The economy of Angola, like that of many other developing nations, has been affected by the blessing and curse of oil since the discovery of the first fields back in the 1950s.
While the nation’s sizable oil reserves in Block Zero generate notable foreign exchange earnings for the economy, many other high-potential sectors have remained untapped and largely neglected.
Crude oil exports account for over 90% of Angola’s exports, 75% of all government spending, and 45% of the GDP, according to best estimates. But, this may be about to change.
Buzzwords such as “diversification,” “sustainability,” and “service economy” have come to the foreground of public discourse in Angola, with many proposing solutions to rid the economy of years of oil dependence.
Worthy as some of these solutions may be, the country can take the first steps toward diversification without doing anything drastic, by simply focusing on immediately profitable sectors which do not require much investment.
Untapped agricultural potential
Since colonial times, Angola has been a producer of coffee, cotton, grains, tobacco, bananas, and other fruits.
Thanks to a long rainy season which lasts from October until May, coffee exports alone generated 50% of the country’s foreign exchange earnings in the 1960s.
Even after the heyday of farming was gone, subsistence agriculture continued to feed many families in Angola. However, by adopting sustainable models of agriculture and modern irrigation, the sector could make a comeback, more than tripling its output.
According to best estimates, less than 20% of the nation’s arable land is currently under cultivation. Some 60 million hectares of land, especially in highland valleys, can quickly turn productive with the right investment and knowledge transfer.
Coffee has seen a major renaissance in recent years, and is generally seen as the nation’s best bet. Angolan coffee farmers once gave the world 230,000 tons of smooth, sweet-smelling robusta coffee beans a year, but sadly the exports dropped to 8,000 tons in the 2010s.
Now, the sector is finally ready to regain its former glory, after the EU proposed a finance program for sustainable farming.
Iron, phosphate, and other minerals
Mining is yet another sector ideal for early-yield enterprises in the country. Iron ore used to be exported in large quantities, but everything came to a halt in 1976, shortly after independence.
The once flourishing iron ore industry died out due to transportation issues, outdated infrastructure, and absence of mining technology.
However, in 2021 Angola resumed iron ore export for the first time in 45 years. The first international shipment left port for China in April, 2021, signaling the rebirth of a highly profitable trade.
There are also proven reserves of several other minerals, such as manganese, quartz, and copper, which have not been mined at industrial scale so far.
Given the growing demand of the electronic industry for such minerals, mining resources could soon turn profitable for the country.
Diamonds and precious metals
Angola has been among Africa’s top three producers of diamonds, though some 60% of the diamond-rich areas remain unexplored to this day.
An incident in 2022 drew everyone’s attention to Angola’s fine diamonds again. A streak of pink diamond was unearthed in the northeast of the country. At 170 carats, the find was considered a rarity.
High potential areas where investors are encouraged to set up their businesses include the provinces of Bié, Uíge, and Malanje.
With the US putting a sanction on the import of Russian gems, pink Angolan diamonds can get the attention they deserve.
Endiama, the national diamond company of Angola, enjoys exclusive mining rights, but is often open to forming partnerships with investors in a “climate of transparency”.
Much like agriculture and mining, the diamond trade should be regarded as a stepping stone toward achieving true economic diversification, as the Angolan economy has much more to offer to investors in the long run.