Photo: jbdodane

Angola’s struggle against oil dependency

Although economic diversification has been a buzzword for years, Angola is still heavily dependent on oil revenues. The sharp downturn in oil prices has put the country in a difficult situation. NAI researcher Cristina Udelsmann Rodrigues undertook fieldwork in the far north as well as the very south of Angola. There, trade across the borders has dramatically declined.

During the oil boom, many small Angolan towns grew and became lively places for trade and business. Santa Clara, close to the Namibian border, was little more than a junction a few years earlier. Now it is a major logistical centre, boasting truck depots, warehouses, banks and other infrastructure geared towards the cross-border trade. Quite similar is Soyo, a city in the far north lying on the coast, which expanded rapidly thanks to the cross-border trade and especially natural gas exploration. Not only did workers in the gas sector came to Soyo, but also many subcontractors and people in the informal sector, who provided food and other services.

Word of mouth
“Angola used to be a very mobile society. People travelled long distances whenever business opportunities arose. There is no formal means of spreading information about businesses. Instead it is relayed by word of mouth, and somehow people always seemed to know where to make a few bucks,” Udelsmann Rodrigues remarks.

However, all this is changing. The decline in oil prices has affected every sector of Angolan society, and without the influx of foreign currency, traders can no longer afford to buy goods in Namibia.  Yet interestingly, people don’t move away, but instead wait for circumstances to improve, according to Udelsmann Rodrigues. This is because of the government’s investments during the golden years of oil-boom.

“The government built hospitals and schools, and hired nurses and teachers, as well as providing other public services. So these are not typical boom-towns,” Udelsmann Rodrigues adds.

Elections mean spending
People she talked to have faith that the crisis will soon pass. One reason for this is the upcoming elections next year.

“During election year, the government normally invests and spends a lot of money as a campaigning strategy to secure people’s votes. The population is counting on this to happen again,” Udelsmann Rodrigues explains.

There are persistent rumours in Angola that Isabel dos Santos will be the ruling MPLA’s presidential candidate. She is currently the director of the state-owned petroleum company Sonangol and one of the richest women in Africa. She is also the daughter of Eduardo dos Santos, the president of Angola since 1979 and thus the second-longest serving president on the continent.

“This appointment is considered by many a risk for the MPLA, which will most definitely win the elections anyhow. The international community will surely not sit quiet and not raise their concerns about this. There will be consequences, and this is not what the Angolan people need now,” Udelsmann Rodrigues argues. 

Only oil specialists
Regardless of who the next leader of Angola is, the economy needs to move away from oil dependency. Now, every single Angolan is affected in one way or another when prices drop.  During the 26-year civil war, there was no possibility of restructuring and promoting new industry. However, even after 14 years of peace, neither the government nor the private sector have been able to improve the situation.

“Diversification has been a buzzword for a long time, but without anything happening. Now the situation needs to be dealt with urgently. Tellingly, Angola has some of the world’s top oil specialists, but hardly any skilled workers in other sectors such as agriculture, energy or water,” Udelsmann Rodrigues concludes.

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