What you need to know


Economic Overview

The global economic crisis accounted for the trigger that Angola needed to accelerate the diversification of the economy, thus freeing up the price of oil as a condition of growth and development.
Although in 2013 Angola grew below expectations (5.1% instead of 7% forecasted) the Angolan GDP grew based on non-petroleum sectors such as agriculture, fishing and construction. The government focused its action on improving people’s lives by investing in the electrical and water distribution network activity as well as public transportation.

To give new boost to economic development the government approved the new foreign exchange currency law for oil and mining sectors.

The great challenge before Angolan authorities today is to develop the economy in order to reduce the weight of the oil sector in Angola’s GDP growth, this goal represents for international investors a huge range of opportunities.


Recent developments


The international economic instability threatened  growth prospects of any country. Angola wants to extend its intervention along the oil supply chain and aims to establish itself as a leading global player in this sector. This doesn’t means to slow down investment in other economic sectors, example of this is the tax law on mining that significantly reduced the tax burden on this activity attracting the investment of foreign mining companies in Angola, particularly in the diamond exploration sector where Angola is ranked as the fourth largest producer of rough diamonds in the world.

The agricultural sector also recorded a high growth. The country has fertile soil with plenty of water. Angola is now the forth biggest coffee world producer. According to the Ministry of Agriculture, Angola needs to import large quantities of maize, rice and wheat to supply the domestic market.

The growth of the industrial sector is due to the production of wood, cement and electrical components. The services sector has also grown at a good pace although there is still much to do. The emergence of a middle class with purchasing power is the reason for this growth.

Foreign investment in the construction sector, particularly Brazilian and Chinese, underpins the growth of this sector.

Fiscal Policy


Fiscal policy has as main objective the country’s growth, job creation and macroeconomic stability. So should remain in the coming years mitigating the consequences of the international oil crisis. Public investment should focus on the production of hydroelectric energy, telecommunications and large-scale agricultural projects. However recorded fall in tax revenue due to volatile oil prices accelerated the country’s need to break free of the dependence upon this sector.

Monetary policy

Angola’s monetary policy focused in 2013 on ensuring inflation and exchange rate stabilisation and resilience to external shocks.  Inflation remains high and is mostly driven by consumer goods and logistical services.. The rate spread between the informal and formal exchange markets widened in late 2012 and early 2013 to nearly 10% because of anxieties over a new foreign exchange law and excess dollarisation – enforced in July 2013.

The central bank will keep the focus on inflation in its monetary policy reducing uncertainty and contributing to a more effective financial system. Consolidation of monetary policy management and the de-dollarisation of the foreign exchange market, through the implementation of a new oil foreign exchange law, is expected to be deepened with new measures to tighten foreign exchange exposure and credit limits, and to streamline and tighten import regulations. Full legislation on de-dollarisation is expected to be adopted.

Economic co-operation, regional integration and trade

Angola has improved economic co-operation with other Southern African Development Community (SADC) members and made efforts to negotiate an economic partnership agreement with the European Union. Angola is also eligible for trade preferences under the US Africa Growth and Opportunity Act. Free movement of people and goods remains constrained and clearing imports through Angolan ports and customs is slow.

Both the current account and trade balances deteriorated during 2013 due to lower-than-expected oil revenue growth. This has highlighted the lack of export diversification. Angola is China’s top African supplier of crude oil. The country’s imports are predominantly machinery and metal equipment, vehicles and transport materials, and food.

In the medium term, the current account surplus is expected to be significantly affected by a projected decline in oil prices. Foreign investment inflows will  mainly be channeled to the oil industry, real estate, construction, hotels and tourism. OECD Development Assistance Committee data indicates that net official development assistance declined from USD 300 million in 2002 to USD 200 million in 2011. Short-term capital transfers also declined from USD 11.5 million in 2008 to less than USD 2.3 million in 2012.

Debt policy


The IMF classifies Angola as a moderate risk for debt distress but the external and domestic debt  levels are vulnerable to oil price and growth shocks. Most of Angola’s external debt is owed to commercial banks and official creditors. In 2013, the government borrowed an estimated USD 5.7 billion for large infrastructure projects. This was raised through 20-year treasury bills and traditional lines of credit for exports and public investment programs. In the near future, foreign borrowing is expected to increase to USD 10.4 billion, mainly through credit lines for capital expenditure financing. Therefore, Angola’s total public debt ratio is projected to increase from 31% of GDP in 2012 to 32.9% in 2014.

The government has sought to ensure that terms for new borrowing are sustainable in the long-term. According to a 2012 IMF report, the finance ministry’s debt management unit has clear channels of communication and independent access to economic ministries. The unit is co-ordinating the preparation of a medium-term debt strategy to be integrated in the budget to make sure macroeconomic policies are in line with the 2001 IMF Government Finance Statistics Manual.

It has also co-ordinated the country’s debt management framework, including the settlement of 2010 and 2011 external arrears, with the central bank’s external debt unit. Management of state liabilities has been improved by ensuring a better distribution of the maturity periods for domestic debt. With these developments, ratings agency Fitch in 2013 maintained its Angolan country debt rating at BB- with a positive long-term outlook for local and foreign currency ratings. Standard and Poor’s affirmed the rating for Angolan foreign and local currency credit ratings at BB-/B.

