Angola’s Economic Crossroads: Reforming for Resilience, Jobs, and Human Capital

Angola’s economic story is one of untapped potential restrained by heavy reliance on oil. Following the end of its civil war in 2002, the country enjoyed a decade of remarkable growth, averaging 7.7% annually until 2014. This boom, driven largely by oil exports, brought a surge in national revenue but failed to deliver inclusive or sustainable development. When global oil prices collapsed in 2014, Angola’s economic weaknesses were laid bare. A five-year recession ensued, worsened by the COVID-19 pandemic, leaving the economy sluggish and public services strained. By 2023, Angola’s per capita income had returned to early-2000s levels, while poverty, inequality, and unemployment remained widespread.

Oil still dominates Angola’s economic structure, accounting for 25% of GDP, 65% of fiscal revenue, and over 90% of exports. Yet the country is now grappling with declining production and an urgent global push toward energy transition. Over half the population lives below the poverty line of USD 3.65/day, and 33% face severe food insecurity. With a Gini coefficient of 51.3, Angola ranks among the most unequal societies globally. The government has enacted meaningful reforms, including fiscal rules, a flexible exchange rate, and targeted social transfers, but the pace of transformation remains too slow for the challenges ahead.

Reforming the Economic Foundation: From Boom-Bust to Stability

The World Bank’s CEM outlines a three-pillar strategy to shift Angola away from its boom-and-bust cycle and toward inclusive growth. The first pillar, macroeconomic stabilization, addresses Angola’s deep-rooted fiscal and monetary volatility. Although the 2020 Fiscal Responsibility Law introduced new tools for medium-term budget planning and fiscal discipline, execution has lagged. Nonetheless, progress has been made: Angola’s debt-to-GDP ratio dropped from a peak of 137% in 2020 to under 90% by 2023, thanks to IMF-supported reforms.

Despite this, Angola remains vulnerable to external shocks. Inflation has averaged 26% over two decades and surged again in 2023 due to currency depreciation and fuel subsidy cuts. To ensure macroeconomic resilience, the report advocates for stronger implementation of fiscal savings mechanisms, expansion of non-oil exports, inflation-targeting monetary policies, and better debt transparency. Fuel subsidy reform, if paired with effective social protection, could also create fiscal space for growth-oriented investments.

Unleashing Private Sector Potential: A Productivity Revolution

A central challenge facing Angola is its low productivity. Between 2009 and 2019, value-added per worker declined by 30%, and most employment shifted toward low-productivity informal jobs in agriculture and retail. Despite a young and increasingly educated population, the private sector remains stifled by weak capabilities and limited access to finance.

The 2019 business census revealed that 79% of companies employ fewer than five people, and just 1% have more than 100 workers. Only 9% of firms have access to formal credit, and over 80% of jobs are informal. Bribery, bureaucratic hurdles, unreliable electricity, and a mismatch between education and job-market needs further undermine growth. The CEM urges targeted reforms to expand digital infrastructure, support micro and small enterprises, improve vocational training, and promote formalization through better regulatory enforcement. With these interventions, Angola’s businesses could shift from survival mode to growth engines.

Closing the Infrastructure and Human Capital Gaps

Angola’s infrastructure shortcomings are holding back progress. Despite strong electricity generation capacity, over 50% of the population lacks access, particularly in rural areas, where only 8% are connected to the grid. The national electricity network remains fragmented, tariffs are unsustainable, and technical losses are above 30%. Transport networks are also lacking: just 52% of primary roads are paved, ports are congested, and the railway system is underutilized.

In the digital domain, Angola trails regional peers in both access and affordability. Just 39% of the population uses the internet, and broadband remains prohibitively expensive. State-owned monopolies and poor competition hinder infrastructure expansion and service delivery. Meanwhile, Angola’s Human Capital Index is a dismal 0.36, among the lowest globally. Children complete an average of eight years of schooling, but the quality is poor, reducing learning-adjusted years to just 4.2. Public spending on education and health is declining, and youth unemployment persists even among the educated.

Investing in human capital is not optional; it is foundational. The report calls for scaling up spending on education and health, improving teacher training, expanding access to clean water and sanitation, and creating better pathways from education to employment.

Agriculture: Angola’s Hidden Economic Engine

With 59 million hectares of arable land and favorable climate conditions, agriculture could become the engine of Angola’s economic transformation. Yet only 10% of arable land is cultivated, and fertilizer, irrigation, and mechanization are virtually absent. More than 80% of rural villages lack electricity, and over 75% lack water storage. Most smallholders work informally and face insecure land rights, limited access to finance, and weak supply chains.

The CEM identifies agriculture as a high-potential sector for job creation and poverty reduction. Strategic interventions, such as investing in infrastructure, strengthening agricultural extension services, securing land tenure, and supporting agribusiness, could unlock Angola’s untapped agricultural wealth. Global demand for food is rising, and Angola could position itself as a major producer, both for domestic consumption and regional trade, especially through the Lobito Corridor.

Angola’s path forward demands bold decisions and strategic investments. The lessons from countries like Malaysia and Chile demonstrate that diversification, institutional reform, and human capital development can transform resource-dependent economies. Angola has the resources, youth, and geography to chart a new course, if it commits to moving beyond oil. The CEM is more than a report; it is a call to action.