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The Angolan Economy
In terms of capital markets, its stock-exchange al-
ready has a defined organisational structure, with
reference shareholders. However, its inauguration
has been postponed for several reasons. In addition
to attracting important sources of capital investment
to finance the future growth of enterprises and of the
economy in general, it is expected that the stock ex-
change will give a boost to the privatization process
announced by the Angolan government.
The main challenge faced by business and capital
markets is now to build investor confidence. To this
end, corporate governance reforms are being intro-
duced for systems including financial reporting, au-
dits and other relevant regulations.
Recent challenges to the stabilization of the economy
Not all is well. Angolans have had to face economic
problems in the last decade: a high inflation rate as-
sociated with the war period, increased living costs
and necessary governmental intervention. Anti-infla-
tion measures were adopted in 2003, along with a
set of administrative pricing control measures. For
instance, in 1999 inflation rates were at 300% and
in 2002 they were 100%. After the implementation of
the programme, the inflation rates in Luanda were ap-
proximately 40%; in 2010, the rate was 15%. These
figures are also an indication of a national currency
that has little consistency in terms of market values.
In 2009, the economy showed signs of ‘cooling’, re-
sulting from a contraction in the petrochemical sector.
It is estimated that the Gross Added Value (GAV) in
this sector had fallen by 5% that year in real terms,
owing to a reduction in the international demand for
oil. The situation was compounded by an interrup-
tion in public investment and consumption levels,
which resulted from a decrease in petroleum related
incomes.
The resulting budgetary restraint has been the focus
of the macroeconomic adjustment plan (stand-by
agreement) agreed with the IMF in 2009, which pro-
vided an essential capital injection into the Republic
of Angola of 1,07 billion dollars.
In addition to the budgetary restraint, this adjustment
programme sought a shift in the restrictive monetary
conditions associated with a Strong Kwanza/Low In-
flation. As a result, there was considerable depre-
ciation in the exchange rate of approximately 20% in
2010. This lead to an immediate surge in economic
activity, with the authorities recording an estimated
growth of 6.7% in 2010.
Sustained macroeconomic stability continues to be
one of the main objectives of the Angolan govern-
ment.
From a business standpoint, the data reveal an
improvement in commercial conditions in Angola.
Across the world, businesses face a series of ob-
stacles in relation to obtaining licenses and au-
thorisation for their installations, and also in order to
become operational. Their related costs in terms of
hampered economic growth and creation of jobs can
be very significant. The World Bank assesses the le-
gal framework and regulations of different countries
in terms of the degree to which these encourage or
restrict business activity. In the last edition of this
document, the WB sites Angola’s efforts to improve
its efficiency in international trade, notably through
investments in harbours/ports and in their manage-
ment. Cargo containers can be more easily moved in
the Port of Luanda, with the addition of two dry ports
and the acquisition of new equipment.
Despite these efforts, Angola is placed in the bottom
25% in the ranking of a group of 183 countries. It is
therefore concluded from the data analysis that pro-
cesses take too long to be completed. Paying taxes:
283 hours per year are spent on average. In order to
be accredited for export, it is necessary to acquire
11 documents (compared to three in France); it can
take 48 days to be connected to the mains electricity
network and requires eight different procedures (as
opposed to 23 days in Austria, with only five related
procedures), and so on.
A study carried out by the World Bank of Angolan
businesses and entrepreneurs in 2006 found that
lack of access to utilities and the informal context
of the economy were the main reported perceived
obstacles.
GDP real (t.v. annueal)
Inflation (t.v.a. average)
Monetary weight tv annual
Current Balance %GDP
Budget Balance %GDP
Foreign Debt %GDP
13,8
12,5
93,5
8,5
8,8
17,4
23,3
12,2
49,5
15,6
11,4
16,2
6,7
15,0
26,7
2,8
(2,9)
22,6
0,7
13,7
27,5
(9,6)
(9,1)
21,1
Main Economic Indicators
2007
Est. Est. Est. Prog.
2008 2009 2010
(2007 - 2010)
Source: National Bank of Angola , Finance Ministry and IMF