STORY HIGHLIGHTS
- The Angolan economy is gradually transitioning from an oil-based growth model to a diversified, resilient, and inclusive economic model.
- The Angola Country Economic Memorandum (CEM) analyzes the country¡¯s economic growth over the past two decades and offers insights into its long-term potential.
- The aim is to identify the main challenges, opportunities, and policy reforms to accelerate the transition to a more resilient, inclusive, and sustainable growth path.
Angola has implemented a series of reforms to restore macroeconomic stability and promote economic diversification. Despite these efforts by the authorities, excessive dependence on the oil sector remains a key challenge. Oil accounts for approximately 30 percent of GDP, 65 percent of revenues, and more than 95 percent of goods exports, while the growth of the non-oil economy remains weak. In addition, oil price shocks have translated into macroeconomic instability and fiscal crisis, slowing down the real economy.
The Country Economic Memorandum: Moving Beyond Oil serves as a diagnostic tool to support Angola¡¯s policymakers in advancing the economic diversification agenda outlined in the National Development Plan (NDP) 2023¨C2027 and the Long-Term Vision (Angola 2050). It identifies three main challenges:
- Macroeconomic instability from oil dependency and volatility ¨C which has not helped develop a strong private sector and foster job creation.
- Low productivity across firms, due to a challenging business environment.
- Limited access to services like electricity, transport, and digital tools ¡ª and the low-level of human capital.
As a result, poverty and inequality are stubbornly high: Approximately one-third of Angolans live below the international poverty line (USD 2.15/ day), and economic inequality is substantial, as reflected by a Gini index of approximately 0.51. Additionally, Angola¡¯s human capital index (HCI) of 0.36 is among the lowest in Sub-Saharan Africa. Unemployment has a significant impact on young people and women, with roughly one-third of the population unemployed. Moreover, approximately 80 percent of jobs are in the informal economy.
To address these challenges, the Country Economic Memorandum offers a roadmap toward a more sustainable and inclusive growth model, which makes better use of the country¡¯s existing resources while also laying the foundation for future prosperity. It is built on three policy priorities:
- Pursuing macroeconomic stability by improving macro-fiscal management.
- Boosting productivity growth to create jobs.
- Expanding access to basic infrastructure and invest in human capital.
The development of the Lobito Corridor also offers a unique opportunity to accelerate economic transformation. With the right reforms, it could be a catalyst for diversifying Angola¡¯s economy and connecting it to regional and global markets.
Economic growth could nearly double by 2050 if the country accelerated implementation of structural reforms targeting macroeconomic stability; boosting productivity growth; expanding physical and human capital endowments; and making use of its substantial agricultural potential.