Angola’s decision to dispense with support from the International Monetary Fund (IMF) at a difficult economic and financial time was based on the idea of securing new financial support from China and of strengthening relations with other Asian countries, according to analysts.
Angola has received a quarter of all the loans China has granted to African countries in the last 15 years and Angolan state oil company Sonangol has received 84 percent of all the loans granted to the extractive industries, according to a new academic database.
The diversification of Angola’s economy, which is a major priority for the country’s authorities, will have the support of China and some support instruments will be analysed “very soon” at the mixed commission between the two countries. The country is facing difficulties as a result of the drop, since 2014, in the price of oil, which made it more urgent to boost the weight of the non-oil sector. As a result of this on 13 June Angola and China discussed economic cooperation at a meeting between multi-sector delegations in Beijing, according to Angolan news agency Angop.
The South Atlantic, where five Portuguese-speaking countries are located, has been a privileged area for key companies China in their efforts at globalisation and Angola and Brazil are among the top five destinations for Chinese investment in the last decade, according to a recent study.
The arrival of the Bank of China in Angola is generating expectations in the business and financial sectors in the Angolan capital, as it will potentially facilitate payments abroad, currently constrained by a lack of foreign currency.
Support from China for the industrialisation of Angola and Mozambique has been set as an objective on a government level, as large investments in local production capacity, even more necessary at a time of economic difficulties, are now expected.
Restoring confidence to setting up business partnerships is the aim of the new Angola-China Chamber of Commerce, whose governing bodies include important figures from Angolan society and the business world.
With the downturn in tax revenue, funding from China has become even more important to Angola and is being implemented in smaller key projects better suited to local needs, according to the Economist Intelligence Unit (EIU).
China has been involved in urban development in Angola, particularly in Luanda, and its experience in this field may help the economic diversification of Angola, with more investment in real estate, thus overcoming current economic difficulties.
Financial support from China to African countries where Portuguese is the official language (PALOP) amounted to S$22.6 billion between 2000 and 2014, half of which was directed to Angola, according to Chinese official figures cited in a study published recently.