The economy of Africa’s second biggest oil producer, Angola, grew by 5.1% in 2013, below the hoped for 7.1%.
Angola’s extra gross domestic product (GDP) came mostly from the non-oil energy, agriculture, fisheries, manufacturing and construction sectors. Growth is projected to reach 7.9% in 2014 and 8.8% in 2015 as major public infrastructure investment kicks in.
Social indicators have not kept pace with the strong economy though. About 36% of the population lives below the poverty line and unemployment remains high at 26%. The government has taken steps to improve living conditions. Major investment is being made to expand access to electricity, water and transport. To boost business, financial sector policies are being modernised with the introduction of a new foreign exchange currency law for the oil sector and a mining law. Though the structural policies are positive, Angola needs to accelerate economic diversification and reduce the dependence on oil which accounts for about 46% of GDP, 80% of government revenues and 95% of Angola’s exports.
Virtually all major inputs for the oil industry are imported. The country has to get a foothold in the global oil industry’s value chain and broaden its participation into sectors such as liquified natural gas, methanol and other high potential sectors. But poor roads, ports, airports and railway connections hinder efforts to reach foreign markets, and there is a poor power supply. Difficulties accessing finance and administrative barriers to free movement of goods and labour are also obstacles. The government has used the Petroleum Activity Law and local content decrees to advance national interests in the oil sector. This legal framework also serves to promote the creation of local skills through the “Angolanization” of human resources and boost the participation of local companies by giving preferential treatment to national firms in the supply of goods and services.