Angola is currently experiencing a significant economic about-face, as rising oil production, the steady privatisation of state-owned companies, and new investments in renewable energy provide a bedrock for a broader economic development strategy. However, while the next few years hold considerable promise, the longer-term outlook is marked by uncertainty. To sustain the current economic trajectory, the government will need to make greater progress in building investor confidence, including through privatising large state-owned companies, as well as passing critical political reforms.

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On 26 September, Angola’s central bank, the Banco Nacional de Angola, cut its benchmark interest rate for the first time since 2019. The rate drop, from 20 percent to 19.5 percent, reflects a significant economic turnaround, driven in large part by the rapid revival of Angola’s oil production amidst a global oil price rally (see ANGOLA: RESURGENT ECONOMY SUPPORTS RULING PARTY PROSPECTS AHEAD OF GENERAL ELECTIONS). As export revenues continued to climb, by the end of September the Angolan kwanza had gained 30 percent against the dollar since January, making one of the best-performing currencies globally. Moreover, in August, Angola’s inflation rate dropped below 20 percent for the first time since 2020. This situation has given rise to a marked improvement in Angola’s debt position: According to figures released by the Central Bank on 30 September, in the first quarter of 2022 the public debt-to-GDP ratio fell to 66 percent from an average of 82.1 percent in 2021.

With most African states trending in the opposite direction, Angola’s current indicators provide for a markedly improved economic outlook in the coming years. Nonetheless, whether the current boom will be sustained beyond the next five years is highly dependent on a range of factors, including progress in economic diversification, privatisation of key sectors, inequality reduction, building resilience to the effects of climate change, and passing crucial political reforms. Thus far, the government has faced significant shortcomings in addressing all these areas, prompting caution in the longer-term outlook (see ANGOLA: MPLA ELECTION WIN BOOSTS ECONOMIC PROSPECTS AND MITIGATES CONTRACT RISKS).

PANGEA-RISK assesses the current progress on key issues and outlines the potential obstacles which may present in the years ahead.

Oil sector outlook contingent on new developments

In large part, projections of sustained longer-term growth are predicated on increasing, or at the least maintaining, the current level of production in the oil and gas sector. According to the latest data from OPEC, in August 2022 Angola’s production stood at 1,179 million barrels per day (BPD), indicating that the production boom since late 2021 has been sustained. In May, Angola overtook Nigeria to become Africa’s largest oil producer (see ANGOLA: RAMPING UP OIL AND GAS PRODUCTION TO MEET DEMAND FROM A SHIFTING MARKET). However, the rise in production in 2022 is a departure from the established trend of the past decade, wherein Angola’s year-on-year production has dropped significantly.

While Angola’s remaining reserves – estimated at some 9 billion barrels of oil – remain considerable, as in the case of Nigeria the country faces a rapid depletion of reservoirs, which has driven a decline in production across almost all major fields, including Cabinda, Dalia, Girassol, Hungo, Kissanje, Pazflor, and Plutonio. Moreover, despite recent project investments coming to fruition, overall investment into the sector continues to fall from year-to-year, meaning that there have been limited efforts to improve production at mature assets, or to open new fields. This in large part reflects Angola’s high production costs, which despite tax rate cuts for smaller fields, has discouraged new investments.


Nonetheless, the oil price boom has coincided with a number of established operators implementing planned expansions of maturing assets. For instance, in July TotalEnergies reached a final investment decision (FID) on an expansion to the Begonia oil field, which is expected to add 30,000 BPD to the field’s production in late 2024. Several other similar FIDs are anticipated in 2023, including a potential floating production storage and offloading (FPSO) facility at TotalEnergies’ Golfinho field, and another at Eni’s Agogo field.

Between 2023 and 2025, the country will also hold at least two bidding rounds for 23 blocks, spread across the Etosha, Okavango and Kassange basins, hoping to drive new exploration. However, while oil and gas majors have demonstrated a willingness to develop existing assets and revive production to a limited extent, if Angola is unable to reduce production costs and administrative barriers to business, it remains unlikely that smaller operators will be willing to invest in exploration of marginal fields. A lack of new projects in turn means that the government’s objective of reaching an average of 1.3 million BPD is unlikely to come to fruition. Indeed, Angola’s national hydrocarbons regulator, ANPG, has warned that production could drop to as low as 500,000 BPD by 2028 if investments stall and newly discovered fields are not developed.

Economic diversification effort makes gradual headway

Faced with significant uncertainty as to the potential of the hydrocarbons sector to act as a long-term engine of growth, the implementation of an effective diversification strategy will be critical to sustaining a positive economic trajectory. However, Angola’s diversification effort has thus far met with limited success. Mechanisms intended to mobilise domestic investors, such as the extension of multi-million-dollar bilateral credit lines by international financial institutions, have largely been unsuccessful. On the international side, while FDI inflows are gradually trickling into a greater range of industries, the bulk of investments remain concentrated in the hydrocarbons sector (see ANGOLA: POLICY CONTINUITY AND ENHANCED ECONOMIC PROSPECTS LOOM PAST ELECTIONS).

Nonetheless, certain sectors have benefited from increased attention in recent months. Notably, in June Angola signed a USD 2 billion deal with US firms to develop an extensive solar project in the south, in line with the government’s objective of producing 70 percent of the country’s electricity requirements via renewable sources by 2025. In addition to providing greater electricity coverage, in similar fashion to neighbouring Namibia, Angola intends to harness its potential in terms of renewable energy for the production of ‘green hydrogen,’ which will be exported to Europe to address rising energy needs. In June, Sonangol signed an MOU with two German companies, Gauff Engineering and Conjuncta, to build a production facility for green hydrogen. The planned production volume at the facility will be 280,000 tons of green ammonia per annum, with production scheduled to begin in 2024. Nonetheless, the feasibility of further similar projects depends significantly on sustained water supplies, as well as sufficient electricity infrastructure.


