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Oil: The Engine of Angola’s Economy
Producing over one million barrels a day, Angola is the second largest oil producer in sub-Saharan Africa. Crude oil accounts for 90 % of total exports, more than 80 % of government revenues and 42% of the country’s GDP. The country’s known recoverable reserves are currently estimated to total almost 4 billion barrels, but continuing exploration has revealed reserves at the same rate oil companies deplete old ones. Approximately 15 foreign companies have invested more than $8 billion in Angola. Oil companies are attracted by Angola’s low operating costs, favourable geology and good business terms and as such, US firms in particular continue to invest more money in Angola. |
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Diamonds
Before 1975, Angola was the world’s fourth largest producer of diamonds. Economists estimate that Angola’s alluvial reserves total between 40 and 130 million carats. In addition, there are untapped diamond reserves in volcanic pipes called kimberlites. Angola’s six known kimberlite pipes, among the ten largest on earth, hold an estimated 180 million carats worth several billion dollars. Currently, official and unofficial diamond production is estimated to be worth $700 million per year. Angola recently announced changes to its production program, which outlines its goal to produce more than 6 million carats of diamonds annually. |
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Other Minerals
Angola’s mineral wealth includes diamonds, iron, ore, phosphates, copper, feldspar, marble, granite, gold, bauxite, and uranium. The mining society of Angola is looking to mobilise $1.4 billion to revive the Cassinga project to exploit gold and other minerals in a 2,681 sq. km. area in the south of the Republic. Cassinga could produce 10 million tons of minerals worth $320 Million per year. The government has developed a policy framework to encourage investment in the mining sector and has ended the state monopoly on geological studies and mineral prospecting and has agreed to award concessions to both foreign and national companies for prospecting as well as production. |
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Agriculture
Angola was self-sufficient in most food crops and a major exporter of coffee and sisal at independence. The potential remains to redevelop the once very prosperous agricultural sector. The United Nations estimates the country has from 5 million to 8 million hectares of prime agricultural land as well as areas suitable for grazing. The country’s different climatic zones enable farmers to grow a wide variety of crops, including: cassava, yams, maize, bananas, beans, cotton, manioc, palm oil, potatoes, sunflowers, citrus and numerous vegetables including cotton farming for the textile industry. |
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Coffee
Prior to war, Angola was the world’s 4th largest coffee producer with outputs totalling 200,000 tons each year. Angola recently submitted a plan to the International Coffee Organisation that would overhaul the sector over the next two years. Under its privatisation program, the government plans to liquidate all 33 state-owned coffee companies and to invite international investors to bid for the largest plantations. |
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Timber
Angola also has considerable timber resources. Valuable tree species, including rosewood, ebony, and African sandalwood, as well as mahogany, tola and mulberry can be found in the northern forests that have been untapped since independence. Nearly 150,000 hectares of eucalyptus, cypress and pine plantations are waiting to be rehabilitated. |
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Fisheries
Angola’s 1,600-kilometre coastline offers some of the richest fishing grounds in Africa. The annual catch once averaged 300,000 tons a year. The government has deregulated fish prices and, with World Bank assistance, set up the Angolan Support Fund for Fisheries Development to support the development of the industry. The U.S. Trade and Development Agency recently commissioned a feasibility study on this potentially lucrative sector. Opportunities exist in processing, vessels, dry dock, and cold-chain development. |
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Electric Power Generation
Internal consumption of energy must increase dramatically throughout Angola. This provides an opportunity for electric generation and distribution, gasoline for cars and trucks, and alternative energy resource development. Angola possesses enormous hydroelectric potential because of the large rivers that cross the country. Once completed, the 520-mw Capanda Hydroelectric Dam on the Kwanza River will double Angola’s generating capacity and provide enough power to meet the country’s needs for the next four decades. Angola currently generates more electricity than it needs and could very well be a regional exporter of hydroelectric energy. Angola is part of an international consortium to develop power stations along its border with Namibia. |
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Manufacturing
Before independence, Angola’s manufacturing sector employed 200,000 people and produced $650 million worth of goods. With the end of the war and an infusion of capital, technology and training, food processing and light industry should recover quickly. Angola previously produced beer, sugar, wheat flour, cooking oil and soft drinks as well as textiles, soap, paint, plastic and glues. Heavy industry, including cement and steel tube production, oil refining, vehicle assembly and tire production, account for about 15 % of the country’s manufacturing output. |
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Infrastructure, Housing & Utilities
Infrastructure opportunities exist within irrigation, water management, engineering and mechanisation. Twenty years of war has caused massive movement of civilians into internal refugees. Resettlement of millions of Angolans to their ancestral home territory needs to be accomplished to ensure distribution of workers throughout the country as well as relieving the over-crowding of Luanda. Low-cost housing using innovative building materials along with the development of a mortgage banking system in Angola is necessary, to encourage home ownership and provide capital liquidity features to an individual’s mortgage. The housing situation calls for immediate attention, quick construction and transfer of technology. |
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Transport
The now finished civil war caused severe deterioration of the existing road, ports, rail and airport facilities that all must be repaired or renovated. This is an opportunity for investors including: Road building, maintenance equipment and engineering, quarrying and bitumen extraction; truck , bus and car assembly; machine shops and vehicle repair facilities; vessel building facilities for fibreglass, wood or metal fishing and the inter-costal shipping industry, dry dock, and shipyard services to fishing, oil field services and freighters. |
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Telecommunications
All forms of telecommunications need to be expanded and made more egalitarian so that the greatest numbers of Angolans use these technologies. Besides cellular phones, landlines, internet, and other voice communication, data transmission and other technologies that track, monitor and complement infrastructure and productive sectors with low cost alternatives are essential and earmarked for development. |
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