and Trade Relations with China
But there is also a significant increase in trade with one of Angola’s main trading partners, China. “Trade between Angola and China increased 23.9% in the first half of 2021, to US$10,550 million (€8,985 million), compared to the same period last year”. According to Gong Tao, Chinese ambassador to Angola, despite the adverse effects caused by the covid-19 pandemic, Chinese companies remain interested in investing in Angola, highlighting the recent construction of factories, one dedicated to the production of tiles and another qualified for the production of energy and water meters.
2021 Summer Forecasts
In modeling the perspectives we present here, several factors are taken into account, among which we highlight the main ones. The first element is the calculation of the oil price (always a determining factor in the Angolan economy). We assume that the price of Brent will maintain a slight upward trend, standing at a level between USD 65 to USD 75 per barrel. A relative stabilization or possible appreciation of the Kwanza against the dollar and the euro is also part of our model, which makes it possible to reverse some of the falls in the past that were merely nominal due to the more flexible exchange rate. We anticipate that the post-Covid-19 world recovery will boost the Angolan economy’s exports, as is already happening with China. Finally, we anticipate that the environment for foreign investment will gradually improve as a result of legislative reforms and the commitment of political power. We have as a recent example the several advertisements coming from Turkey. At the end of July 2021, Angola and Turkey signed 10 cooperation agreements, in the fields of economy, trade, mineral resources and transport, having already announced an increase in the trade balance with Angola to a value of around USD 500 million.
From the point of view of obstacles, it is worth mentioning the immense lack of capital. This is the main element for any sustained recovery, and also the inexistence of economic diversification and the persistence of administrative bureaucracy.
All things considered, our model predicts that by the year 2021 the Angolan economy will come out of recession, and GDP growth will reach between 1.4% and 1.75%.
Our model points to a budget surplus between 2.3% and 2.75%, depending on the evolution of the oil price until the end of the year. And considering the evolution of the Kwanza exchange rate, our forecast is that in 2022, the public debt/Gross Domestic Product (GDP) ratio will be below 100%, achieving greater consolidation.
Figure 3 – CEDESA Model – Forecasts for the Angolan Economy
Consequently, the initial period of strong adjustment and contraction of the Angolan economy is expected to come to an end this year, with no more shocks and global control of the Covid-19 pandemic.
The special case of Unemployment
We understand that unemployment is a special case that should be treated differently, both statistically and in terms of public policies. In terms of statistics, it should be better ascertained who is occupied with informal productive paid activities and who cannot effectively obtain any paid work they want. We should avoid statistical biases that disturb the proper understanding of reality.
On the other hand, it is clear that it will not be the market or the private economy that will solve the problem of lack of employment in the short term, especially for young people. To that extent, the authorities are urged to develop a Keynesian-type employment promotion program, if necessary using available capital from the fight against corruption, as we have advocated in other reports. The state has to spend money on job creation.
https://www.cedesa.pt/wp-content/uploads/2021/08/economia-angola-1.jpg14152560CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2021-08-30 10:20:372021-08-30 10:21:13Indications and Summer Forecasts for the Angolan Economy
0-Introduction. A different focus for Angolan economic analysis
The consulting companies that are dedicated to the study of the Angolan economy follow a conjunctural methodology in which the predominant narrative is based on the negative numbers about the macroeconomic aggregates and their possible perspectives.
However, a more detailed analysis of the evolution of the Angolan economy suggests that behind the numbers of inflation, unemployment, GDP growth and public debt, which are not very encouraging, a series of public political reforms are taking place together with the reinforcement of certain economic trends that will indicate the construction of a new, more positive economic reality for Angola.
This study deals with the positive elements that point to the correction of the direction of the Angolan economy in a sense more consistent with the necessary prosperity.
A-Positive trends in the Angolan economy
1-The International Monetary Fund (IMF) and public policy reform
A first element that allows to shed a different light on the perspectives of the Angolan economy lies in the recent assessment carried out by the IMF. In fact, on January 11, the IMF Executive Board concluded the fourth review of the Extended Fund Mechanism Agreement for Angola and approved the disbursement of an additional USD 487.5 million.
