POLITICS OF ANGOLA’S ENERGY ECONOMY 2

Politics of Angola’s Energy Economy

Angola is a nation of glaring contrasts. It is a massively wealthy natural resource-driven
economy with one of the highest economic growth rates in the world. Despite this wealth and
impressive economic growth, a huge portion of its population consisting of millions of people
live in desperate poverty (Economist, 2001). Its infant mortality rate is one of the world’s highest
and a majority of the population lack access to education (Economist, 2001). To understand this
contradiction, it is important to understand Angola’s recent history and the political and
economic system that has emerged from it.
Like many African countries, Angola is mixture of ethnic groups forced together by the
Portuguese. The three main ethnic groups are the Ovimbundu, the Ambandu, and the Bakongo
(Herbst, 1989). The boundaries, established by the Portuguese and approved by other Western
European powers in the Berlin Conference of 1884, almost entirely ignored ethnic and linguistic
considerations (Herbst, 1989). For instance, the Bakongo were split from among three countries
– Angola, Republic of Congo, and Congo DRC where they are the largest ethnic group.
Since their establishment and approval in late nineteenth century, the boundaries have
remained intact. The only serious threat to the country’s territorial integrity has come from
secessionist movement of Cabinda Province, the country’s enclave in the north which is bordered
by the Democratic Republic of Congo, Republic of Congo, and the Atlantic Ocean (Herbst,
1989). Thus far the secessionist movement has not had any success. It is highly unlikely that
Angola will ever allow Cabinda to secede because it contains over three fifths of its oil
production and huge quantities of other natural resources such as timber and palm oil (Hanson,
2008). Cabinda secession, if it were to succeed, would be a major blow to Angola’s economy.

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Cabinda is emblematic of Angola’s problems. Massively endowed with huge quantities of
offshore oil reserves, it also one of the poorest provinces of Angola. In fact, the whole of Angola
is just Cabinda magnified. The oil wealth, thanks to corruption and a complex system of
patronage perpetuated by the country’s ruling elite, has created a fabulously wealth group of well
connected individuals primarily centred around Luanda, the country’s capital, while leaving out
millions of people in the city’s slums and rural areas to struggle for survival (Hanson, 2008).
The fortunes of the elite have particularly taken a turn for the better following the end of
the country’s long civil war in 2002 that pitted the ruling Ambundu-dominated People’s
Movement for the Liberation of Angola (MPLA) against the Ovimbundu-dominated National
Union for the Total Independence of Angola (UNITA) rebels (Hanson, 2008). With peace came
massive economic growth fueled by high commodity prices. The resulting economic windfall
went largely into the pockets of a few individuals (Economist, 2001). The rest of the population
was almost untouched by this wealth growth.
Before oil discovery in the 1960s, majority of Angolans earned their livelihood through
agriculture. The decades-long civil war and the country’s increased reliance on oil has led to near
collapse of the agriculture sector (Hanson, 2008). As Resolution 5/18: African’s Economic
Development notes, Angola is one of the countries in Africa that has increasingly become totally
dependent on its extractive resources (oil) (African Union, 2018). The neglect of agriculture (the
government invests just 1% of its budget in agriculture) means that millions of Angolans,
particularly those in rural areas, are actually poorer today than they were before oil discovery
(Hanson, 2008). The task of meeting their needs such as provision of healthcare and education
has been left largely to international aid groups. Their work has been hampered by exorbitant

POLITICS OF ANGOLA’S ENERGY ECONOMY 4
visa fees and short-term visas issued by the Angolan government which force many of their
employees to regularly travel to their home countries for visa renewals (Economist, 2001).
The poverty caused by the collapse of agricultural sector would have been lessened if the
government had taken steps to prepare the population, particularly the youth, for new jobs in the
oil, financial, and construction sectors that are booming. Unfortunately, to use the language of
Resolution 5/18: African’s Economic Development, Angola has not “utilized its energy in
innovative ways so that its youth prosper and its economy becomes self-sustaining” (African
Union, 2018). In other words, Angola has not invested its oil revenues in the country’s human
resources. Many of its youth remain uneducated. The result has been a skills dearth that stifles
the growth of the country’s private sector and makes its public sector largely incompetent. Of all
Angolan employed in the public sector, less than a fifth have completed high school (Hanson,
2008).
The low skills level among Angolans means that many high paying jobs in the country’s
lucrative energy, financial, and construction sectors are performed by foreigners, mainly
Portuguese and Chinese. Apart from direct government employment, the few highly educated
Angolans often end up in Sinangol, the giant state-run oil company which controls Angola’s on-
shore and offshore oil production (Hanson, 2008). Although competently run, the company has
usurped many of the roles that would ordinarily be performed by the Central Bank, Finance
Ministry, and various state regulators (Hanson, 2008). The oversize role it plays in the economy
makes it hard for Angola to strengthen its institutions and diversify its economy. The company
has also been an enabler of corruption as it lacks transparency.
Perhaps if Angola had a strong opposition and other important institutions that advance
transparency such as independent judiciary, there would more transparency in the way in which

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oil revenues are used. Unfortunately, since the end of civil war, the main opposition party,
UNITA, has been too weak to pose any challenge to the government or hold it to account. The
result is that Angola is practically a one-party state with no checks on the powers of the
executive. Such a state of affairs allows corruption and cronyism to thrive, makes diversification
efforts hard, and ensures that millions of Angolans will continue suffering despite their
government receiving billions of dollars in oil revenues.

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References

African Union. (2018). Resolution 5/18: African’s Economic Development.
Economist. (Jan 11, 2001) Oil, diamonds and danger in Angola. Economist. Retrieved on 30th
December, 2018 on
https://www.economist.com/international/2001/01/11/oil-diamonds-and-danger-in-angola
Hanson, S. (2008). Angola’s Political and Economic Development. Council on Foreign
Relations. Retrieved on 29th November, 2018 on
https://www.cfr.org/backgrounder/angolas-political-and-economic-development.
Herbst, J. (1989). The creation and maintenance of national boundaries in Africa. International
Organization, 43(4), 673-692.