Economic and political governance


Private sector

Angola’s business environment has not kept pace with international developments. The country ranked 179th out of 189 in the World Bank’s 2014 Doing Business report. Angola also placed 178th on the ease of starting a business, below most regional competitors.

The government carried out some major reforms on regulations impacting business operations in 2013, including:

i) the introduction of a 10% consumption tax levy on oil companies;

ii) a presidential decree to reduce and eliminate the custom tax burden on imported goods used as main inputs for national production, including some food products;

iii) the approval of laws to regulate stock and debt market operations.

In the medium term, significant changes to the 2000 Labour Law are expected to cover minimum wage requirements, the social security system and determining employees’ contributions and benefits.

The government has made significant investment in Angola’s infrastructure and business environment. Energy reforms are expected to cost USD 13 billion by 2025. Work to link three major national railways (Benguela, Moçâmedes and Luanda) is underway. Plans are being prepared for a deep sea port north of the capital Luanda and for a Bus-Rapid Transit (BRT) in the Luanda region.

The national airline, TAAG Angola Airlines, and the Civil Aviation Authority are among state entities being restructured.


Financial sector

Angola’s financial sector is highly concentrated. The top five banks account for 77% of total assets. Banking coverage expanded from 22% in 2010 to 51% of the country’s area in 2012 though it is still concentrated in Luanda.

The banking system’s capital adequacy ratio remained strong at 18.3% in 2013, well above the 10% minimum requirement.

Non-performing loans rose sharply from 2.5% in 2012 to 6.7% in 2013. According to the central bank, this reflects classification errors by domestic banks as well as problematic loans.

Angola has fully implemented six of the Basel Core Principles on banking supervision and partially implemented 16 others. It is not compliant to three principles on maintaining a specific capital ratio, governance principles and principles dealing with cross-border issues.

In 2009, there were three pension fund management companies operating and 19 pension funds (13 closed and 6 open) in Angola. In 2010, Angolan pension funds saw a turnover of USD 320 million, with annual contributions of USD 42 million. Since then, the system has witnessed rapid growth because of the introduction of a compulsory pension contribution regime.

Although the liberalisation of the market for private pension funds has created some dynamism, the penetration rate of pension funds and microfinance institutions is still less than 1% of GDP.

Public sector management, institutions and reform

Until 2010, the finance ministry, planning ministry and central bank were the main institutions designing and implementing economic policies. Despite international efforts to boost capacity, these bodies remain short of professional staff able to collect data and formulate economic policy.

Inadequate public sector salaries have traditionally impacted the performance of civil servants but wages and standards have improved and state institutions are more efficient.

A 2007 law introduced local Consultative Social Councils (CACS) across the country which have enabled a participatory decision-making process. These include the creation of budget units at local level. Political parties with a seat in parliament and other associations can take part in the councils. The 2010 constitution further establishes a gradual introduction of municipal elections.

The weak enforcement of intellectual property rights has discouraged investment in innovative or proprietary technology.

Natural resource management and environment

A 1998 Environmental Framework Law lays down guiding principles for the prevention and combat of pollution, and standards to protect the environment. The 2013 state budget allocated 2.1% of fiscal receipts for environmental protection, including research and environmental biodiversity management. Over the last decade, Angola has developed comprehensive environmental legislation regarding water resources, petroleum, mining, and land management, and has increased engagement with regional and international partners. The African Development Bank is supporting the government in biodiversity management through the establishment of pilot centres. The government also signed, in February 2013, a joint biodiversity management initiative with the United Nations Development Programme (UNDP).Angola’s ecological system is fragile and vulnerable to climate change. Key challenges include soil degradation, deforestation, air pollution and loss of biodiversity. All these have important implications for sustainable livelihoods. According to the United Nations’ 2013 Millennium

Development Goals (MDGs) report, the country is unlikely to achieve the goal on environmental sustainability. And Angola is yet to join the Extractive Industries Transparency Initiative (EITI), move that would contribute to greater transparency and accountability in the management of natural resources.

Political context

A 2012 legislative election contributed to the consolidation of democracy in Angola. Since the approval of a new constitution in 2010, a number of measures have been taken to increase parliament’s efficiency, including setting up a research service to analyse the legislative processes.

Political violence is not a substantial risk to Angola’s economy, but the authorities have often given a tough response to civil demonstrations. Angola’s national security has improved significantly however and Angola’s rating on the safety and rule of law indicator on the Ibrahim Index of African Governance improved by 8.7 percentage points between 2007 and 2013.

Overall, Angola is one of the most improved countries on the index with its rating rising 18.5 percentage points since the index was launched in 2000. In September 2013, Angola ratified the UN Second Optional Protocol to the International Covenant on Civil and Political Rights, aiming at the abolition of the death penalty. The country also ratified the protocol on the elimination of all forms of racial discrimination, against torture and other forms of cruel treatment and degrading punishment as well as the protocols relating to the convention on economic, social and cultural rights.

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