Oil-rich Angola looks to diversify economy to avoid slump

When you visit Luanda’s upmarket beachfront restaurants, where diners pay hundreds of dollars for their meal without even blinking, it’s hard to imagine the world is in economic meltdown.

Outside, giant 4x4s and Hummers are kept air-conditioned by snoozing drivers waiting on their bosses, while they toast their financial success with $20 cocktails.

Down the road large billboards show brightly coloured digital images of new football stadiums being built across the country, in preparation for the Africa Cup of Nations tournament in 2010.

“Angola is not directly affected by the crisis, but it is affected indirectly because it is an oil economy, and the fall in the price of oil has had a big impact,” Alberto Chueca, World Bank country manager for Angola, said.

The wealth of the Southern African country, emerging from almost three decades of civil war that ended in 2002, is looking at ways to diversify its economy and avoid the global financial crisis.

“The government is revising the budget, which is clever to do, but I hope that given the huge social challenges and the need for reconstructing the country, they do not cut too much on capital budget,” said Chueca.

“This is a country with some of the worst social indicators in the world. I hope they cut the fat but not the muscle and they don’t reduce their social investment,” he added.

Since the end of the 27-year war, Angola has emerged as one of the world’s fastest-growing economies with an average annual GDP growth of 15%.

President Jose Eduardo dos Santos said “the fall in the price of oil and diamonds will seriously reduce our revenues and this means the state will have less money to use for public spending”.

“The crisis comes to reveal once more that the enormous dependence of our economy on oil and diamonds is not convenient and that there is need for diversifying ... implementing and promoting investments in other sectors of production,” said Dos Santos.

Dos Santos is hoping to extend his 29 years in office at a presidential poll expected later this year.

Addressing an audience of government ministers and top banking heads, Aguinaldo Jaime, president of ANIP (National Agency for Private Investment), stressed the importance of diversification and developing an effective private sector.

“We need growth that offers jobs for all citizens, changing the capital-intensive industries and looking outside of the mineral economy, beyond oil and diamonds,” said Jaime during the launch of a new weekly financial paper, Expansao.—Sapa-AFP

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