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The Angolan Economy
© Kodilu
More recently, evidence shows that international
entrepreneurs listed the Angolan fiscal system, re-
duced capital movement, and the costs associated
with an informal economy, as their main perceived
obstacles. It is worth noting that a common factor to
all these aspects reflect uncertainties in terms of the
profitability of investments. This is a particularly criti-
cal problem for an economy that needs to diversify.
The current risks in the Angolan economy are associ-
ated with its dependency upon a petroleum. There is
a need to diversify production. With the injection of
foreign currency derived from oil exports, the petro-
chemical sector (including its workers) gained, and
will continue to gain, significant purchasing power,
which will also increase the value of the local curren-
cy. Therefore, the competitive edge of the insubstan-
tial national industry can be further weakened, which
in turn can stimulate imports. This phenomenon, re-
ferred to as ‘Dutch Disease’ requires two measures:
adequate budgetary policy and the diversification of
economic activity with other exports. In fact, evidence
shows that profits from oil exports are being chan-
nelled to imports of consumer goods, which is bound
to worsen the situation and compromises future sus-
tained growth. Additionally, this can present a risk to
the non-diversification of incomes in the country. The
main issue is then achieving a balance between fu-
tures gains and the peace dividends.
In any scenario, Angola needs to develop expertise
in new areas to promote the diversification of its
economy.
In terms of attracting Foreign Direct Investment, An-
gola reveals great potential. It is worth highlighting:
1. Angola is one of the largest producers of oil in Africa.
2. Its two-digit growth rates are attributed to petro-
leum (75%) and diamonds (5%), as well as to the
creation of new business opportunities in the finan-
cial sector, infrastructure and retail.
3. Anew middle-class is emerging, which is able to sup-
port other socio-economic classes. The ex-pats, as well
as the new middle management and senior executives,
form a new class that should not be overlooked.
4. Luanda is transforming itself into a complex and
dynamic city, with the construction of over 40 sky-
scrapers in the capital.
5. It has become easier to do business in Angola,
despite some of the challenges that remain in terms
of costs and the use of utilities.
6.There are risks associated with Angola’s monetary
control policy and with its dependency on oil exports.
There is a need to diversify.
View on Luanday bay from La Ilha by Kolidu