Angola

Economic Overview

The Republic of Angola is one of Sub-Saharan Africa's largest economies and a major oil producer. The nation is at a crucial stage of economic transformation, striving to diversify its economy away from its heavy dependence on oil and gas. Following a period of economic hardship caused by the oil price crash, the government has embarked on a comprehensive reform program supported by the IMF, focusing on fiscal consolidation, privatization, and improving the business climate. The 2025-2026 outlook is one of modest recovery, highly dependent on stable oil prices, the success of ongoing reforms, and growth in the non-oil economy.

GDP Size & Growth Trajectory

Angola's economic fortunes are inextricably linked to the oil sector. After a prolonged recession, the economy has returned to growth. Real GDP growth was estimated at 0.9% in 2023. Projections for the coming years are for continued modest growth, with the IMF forecasting 3.1% in 2025. This recovery is supported by higher oil prices and a rebound in non-oil sectors like agriculture and services. The government's diversification efforts are crucial for achieving more sustainable and inclusive growth in the long term.

Sector Composition

• Industry: This sector dominates the economy, contributing over 50% of GDP, almost entirely driven by the oil and gas industry. Oil accounts for more than 90% of export earnings and a significant share of government revenue. Diamond mining is the second most important extractive industry. This extreme reliance on hydrocarbons makes the economy highly vulnerable to global energy price volatility.

• Services: The services sector accounts for approximately 35% of GDP, led by trade, financial services, and telecommunications.

• Agriculture: This sector contributes around 10% to GDP but employs the majority of the population. It has vast, untapped potential. Angola has abundant fertile land and water resources but is currently a net importer of food. Revitalizing the agricultural sector is a top government priority.

Inflation Trends

High inflation has been a persistent macroeconomic challenge, exacerbated by the depreciation of the national currency, the Kwanza (AOA). The Banco Nacional de Angola (BNA), the central bank, has maintained a tight monetary policy to combat inflation, raising interest rates significantly. Inflation is expected to remain in double digits in the near term before gradually moderating as stabilization policies take hold.

Fiscal & Monetary Policy Stance

• Monetary Policy: The BNA is focused on price stability, using high interest rates and a more flexible exchange rate regime to manage inflation and external pressures.
• Fiscal Policy: The government is committed to fiscal consolidation. The high oil prices have provided a fiscal windfall, allowing the government to reduce its deficit and build fiscal buffers. Key reforms include the introduction of a Value Added Tax (VAT) and the phasing out of inefficient subsidies.

Debt Sustainability Indicators

Public debt levels surged following the oil price shock, but have since been on a downward trend thanks to fiscal discipline and higher oil revenues. The debt-to-GDP ratio has fallen significantly from its peak, but a large portion of the debt is external, making it vulnerable to exchange rate fluctuations. Prudent debt management remains a key policy priority.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

Angola's market is characterized by a large and youthful population, representing significant long-term consumer potential.

Population Size and Demographics

With a population of nearly 38 million, Angola is one of the most populous countries in Southern Africa. The population is very young, with a median age of around 16 years, which provides a massive future labor force and consumer market.

Urbanization and Consumer Hubs

The country is highly urbanized, with over 67% of the population living in cities. The capital, Luanda, is a sprawling metropolis and the undisputed center of all economic and commercial activity. Other important cities include Huambo and Lobito.

Consumer Spending & Market Access

Consumer spending has been impacted by high inflation and currency depreciation. The formal retail sector is concentrated in Luanda and caters to a small middle and upper class. The vast majority of the population relies on the informal market.

Business Environment

The Angolan government under President João Lourenço has made improving the business climate a cornerstone of its reform agenda.

Ease of Doing Business & Regulatory Reforms

The government has launched an ambitious privatization program (PROPRIV) to sell off state-owned enterprises and attract private investment. Efforts are being made to streamline bureaucracy, improve transparency, and combat corruption. The Agency for Private Investment and Export Promotion (AIPEX) is the one-stop-shop for investors.

Company Registration Process

The process of starting a business has been simplified through the "Guiché Único da Empresa" (One-Stop Business Shop). While progress has been made, bureaucratic hurdles can still exist.

Tax Regime

• Corporate Income Tax (CIT): The standard rate is 25%.
• Value Added Tax (VAT): A standard VAT rate of 14% was introduced in 2019, replacing an older consumption tax.

The government offers tax incentives for investment in priority zones and sectors as part of its strategy to diversify the economy.

Political Stability & Governance

Angola has enjoyed peace and stability since the end of its civil war in 2002.

Political Environment

The country is a presidential republic. The People's Movement for the Liberation of Angola (MPLA) party has been in power since independence in 1975. President Lourenço has focused his administration on economic reforms and a high-profile anti-corruption campaign, which has been a significant departure from the past and has improved investor sentiment.

Rule of Law & Investor Protection

The legal system is based on Portuguese civil law. The government has taken steps to strengthen the rule of law and improve investor protection. The new Private Investment Law provides a more liberal framework and guarantees for foreign investors. However, the judicial system can be slow, and contract enforcement remains a challenge.

Infrastructure Readiness

Years of underinvestment have left Angola's infrastructure in need of significant upgrades, which presents both a challenge and an opportunity.

Transport and Logistics

• Ports: Angola has three major port and rail corridors: the Port of Luanda, the Port of Lobito, and the Port of Namibe. The Lobito Corridor, in particular, is being revitalized as a strategic gateway to the sea for the mineral-rich regions of the Democratic Republic of Congo (DRC) and Zambia.
• Railways: The historic Benguela Railway, which runs along the Lobito Corridor, has been rehabilitated and is crucial for transporting minerals from the Copperbelt to the Atlantic.

Energy Sector

The energy sector is the engine of the economy.

• Oil and Gas: Angola is a member of OPEC and one of Africa's top oil producers. Production is dominated by deep-water offshore fields operated by major international oil companies. The government is working to attract new investment in exploration to reverse a decline in production.
• Hydropower: The country has immense hydropower potential. The development of new dams and the expansion of the electricity grid are key priorities to increase energy access and support industrialization.

Sector-Specific Opportunities

1. Oil & Gas

The oil sector continues to be the primary investment area, with opportunities in exploration for new blocks, increasing production from existing fields, and providing services to the industry. The government is also keen to develop its natural gas resources.

2. Mining (Diamonds and other minerals)

Beyond oil, Angola has rich diamond deposits and significant potential for other minerals like iron ore, phosphates, and copper. The government is reforming the mining code to attract new investment into exploration and production.

3. Agriculture

This is arguably the sector with the greatest long-term potential. With vast fertile land, favorable climates, and abundant water, Angola has the capacity to be an agricultural powerhouse. Opportunities are vast in large-scale commercial farming of crops like coffee, cotton, grains, and fruits, as well as in livestock and agro-processing.

4. Infrastructure

Given the significant needs, there are major opportunities in infrastructure development, particularly in public-private partnerships (PPPs) for roads, railways, ports, and energy generation and transmission. The revitalization of the Lobito Corridor is a key project.