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France wants a share of Angola’s economic 'miracle'
French Foreign Minister Laurent Fabius’s visit to Angola on Thursday is meant to offer France’s business leaders the opportunity to partake in the African country’s economic boom. But many see Angola’s “economic miracle” as a mirage.
The delegation of business leaders accompanying French Foreign Minister Laurent Fabius on his visit to Angola on Thursday, October 31, is impressive.
Among them are top representatives from Air France, Airbus, BNP Paribas, and Total, all hoping to get a piece of the economic boom the southern African country has been enjoying over the last several years.
The stakes of this diplomatic visit are even articulated on the website of France’s finance ministry, where the Angola page reads: “Few countries in the world have as great a potential as Angola, where, despite the competition, there are several possibilities for French companies.”
China, Portugal and France rally for piece of ‘miracle’
On paper, Angola’s “economic miracle” is obvious. Since the end of the bloody civil war that ravaged the country from 1975 to 2002, the former Portuguese colony has registered rates of growth comparable to China’s. Despite a slowdown during the first years of the financial crisis, Angola saw its annual growth rise above 7 percent as of 2012.
Analysts from the International Monetary Fund (IMF) and the African Development Bank (AfDB) have predicted that the country -- Africa’s third strongest economically, after South Africa and Nigeria – will maintain this growth rate for years to come.
Moreover, China has lobbied to become Angola’s principal business partner, investing more than 15 billion dollars in 17 different economic agreements with the country. “Officially, there are 276,000 Chinese citizens residing in Angola,” read a memo from the Switzerland Global Enterprise, an institution with the mission of boosting Swiss commerce, in December 2012.
Portugal has also manifested its interest in Angola’s robust economic health – but in a different way. Struck low by the crisis at home, more than 150,000 Portuguese citizens have obtained visas to work in Angola, a migratory phenomenon that the site Slate Afrique qualifies as “never before seen in contemporary history”.
Angola largely owes its economic success to oil. The country is the second biggest oil producer on the African continent, and the fourth biggest in the world. Angola is planning on increasing its production from the current rate of 1.8 million barrels per day to 2 million in 2015.
France has also been staking out its spot in the race for Angola’s oil money, with Total investing 9.1 billion euros in the country (out of a total of 10 billion euros invested by France in Angola in 2012).
Some analysts have gone as far as predicting that Angola could become the African Qatar. The country could indeed transform itself into a gas jackpot like that Gulf state, as it has the second biggest reserve of natural gas in Africa, which it has only recently begun to exploit. Following the Qatari model, Angola set up a 5-billion-dollar sovereign wealth fund in 2012, which it plans to use to diversify its economy.
A land of inequality and corruption
But the parallel with Qatar could be misleading and many fear that the “miracle” is, in fact, a mirage. Angola is still dependent on oil price fluctuations, as oil accounts for 90 percent of the country’s exports and more than 40 percent of its GDP, according to the African Development Bank.
In other words, the slightest change in the economic climate could send Angola’s economy reeling. During the financial crisis in 2008, and the drop in oil prices that ensued, Angola’s economic growth plummeted from more than 10 percent to once percent in just a year.
Furthermore, Angola is a country of striking inequalities. The GDP per capita (6,120 dollars), one of the continent’s highest, is particularly misleading. Almost all of Angola’s wealth is in the hands of only five percent of the population, according to the Centro de Estudos de Investigaçao Cientifica, an economic think tank in Angola.
The wealth gap in Angola is one of the highest in sub-Saharan Africa, according to the website African Economic Outlook, which compiles regional economic data on the continent. Roughly 25 percent of the country’s population is unemployed, and 36 percent of Angolans live on less than two dollars a day.
Angola’s social problems are aggravated by the corruption that plagues the nation. In 2011, the IMF noted an unexplained gap of 32 billion dollars in Angola’s public finances for the 2007-2010 period. That very sum was recorded in the accounts of Sonangol, the powerful public oil company, but no one seems to know where they money went.
According to the NGO Transparency International, Angola, despite its efforts, remains one of the most corrupt countries in the world, ranked 157 on a list of 176 in 2012.
Though the corruption is endemic, it is nevertheless not the principal obstacle standing in the way of Angola’s continued economic development. A lack of access to drinkable water, crumbling infrastructure, inefficient bureaucracy, and a weak financial sector collectively make Angola one of the worst countries for business.
It is ranked 179 out of 189 on the World Bank’s “Doing Business 2014” list.