The important thing in this decision is the IMF’s positive assessment of the reform of Angolan public policies. The IMF states that: “The [Angolan] authorities achieved a prudent budgetary adjustment in 2020, which included gains in non-oil revenues and containment of non-essential expenses, while preserving essential spending on health and social security networks. The approval of the 2021 budget in December consolidates these gains. The authorities have also allowed the exchange rate to act as a shock absorber and have begun to implement a gradual shift towards monetary restraint to face increasing price pressures ”.
According to what the IMF explains, the economic policy followed by the Angolan government is developed in the following vectors:
-The stabilization of public finances, which is the cornerstone of the authorities’ strategy. In this regard, the government achieved a strong fiscal adjustment in 2020. In addition, its budget for 2021 consolidates non-oil revenue gains and the containment of budget expenditures for 2020, while protecting priority social and health expenditures.
These advances help to reduce the budget’s dependence on oil revenues.
– Reformulation and management of public debt. The government has implemented debt profile reform agreements, in addition to benefiting from the extension of the Debt Service Suspension Initiative until the end of June 2021, which will provide significant debt service relief and help reduce risks related to debt sustainability. We will elaborate below on the reformulation and management of public debt.
-Restrictive monetary policy and exchange rate easing. After easing the monetary constraint to mitigate the shock of COVID-19, the National Bank of Angola (BNA) began, once again, to face the increase in inflationary pressures through the tightening of monetary policy. A more gradual tightening of monetary policy is needed to reduce inflation. Exchange rate flexibility served as a valuable buffer during the crisis. Efforts are underway to develop a liberalized foreign exchange market.
-Reform of the financial sector. Continued progress in financial sector reforms was critical, especially the completion of the restructuring of the two struggling public banks. The timely adoption of the revision of the BNA Law and the revision of the Financial Institutions Law is the key to continuing this progress.
Finally, the IMF highlights the fundamental aspect that underlies all political reform, which is the maintenance of the fight against corruption.
What can be seen clearly from this IMF assessment is that the government is pursuing a reformist policy based on the assumptions made by this international organization, and is implementing difficult reforms.
It is known that many of these IMF policies have an initial recessive effect, especially fiscal consolidation when it involves raising taxes and cutting wages and subsidies, as well as restrictive monetary policy to fight inflation. It is therefore no wonder that the first result of adopting IMF policies is recession and not growth.
What is expected is that this “housekeeping” creates the conditions for a sustained and virtuous growth of the Angolan economy.
Fig. Nº. 1 – Economic policies of the Angolan government celebrated by the IMF
2-Management and careful reformulation of public debt
The executive followed an appropriate strategy when initially negotiating with China the issue of public debt. As we described in previous reports, the Chinese debt is key to Angola, as it represents about 50% of external commitments. Consequently, it was important, first of all to ensure the appropriate terms with China, although they are not public knowledge, apparently imply a three-year suspension of payments agreement. The adherence already mentioned to the IMF’s debt suspension program allowed the government room for maneuver. It should be noted that the Eurobonds on which a lot has been written and pointed out various dangers, has a smaller weight in the total Angolan debt, around USD 8 billion, thus not having, on the contrary, what one could think of exaggerated pressure on Angolan finances in this area.
So, for now, the issue of public debt pressure seems to be eased and within the government’s management capacities.
3-Meridian oil price recovery
As we had also anticipated, after an abrupt drop in the price of oil at the beginning of the pandemic (March 2020) there would be a rise, which is gradually happening.
The reality is that following a trend that was already very clear at the end of the year, the barrel of brent finally reached a price above $ 55, a value that had not been reached since the end of February 2020, the month before the start of the pandemic. Still being the most relevant indicator for the Angolan economy, and considering that the budget for 2021 was calculated based on USD 33 per barrel, we have a financial margin of more than USD 20. This is an additional “cushion” in the management of Angolan public finances.
