Summary
Oil is the driving force of the economy in Angola. In 2019, it accounted for over one third of Angola’s GDP, 90% of exports and 75% of government revenues. The industry plays an important role in Angola’s complex transformation from a ‘state-led oil economy to a private-sector-led’ model. Prior to the end of the oil boom, Angola enjoyed some of the highest economic growth in the world following a devastating 27 year-long civil war. Due to the lack of a diversified economy, however, Angola struggled with the fall of exported oil prices in 2014, reducing oil revenues from 35.3% in 2013/14 to 17.5% of GDP in 2017. The recession which followed has undoubtedly been exacerbated by the COVID-19 pandemic.
Central to the economy is Angola’s state-owned oil company, Sociedade Nacional de Combustiveis de Angola (Sonangol), which owns stakes in almost every other industry in the nation. Although it has the potential to be a vessel through which the government could transform the country, Sonangol has in the past been at the centre of the systematic looting of state assets, with at least $1 billion a year going unaccounted for since 1996. As the Angolan government has been the direct beneficiary of a revenue stream in the form of Sonangol, rather than relying on domestic tax revenue or a diversified economy, those in power have had
access to unique opportunities for self-enrichment while simultaneously avoiding responsibilities of transparency and accountability. This is the case in Angola to the extent that President Lourenço himself has referred to Sonangol as the ‘golden goose’.
In response, President Lourenço has committed to systematically tackling this corruption. A positive indicator of that work is this year’s upwards credit re-rating of Angola by international ratings agency Moody’s, in light governance ameoloration categorised as permanent. Prior to his presidency, a 2004 study conducted to determine how much oil revenue was being deposited into Angola’s central bank, the Banco National de Angola, found that billions of dollars from Sonangol were missing. The study also concluded that the government at the time did not have any mechanism in place to investigate and reconcile the discrepancies.
Full text available (link below) for this October 2021 Research Insight authored by Amina Ibrahim.