January saw a rebound of Angolan tax revenue from oil production, bringing back bittersweet memories of its pre-crisis sums.
Tax revenues amounted to 847 million euros, the highest since 2014, as reported by Lusa. This, along with a positive outlook for oil in 2018, is great news for the government finances which have been hit by the slump in oil prices since mid-2014 – followed by recession, high inflation and a shortage of foreign currency.
Last week, an IMF mission to Angola ended on a positive note with Ricardo Velloso, IMF division chief for Africa, stating that “The Angolan economy is experiencing a mild economic recovery”, with a projected output growth of 2¼ percent.
It is not, however, time to be complacent. Angola is in an urgent need of economic reform and calls for a more diversified economy have mostly fallen on deaf ears.
Diversification of Angola’s oil-dependent economy is a must for sustained and inclusive economic growth that benefits every segment of society. The sub-Saharan country has been paradoxically cursed by an abundance of oil, which accounts for more than 90% of Angola’s exports. Adding diamonds to the equation gives 96% of the country’s exports. The country, still recovering from a 27-year-long civil war, saw an unsustainable boom in these capital-intensive extractive industries, which led to limited employment growth and little spillover effects to the remainder of the economy.
Angola, once a net agricultural exporter of agricultural commodities, in pre-independence times, now imports most of its food. With a highly fertile, but underutilized, land – only 10% of the country’s arable land is under cultivation – policies need to be put in place to revive the currently lethargic agricultural sector and to avoid needlessly depleting foreign exchange.
Tourism is another largely untapped sector, in a country endowed with a coastline that stretches over 1,650 km – home to countless picture-postcard beaches. So, it is encouraging to know that Angola is progressively getting rid of its draconian visa restrictions: last month the state-run Rádio Nacional de Angola confirmed that visa on arrival will now be granted to visitors from 61 nations. A push to boost tourism and overseas investment which goes in line with the current Angolan President’s self-reported economic agenda.
Last year’s replacement of José Eduardo dos Santos, by João Lourenço brought hope to many. Especially after his bold political moves: sacking the son of the former president, as head of the country’s sovereign wealth fund, as well as dismissing dos Santos’s daughter as chair of state oil company Sonangol. Some critics, however, argue that his actions are just part of a quest to consolidate power, rather than an attempt to carry out long-awaited economic and political reforms.
Is this the political figure who will allow Angola and Angolans to live up to their potential, or are we poised to have another cautionary tale of how oil wealth does not equal economic prosperity?