PESA
Infrastructure Development and Financing in SADC

Infrastructure Development and Financing in SADC

Country Spotlight: Republic of Angola

Angola is the second largest oil producer in sub-Saharan Africa after Nigeria[6]. However, Angola’s economic outlook for 2017 remains uncertain due to the decline of international oil prices, which are not expected to recover in the short-term. Economic growth is projected to remain steady at 3.5% in 2017[7]. The decline of the oil price had an adverse effect on fiscal revenue and exports. For instance, oil rents as a share of GDP accounted for about 10.8% in 2015 compared to 27.2% in 2014, and oil and gas exports as share of GDP accounted for 31.0% in 2015 compared to 45.5% in 2014[8].

From 2010 to 2013 Angola lost an average of USD 5.1 billion in foreign investment due to policy mismatch. Angolan legislation requires foreign investors to have a local partner but due to the lack of appropriate partners, some projects failed, resulting in divestment despite the demand for Angolan projects by foreign investors[9]. However, the country has since improved its policy by passing new legislation reducing bureaucratic procedures required for the admission of eligible foreign investments[10]. As a result, in 2015 Angola achieved a 352.0% growth in FDI after receiving USD 8.7 billion, accounting for about 39.0% of total SADC FDI inflows, with South Africa receiving just 8.0% of total SADC FDI inflows[11].

Figure 1: Angola Real GDP Growth Comparison, % (2010-2017)

Source: AfDB 2016b. African Economic Outlook 2016: Sustainable Cities and Structural Transformation, ibid.; IMF 2017b. Angola 2016 Article IV Consultation, ibid.; SADC 2017, SADC Selected Indicators 2016, Southern African Development Community: Gaborone. Available At: https://www.sadc.int/ [Last Accessed: 10 February 2017]. Note(s): (*) The figure for 2017 SADC Real GDP Growth is a projection from AfDB 2016b; The figures for 2017 SADC Real GDP Growth are projections from AfDB 2016b.

From 2010 to 2015, oil production in Angola averaged approximately USD 1,719.0 million barrels per day[12]. Angola’s oil industry comprises 47.0% of GDP, followed by services at 39.0% and Agriculture at 5.0%[13]. Angolan agriculture remains primarily a subsistence sector, with half of the country’s demand for food being met through imports[14]. Angolan food imports accounted for approximately 17.0% of total merchandise imports[15]. There is a need to diversify the Angolan economy from its current reliance on commodity and primary exports.

Angola should strategically channel FDI towards sectors and industries with a trade deficit outside of oil and extractive industries. In this regard, Angola has been able to redirect some foreign investments from Brazil, China, USA and the UK towards the financial sector, transport infrastructure and logistics[16].

However, oil and extractives remain the strongest and most attractive sectors for FDI. Angola has made significant progress toward maintaining political and economic stability since its 27 years of civil war which ended in 2002. However, Angola is still faced with infrastructure development challenges and an infrastructure investment backlog. Angola’s main export trading partner is China, which accounts for 44.3% of Angola’s exports – predominantly made up of oil, followed by Portugal (18.0%) and India (10.2%). In 2015, China signed new construction contracts in Angola for about USD 6.0 billion[17]. China has also invested significantly in Angolan transport and social infrastructure through the construction of railway, roads, and ports[18]. China plays an important role in Angola.

Angola’s power sector has experienced severe inefficiency and a shortage of supply. The Angolan government had committed to invest USD 16.0 billion in the energy sector in last few years, including the building of two large dams: the Cambambe Dam with 960.0 megawatts (MW) and the Laúca Dam with 2.1 gigawatts (GW), which will increase Angola’s electric power generation[19]. In 2017, the power generation is expected to reach 5.0 GW. Several hydropower projects are underway and aimed to reach 62.0% of Angola’s energy requirements in 2017 such as Caculo Cabaça, Jamba-Ya-Oma and Baynes, which is a joint project with Namibia. In addition, Angola’s government plans to interconnect the three grids (North, Central and South) to increase the electricity coverage from 30.0% to 60.0% by 2025. The aim is to expand access to basic energy services. Angola’s investment in the energy sector aims to increase power generation in order to meet the strong growth in demand, as well as to boost economic growth and improve the business environment[20].

