Angola worse off as hyped economic vision fails litmus test

Angola President João Lourenço

Angola President João Lourenço

from PEDRO AGOSTO in Luanda, Angola
LUANDA, (CAJ News) EXACTLY a year after President Joao Lourenço assumed office and promised Angolans a so-called economic miracle, the Southern African’s economy is in dire straits, highlighted through downgrades by international credit rating agencies, downward revisions of growth forecast and plans by government to borrow.

Recently, Fitch Solutions forecast Angola’s gross domestic product (GDP) real growth at 1,5 percent, down from 2,8 percent. The rating agency anticipates growth of 2,3 percent for 2019, down from the previous projection of 2,6 percent.

The government in August revised the growth forecast to 2,2 percent, compared to 4,9 percent in the previous forecast.

According to data by the National Statistics Institute, the Angolan
economy has remained in recession at the outset of the year.

The government of the former defence minister is to request a loan of $4,5 billion from the International Monetary Fund (IMF), with talks set to begin October, Finance Minister, Archer Mangueira, confirmed.

Angola’s debt is over $33 billion, which represents more than 70 percent of Angola’s gross domestic product (GDP), meaning that technically, it is a heavily indebted poor country.

At face value, the malaise is a result of the declining production of oil, a commodity that is the heartbeat of the economy, but critics argue this is the reflection of the failure of contentious reforms initiated by Lourenço upon succeeding Jose Eduardo dos Santos.

Global crude prices have coincidentally recovered considerably.

Energy Wise, the oil industry think-tank, said there was “a high degree of impatience” amid the downturn blamed on the declining oil industry.

Southern Africa’s largest country’s by size, Angola is the continent’s
second biggest producer of crude oil (after Nigeria).

Hence, key to above-mentioned reforms has been the transformation, albeit with controversy, of the oil sector. These include the restructuring of Sonangol, the parastatal that oversees petroleum and natural gas production, and setting up a new regulator, National Agency of Oil and Gas (NOGA).

Among other pledges by Lourenco included greater exchange rate flexibility, initiatives to foster growth and reduce the public debt-to-GDP ratio as well as programmes to alleviate poverty and other social problems.

Analysts argue reforms, particularly in the oil sector, are just euphemism for a system of political patronage entrenched since the People’s Movement for the Liberation of Angola (MPLA) came to power at independence from Portugal in 1975.

Manuel Vicente, the disgraced former deputy president, is at the centre of a recurring system of patronage.

He is accused of was accused of bribing a magistrate with over $800 000 in order to shelve investigations into his alleged deals at, which he headed between 2009 and 2012.

A court in Portugal ruled he should face trial over the allegations
brought against him by a prosecutor in 2017.

Vicente is not only an advisor to Lourenço but is alleged to maintain an extraordinary position of influence over the economy, through his family and close associates.

“However, the restoration of Manuel Vicente carries significant political, reputational, and transparency risks that are likely to undermine the government’s popular manifesto of probity and economic liberalisation,” EXX Africa, the specialist intelligence company, stated.

Over the past year, Vicente, described as one of the wealthiest and most influential power brokers in the country, is said to have regained immense control over Sonangol, the central bank and the finance ministry.

His business associates are reportedly benefiting from recent contract allocations.

“By bringing Vicente back into a position of political influence and
shielding him from various international corruption investigations,
Lourenço has found a powerful ally in his campaign to consolidate his own authority and to prosecute members of the former president’s family,” EXX Africa stated.

After the dismissal of dos Santos’ daughter, Isabel, as chair of Sonangol, her brother, Jose Filomeno, has been arrested following a fraud investigation without any evidence after a London judge lifted an asset freeze order against Quantum Global in Angolan sovereign wealth fund (SWF) case in July .

Analysts have dismissed Lourenço’s crusade against corruption as a ploy to purge dos Santos’ appointees and cement his (Lourenco’s) position atop government and the ruling party.

A fortnight ago, Lourenço took control of MPLA, bringing to an end of dos Santos’ lengthy dominance of politics in this country with an estimated 29 million people.

Dos Santos and Lourenço in 2017 were holding hands during a campaign rally in Luanda when the announcement was made that handover would happen and the torch passed to Lourenco.

“The MPLA should be at the vanguard, even if the first to fall (to
anti-corruption crusade)are party members or other leaders of the party,” Lourenço said after his election as MPLA head.

– CAJ News

 

 

 

 

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Posted by on Sep 26 2018. Filed under Africa & World, Energy, Exclusive, Featured, Finance, Finance & Banking, Investing, Investing, News, Oil & Gas, Regional. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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