One to watch – Angola

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One of the emerging countries in Africa to watch out for in 2014 should be Angola. It’s located in south – central Africa and is close to Congo, Zambia and Namibia. In 1975 independence was achieved having been an overseas territory for the Portuguese since the 16th Century and the country is now entering a new phase in its development, a decade after the end of a 30 year civil war. The economy grew 18% in 2005, 26% in 2006 and 17.6% in 2007, and then the country experienced a period of slow growth due to the global financial crisis and also the Oil price crisis of 2008 which affected investors’ confidence in both developed and emerging economies. The Angolan economy is slowly but surely improving, recording a 7.4% increase in the GDP in 2013 in comparison to 2012 (Source: Ministerio das Financas Angola). During the 13 year period between 2000 and 2013 the Angolan GDP Growth Rate averaged 11.2%, peaking at a record high of 23.2% in December 2007 and a record low of 2.4% in December 2009. GDP otherwise known as the Gross Domestic Product is the market value of all officially recognized final goods and services produced within a country in a year (Source: Wikipedia).
The civil war had a profound effect on the country. The consequences of 30 years of violence and brutality and the deterioration of the rural economy were the catalysts for the decline of the country’s infrastructure with respect to the production and exportation of coffee, tobacco, cassava, cotton etc. The agriculture of Angola is currently expanding due to the end of the Civil War in 2002, and the growth of foreign investment in the sector. However, the return to productivity in rural areas has proven to be difficult and slow.
The country’s economy has been heavily dependent on its production and exportation of oil in order for the country to have a stability and sustainability – oil accounts for nearly half the country’s GDP, 90% of exports and around three-quarters of the government revenue. They are also the third largest producer of diamonds in Africa, however due to diamonds smuggling and corruption revenues from this sector are much harder to accurately account for. The country’s over reliance on oil is not necessarily a good thing. It is only favourable if the price of Oil goes up in their favour. It is also a good thing for Angola if the price doesn’t change much. However the country is vulnerable to volatile movements in the market and shocks to the oil price which could cause prices to fall drastically. A 5 million dollar Sovereign Wealth Fund was created late 2012 to further diversify the economy and provide protection from the devastating financial impact a fall in the price of oil would have.
In December 2012 in a memo read from the Swiss Global Enterprise conference there were officially 276,000 Chinese citizens residing in Angola and another 150,000 Portuguese citizens obtaining visas to work in the country – something that has never been seen before in recent history.
The main challenge rests on the ability of the government to ensure transparency of the country’s earnings from its Natural resources. The government needs to be responsible for the fair distribution of the earnings primarily into the redevelopment of the country. As Angola continues to obtain financing to meet assist with their long term development needs and expansion in the exploration and production of its natural resources, the government will need to guarantee that the country’s sustainability is not put at risk with respect to the amounts owed to other countries, primarily China. Analysts from the International Monetary Fund and the African Development Bank have predicted that the country, Africa’s third strongest economically after South Africa and Nigeria, will maintain this growth rate for years to come. If this statement holds for the next few years, along with investment into the accessibility of drinking water, improvement of infrastructure and the easing of barriers to entry into there will definitely be good times ahead for the country.

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