Lagos, Nigeria – The National Bank of Angola (BNA) is grappling with deep-seated economic challenges, as inflation continues to soar and the national currency, the Kwanza, remains in a precarious state. Despite repeated assurances of stability, the lack of robust structural reforms and a coherent economic strategy has left the country’s economy vulnerable to external shocks and internal inefficiencies.
AfricaHeadline Reports Team
editorial@africaheadline.com
Angola’s inflation rate climbed to 31% in June 2024, up from 29.6% at the end of 2023, according to the National Statistics Institute.
The soaring inflation is largely driven by a heavy reliance on imports for essential goods, exacerbated by the significant depreciation of the Kwanza. Since 2023, the currency has lost nearly 40% of its value, with the exchange rate breaching 850 AOA/USD in 2024.
While the central bank has maintained a tight monetary policy, including raising the base interest rate to 19.5%, the impact on curbing inflation has been marginal.
Critics argue that these measures are failing to address the underlying structural issues, further eroding consumer purchasing power and discouraging investment in the productive sectors.
Oil remains the lifeblood of Angola’s economy, accounting for approximately 95% of export revenues and more than 50% of GDP. However, this dependence leaves the economy exposed to fluctuations in global oil prices. The 2025 national budget is based on a projected oil price of $70 per barrel, a figure that is precariously vulnerable to market volatility.
Efforts to diversify the economy have yielded limited results.
Agriculture contributes only 10% of GDP, and the non-oil industrial sector represents less than 8%, highlighting the absence of substantial progress in reducing reliance on oil revenues. Meanwhile, countries like Ghana and Rwanda have made notable strides in diversifying their economies, providing lessons that Angola has yet to fully embrace.
Angola’s projected fiscal deficit of 1.65% of GDP in 2025, compared to 1.46% in 2024, underscores the government’s struggle to maintain fiscal discipline.
The lack of effective coordination between fiscal and monetary policies further complicates the central bank’s efforts to stabilise the economy. This disconnect is particularly evident in the failure to address Angola’s mounting public debt and limited fiscal space for critical investments.
The country’s foreign exchange reserves, currently covering only 3.4 months of imports, remain insufficient to buffer against external shocks. While the BNA aims to increase this coverage to 5 months by 2025, achieving this target will require significant improvements in revenue mobilisation and a reduction in dependency on volatile oil markets.
Neighbouring countries offer stark contrasts. Ghana, for instance, has bolstered its foreign exchange reserves to cover 6.8 months of imports, and Rwanda continues to expand its agricultural and technological sectors. Angola, in comparison, lags behind, with its economic resilience undermined by structural inefficiencies and policy misalignments.
While the government projects a modest recovery in non-oil GDP growth to 3.8% in 2025, this is unlikely to make a significant dent in the country’s economic vulnerabilities. Inflation is forecast to slow to 26%, but this remains one of the highest rates in sub-Saharan Africa.
Meanwhile, the Kwanza is expected to stabilise at an exchange rate of 800–820 AOA/USD, assuming no further external shocks.
Angola’s economic outlook is one of cautious realism rather than unbridled optimism. Without meaningful reforms to diversify its economy, strengthen its fiscal framework, and stabilise its currency, the country risks remaining trapped in a cycle of dependency and volatility.
The National Bank of Angola must adopt a more transparent and proactive approach to policymaking, prioritising structural reforms and closer coordination with fiscal authorities.
This includes bolstering credit access for productive sectors, expanding foreign exchange reserves, and creating conditions for sustainable economic growth.
For Angola, the path to recovery requires more than rhetoric; it demands decisive action. The stakes are high, and the time to act is now.
