India: a new strategic bet for Angola?

The centrality of trade relations between India and Angola

Angola has become the epicenter of many international relations. There is talk of the rapprochement with the United States, the recalibration with China, the history with Russia, the role in the Great Lakes. However, one of the relationships that is discreetly becoming more important, but seems to have been forgotten, or needs to be discovered, is the relationship with India.

India is currently Angola’s third largest trading partner, sharing around 10% of Angola’s foreign trade, mainly due to the purchase of crude oil in bulk. The trade balance is in Angola’s favor, with India being Angola’s 2nd largest oil importer, accounting for 90% of bilateral trade. The trade relationship is clearly driven by the oil partnership.

Clearly, since 2021-22, India-Angola bilateral trade has been on the rise, reaching 3.2 billion dollars in 2021-22, with a large increase in Indian exports to Angola of 452 million dollars (45 % increase year-on-year). Bilateral trade in 2022-23 reached 3.9 billion dollars (by February 2023), with Indian exports to Angola registering a new high of 575 million dollars[1] .

Figure 1: Angola – India: Imports/Exports

(in millions of dollars)

Source: Embassy of India in Luanda (April 2023)[2]

As a comparison, the value of trade in tradable goods (excluding services) between Portugal and Angola totals €1,149.3 million (M€) in exports and €488.1 M€ in imports, on average for the 2019-2023 period.[3]

It’s easy to see that the value of trade relations between India and Angola is three times greater than that between Angola and Portugal. India is already a giant in its relationship with Angola.

Figures in millions of USD. For Portugal average 2019-2023, for India values 2023.

The Indian community in Angola is made up of around 4,000 people, mainly based in offshore oil fields or working in establishments owned by Indian owners, mostly involved in restaurants, supermarkets, commerce and other services; in industries dealing with plastics, metal, steel, clothing. In the non-oil sector, several projects are being carried out by Indian companies in the retail, hotel, agricultural plastics, scrap metal, steel, trade and other services sectors[4] .

India’s potential in relation to Angola

Having established the strong economic ties between India and Angola, it is worth highlighting India’s potential and the possibilities it opens up for Angola.

India is one of the world’s fastest growing large countries, expanding at an annual rate of 6-7%. New data shows that private sector confidence is at its highest level since 2010. Already the fifth largest economy, it could take third place by 2027, after America and China. India’s influence is manifesting itself in new ways. American companies have 1.5 million employees in India, more than in any other foreign country. Its stock market is the fourth most valuable in the world, while the aviation market ranks third. India’s purchases of Russian oil drive global prices. Increased wealth means more geopolitical clout. India has sent ten warships to the Middle East to contain the Houthis in Yemen.[5]

India’s strong presence in the Gulf should also be noted. Since Modi (the Indian prime minister) took office in 2014, India has transformed its relationship with the Gulf states, moving from one centered on energy, trade and Indian expatriates, to a new framework that encompasses political relations, investment and cooperation in defense and security. In addition, India has a keen interest in the stability of the Gulf, given that approximately 8.8 million Indian citizens live in the region[6] .

These are the essential facts, which pose a strategic challenge for Angolan presidential diplomacy.

As we all know and have mentioned in previous reports, João Lourenço’s new foreign policy, launched after 2017, is based on several vectors: a rapprochement with the United States and Europe in general, a new relationship with the Gulf States, a friendly recalibration with China and a repositioning with Russia. All this has been done. Now it will be India’s time.

India as a strategic priority for Angola

Given India’s economic growth and potential, its relationship with the Gulf States, as well as its global position as a country that is friendly to the United States but maintains its own external sovereignty, which leads it to buy oil from Russia, among other things, it is important to include India in Angola’s strategic priorities.

The point is not only that India is a market with clear potential for Angolan oil, as well as for other future exports, such as those linked to the agri-food sector, but also that it is a source of technological innovation for Angola. However, India’s economic aptitude is also important and relevant in discovering new robust markets for Angola.

Equally important is that India can be a support for Angola in its relations with the Gulf, where many Indians occupy prominent positions in the financial sector, and at the same time serve as a support for the difficult negotiations with China over the debt and, finally, serve as an example to the United States of a friendly country, but one that follows its own foreign policy.

