Economy of Angola

The Angolan economy has been dominated by the production of raw materials and the use of cheap labor since European rule began in the sixteenth century.[25] The Portuguese used Angola principally as a source for the thriving slave trade across the Atlantic; Luanda became the greatest slaving port in Africa.[25] After the Portuguese Empire abolished the slave trade in Angola in 1858, it began using concessional agreements, granting exclusive rights to a private company to exploit land, people, and all other resources within a given territory.[25] In Mozambique, this policy spawned a number of companies notorious for their exploitation of local labor.[25] But in Angola, only Diamang showed even moderate success.[25] At the same time, Portuguese began emigrating to Angola to establish farms and plantations (fazendas) to grow cash crops for export.[25] Although these farms were only partially successful before World War II, they formed the basis for the later economic growth.[25]

The principal exports of the post-slave economy in the 19th century were rubber, beeswax, and ivory.[26] Prior to the First World War, exportation of coffee, palm kernels and oil, cattle, leather and hides, and salt fish joined the principal exports, with small quantities of gold and cotton also being produced.[27] Grains, sugar, and rum were also produced for local consumption.[28] The principal imports were foodstuffs, cotton goods, hardware, and British coal.[28] Legislation against foreign traders was implemented in the 1890s. The territory's prosperity, however, continued to depend on plantations worked by labor "indentured" from the interior.[29]

Before World War II, the Portuguese government was concerned primarily with keeping its colonies self-sufficient and therefore invested little capital in Angola's local economy.[25] It built no roads until the mid-1920s, and the first railroad, the Benguela Railway, was not completed until 1929.[25] Between 1900 and 1940, only 35,000 Portuguese emigrants settled in Angola, and most worked in commerce in the cities, facilitating trade with Portugal.[25] In the rural areas, Portuguese settlers often found it difficult to make a living because of fluctuating world prices for sugarcane and sisal and the difficulties in obtaining cheap labor to farm their crops.[25] As a result, they often suspended their operations until the market prices rose and instead marketed the produce of Angolan farmers.[25]

But in the wake of World War II, the rapid growth of industrialization worldwide and the parallel requirements for raw materials led Portugal to develop closer ties with its colonies and to begin actively developing the Angolan economy.[25] In the 1930s, Portugal started to develop closer trade ties with its colonies, and by 1940 it absorbed 63 percent of Angolan exports and accounted for 47 percent of Angolan imports, up from 39 percent and 37 percent, respectively, a decade earlier.[25] When the price of Angola's principal crops—coffee and sisal—jumped after the war, the Portuguese government began to reinvest some profits inside the country, initiating a series of projects to develop infrastructure.[25] During the 1950s, Portugal built dams, hydroelectric power stations, and transportation systems.[25] In addition, Portuguese citizens were encouraged to emigrate to Angola, where planned settlements (colonatos) were established for them in the rural areas.[25] Finally, the Portuguese initiated mining operations for iron ore, manganese, and copper to complement industrial activities at home, and in 1955 the first successful oil wells were drilled in Angola.[25] By 1960 the Angolan economy had been completely transformed, boasting a successful commercial agricultural sector, a promising mineral and petroleum production enterprise, and an incipient manufacturing industry.[25]

Yet by 1976, these encouraging developments had been reversed.[25] The economy was in complete disarray in the aftermath of the war of independence and the subsequent internal fighting of the liberation movements.[25] According to the ruling MPLA-PT, in August 1976 more than 80 percent of the agricultural plantations had been abandoned by their Portuguese owners; only 284 out of 692 factories continued to operate; more than 30,000 medium-level and high-level managers, technicians, and skilled workers had left the country; and 2,500 enterprises had been closed (75 percent of which had been abandoned by their owners).[25] Furthermore, only 8,000 vehicles remained out of 153,000 registered, dozens of bridges had been destroyed, the trading network was disrupted, administrative services did not exist, and files and studies were missing.[25]

