I spent the beginning of December in Luanda, Angola. In this beautiful coastal country where I went on a business visit, I had the chance to examine the latest economic situation and the existing industrial reforms.
Frankly, Angola has impressed me a lot with the industrial transformation it has undergone in the last five to six years.
It is an admirable move that the country has turned to local production more aggressively than others on the African continent and has achieved this in a very short time. When we look at the short history of Angola, we see that these lands, which have been a Portuguese colony for many years, still have a serious Europeanness in their essence, especially from the moment you set foot on the capital Luanda, the modern buildings in the city. The synergy of people and the beautiful hills overlooking the ocean draw you in.
After drinking our coffee towards the Brazilian beaches on the opposite shore of the Atlantic Ocean, let’s get started on sharing some information about Angolan economy. Angola is mainly sustained by oil and diamonds. It is a sub-Saharan country with a relatively high-income level. As there is no defect in security and terrorism in the country, with its stable structure, geostrategic location, rich water resources, climate diversity and fertile soils, Angola is a virgin and open paradise for investors. It is an untouched geography where features such as underground resources and mineral potential are remarkable.
Oil is at the centre of Angola’s economy. Possible increases in oil prices directly affect the country’s gross national product and imports. Oil plays a key role in government revenues in Angola, which is the second largest producer of crude oil in Africa after Nigeria, is the seventh in the world. Because the infrastructure was destroyed in the country’s civil war, the population was largely displaced and mine fields, instead of farming, defined the land everywhere, especially in the southwest of the country. For this reason, agricultural production is still limited. Therefore, there is an important potential in the field of arable agriculture and food production.
Angola’s economic development, prosperity, social development and stability totally depend on oil. Sixty-five percent of the country’s oil reserves are located in the Cabinda region. Oil accounts for 85 percent of Angola’s gross national product, 97 percent of exports and 83 percent of government revenues. Angola is the second country in the world after Libya in terms of its economy being dependent on oil. After oil, the country’s most important export product is diamonds with 6 million carats produced annually.
One of the cornerstones of the country’s economy is fishing and fisheries. In Angola, which has the richest coast in Africa, thanks to the cold Benguela current, mackerel, sardines, tuna and crustaceans, Angola is a leading county for fishing. The fishing and fisheries sector is the third most important in the Angolan economy after oil and diamonds. Annual production is around 300 000 tons. About half of this amount is of great importance for internal food supply.
Apart from these three main sectors, until five years ago Angola imported almost all food products. However, thanks to the steps taken by the Lourenço government, Angola has started to evolve rapidly from being a net importer of food to a producer of food. It has succeeded in attracting foreign investors by putting together the necessary incentive packages and reforms into effect at a speed that almost no other sub-Saharan African country has been able to achieve. Local production for flour, pasta, cereals, cooking oil, beverages, confectionary, and hygiene and cosmetics products started rapidly, and the country’s foreign dependence for basic needs was considerably reduced.
Due to my job, I visited many food wholesalers and warehouses in Luanda. I saw the label of “Made in Angola” on the back of almost all products. Obviously, witnessing how Angola has achieved this in such a short time is a great success story. I can clearly say that the most important share in this success belongs to the government, which regulates the nation’s industrialisation policies. In my personal opinion, Angola is one of the 10 largest economies on the African continent whose economy can only grow. The country, which is one of the stars of the southern African region with its increasing population and rapid urbanization rate, I believe that it will come to the fore in economically.
Reforms announced to support Angola’s economic development, new opportunities in many different sectors paved the way for growth. The regulations prepared with a transparent approach of the government and the participation of all stakeholders created the infrastructure of a conducive business environment and opened the door to foreign investors. Angola’s rich natural resources and young population, opportunities in different sectors are an advantage.
Angola’s industrialisation drive first started with the banking institutions and financial system under strict control. Angolan banking and general the financial system is under the supervision of the National Bank of Angola (BNA), which outlines monetary and exchange policies with the aim of increasing national investment and stabilising the exchange rate, as well as controlling the current financial situation. It increases Net International Reserves (RIL) and keeps inflation rates at acceptable levels. BNA’s strategy and policy are aligned with the 2018-2023 National Development Plan and the Macroeconomic Stability Programme of the government after 2017 elections and a number of reforms are being implemented. Thus, Angolan banking becomes more effective and contributes to achieving the goals in the two elements listed above.
BNA has won the technical advisory race of two of the largest international financial institutions to achieve these goals. In other words, the World Bank and the IMF contribute to the improvement of the business environment, giving more credibility and confidence to the reforms being implemented in this sector.
Improving the business environment, it aims to:
- To facilitate access to the exchange rate;
- Improve relations with correspondent banks;
- Ensure exchange rate stability and manage inflation;
- Provide financing to the private sector with less cost and risk; and
- Analyse of assets of the largest banks operating in the country.
Sectors that follow the developmental vision of the Angolan government are primarily composed of agriculture and the agro industry, mining, natural gas, forestry, textiles, construction, health and information technologies. My interpretation from conversations with my business partners during my visit to Angola is that the government has mobilised all means to improve the current business environment.
Angola, which was a more closed country in the period before President João Lourenço who took office in 2017, did not sign basic economic and commercial agreements even with Portugal with which it has historical and cultural ties, and has turned its eyes to the world and new investors.
During my visit, I saw that Angola has already implemented industrial reforms very decisively. An Angolan proverb says: “Don’t underestimate a seed as small as a nut because it will one day become a palm tree.” Angola has already begun to sow its seeds and the growth of the palm trees is imminent.
