Angola: Signs of a new trajectory
After years of economic mismanagement a new, if restrained, sense of optimism has gripped Angola as the actions of the country’s fledgling president start to suggest that change may be possible.
Upon taking the helm of Africa’s second-largest oil producer, João Lourenço surprised many by immediately starting to dismantle the patronage networks of his predecessor, Eduardo dos Santos. Making it clear he is no puppet, he has also broken with a number of long-standing policies, especially with regard to economic and foreign policy.
A real change of direction would be a welcome in a country reeling in the wake of years of kleptocracy and suffering from high levels of public debt, unemployment and inflation. Yet politics and economics often go hand in hand in Angola and the real significance of Lourenço’s changes is not yet apparent.
“I think its unclear at present to what extent these are just moves against the dos Santos clique or if they are more substantive moves to diversify and open up the economy,” says Claudia Gastrow, Angola expert at the University of Johannesburg.
A number of economic reforms and bold political manoeuvres suggest a change of course for Angola. Dismissals have come thick and fast since Lourenço entered office in late September, starting with the chief of police and the head of the intelligence service, and culminating with the dismissal of the former president’s daughter, Isabel dos Santos, as head of the national oil company, Sonangol.
Many of the new faces hail from the barracks. Lourenço served as defence minister and is heavily associated with the military. The overhaul, however, has not been absolute and his cabinet reflects the delicate tightrope Lourenço must walk between old dos Santos loyalists and his own cadres.
Perhaps his real focus is on the economy, as Lourenço himself has suggested. In the run-up to the election, he described himself to a local journalist not as the Gorbachev of Angola but as its Deng Xiaoping – an economic rather than a political reformer.
This statement certainly bears some weight in the current context. Lourenço has opened up the Angolan business space in a variety of ways that contrast starkly with Angola’s former isolationist policies. For example, Angola will allow a fourth mobile operator to enter its profitable telecoms sector.
“We are increasing competition to improve the service, and will work on pricing and quality of service,” says telecoms minister José Carvalho da Rocha.
Movicel and Unitel are currently the largest providers and both are partly state-owned. In another liberalising move, Lourenço quickly visited Jacob Zuma in South Africa in order to bolster bilateral cooperation, and the two countries have agreed to scrap visas for all passport holders.
“In the past there was almost a protectionist stance regarding South Africa and this has shifted,” says South African political analyst Paula Cristina Roque. “It’s unheard of and it’s going to bring incredible opportunities by increasing the possibility of regional trade.” Another inhibitor to inclusive Angolan growth is corruption, something that Lourenço took a hard line on during his electoral campaign.
In one of his boldest policy moves to date, the president has told Angolans they risk prosecution if they do not repatriate funds illegally held abroad within the coming months. Speaking at the end of a conference on corruption held by his party, the ruling MPLA, he said a grace period would be announced during which money could be repatriated and invested in the Angolan economy with no questions asked – a thinly veiled warning to those who have plundered the country’s assets.
These reforms suggest a new economic path for Angola. It remains to be seen whether Lourenço can gather enough support from his party to properly implement them, or indeed if they are indicative of a long-term strategy rather than minor calibrations.
“If he tried to shake up the system too much he would lose his support base. I imagine it would be extremely difficult to totally abandon a system that has been steeped in corruption and patrimonialism, so I think there is a real concern that the initial symbolic move might eventually be replaced by another entrenched system,” says Gastrow.
Can oil save Angola?
After the dismissal of Isabel dos Santos, Angolans are looking to the state oil company, Sonangol, under its new head, Carlos Saturnino, to save the country from its economic woes. The World Bank estimates that public debt stood at 59.2% of GDP at the end of 2016. Net international reserves have deceased by 20.4% since the beginning of 2017.
Inflation now stands at around 27%. As oil accounts for a third of economic output in Angola and over 95% of exports it is clear the sector needs a revamp, irrespective of rising oil prices. According to the major oil companies, the Angolan oil sector is being devastated by delays in project approvals at Sonangol and a backlog of payments owed.
Roque cites the planned Lobito refinery as one such project – construction has been delayed for years due to irregularities in contracts and financing disagreements. The refinery would work wonders for downstream production in Angola, and it is yet to be seen how Saturnino will tackle the issue.
Sonangol owes huge sums to its biggest lenders – the Bank of China, Standard Bank and Standard Chartered – as well as $3bn to majors, contractors and traders. The government itself lent Sonangol $6.9bn in 2016, a sum procured from the China Development Bank.
That said, Lourenço remains optimistic about the company’s potential and described it as a “golden goose”, instructing the new board to “take good care of her.” His recent pragmatism suggests progress for the sector.
Roque points out that under Eduardo dos Santos, the French major Total was partially excluded from the local market due to strains with the French government. Total and Sonangol have now signed new project pipeline agreements to develop upstream and downstream projects, and this move seems to indicate Lourenço’s growing wish to open all areas of Angola to new players and investments.
“He is trying to signal there is an alternative,” says Gastrow. Whether or not any of these recent developments will come to define Lourenço’s administration will depend on how genuine the reforms are and how much his party allows. For now, the signs are good.