Economy of Angola

Angola's is the fastest-growing economy in Africa, largely due to a major oil boom, but it also ranks in the bottom 10 of socioeconomic conditions in the world. Aside from the oil sector and diamonds, it is in economic disarray because of 26 years of nearly continuous warfare. Despite abundant natural resources, output per capita remains among the world's lowest. Subsistence agriculture and dependence on humanitarian food assistance sustain the large majority of the population. Little industry exists.

By contrast, the rapidly expanding petroleum industry now producing up to 800,000 barrels per day, behind only Nigeria in Africa, accounts for more than 60% of GNP and 90% of government revenues. Oil production remains largely offshore and has few linkages with other sectors of the economy. Block Zero, located of the enclave of Cabinda, provides the majority of Angola's crude oil production. There, ChevronTexaco, through its subsidiary Cabinda Gulf Oil Company, is the operator with a 39.2% share, with SONANGOL (the Angolan state oil company), TotalFinaElf, and ENI-Agip splitting up the rest. ChevronTexaco also operates Angola's first producing deepwater section, Block 14, which started pumping in January 2000. The U.S. takes more than half of Angola's production, by far the largest importer. Exports to Asian countries have grown rapidly in recent years, however, especially China. Significant discoveries have been made on deepwater Blocks 15, 17, 18, and 24, with ExxonMobil, BP, Statoil, Norsk Hydro, and Agip having major interests. TotalFinaElf operates Angola's one refinery (in Luanda) as a joint venture with SONANGOL; plans for a second refinery in Lobito are moving forward.

In the last decade of the colonial period, Angola was a major African food exporter but now is forced to import almost all its food. Because of severe wartime conditions, including extensive planting of landmines throughout the countryside, agricultural activities have been brought 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. In sharp contrast to a bleak picture of devastation and bare subsistence is expanding oil production, now almost half of GDP and 90% of exports, at 800,000 barrels a day. Diamonds make up most of the remaining exports--and have 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 countless fruits.

An economic reform effort was launched in 1998. In April 2000, Angola started an International Monetary Fund (IMF) Staff-Monitored Program (SMP). The program formally lapsed in June 2001, but the IMF remains engaged. In this context, the Government of Angola has succeeded in unifying exchange rates and has raised fuel, electricity, and water rates. The Commercial Code, telecommunications law, and Foreign Investment Code are being modernized. A privatization effort, prepared with World Bank assistance, has begun with the BCI bank. Nevertheless, a legacy of fiscal mismanagement and corruption persists.

Angola is the third-largest trading partner of the United States in Sub-Saharan Africa, largely because of its petroleum exports. The U.S. imports about 4% of its oil from Angola, a share which should continue to increase. By the same token, 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.

Economy - overview: Angola is an economy in disarray because of a quarter century of nearly continuous warfare. 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. Notwithstanding the signing of a peace accord in November 1994, violence continues, millions of land mines remain, and many farmers are reluctant to return to their fields. As a result, much of the country's food must still be imported. To take advantage of its rich resources - gold, diamonds, extensive forests, Atlantic fisheries, and large oil deposits - Angola will need to implement the peace agreement and reform government policies. Despite the increase in the pace of civil warfare in late 1998, the economy grew by an estimated 4% in 1999. The government introduced new currency denominations in 1999, including a 1 and 5 kwanza note. Expanded oil production brightens prospects for 2000, but internal strife discourages investment outside of the petroleum sector.

GDP: purchasing power parity - $16.9 billion (2002 est.)

GDP - real growth rate: 9% (2002 est.)

GDP - per capita: purchasing power parity - $1,600 (2002 est.)

GDP - composition by sector:

  • agriculture: 8%
  • industry: 67%
  • services: 25% (2002 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:

  • lowest 10%: NA%
  • highest 10%: NA%

Inflation rate (consumer prices): 106% (2002 est.)

Labor force: 5 million (1997 est.)

Labor force - by occupation:

  • agriculture: 85%
  • industry and services: 15% (1997 est.)

Unemployment rate: extensive unemployment and underemployment affecting more than half the population (2002 est.)

Budget:

  • revenues: $928 million
  • expenditures: $2.5 billion, including capital expenditures of $963 million (1992 est.)

Industries: petroleum; diamonds, iron ore, phosphates, feldspar, bauxite, uranium, and gold; cement; basic metal products; fish processing; food processing; brewing; tobacco products; sugar; textiles

Industrial production growth rate: 1%

Electricity - production: 1.45 billion kWh (2001)

Electricity - production by source:

  • fossil fuel: 36.4%
  • hydro: 63.6%
  • nuclear: 0%
  • other: 0% (2001)

Electricity - consumption: 1.348 billion kWh (2001)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Oil - production: 742,400 bbl/day (2001 est.)

Oil - consumption: 31,000 bbl/day (2001 est.)

Oil, proved reserves: 5.691 billion bbl (January 2002 est.)

Natural gas - proved reserves: 79.57 billion cu m (January 2002 est.)

Agriculture - products: bananas, sugarcane, coffee, sisal, maize, cotton, manioc (tapioca), tobacco, vegetables, plantains; livestock; forest products; fish

Exports: $8.6 billion (f.o.b, 2002 est.)

Exports - commodities: crude oil, diamonds, refined petroleum products, gas, coffee, sisal, fish and fish products, timber, cotton

Exports - partners: United States 44.2, China 18.7%, France 9.0%, Belgium 8.8%, Spain 2.1% (2001)

Imports: $4.1 billion (f.o.b., 2002 est.)

Imports - commodities: machinery and electrical equipment, vehicles and spare parts; medicines, food, textiles, military goods

Imports - partners: Portugal 14.6%, South Africa 12.4%, US 10.3%, France 4.8%, Brazil 4.1% (2001)

Debt - external: $9.9 billion (2001 est.)

Economic aid - recipient: $383.5 million (1998)

Currency: 1 kwanza (NKz) = 100 lwei

Currency Code AOA

Exchange rates: kwanza per US dollar - 43.5302 (2002), 22.058 (2001), 10.041 (2000), 2.791 (1999), 0.393 (1998); note - in December 1999 the kwanza was revalued with six zeroes dropped off the old value

Fiscal year: calendar year

Reference

Much of the material in this article comes from the CIA World Factbook 2003 and the 2003 U.S. Department of State website.

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