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Angola's Vast Economic Potential:
A Resource Rich Country
Angola's many natural resources make it one of Africa's wealthiest nations.
Oil: The Engine of Angola's Economy
Producing nearly 700,000 barrels a day, Angola is the second largest oil producer in sub-Saharan Africa. Crude oil accounts for 90 percent of total exports, more than 80 percent of government revenues and 42 percent of the country's GDP. Oil output is expected to reach one million barrels per day by the year 2000. The country's known recoverable reserves are currently estimated to total almost 4 billion barrels, but continuing exploration finds new reserves at the same rate oil companies deplete old ones.
Approximately 15 foreign companies, including Chevron, Texaco, Exxon and Occidental, have invested more than $8 billion in Angola. Oil companies are attracted by Angola's low operating costs, favorable geology and good business terms. U.S. firms continue to invest more money in Angola. Chevron, which has been operating in Angola for over 40 years, announced it had discovered four new offshore fields with 300 million barrels of recoverable oil. It plans to invest $2.8 billion between 1994 and 1998 to develop deep water oil fields off Angola's coast. Texaco has been in Angola for more than 25 years and will invest $600 million to develop new fields. Halliburton was recently awarded a $200 million dollar contract to develop oil well services in Cabinda province which will benefit all oil companies operating there.
Diamonds
Before 1975, Angola was the world's fourth largest producer of diamonds. Economists estimate that
Angola's alluvial reserves total between 40 and 130 million carats. In addition, there are untapped diamond reserves in volcanic pipes called kimberlites. Angola's six known kimberlite pipes, among the ten largest on earth, hold an estimated 180 million carats worth several billion dollars. Currently, official and unofficial diamond production is estimated to be worth $700 million per year. Angola recently announced changes to its production program which outlines its goal to produce more than 2 million carats of diamonds annually.
Other Minerals
With substantial deposits of gold, iron ore, phosphates, manganese, copper, lead, quartz, gypsum, marble, black granite, beryl, zinc and numerous base and strategic metals, Angola has been described as one of the world's biggest and least developed mineral treasure troves. The government has developed a policy framework to encourage investment in the mining sector. It has ended the state monopoly on geological studies and mineral prospecting and will award concessions to both foreign and national companies for prospecting as well as production.
Agriculture
Angola was self-sufficient in most food crops and a major exporter of coffee and sisal at independence. The potential remains to redevelop the once very prosperous agricultural sector. The United Nations estimates the country has from 5 million to 8 million hectares of prime agricultural land as well as areas suitable for grazing. The country's different climatic zones enable farmers to grow a wide variety of crops, including: cassava, yams, maize, bananas, beans, cotton, manioc, palm oil, potatoes, sunflowers, citrus and numerous vegetables.
Prior to war, Angola was the world's 4th largest coffee producer with outputs totaling 200,000 tons each year. In 1995-96, Angola more than doubled its coffee output thus demonstrating that this once rich export sector is making a recovery. Coffee production during the 1996-97 season is forecasted at 8,000 tons and is projected to reach 120,000 by 1998-99. Angola recently submitted a plan to the International Coffee Organization that would overhaul the sector over the next two years. Under its privatization program, the government plans to liquidate all 33 state-owned coffee companies and to invite international investors to bid for the largest plantations.
Timber
Angola also has considerable timber resources. Valuable tree species, including rosewood, ebony, and African sandalwood, as well as mahogany, tola and mulberry can be found in the northern forests which have been untapped since independence. Nearly 150,000 hectares of eucalyptus, cypress and pine plantations are waiting to be rehabilitated.
Fisheries
Angola's 1,600 kilometer coastline offers some of the richest fishing grounds in Africa. The annual catch
once averaged 300,000 tons a year. The government has deregulated fish prices and, with World Bank assistance, set up the Angolan Support Fund for Fisheries Development to support the development of the industry. The U.S. Trade and Development Agency recently commissioned a feasibility study on this potentially lucrative sector.
Electric Power Generation
Angola possesses enormous hydroelectric potential because of the large and powerful rivers that cross the country. Once completed, the 520-mw Capanda Hydroelectric Dam on the Kwanza River will double Angola's generating capacity and provide enough power to meet the country's needs for the next four decades. Angola currently generates more electricity than it needs and could very well be a regional exporter of hydroelectric energy. Angola is part of an international consortium to develop power stations along its border with Namibia.
Manufacturing
Before independence, Angola's manufacturing sector employed 200,000 people and produced $650 million worth of goods. With the end of the war and an infusion of capital, technology and training, food processing and light industry should recover quickly. Angola previously produced beer, sugar, wheat flour, cooking oil and soft drinks as well as textiles, soap, paint, plastic and glues. Heavy industry, including cement and steel tube production, oil refining, vehicle assembly and tire production, account for about 15 percent of the country's manufacturing output.
Promoting Trade And Investment
Recognizing the importance foreign participation will play in economic rehabilitation and recovery, the government of Angola has made promotion of trade and investment a high priority. By adopting tough new economic reform measures and entering negotiations with the IMF, the Government is laying the ground work for stable economic growth and development. Angola has an excellent history of cooperation with US firms, particularly in the oil sector. The oil industry provides a good example of how the US-Angola partnership has benefited both countries.
In September 1994, Angola passed a new foreign investment law to reduce barriers to investment and provide the necessary protections and guarantees to attract new investors.
Since then, major US and international companies have begun to participate in Angola's growing economy through infrastructure and natural resources development projects. The government continues to strengthen its commitment to foreign investors by abolishing state monopolies, privatizing state-owned companies and speeding up foreign investment procedures.
The government plans to make available new opportunities to foreign investors, including:
participation in onshore and downstream oil operations;
privatization of all 33 state-owned coffee companies; rehabilitation and reconstruction contracts worth hundreds of millions of dollars; reconstruction of its national power grid at a cost exceeding $800 million; modernization of its telecommunications facilities and infrastructure.
The New Foreign Investment Law:
Ensures that foreign companies are guaranteed equal treatment; Opens nearly all sectors of the economy to foreign investment, including infrastructure development; Private commercial banking is now permitted;
Privatization of state owned companies continues; International participation in the mining sector; Allows foreign investors to transfer abroad dividends, profits and proceeds of the sale of investments; Offers special fiscal incentives to foreign investors who employ a high proportion of Angolans and provide them with professional training and benefits equal to foreign employees; Simplifies and speeds up foreign investment procedures; Investments less than $5 million no longer need full Cabinet approval.
News on AngolaFriday, January 16, 1998According to a report released this past Wednesday, UN Secretary General Kofi Annan has recommended that a UN force in Angola have its mandate extended by three months in order to support the peace process. Secretary General Annan also suggested that the number of UN peacekeepers in Angola be reduced from 1,560 to 910. "Certain important tasks remain to be completed in order to conclude the peace process in Angola," Annan stated in the report. "While significant progress has no doubt been achieved toward this goal . . . persistent delays in the implementation of the Lusaka protocol continue to be a source of serious concern." The Angolan national petroleum company announced yesterday that a new refinery will be created in central Angola. According to Carlos Satunino, Director of Planning for the company, the refinery, which will be able to process 200,000 barrels of crude oil, will be established in Lobito. Construction of the new refinery project will start at the end of the month. The aim of the project is to expand Angola's oil refining capacity and promote economic growth in central Angola. The Angolan government is also planning to build a shipyard and an oil logistics and supply base in Lobito.
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