Due to strong economic dependence on the oil industry, the Angolan government seeks to reinvest surplus oil revenues in other high-potential sectors such as agriculture, fisheries, tourism and port services in order to diversify the economy. In 2015, the Angolan government promulgated the new private investment legislation to create incentives for investment in strategic priority sectors and also established the National Agency for Promotion of Investment and Exportation of Angola (APIEX). However, investment in the other key sectors such as mining, finance, and oil are governed through different regulations. The government’s strategy is aimed at investing in infrastructure, reducing imports, promoting financial sector reforms, enhancing skills development and improving the business environment. Angolan investment in infrastructure is targeted at improving the country’s economic competitiveness and intra-regional trade through cross-border agreements with the Democratic Republic of Congo, Namibia and Zambia.

By Serge Hadisi


[6] AfDB 2012. African Economic Outlook 2012: Angola, African Development Bank: Abidjan. Available At: https://www.afdb.org/ [Last Accessed: 10 February 2017].
[7] AfDB 2016b. African Economic Outlook 2016: Sustainable Cities and Structural Transformation, African Development Bank: Abidjan. Available At: https://www.afdb.org/ [Last Accessed: 17 January 2017].
[8] WB 2017. Countries and Economies, World Bank: Washing, D. C. Available At: https://data.worldbank.org/ [Last Accessed: 10 February 2017]; IMF 2017b. Angola 2016 Article IV Consultation, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 10 February 2017].
[9] UNCTAD 2014. World Investment Report 2014: Investing in the SDGs – An Action Plan, United National Conference on Trade and Development: Geneva. Available At: http://unctad.org/ [Last Accessed: 17 February 2017].
[10] UNCTAD 2016. World Investment Report 2016: Investor Nationality – Policy Challenges, United Nations Conference on Trade and Development: Geneva. Available At: http://unctad.org/ [Last Accessed: 17 February 2017].
[11] UNCTAD 2016. World Investment Report 2016: Investor Nationality – Policy Challenges, ibid.; UNCTAD 2017. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: http://unctadstat.unctad.org/ [Last Accessed: 8 February 2017].
[12] IMF 2017b. Angola 2016 Article IV Consultation, ibid.
[13] UNCTAD 2017. UNCTADStat Database, ibid.
[14] USDS 2016. Investment Climate Statements 2016: Angola, on the US Department of State Website, viewed on 31 January 2017, from https://2009-2017.state.gov/.
[15] WB 2017. Countries and Economies, ibid.
[16] AEO 2016. African Economic Outlook: Angola, on the African Economic Outlook Website, viewed on 17 January 2017, from http://www.africaneconomicoutlook.org/.
[17] UNCTAD 2017. UNCTADStat Database, ibid.
[18] Dionisio, T. E. 2014. Rebuilding Angola’s Infrastructure, Eaglestone: Luanda. Available At: http://www.eaglestone.eu/ [Last Accessed: 17 January 2017].
[19] AfDB 2012. African Economic Outlook 2012: Angola, ibid.
[20] UNDP 2015. Rapid Assessment and Gap Analysis: Angola, United Nations Development Programme: New York. Available At: https://info.undp.org/ [Last Accessed: 21 February 2017].

Serge Basingene Hadisi

Serge is a Senior Analyst at PESA.

Siyaduma Biniza

Siya is the Executive Director at PESA.

Michelle Livie

Michelle Livie is the Non-Executive Director: Development at PESA.

Trevor Mbedzi

Tafadzwa Mahubaba

Grace Nsomba

Serge Basingene Hadisi

Siyaduma Biniza

Michelle Livie

Trevor Mbedzi

Tafadzwa Mahubaba

Grace Nsomba

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