Angola's economic ills can also be traced to the legacy of Portuguese colonial development.[25] Many of the white settlers had come to Angola after 1950 and were understandably quick to repatriate during the war of independence.[25] During their stay, however, these settlers had appropriated Angolan lands, disrupting local peasant production of cash and subsistence crops.[25] Moreover, Angola's industries depended on trade with Portugal—the colony's overwhelmingly dominant trade partner—for both markets and machinery.[25] Only the petroleum and diamond industries boasted a wider clientele for investment and markets.[25] Most important, the Portuguese had not trained Angolans to operate the larger industrial or agricultural enterprises, nor had they actively educated the population.[25] Upon independence Angola thus found itself without markets or expertise to maintain even minimal economic growth.[25]

As a result, the government intervened, nationalizing most businesses and farms abandoned by the Portuguese.[25] It established state farms to continue producing coffee, sugar, and sisal, and it took over the operations of all factories to maintain production.[25] These attempts usually failed, primarily because of the lack of experienced managers and the continuing disruptions in rural areas caused by the UNITA insurgency.[25] Only the petroleum sector continued to operate successfully, and by 1980 this sector had helped the gross domestic product reach US$3.6 billion, its highest level up to 1988.[25] In the face of serious economic problems and the continuing war throughout the countryside, in 1987 the government announced plans to liberalize economic policies and promote private investment and involvement in the economy.[25]

Despite its abundant natural resources, output per capita is among the world's lowest. Subsistence agriculture provides the main livelihood for 85% of the population. Oil production and the supporting activities are vital to the economy, contributing about 45% to GDP and 90% of exports. Growth is almost entirely driven by rising oil production which surpassed 1.4 million barrels per day (220×10^³ m³/d) in late-2005 and which is expected to grow to 2 million barrels per day (320×10^³ m³/d) by 2007. Control of the oil industry is consolidated in Sonangol Group, a conglomerate owned by the Angolan government. With revenues booming from oil exports, the government has started to implement ambitious development programs to build roads and other basic infrastructure for the nation.

In the last decade of the colonial period, Angola was a major African food exporter but now imports almost all its food. Severe wartime conditions, including extensive planting of landmines throughout the countryside, have brought agricultural activities to a near-standstill. Some efforts to recover have gone forward, however, notably in fisheries. Coffee production, though a fraction of its pre-1975 level, is sufficient for domestic needs and some exports. Expanding oil production is now almost half of GDP and 90% of exports, at 800 thousand barrels per day (130×10^³ m³/d). Diamonds provided much of the revenue for Jonas Savimbi's UNITA rebellion through illicit trade. Other rich resources await development: gold, forest products, fisheries, iron ore, coffee, and fruits.[36]

This is a chart of trend of nominal gross domestic product of Angola at market prices using International Monetary Fund data;[37] figures are in millions of units.

The following table shows the main economic indicators in 1980–2017. Inflation below 5% is in green.[38]

