The end of the Angola Civil War in 2002 instigated the rise of its economic prosperity. With an average growth of 10.61%, Angola experienced a twelve-fold increase in real GDP from 2001 to 2011. As Angola slowly emerges as an economic hub in Southern Africa, China is becoming a pivotal trading partner and a channel for future growth.
Trade relations with China may not bode well for Angola
However, the Angola’s economic model emphasizes short-term profit at the expense of long-term growth similar to many developing nations. The pressures imposed by larger, more powerful nations steer these countries into resource traps with little hope of escape.
China’s growing energy demands
China has built deep foundations across Africa. Contributing billions of dollars of aid to health, education, and infrastructure, China has built more hospitals, roads, and schools than the United States Agency for International Development. The relationships that China is building have a purpose. As it continues to develop, its appetite for natural resources is growing exponentially.
Natural resources are what Angola has in abundance. Petroleum, diamonds, and iron represent the vast majority of the nation’s economic activity. Oil alone contributes over 50% of the annual GDP, 90% of annual exports, as well as 80% of total government revenue. As the world’s largest consumer of oil, China worked to strengthen its bond with Angola. Consequently, in 2008, Angola became China’s main source of petroleum.
Angola’s uncertain future
When China’s growth cooled in 2009 due to the recession, Angola’s GDP fell from an impressive 13.2% growth to a modest 1%. With a third of the population living in poverty and literacy rates at 70%, Angola faces an uphill battle that is mirrored in other developing countries. Because these countries are specializing in commodities and trading heavily with developed countries, they are becoming increasingly susceptible to economic troubles abroad.
As opposed to other leading nations, China has adopted a strict non-interference policy that makes it an ideal trading partner. This policy allows China to freely exchange goods with any nation regardless of government corruption. For China, nations such as Angola are ideal offloading grounds for products in exchange for oil. Because both countries benefit from this arrangement, China defends its relationship with Angola as an economically efficient one.
However, as China begins to expand its influence, Angola’s economy may suffer. As the economy concentrates on commodities with no real capital, infrastructural and educational investments, Angola is diminishing its future economic prospects. Other developing nations, such as Ghana and Sierra Leone, have walked the same path to stunted growth. Angola is in a state of uncertainty and slow recovery, and its economic volatility is challenging its young government to make decisions that will be beneficial to its citizens.