These elements, both economic and in terms of international relations, are strong enough to attract the attention of Angolan presidential diplomacy to create a common framework for intense political and commercial cooperation. It is easy to understand that India can be an excellent expansion market for Angola, as well as a technological partner, and can also be complementary to Angola in many political aspects, both in establishing bridges with the Gulf countries and in knowing how to draw the boundaries of balance in relations with the major powers. This experience should be assimilated by Angola.

It should be remembered that the history of relations between heads of government (presidents of the republic and prime ministers) is not very intense. The first visit by an Indian prime minister to Angola took place in May 1986, by Prime Minister Rajiv Gandhi, which was reciprocated by Angolan President José Eduardo dos Santos in April 1987. PM Dr. Manmohan Singh met President José Santos on the sidelines of the G-8 meeting in L’Aquila, Italy, on July 10, 2009. In October 2015, Angola’s Vice-President Manuel Vicente visited India to take part in the Third India-Africa Summit. Finally, during his visit to Johannesburg to attend the BRICS Summit, Angolan President João Lourenço met Prime Minister Narendra Modi on July 26, 2018 and discussed ways to improve trade and investment between the two countries and also to deepen cooperation in sectors such as Energy, agriculture, food processing and pharmaceuticals[7] .

There really is no proximity between diplomacies at the highest level. Now, it is this pattern that would indicate that we need to move to a new level. This is possibly the time to create a strong bridge between India and Angola, based on political and economic aspects.

[1] Embassy of India Luanda (2023) Bilateral Brief on India-Angola Relations:

[2] idem

[3] GPP (2024) ANGOLA Trade with Portugal (PT) 2019-2023:

[4] Ditto note 1

[5] The Economist (2024), How strong is India’s economy?

[6] Viraj Solanki (2024) The Gulf region’s growing importance for India:

[7] See note 1.

The African Continental Free Trade Area boosts Angola’s economic growth

1-Introduction: The Free Trade Area and Angola

Angola deposited the ratification of accession to the African Continental Free Trade Area (ACFTA) on the 4th of November 2020, after the National Assembly approved for ratification on the 28th of April of this year, and the President of the Republic signed a Letter of Ratification on 6 October.

The agreement is scheduled to enter into force on 1 January 2021.

The ACFTA has so far been ratified by 30 countries and, in the first phase, will lead to the elimination of tariffs on 90% of products. In addition, the agreement commits countries to progressively liberalize trade in services and to deal with a number of other non-tariff barriers, such as long delays at national borders that hinder trade between African countries. Eventually, in the future, the free movement of people and a single African air transport market may emerge within the newly created free trade area.

The goal of this agreement is to create the largest free trade area of ​​its kind in the world, with a gigantic market from Cairo to Cape Town. The ACFTA brings together 1.3 billion people and a combined gross domestic product (GDP) of more than $ 2 trillion.

Essentially, the agreement’s business goals are:

-Create a single market, deepening the economic integration of the continent;

– Assist the movement of capital and people, facilitating investment;

– Move towards the establishment of a future continental customs union.

As stated, the agreement initially requires members to remove tariffs on 90% of goods, allowing free access to commodities, goods and services across the continent.

Table 1 – ACFTA Goals

2- The impact of the FTA on Angola’s foreign trade

Recent modeling by the United Nations Economic Commission for Africa (UNECA) projects that the value of intra-African trade will be between 15% and 25% higher in 2040 due to the ACFTA. The analysis also shows that least developed countries are expected to experience the greatest growth in intra-African trade in industrial products by up to 35%[1].

There is no doubt that insertion in a free trade area increases foreign trade in a country, this should happen in Angola, aiming, in view of the United Nations data, for a reinforcement of at least 25% of foreign trade with the rest of Africa until 2031.

This percentage arises from the weighting of the UNECA modeling referred to above with specific factors underway in Angola[2] such as the political commitment to liberalization and diversification of the economy, the operationalization of some international transport structures such as the completion of Luanda International Airport, the entry into operation the deep water port of Caio, as well as the operation of the Lobito Corridor; a rail corridor for international goods traffic starting in Porto do Lobito (Benguela) and integrating three countries – Angola, Democratic Republic of Congo and Zambia – the government’s wish being one of the main axes of circulation of raw materials and goods in the territories it crosses.

There is a tripartite combination that enhances Angola’s medium-term growth:

i) the liberalization and diversification of the Angolan economy with the manufacture of new products (some of which Angola had specialized in colonial times and later abandoned) and services,

ii) membership of the African free trade area, and

iii) the construction of transport logistics infrastructures.