It is clear that it is not known for how long this rise in the price of oil will continue. The commitment of the new Biden administration to the Paris Agreement, the evolution of the Chinese economy, the decision to cut or increase production by Saudi Arabia and the maintenance of the restrictions resulting from the Covid-19 pandemic are factors that may imply a further decline in the oil price.
Therefore, movements in the oil price are always unknown and these moments of increase must be used by the government to reinforce its reserves for future reproductive and social investments.
Fig. No. 2- Evolution of the Brent price since February 2020
4-Decrease in imports of food basket and agricultural production with continental relevance
The diversification policy combined with the promotion of the national industry through the substitution of exports has been another “motto” of this government. This policy allows in one fel swoop to reduce external dependency and create a thriving national industry.
While it is still untimely to draw any definitive conclusions about the results of this policy, some figures emerge that can be encouraging, at least in relation to the dependence on imports and foreign exchange spending on foreign trade.
According to data provided by the Ministry of Industry and Trade, Angola managed to record a reduction of almost US $ 100 million in the import of products from the basic basket and other essential goods in the last month of 2020, compared to the same period in December 2019. In December 2019, the Government disbursed US $ 250 million for imports, while in the same period of 2020, it only spent US $ 152 million.
In particular, it is worth noting the reduction in sugar imports, which went from 2.1 million tons in 2019, at the cost of 17.6 million dollars, to 1,472 tons, at the cost of 831,121 dollars. Regarding the importation of current rice, in 2019 Angola imported 136,985 tons in the amount of US $ 37.2 million and in 2020, only 59,505 tons, in the amount of US $ 10.5 million. In what concerns chicken (the most consumed meat in Angola), it is also worth mentioning a considerable reduction, compared to 2019. In that year, 46,385 tons were imported, for US $ 51.5 million, whereas last year, only 32,447 tonnes were acquired, for a value of just over US $ 25 million.
Fig. Nº. 3- Comparison of annual imports of basic basket products (Dec.2019 / 2020 in USD million)
These are just some of the products highlighted in the considerable reduction in imports, however this trend has proved to be general in the remaining products that make up the basic basket.
For these numbers to be considered a success, it is necessary to compare them with the internal consumption of the same goods, and understand if the decrease in imports was due to a substitution by domestic products or only reflects a decline in demand as a result of the economic crisis.
In the latter case, although they represent savings in foreign exchange, they do not mean a success in politics, but a decrease in the quality of life of the population. However, even in this situation, national investors should be alert to proceed with investments in these areas in order to correspond to future demand growth.
Statistics published by the Angolan Ministry of Industry and Trade and released by the Portuguese news agency Lusa show the enhanced sustainability of some Angolan agricultural production.
Angola asserts itself as a continental-level agricultural producer. Angola is the largest African banana producer and the seventh in the world with an offer of 4.4 million tons, according to the latest table of the United Nations Food and Agriculture Fund (FAO). It should be noted that the banana continues to be the most produced and consumed fruit in the world. Angola, in particular, has declared itself self-sufficient in banana production for more than six years, with emphasis on the provinces of Bengo and Benguela. In these provinces, private companies already export the fruit to countries such as Portugal, Zambia, Democratic Congo and plan to bring the fruit to the United States, the world’s largest consumer.
In relation to cassava, Angola has an annual production estimated at more than 11 million tons of cassava, being today the third largest producer in Africa, after Nigeria and Ghana, and wants to bet on its transformation into starch.
5-New investments and exports. Two examples: Rio Tinto and Gold
The finance minister recently told Reuters: “We are building a future (through our reform program) that prioritizes direct investment (not just with China, but with other partners). We want to add value for our economy to create jobs. We want the money to stay. Borrowing is an option, but we are trying to change the way we relate to our partners ”.
Thus, it appears that the government is betting on direct investment to revive the economy and also to increase exports.