Year	GDP (in Bil. US$ PPP)	GDP per capita (in US$ PPP)	GDP growth (real)	Inflation rate (in Percent)	Government debt (in % of GDP)
1980	20.3	2,273	2.4%	46.7%	n/a
1981	21.2	2,316	−4.4%	1.3%	n/a
1982	22.5	2,396	0.0%	1.8%	n/a
1983	24.4	2,528	4.2%	1.8%	n/a
1984	26.8	2,705	6.0%	1.8%	n/a
1985	28.6	2,563	3.5%	1.8%	n/a
1986	30.0	2,616	2.9%	1.8%	n/a
1987	32.0	2,721	4.1%	1.8%	n/a
1988	35.2	2,910	6.1%	1.8%	n/a
1989	36.5	2,945	0.0%	1.8%	n/a
1990	36.6	2,873	−3.5%	1.8%	n/a
1991	38.2	2,912	1.0%	85.3%	n/a
1992	36.8	2,723	−5.8%	299.1%	n/a
1993	28.6	2,057	−24.0%	1,379.5%	n/a
1994	29.6	2,067	1.3%	949.8%	n/a
1995	34.8	2,357	15.0%	2,672.2%	n/a
1996	40.2	2,645	13.5%	4,146.0%	n/a
1997	43.9	2,803	7.3%	221.9%	n/a
1998	46.5	2,881	4.7%	107.4%	n/a
1999	48.2	2,899	2.2%	248.2%	n/a
2000	50.8	2,966	3.1%	325.0%	133.9%
2001	54.1	3,066	4.2%	152.6%	133.5%
2002	62.4	3,437	13.7%	108.9%	73.7%
2003	65.5	3,500	3.0%	98.2%	58.0%
2004	74.6	3,872	11.0%	43.5%	47.7%
2005	88.5	4,459	15.0%	23.0%	33.5%
2006	101.7	4,976	11.5%	13.3%	18.7%
2007	119.1	5,655	14.0%	12.2%	21.0%
2008	135.0	6,223	11.2%	12.5%	31.4%
2009	137.2	6,140	0.9%	13.7%	56.2%
2010	145.5	6,323	4.9%	14.5%	37.2%
2011	153.7	6,485	3.5%	13.5%	29.6%
2012	170.0	6,965	8.5%	10.3%	26.7%
2013	181.6	7,222	5.0%	8.8%	33.1%
2014	194.0	7,489	4.8%	7.3%	39.8%
2015	197.9	7,417	0.9%	9.2%	57.1%
2016	194.9	7,086	−2.6%	30.7%	75.3%
2017	193.6	6,835	−2.5%	29.8%	65.0%

Angola produced, in 2018:

• 8.6 million tons of cassava (8th largest producer in the world);
• 3.5 million tons of banana (7th largest producer in the world, or the 10th largest, if we consider together with plantain);
• 2.2 million tons of maize;
• 1.2 million tons of sweet potato (10th largest producer in the world);
• 806 thousand tons of potato;
• 597 thousand tons of pineapple (13th largest producer in the world);
• 572 thousand tons of sugarcane;
• 355 thousand tons of cabbage;
• 314 thousand tons of beans;
• 280 thousand tons of palm oil;
• 154 thousand tons of peanut;

In addition to smaller productions of other agricultural products, like coffee (16 thousand tons).[39]

Exports in 2004 reached US$10,530,764,911. The vast majority of Angola's exports, 92% in 2004, are petroleum products. US$785 million worth of diamonds, 7.5% of exports, were sold abroad that year.[40] Nearly all of Angola's oil goes to the United States, 526 kbbl/d (83.6×10^³ m³/d) in 2006, making it the eighth largest supplier of oil to the United States, and to China, 477 kbbl/d (75.8×10^³ m³/d) in 2006. In the first quarter of 2008, Angola became the main exporter of oil to China.[41] The rest of its petroleum exports go to Europe and Latin America.[34] U.S. companies account for more than half the investment in Angola, with Chevron-Texaco leading the way. The U.S. exports industrial goods and services, primarily oilfield equipment, mining equipment, chemicals, aircraft, and food, to Angola, while principally importing petroleum. Trade between Angola and South Africa exceeded US$300 million in 2007.[42] From the 2000s, many Chinese have settled and started up businesses.[43]

• Banco Espírito Santo Angola
• United Nations Economic Commission for Africa

• McCormick, Shawn H. The Angolan Economy: Prospects for Growth in a Postwar Environment, 1994.
• OECD, International Energy Agency. Angola: Towards an Energy Strategy, 2006.
• "Angola Financial Sector Profile: MFW4A – Making Finance Work for Africa". MFW4A. Archived from the original on June 10, 2016. Retrieved July 13, 2014.

• Economy of Angola at Curlie
• MBendi overview of Angola
• Angola latest trade data on ITC Trade Map
• Exports to Angola Datasheet