This interaction is essential for the membership to a free trade area to be successful. The free trade area will be the driver of growth, which in turn is accelerated by the combination of economic diversification and new logistical structures. Tariff reductions can play a significant role in the development of intra-regional trade, but they must be complemented by policies to reduce non-tariff bottlenecks (eg logistics).

3- Increase in foreign trade and economic growth in Angola

The forecast is that the result of this interaction will be an increase in international trade that will lead to a more accelerated growth of the Gross Domestic Product (GDP).

As a rule, an increase in international trade leads to an increase in GDP[3].

In the past two centuries, the world economy has experienced sustained positive economic growth and, over the same period, this process of economic growth has been accompanied by an even faster growth in global trade. Similarly, we found that there is also a correlation between economic growth and trade: countries with higher rates of GDP growth also tend to have higher rates of growth in trade.

Among the potential growth factors that can result from greater global economic integration are: Competition (companies that do not adopt new technologies and do not cut costs are more likely to fail and be replaced by more dynamic companies); Economies of scale (companies that can export to the world face greater demand and, under the right conditions, can operate on larger scales where the price per unit of product is lower); Learning and innovation (companies gain more experience and exposure to develop and adopt technologies and industry standards from foreign competitors) [4].

Overall, the available evidence suggests that trade liberalization improves economic efficiency. This evidence comes from different political and economic contexts and includes micro and macro measures of efficiency. This result is important, as it shows that there are gains with trade that imply an increase in GDP.

It is difficult to calculate the impact on GDP of a 25% increase by 2031 in trade between Angola and the rest of Africa. In fact, Angola’s trade with other African countries in 2019 represented only 3% of the country’s total foreign trade[5]. We admit that the ACFTA will increase this number by 25%, causing an increase in the total Angolan trade between 0.75% to 1% compared to the relative weight mentioned.

In this sense, a conservative perspective based on historical data on the relationship between increased trade and GDP growth in other countries with many differences between them points to a possible 1: 1 ratio. (See table below that allows establishing this correlation with some security).

Table 2 – GDP and Trade growth in several countries (sources: those mentioned in the Table)

In this case, the increase in foreign trade until 2031 would imply an average increase in annual GDP to GDP growth between 0.75% to 1% between 2021 and 2031 in Angola due to the operation of the ACFTA. If, for example, for 2022 there was a GDP growth forecast of 2% without ACFTA, with ACFTA that forecast could reach 2.75% to 3% and so on.

It should be noted that this result is only possible if the following conditions are met:

-Effective operation of the free trade zone;

-Liberalization and diversification of the Angolan economy;

-Concretization and operationalization of transport logistics projects (airport, deep water port, and international railway).

The political framework that the Angolan government wants to give to the economy of increasing structural reforms and competition is in line with the advantages that may arise from the increase in trade with the rest of Africa.

In addition, public policies must address the costs of adjusting trade integration:

  • Foster agricultural productivity in less diversified economies;
  • In some countries, mobilize domestic tax revenue to offset losses;
  • Use targeted social and training programs to facilitate worker mobility between industries to mitigate adverse effects on income distribution.


In conclusion:

It is possible to foresee a 25% growth in Angola’s external trade with Africa by 2031 if the African Free Trade Area is really implemented and the internal policies are adequate.

This growth may result in an average annual growth of the economy in those years, from 0.75% to 1%.

This is good news for Angola.

Table No. 3 – IMF% GDP growth forecasts adapted[6]

1 Vera Songwe,  Mamadou Biteye, African  Trade  Agreement: Catalyst  for Growth, UNECA,

2 The modeling we have adopted assigns a weight of 60% to UNECA’s predictions (which act as a driving mechanism) and 40% to the domestically mentioned internal factors in development (accelerator mechanism), believing that it is the virtuous combination of the two that will make it possible to exponentiate the growth of trade.

3 Frankel, J. A., & Romer, D. H. (1999). Does trade cause growth? American economic review, 89(3), 379-399.

4 Esteban Ortiz-Ospina (2018), Does trade cause growth?

5 Cfr. comercio-com-o-mundo?seccao=exp_merc

6 / October 2020. FTZ projections are our sole responsibility, although based on the IMF forecasts of October 2020 and imply the verification of all conditions prescribed in the text.