There are two recent examples that are important to underline in this context. The first is the entry of the powerful multinational Rio Tinto into the Angolan market. Apparently, such a perspective will materialize this year.
Also important is the first export of gold mined in Huíla in 2020, in the amount of sixteen hundred and ninety-six ounces sent to Portugal and the United Arab Emirates, which corresponds, at the current price, to more than three million dollars. Obviously, what is relevant is not the amount of gold exported, but the beginning of a trend. As with the entry of Rio Tinto, it is important to mark a trend that brings other big investors like Anglo-American or DeBeers.
None of these investments is very firm yet. Their reference is important because they can represent future axes for the development of the Angolan economy, now in the beginning.
Fig. nº 4 – Signs of optimism in the Angolan economy
B-Necessary policy adjustments
The foregoing demonstrates that the Angolan government pursues an economic reform policy based essentially on the IMF’s revenues: i) budgetary balance and debt control, considering financial solvency as a sine qua non for economic growth; ii) restrictive monetary policy to control inflation; iii) flexible exchange rate policy, allowing for a devaluation of the currency that encourages exports and hinders imports; iv) investing in investment and the private sector as engines of the economy.
Basically, the policy followed corresponds to what was once called the Washington consensus. This is the standard reform package adopted by the IMF, World Bank and the US Treasury Department since the late 1980s and which corresponds to a liberal model of the economy, based on fiscal prudence and the free market.
Naturally, this model has potential for Angola, but it is not enough. There are not strong enough institutions in Angola yet to guarantee the functioning of a free market in which some do not end up dominating others and creating oligopolistic and inefficient situations, as there is not a private sector strong enough to become the engine of the economy.
Making Angola’s economic reform dependent on reforms inspired by the Washington Consensus is not enough, a broader view is needed.
This broader view should imply structural institutional reform. This means that property rights must be clarified by abandoning the confusion that the collectivization of property has generated and still generates, courts must be put in place, bureaucracy is no longer an obstacle, and obviously great corruption must be eradicated. In addition to structural institutional reform, it should be realized that the State has a role to play in this new phase. There is no robust private sector in Angola, nor can everything be delivered to foreign investors with short-term perspectives. A mix should be found between the state and the private sector. In fact, this is how the most advanced Western countries work, despite rhetoric. It is important to adopt the concept advanced by Mariana Mazzucato of Entrepreneurial State.
The point to consider in economic reform in Angola is that the role of the government, in the most successful economies, went far beyond creating the right infrastructure and setting the rules. The State is a fundamental agent to achieve the type of innovation that allows companies and economies to grow, not only by creating the “conditions” that allow innovation. Instead, the state can proactively create a strategy around new areas of high growth before the potential is understood by the business community by financing the most uncertain phase of research in which the private sector is risk-averse, seeking new developments, and often even supervising the marketing process.
In addition, the IMF’s recessionary policies, while necessary, must be offset by other types of policies that alleviate the socially depredating burden of those. In short, there must be a mix of reformist policies that is more comprehensive and adequate to Angola, so that in the end the first flashes of success have sustained results.
It is necessary to look beyond the negative conjuncture numbers of the Angolan economy and understand that there is a reformist economy policy that is beginning to bear fruit and to mark some new trends. This policy has been applauded (and possibly advised) by the IMF, and here lies its strength and weakness. Strength because it contains some indispensable measures to clean up the Angolan economy and launch it on the path of growth. It also strengthens because its adoption and implementation brings the praise and support of the IMF and sister organizations. However, this policy also has weaknesses, including the lack of attention to institutional reform, the weakness of the private sector in Angola, the recessive effects of contractionary policies, among others.
Consequently, with signs of optimism in the medium-term perspectives of the Angolan economy, it is necessary to improve the economic policy that is being followed, including the intensification of institutional reforms that ensure that the judiciary works, bureaucracy does not hinder, corruption does not divert resources. In addition, the role of the State as an entrepreneurial partner in the private sector should be reviewed.
