Angola’s agriculture sector tops non-oil investment but needs more productive, modern model

23 November 2009

Luanda, Angola 23 Nov – Most investment in Angola’s non-oil sector this year is in agriculture but a new more productive and efficient model is needed in this area, say analysts from Portuguese bank BPI.

“The level of production can be improved considering the existent (family) productive structure, expected improvements in infrastructures, access roads and available resources. But this method will be insufficient and investment in this area will have to be made with the goal of promoting a change in the production model,” says the latest report on Angola from BPI’s research center.

The changes will involve creation of farmers’ associations to create productive units with more modern management models using know-how and more sophisticated and productive cultivation techniques, says the BPI report.

“However, it can be deduced this is a route that is slow given it is underpinned by the assumption of more qualified labor, as well as administrative, institutional and even cultural change, which allows this new model of development to be supported,” adds the BPI document published in October.

Angola’s primary sector “has vast potential for exploitation when we evaluate the level of existing natural resources, but currently production levels remain at subsistence level supported by small family production units with low levels of productivity and little incentive to change their manner of production.”

The Luanda government has defined agriculture as a priority and launched a 2009-2013 program with predicted investment of 59 billion kwanzas in modernization projects.

Figures from the United Nations Food and Agriculture Office (FAO) show that Angola’s faming production is today less than half Africa’s average and that the country continues to have production deficits in agriculture and livestock.

Angola’s non-oil sector showed signs of growth in the first half of this year, with the Agency for Private Investment (ANIP) approving investment schemes worth a total US$ 1 billion – the largest slice, US$ 360 million, going to agriculture.

BPI analysts noted the recent upward revision of growth forecasts by BPI Angola, which practically end recession, as well as Luanda getting access to fresh financing, like the International Monetary Fund (US$ 900 million).

“Movement to economic recovery in the second half of the year, driven by improved revenues (price and quality) of oil exports allows the fall in currency reserves to be stemmed.”

This indicator has developed positively since July, say the BPI analysts, and the trend is expected to heighten in coming months, with the fall of currency reserves seen at the start of the year ruled out due to boosted crude revenues.

The International Energy Agency puts Angola’s increased oil output at 1.7 million barrels per day in July and rising. Angola’s state budget envisages an annual average of 1.79 million.

Dollar appreciation against the kwanza continues but this trend will relieve some pressure on the current account through falling, but more expensive, imports.

As for inflation, the official goal of 12.5 percent is improbable due to high rates up to August and the devaluing effect of the exchange rate. (macauhub)