The government has also flagged agriculture as another priority sector for the diversification programme, noting that the wealth of arable land in Angola has significant potential to assist in countering global food crises in the years to come. Indeed, approximately only 10 percent of the country’s arable land, comprising some 35 million hectares, is currently being used for agricultural production. However, there remains significant uncertainty over the longer-term viability of the sector without broader investments in technology and resilience mechanisms, given the mounting impact of climate change. For instance, the country is currently experiencing its most severe drought in the last four decades, which has killed off livestock and destroyed crops across the south-western provinces of Cunene, Huila and Namibe.

Privatisation programme lags in critical areas


Mobilising foreign investors will rely in large part upon the success of government reforms in the coming years. In particular, much hinges on progress in the large-scale privatisation effort launched in 2019, which has experienced repeated delays and setbacks. The past year has seen marked progress on this front: by September of this year, the government had sold off state-held shares in 92 of the 195 companies which were earmarked for privatisation by the end of 2022. However, most of the assets sold thus far comprise small industrial units and farms, rather than larger assets. Moreover, approximately 70 percent of the buyers were domestically based companies, reflecting limited interest from foreign investors.


Critically, there has been no visible progress in privatising the country’s most productive sectors, namely hydrocarbons and mining. For instance, while Angolan officials had declared that the sale of a 30 percent stake in state-owned hydrocarbons company, Sonangol, would take place in late 2021 or early 2022, the process has been subjected to repeated postponements. Most recently, in early September the chairman of the Institute of Management of Assets and State Participations, Patricio Vilar, stated that Sonangol’s divestment would take place in several stages over the next five years, although there remains little clarity about the exact timeline, or which specific assets will be included in which stages. Moreover, Vilar has also indicated that the sale will be conditional on market readiness, suggesting that the state is anticipating a potential lack of interest. Progress in privatising the state-owned diamond mining company, Endiama, has also been similarly slow, and the sale of state-owned carrier, TAAG Angola Airlines, which was intended to be completed by 2022, has also been postponed until 2025 due to a fall in investor interest in the wake of the COVID-19 pandemic.

With the government’s recent track record providing little encouragement, a crucial indicator of whether the privatisation programme can get back on track in the coming months will be whether the state can complete those divestments scheduled to take place before the end of the 2022 – many of which are aimed firmly at foreign investors. These include the selloff of government stakes in petrol station network, Sonangalp, as well as commercial bank Banco Caixa Geral Angola and insurance provider, Empresa Nacional de Seguros de Angola. A failure to clear these assets from the state’s portfolio will signal continued hesitance amongst foreign investors, likely resulting in further setbacks to the government’s broader plans for diversification.


Angola’s economic situation has improved significantly since 2021, as higher global oil prices have provided an impetus to a revival of oil production, strengthening the country’s currency, and stabilising its fiscal position. The ongoing implementation of a broad privatisation agenda, alongside IMF-backed reforms, are likely to facilitate higher investor confidence and drive a steady increase in foreign direct investment inflows in the coming years. New investments into renewable energy production, including ‘green hydrogen’ for export, will contribute towards diversification efforts, buffering the economy from further oil price shocks. Nonetheless, efforts to attract foreign investments to diverse sectors will likely to be constrained by the slow pace of political reforms, especially anti-corruption measures, as well as delays in the privatisation of large state-owned companies in key sectors. With the governing MPLA’s popularity on a sharply downward trajectory, the outlook for political stability is marked by uncertainty. A failure to address mounting socio-economic needs is likely to feed into popular dissatisfaction, driving the threat of political unrest.

  • In the 2022 general election, the ruling MPLA experienced its worst performance at the election booth in 30 years, reflecting the rapid erosion of the ruling party’s popularity following a major recession between 2015 and 2020 and mounting corruption allegations against senior figures in the party. An inner circle of MPLA party leaders, “business generals”, and other members of the elite remain entrenched in sectors that are opening to foreign investment, thus posing persistent reputational and corruption risks to contracts. The perceived failure of President João Lourenço’s administration to implement economic and political reforms is likely to continue to contribute to growing popular discontent. In the context of the government’s privatisation drive and efforts to increase FDI inflows, lagging social investments and rising inequality are likely to drive support for the opposition UNITA, especially among the country’s youth.
  • The threat of civil unrest and political violence will be sustained in the coming years, as the ruling MPLA continues to address public discontent through repressive means, including arbitrary arrests, restrictions on press freedoms, and the use of high levels of force against protests. Socio-economic and political grievances are likely to escalate in the event that the government fails to effectively channel improved FDI inflows and higher hydrocarbons revenues into social investments aimed at raising living standards and lessening inequality. A low-level insurgency is likely to continue in the inland areas of the Cabinda Enclave, although a significant escalation of violence which would affect foreign commercial operators in the coastal and offshore areas is unlikely. After a brief respite in 2020, crime levels are once again on the rise in the capital Luanda.
  • With the recent oil production boom, improved FDI inflows, and the strengthening of the Angolan kwanza, Angola’s GDP growth is projected to reach 3 percent in 2022, before rising to 3.3 percent the year after. Angola’s central bank estimates that annual inflation will fall to 18 percent by the end of 2022, and a fall to single digits looks increasingly likely by the second half of 2023. The government plans to expand infrastructure and launch construction of a new commercial hub after the 2022 elections, which should boost employment and investment. However, while the outlook for debt sustainability has improved in the short-term, the situation remains highly vulnerable to oil price fluctuations. Another oil price crash, with the associated currency depreciation, will significantly raise Angola’s debt servicing burden, increasing the risk of debt distress.