 See the most recent figures: Unemployment 34% (III quarter 2020), Annual inflation 25.19% (December 2020 / December 2019), GDP growth -5.8% (III quarter 2020) at https: // www. ine.gov.ao/
https://www.cedesa.pt/wp-content/uploads/2021/01/otimismo-economia-2.jpg10801920CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2021-05-12 18:51:492021-05-12 18:51:51Flashes of optimism in the Angolan economy at the beginning of 2021
This is a time of reinvention for Angola. Sonangol is no longer the engine of the Angolan economy and it is necessary to find a new driver. There are two reasons for the need to overcome the economic model based on a single product – oil.
The first reason is Sonangol itself. The results for 2019, presented by the Angolan oil company, are structurally discouraging. Although they show a profit, this profit derives from unrepeatable extraordinary results and the essential elements of the oil operation are stagnant: production does not increase, sales do not exceed the level of previous years. The company’s net income was USD 125 million. However, revenues remained stable compared to the previous year. Sonangol produced around 232 thousand barrels of crude oil per day, a number similar to the past and made sales of USD 10,231 million, which represents a 4% reduction compared to the 2018 financial year.
In short, oil exploration no longer adequately supports Sonangol. Not supporting Sonangol means not supporting the country.
In addition to this stagnation at Sonangol, there is the fact that oil is being increasingly viewed with skepticism, seeking to invest in alternative energies and moving away from the use of black gold. This is obviously not a short-term process, but it will have been accelerated with the Covid-19 pandemic. Oil will still have price rises, possibly peaks in higher demand, but everything indicates that the gluttonous years will be over, as other energy sources will emerge that will more or less gradually replace oil. Just note that in the last few months the price of the Brent barrel has fluctuated between USD 53 in October 2019, USD 60 in January 2020, USD 12.78 in April or USD 40.7 recently. However, he never returned to the 2014 figures where he was often above USD 100.
These two reasons mean that the Angolan economy has to reinvent itself, and more quickly than it thinks. It is not just a matter of restructuring Sonangol and focusing it on the oil business. It is not enough, because this business is stagnant. It is the economy itself that needs restructuring, which in the official jargon of the Angolan government is called diversification.
The problem is that diversification implies the creation of a new offer in the Angolan economy, of the production of goods and services that did not exist in the recent past. And for production to exist, investment is necessary. Investment requires, obviously, the contribution of capital.
And here we face another issue that affects the Angolan economy, which is the lack of capital and the recessive policies that intensify this scarcity. Following the parameters chosen by the International Monetary Fund (IMF) and the neoclassical orthodoxy of the economy, a program to contain / reduce public debt and reduce the deficit is being imposed on Angola.
We have many doubts as to whether such a program is justified in the case of the Angolan economy, especially considering the doctrinal contributions in Modern Monetary Theory, but the fact is that such a program to cut spending and increase taxes is being followed. However, the pursuit of such a policy ends up limiting the availability of capital for investment, whether public or private. Therefore, it prevents the so-called diversification that is so necessary to overcome Sonangol’s stagnation.
Thus, the outlook facing the Angolan economy at the moment is difficult. On the one hand, its engine – Sonangol – is stalled, on the other, the creation of capital to mobilize productive investment to diversify the economy is being strangled due to the recessionary policies adopted. This has obvious repercussions on the economy’s figures. GDP growth is negative – 3.6%. Unemployment assumes a staggering number of 32.7% and inflation of 22.8% (similar in August 2020). None of these numbers are encouraging.
The Angolan economy needs political courage to reverse this state of affairs.
Sonangol has to be restructured, but as an energy company and not merely an oil company. In reality, it is not enough to focus on oil, you will have to present yourself with a modern renewable energy company, taking advantage, for example, of the sun. If the United Kingdom recently announced that it wants to become Saudi Arabia by the wind, Angola may be Saudi Arabia by the sun. Therefore, an imaginative restructuring of Sonangol is necessary.
