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As international oil prices have risen, Angola, largely dependent on oil income, has become one of the fastest-growing economies in the world. In sub-Sahara Africa it is among the third largest - after South Africa and Nigeria (AfDB/OECD 2009a). Some of the oil income has been used for national reconstruction since the end of civil war in 2002. Other sectors have been gaining momentum with increasing investments in agriculture, construction, transport, water, energy, health and social infrastructure as well as commerce.

Cattle breeding contributes significantly to Angola's agricultural sector.
Source: Tump 2007
( click to enlarge )

Economic Sectors

Oil & Gas

Angola’s oil production, which is concentrated offshore off Cabinda Province, is controlled jointly by the Angolan state-owned oil company Sonangol and by foreign multinationals. Oil output experienced an annual average growth of 17.4 % between 2003 and 2007, making Angola Africa's second-largest oil producer after Nigeria. Proven natural gas reserves are estimated to maintain production over the next 30 years. A liquefied natural gas (LNG) plant is under construction and scheduled for completion in 2010 (AfDB/OECD 2009a).

Diamonds and Other Mineral Resources

The diamond sector, which was seriously affected by the civil war, has significant recovery potential. Launched in 2005, the Luo diamond-mining project will be able to process 6 to 7 million tonnes of rock per year, making it one of the ten largest diamond mines in the world. State-owned Endiama, which has the monopoly over diamond production, produced some 7 million carats in the first three quarters of 2008 (a 5.5 % increase over the previous year) (AfDB/OECD 2009a). Other mineral resources (such as quartz, granite, marble, iron) have become virtually meaningless during the civil war. The geological diversity of the country, however, gives an indication of potential future resource development (Kuder and Möhlig 1994).


Whilst oil continues to be by far the largest economic sector, non-oil activities have recently been showing a new dynamic. This holds particularly true for agriculture, which accounts for more than 50 % of total employment in the country (AfDB/OECD 2009a). Prior to the civil war, Angola had one of the most productive agricultural sectors in Africa, thanks to its fertile soils and its ecological diversity reaching from tropic to (semi-)arid areas. Agricultural products include: maize, manioc, millet, coffee, sisal, sugar cane, cotton, beans, rice, peanuts, sesame, castor beans, palm oil, and palm kernels. Livestock (mainly cattle and goats) is primarily raised by pastoral farmers using extensive grazing of natural pastures (Kuder and Möhlig 1994).

After the decimation of the agricultural sector during the civil war, it is now experiencing a revival, although it still accounts for only 8 % of GDP. Cultivated and irrigated areas are increasing and productivity is rising as land mines are cleared and many former smallholders return. Investment in commercial farming is also increasing, especially in the provinces of Kwanza Norte, Kwanza Sul, Benguela, Huambo and Huíla. Despite these improvements, the threat of food insecurity persists, with the deficit in domestic cereal production approaching 50 % (AfDB/OECD 2009a).


The manufacturing sector contributed 5.3 % of GDP in 2007, with food and beverages accounting for 85.6 % of sector output. In 2008 it increased by 11.7 %. The government undertook several projects to stimulate manufacturing activity, including the Viana Special Economic Zone in Luanda Province, where 11 out of 70 factories are already active, including a new Nissan vehicle assembly factory. Other industrial zones are located at Fútila (Cabinda Province) and Catumbela (Benguela Province). The Kunene River basin includes Caàla (Huambo Province) and Matala (Huíla Province) as industrial promotion projects (AfDB/OECD 2009a).


Another expanding sector is construction with growth rates of 37 % in 2007 and 10.6 % in 2008. In contrast to the last few years, when the sector’s growth was driven by construction and rehabilitation of infrastructure and non-residential construction in Luanda, residential projects are now gaining momentum. In 2008 a new plan was launched to build 1 million houses for lower income people in the main urban centres. Public investment is expected to remain strong, owing to the development of the Fortaleza and Bela shopping malls in Luanda, the Luanda Bay project, and the 2009-13 Tourist Sector Development Programme anticipating 39 new hotels (AfDB/OECD 2009a).


The services sector has also been increasing dynamically, accounting for 17 % of GDP in 2007. The most important sub-sectors are tourism, real estate, financial services and, lately, retailing and commerce. The “Restructuring the Systems of Logistics and Distribution of Essential Goods to the Population Programme (PRESLID)”, launched by the government in 2007, aims at developing the retail distribution chain in order to reduce food prices. It calls for the construction of 10 000 lojas de proximidade (retail shops), 163 municipal markets, 31 NossoSuper supermarkets and eight warehouses, with a public investment contribution of USD 1.7 billion through 2012 (AfDB/OECD 2009a).

Gross Domestic Product by sector in 2007.
Source: AfDB/OECD 2009a
( click to enlarge )

Infrastructure and Public Sector

In recent years Angola has intensified its efforts to advance infrastructure development and public sector restructuring.

Public Sector Reform

Plans have been developed to halve the number of state-owned enterprises and privatise over 100 companies by 2009. However due to the elections and administrative hurdles the implementation of privatisation is currently delayed (AfDB/OECD 2009a).

More recently, the Government of Angola started a decentralisation process, enhancing the institutional, organisational, technical and management capacities of Provincial Governments and Municipal Administrations. In January 2007 the Law number 2/07 established the legal framework for this process (BTI 2010).

Electricity Sector

Angola faces rapid economic growth associated with the demand for energy supply (ERM 2009). At the moment hydroelectric facilities generate two-thirds of Angola’s electricity, the remainder coming from conventional thermal sources such as diesel generators. Only 20 % of the population have access to electrical power (AfDB/OECD 2009a). The majority of the rural population depends on fuel wood and charcoal as an energy source (Kuder and Möhlig 1994). The sector is currently under reform, responding to the growing energy demand. A number of possible sources are available including hydropower, natural gas, diesel plants, biomass, and solar energy (ERM 2009). The Angolan government is planning to develop a nuclear energy industry and the national power company ENE may lose its monopoly over the production, distribution and commercialisation of electricity in favour of private operators (AfDB/OECD 2009a).


Angola’s coastline possesses five major ports – Luanda, Benguela, Lobito, Namibe and Tómbua – as well as numerous smaller ports. Three major railroads traverse the country in an east-west direction. They start from the Atlantic ports of Luanda, Benguela and Namibe and are connected through north-south roads (Kuder and Möhlig 1994). During the civil war the transport infrastructure was mainly destroyed or neglected. In recent years, however, rail rehabilitation and reconstruction of the roads connecting the main urban centres and the roads around Luanda is progressing. Furthermore, port rehabilitation and the construction of a new deep water port in Luanda are foreseen (AfDB/OECD 2009a).

Social Infrastructure

The share of the national budget allocated to social sectors has increased to over
30 % in 2007 and 2008, enabling extensive recruitment of health and education staff, as well as the construction of hospitals and schools. However, infrastructure development is skewed towards the coastal regions and the capital city, leaving the inland provinces behind (AfDB/OECD 2009a).




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