By Prince Kuripati
Angola’s new president João Lourenço is making huge strides to change the economic fortunes of his country. João Lourenço who came into power in September inherited a country that just barely escaped a recession in 2016 when it posted a 0.1 percent economic growth followed by a 1.1 percent growth rate the following year after the slump in the global oil price.
Faced with a daunting task, Joao Lourenco quickly replaced the 2013-17 national development plan with the new development blueprint for the period 2018-22 that sets to revive sub-Saharan Africa’s third-largest economy, attract investment and combat the endemic corruption.
It’s just a few months since the new economic blueprint has been in place but significant changes are already starting to take place indicating that Angola’s economic future is very much alive and robust. Economic projections by the country’s ministry of finance state that for the first time in over a decade, the non-oil sector is going to grow by a favourable 4.4 percent. Key performers in the non-oil sector include the diamond mining, metal and non-metallic minerals expected to rise by 4.4%, construction set to rise by 3.1%, mercantile services set to rise by 4.3%, and the manufacturing industry set to rise by 1.8%.
The oil field which provides 50 percent of Angola’s GDP as well as being the primary source of revenue for the country (more than 70% of government revenue and 90% of Angola’s exports come from oil activities) is also expected to grow by 6.1%. The forecasts for this growth rate are premised largely on two factors, firstly the steadily rising global oil prices and the entry into service of new oil fields.
Angola’s growth projection for 2018 in Joao Lourenco’s first few months in office is quite impressive. To understand more about how Angola’s new leader is carving out such an impressive economic offensive, let’s explore his economic vision and the steps he has taken thus far.
Relaxed immigration laws
The first step taken by Joao Lourenco when he came into office was to relax immigration laws by revising visa requirements. Several countries from different tiers were changed with most visa requirements being scrapped for some African countries such as South Africa. This not only made it possible for potential investors mostly on the African continent to start looking into moving their capital into Angola but it will also considerably help to improve the country’s ranking on the World Bank Ease of Doing Business Index. Angola is currently ranked 175 among 190 economies in the ease of doing business. This low ranking greatly affects the type of investments the country attracts.
Public sector reforms
Another reason for Angola’s poor economic performance in recent years has been due to graft. The country had been steadily falling and is now the 167 least corrupt nation out of 175 countries, according to the 2017 Corruption Perceptions Index reported by Transparency International. Corruption affects investor confidence and in turn, hurts the country’s economic fortunes thus the steps taken by Joao Lourenco so far to combat graft are very much positive. The president fired the head of state oil giant Sonangol, Isabel dos Santos — one of Africa’s richest women and daughter of the former long-standing president. He also fired Isabel dos Santos’ half-brother José Filomeno, from his position as head of the country’s sovereign wealth fund. The Dos Santos family had become the face of graft in Angola due to numerous reports of underhand dealings.
Joao Lourenco has also taken steps to remove Swiss-based Quantum Global as its asset manager. Quantum Global manages Angola’s sovereign wealth fund. The firm is accused of not managing the country’s assets in the interest of the country. There are also reports of close ties between the firm and the Dos Santos family; Jean-Claude Bastos de Morais who until recently headed the QG Investments Africa Management in Mauritius is believed to be close friends with Jose Filomeno dos Santos. Mauritius has since frozen bank accounts and suspended business licences linked to Quantum Global Investments Africa Management.
Devaluation of the kwanza
Joao has already taken the hard step of devaluing the kwanza in an effort to tackle the severe foreign currency challenges. The initial devaluation has not had much success thus far but further small-scale devaluations are expected during the course of the year.
Other economic measures expected to be implemented in the near future. Joao Lourenco in his economic blueprint has stated that he is going to put in place incentives for local manufacturing firms. The blueprint also states that Lourenco will curb money laundering by implementing stricter banking laws. The telecommunications sector is also going to be liberalised.