Angola's public external debt increased to some US$51 billion in 2021. From the total, the largest amount (US$38.1 billion) was owed to commercial banks and enterprises. Debt with bilateral and multilateral creditors summed up to US$5.4 billion and US$7.6 billion, respectively.
There are some sectors that could help revive the economy among them the oil and gas industry.
Oil & Gas Sector
Angola's oil production and supporting activities, which represents about one-third of Angola's GDP and over 95 per cent of its exports, slipped into recession in 2015. However, as of August 2022, Angola overtook Nigeria as Africa's largest oil producer. The country is also the third largest producer of diamonds in the continent, surpassed only by Botswana and the Democratic Republic of Congo.
This was after a new strategy to discover up to 57 billion barrels of crude oil by 2025 was unveiled in 2020. Prior to the unveiling of this strategy, Angola's crude oil production had dropped to 1.247 million barrels per day (bpd) in 2020, from the 1.8 million bpd that was being recorded back in 2015 and peaked at about 2 million bpd in 2008.
In addition, the Government of Angola has plans for the construction of national refineries to increase its refinery capacity. It introduced legislative reforms, began to restructure the state oil company, Sonangol, and created the National Concessionaire - Angola's Oil, Gas and Biofuels Agency (ANPG) - to oversee licensing.
How Angola is planning to revive its oil industry, jumpstart economy
Other Mineral Resources
Angola is also rich in other minerals like iron ores, diamonds, gold, marble and phosphate deposits. The embassy of Angola's economic outlook indicates that from the 1950s through 1975, iron ores were explored in provinces such as Malange, Bié, Huambo, and Huíla, and average output reached 5.7 million tonnes per year between 1970 and 1974.
The most explored minerals were exported to Japan, Germany, and the United Kingdom, earning Angola US$50 million a year.
Angola's phosphate deposits are estimated at 150 million tonnes, located in the provinces of Cabinda and Záire. These resources have so far been unexplored. In Southeastern Angola in the provinces of Namibe and Huíla, marble, granite, and quartz reserves abound. Marble is especially consumed in the local market, while black granite is on demand and exported to United States and Japanese markets.
Services sector
The services sector (banking, communication, tourism) has been growing rapidly, accounting for 39.6 per cent of GDP and employing 42 per cent of the population.
However, the tourism sector has a severe shortage of hotels and other types of accommodation. This led to Angola identifying Cuando-Cubango, a key region for biodiversity, to open new lodges such as Rio Cuebe which hosts a collection of endearing and edgy huts well-arranged along the leafy banks of a lazy river near Menongue.
Agriculture
Another sector that could help revive the country's economy is Agriculture.
Angola has abundant arable land and has a climate, soil, and topography appropriate for modern and large scale agricultural production of a wide range of crops, making it suitable for producing a variety of agricultural produce. Its arable land stands at 58 million hectares.
Food and Agriculture Organization (FAO) defines arable land as land under temporary crops (double-cropped areas are counted once), temporary meadows for mowing or for pasture, land under market or kitchen gardens, and land temporarily fallow. Land abandoned as a result of shifting cultivation is excluded.
According to a story titled Angola's agricultural sector could become Africa's powerhouse. Here's why by weforum, the country was once a major producer and exporter of agricultural products, including coffee, cotton and bananas.
However, these exports had virtually ceased by the 1990s as a result of the civil war which took place between 1975 and 2002. This led to the collapse of commercial agricultural production, and Angola's agricultural potential has remained untapped since then. Only about 6 million hectares of arable land in the country are currently being cultivated.
In recent years, however, agriculture's share of Angola's economy has grown rapidly, averaging 4.9 per cent a year, thus leading to agriculture's share of GDP increasing from 5.8 per cent to 10 per cent of Angola's GDP during the 2011-2017 period.
Similarly, irrigation, as a pathway to climate adaptation, currently plays a modest role in Angola, but offers great potential for supporting resilience in the agricultural sector against water-related risks.
In an attempt to rejuvenate the agricultural sector, the Government of Angola has started beneficial projects in collaboration with development partners, like the World Bank Group.
Angola Commercial Agriculture Development Project (PDAC)
Among them is the US$230 million Angola Commercial Agriculture Project (PDAC), co-financed by the World Bank and the French Agency for Development. The project is aimed at increasing agricultural productivity and market access to more commercial farms.
Up to now, PDAC's innovative interventions to promote and support agribusiness development have led to the approval of 25 business plans with a total of US$7.7 million in investments, of which US$2.9 million were matching grants, and to the unprecedented issuance of 16 partial credit guarantees for the agricultural sector, amounting to more than US$1 million in local investment.
Smallholder Agricultural Transformation Project (PROTAF)
In June, 2022, the World Bank also approved the US$300 million Smallholder Agricultural Transformation Project (PROTAF), which will become effective on December 15, 2022, and will contribute to Angola's efforts to transition from vulnerable subsistence farming to climate-resilient farming.
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The PROTAF project will help farmers increase production, so they have surpluses to sell at local markets, expand access to agricultural extension through the institutionalization of the Farmer Field Schools, and support smallholder farmers to adopt climate- as well as nutrition-smart agriculture.
Together, these efforts will increase resilience, food security, and nutrition and reduce both dependence on food imports and the agriculture sector's environmental footprint. Additional climate co-benefits will be achieved by expanding access to improved production technologies, inputs, and extension services through public-private dialogue.
Angola, according to the FAO, is among the top 5 countries with the highest potential for agriculture in the world. The country has 58 million hectares of arable land, the equivalent of the surface of a country larger than France. Only 10% of these lands are exploited.Climate Resilience and Water Security Project (RECLIMA)
In addition, the US$300 million Bank-financed Climate Resilience and Water Security Project (RECLIMA), approved in March 2022 will support the government in its efforts to improve water supplies and strengthen water resource management for greater climate resilience in Angola.
Once these sectors are tapped, Angola could well be on its path to lower debt dependency with projections showing that the country could move from a high of 136.83% of the GDP indebtedness in 2020 to 36.1 per cent in 2027.