At the same time, recessionary economic policy must be abandoned. Although there should be budgetary discipline and not paying works twice or paying wages to phantom employees, as well as not contracting public debt to feed private pockets, the fact is that the policy of financial rigor must be complemented by a policy of fiscal stimulus that allows building a sufficient capital base to carry out the necessary reproductive investment. A public and private pro-investment tax policy is fundamental in reinventing the Angolan economy.
https://www.cedesa.pt/wp-content/uploads/2020/10/sonangol.png554924CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2021-05-10 20:14:122021-05-10 20:14:14Sonangol and the reinvention of the Angolan economy
It is encouraging
the effort that the Angolan authorities are making to liberalize the economy
and make it competitive in the middle of the storm that hit the world, with
serious consequences for Angola.
A first measure
announced is of particular importance for the creation of a favourable and
stimulating business environment in Angola.
COMMERCIAL PERMIT AND STATISTICAL REGISTRATION
information made public, within the scope of measures to simplify business
bureaucracy and to deal with the economic slowdown eventually caused by Covid
19, the Government “intends to revoke the procedure for issuing the business
license for all economic activities and the obligation of companies to carry
out statistical registration in the act of incorporation.” Of course, some
exclusions from this free regime are foreseen, such as those related to the
trade in foodstuffs, live plant species, animals, birds and fishing, medicines,
car sales, fuels, lubricants and chemicals.
apart from these sectors, the need for issuing a business license by the
central administration is canceled.
This step, and
as long as it is not replaced by another, is very important and has a clear
Do not forget
that, according to the World Bank Report “Doing Business 2020”, which analyzes
the position of countries in the world regarding the ease of doing business and
generating wealth, Angola ranks 177th out of 190 nations. Consequently, at the
end of the list.
It is clear that
there is an urgent need to facilitate business and entrepreneurial initiative
in Angola, so it is imperative that the State promotes the business environment
in the country. One of the problems detected by the World Bank Report was the
delay between 14 and 45 days to obtain a permit from the Ministry of Commerce
to start business activities in Angola. This requirement would have a
historical justification linked to the industrial conditioning policies of the
Portuguese Salazar colonial regime, carried on by the Soviet leaderships that
prevailed in the 1970s and 1980s. However, at present, the existence of Licences
is an obstacle to internal free trade and country empowerment business
For this reason,
we must emphasize and applaud this decision to abolish the need for commercial
As for the
statistical registration, it is now carried out with the tax identification
number. Another positive simplification measure.
positive fact to note is the continuation of the privatization process, despite
the shutdown of activities derived from Covid 19.
belonging to the Angolan state have recently been privatized. This was the
Camaiangala Agro-industrial Farm, located in the province of Moxico, with an
area of 19 thousand hectares, with a grain processing factory and a structure
for livestock; the Longa (Cuando Cubango), Cuimba (Zaire) and Sanza Pombo
(Uíge) and Modular Slaughterhouses in Luanda, Camabatela and Porto Amboim, the
Catete Silos Complex, the Caxito Cold Warehouse and from the Caxito Tomato and
Banana Processing Factory.
In the case of
small or medium-sized structures, the important thing, in addition to the
revenue brought to the State, is that these sales demonstrate the Government’s
commitment to proceed with the privatization process in a crescendo until
reaching the large Angolan companies and Blue Chips. This procedure allows to
test the multiple privatization processes and methods in smaller series,
refining the administrative and decision-making machinery in order to
The relevance to
be retained from this information is the Government’s strong commitment to
pursue a policy of effective market implementation, promotion of
entrepreneurship and privatization. Thus, the country will lay down the roots
for the structural success of the economy in the medium term.
https://www.cedesa.pt/wp-content/uploads/2020/04/Good-News.png438775CEDESA-Editorhttps://www.cedesa.pt/wp-content/uploads/2020/01/logo-CEDESA-completo-W-curvas.svgCEDESA-Editor2020-04-20 09:10:572020-04-20 09:21:03An overview - Two good news for the Angolan economy: Abolition of the Business Permit and the materialisation of privatizations
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