February 16, 2025
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Angola Economic

Angola invests in economic diversification to reduce oil dependence and drive sustainable growth

Lagos – In a strategic move to secure long-term economic stability and lessen its historical dependence on oil, the Angolan government is channeling significant investments into key sectors such as agriculture, infrastructure, and renewable energy. This step is part of a broader plan to transform Angola’s economy, increasing the share of non-oil sectors and strengthening the country’s resilience against global market fluctuations.

Currently Africa’s second-largest oil producer, Angola exports approximately 90% of its oil output, generating revenues that account for nearly 30% of its Gross Domestic Product (GDP).

In 2024, oil exports are expected to generate around USD 35 billion, driven largely by Asian market demand, especially from China. However, fully aware of the risks of reliance on a single commodity, Angolan authorities are now pursuing a more balanced growth model.

According to the National Development Plan 2023-2027, Angola has allocated USD 8 billion for infrastructure projects and expanded oil refining capacity, addressing the critical need to reduce its reliance on fuel imports.

New refineries under construction in Cabinda and Lobito, as well as the modernization of the Luanda refinery, are expected to make Angola self-sufficient in refined oil products by 2026. With a projected refining capacity of 400,000 barrels per day, Angola could save around USD 3 billion annually on fuel imports, creating over 15,000 new jobs in the petrochemical sector.

“Angola is at a crucial point in its economic history. Diversification isn’t just an option but a necessity to secure a future of stability and prosperity,” said Minister of Planning, Victor Hugo Guilherme. According to him, the goal is for sectors like agriculture, tourism, and renewable energy to increase their GDP share by about 20% by the end of the decade.

The government has allocated USD 2 billion to agricultural development in 2024, focusing on boosting the production of traditional commodities such as corn and coffee and incentivizing family farming. The target is for agricultural production to grow by 4% annually, contributing not only to food security but also to job creation, especially in rural areas. With an untapped export potential, agriculture could become a new source of foreign exchange and strengthen the private sector, which saw a 25% increase in investments over the past two years.

Alongside agricultural development, Angola’s Sovereign Wealth Fund (FSDEA) plays an essential role in the country’s economic structure.

With assets totaling USD 7 billion, the fund acts as a strategic reserve to shield the economy from external shocks and support investments in health, education, and infrastructure. In 2024, approximately 20% of FSDEA resources were allocated to these sectors, helping to bridge the infrastructure deficit and improve quality of life for the population.

In the renewable energy sector, Angola has formed partnerships totaling over USD 5 billion for the construction of solar and hydropower plants by 2027, setting the country on the path to an energy transition. With growing electricity demand and a goal to electrify rural areas,

Angola is expanding its clean energy sources to ensure sustainable development and reduce its carbon footprint. These projects are expected to create around 10,000 direct jobs and provide electricity to approximately 3 million Angolans in remote areas.

Compared to other African oil-dependent economies, such as Nigeria and Algeria, Angola stands out for its consistent investments in diversified sectors and its strategy for self-sufficiency.

While Nigeria faces challenges with infrastructure and refining, Angola is making strides toward self-sufficiency and strengthening its internal market. Angola anticipates 4% economic growth in 2024, driven by increased non-oil investments and enhanced basic infrastructure.

Experts view Angola’s strategy to reduce oil dependency and diversify the economy as a robust and effective approach to sustainable development. With the successful execution of these plans, Angola has the potential to establish itself as one of the most resilient and forward-thinking economies on the African continent, promoting prosperity and inclusion for its population.

“We are building a stronger Angola, less vulnerable to external fluctuations,” said Victor Hugo Guilherme. “Investment in strategic sectors and responsible management of our reserves are the way forward to a secure future for the next generations.”

The future looks promising for Angola, with structural investments and an increasingly diversified approach that reduce the economy’s exposure to oil prices and strengthen essential sectors. If Angola maintains its implementation pace and efficient resource allocation, it could emerge as a model economy in Africa, recognized for its resilience and adaptability in a constantly evolving global economic landscape.

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