• Angola’s economy grew by 3.8% in 2015, and GDP growth will remain subdued, at 3.3% in 2016 and 3.5% in 2017, due to lower crude oil prices.
• Policies to accelerate economic diversification and strengthen human development and equitable growth are needed to reduce vulnerability to external shocks.
• Investment in economic and social infrastructure is needed to enhance the sustainability of the country’s urbanisation process.

Angola’s natural resource wealth helped attract foreign direct investment and ensured strong economic growth over the past decade. But the economy has recently undergone a major structural shock due to lower crude oil prices, and forecasts for the coming years remain filled with uncertainty about the evolution of the country’s oil exports and international commodity prices. Growth of gross domestic product (GDP) is projected to remain subdued, at 3.3% in 2016 and 3.5% in 2017, down from 3.8% in 2015. Growth of the oil sector will average 4%, while the non-oil sector is expected to show a small improvement, growing by 3.4%, driven mainly by a strong recovery in agriculture.

In January 2016, the government adopted a strategy for mitigation of the oil crisis aimed at finding substitutes for oil as a major source of revenue. Agriculture is expected to play a key role in boosting the country’s exports and generating foreign currency earnings. The strategy also envisages investments in infrastructure, gradual reduction of imports, deepening of financial sector reforms, skills development and improvement of the business environment. The main initiatives for enhancing the ease of doing business involve reducing bureaucracy and facilitating credit. Notwithstanding these reforms, the legal framework still needs adjustment to ease the business environment. Income inequality, unemployment and poverty remain a challenge in Angola. Regional economic imbalances also persist. Transformative investments are required to decongest large cities and reconnect them with major economic growth poles, particularly in rural areas.

Although Angola is perceived as highly urbanised, with 62.3% of the population living in urban areas, the country needs to broaden human development opportunities for the population. Under its National Development Plan 2013-2017, the government is contemplating a territorial development strategy to create a network of development poles. The country has a National Urbanisation and Housing Programme, a 2015-2030 Metropolitan Plan for Luanda and several ongoing urbanisation projects in other areas. Rural to urban migration has been a major driver of urbanisation, especially during the 27 years of armed conflict that followed independence in 1975. The country counts 18 provinces divided into municipalities, communes, villages and towns. Depending on the setting, the government recognises different criteria for classifying urban areas. There is a need to integrate informal housing progressively into city planning and management and to strengthen national institutional capacities for managing urbanisation and urban and rural development.

Source: African Economic Outlook