Angola to diversify economic base
Angola’s Economic Commission met recently to develop a strategy for exploring the potential for mining gold in Cabinda province.
While still in its early stages, the plan aims to start working towards developing a gold industry in the northern Cabinda region, a province which has struggled with internal conflicts as a result of separatist groups operating in the region.
The region is already known for its artisanal mining operations, and Angolan Mining Minister, Francisco Queiroz, has stated that he wants the sector developed and formalized so that it can benefit all Angolans.
He has also made clear Angola’s intention of initiating new projects to create an attractive business environment in the minerals sector for indigenous Angolan entrepreneurs as well as foreign investors.
The government’s intervention in Cabinda is part of a wider plan, the National Plan on Geology and Mining, which they adopted earlier this year.
The plan commits the government to exploring the entire country to ascertain the extent of Angola’s mineral wealth, excluding traditionally exploited sectors like oil, and develop plans for the extraction and exploitation of the minerals where economically feasible.
Angola’s economy is underpinned by its strong hydrocarbons sector, but the Angolan government has decided to diversify away from those resources and look for alternative sources of income for the future.
The Organisation of Petroleum Exporting Countries (OPEC) estimates that oil alone accounts for half of Angola’s GDP and 90 percent of its exports.
The move is also aimed at removing some of the volatility in Angola’s economy. Its heavy reliance on oil has meant that fluctuations in the oil price and the kwanza-US dollar exchange rate create havoc for Angola’s economy and planning.
Gold is not the only commodity that the government is targeting. Other commodities that could be mined in Angola include iron ore, copper and phosphates.
Diamonds already account for about five percent of Angola’s GDP, and the country still has large diamond deposits that have not been fully explored.
The government wants to see the local diamond industry grow by 5 percent per annum and contribute towards a more diversified economy.
Angola’s diamond potential is estimated to be around a billion carats.
Diamonds will be the main commodity driving the country’s minerals plan and by the year 2017, the mining industry in Angola should be worth US$2.8 billion.
Angola remains one of the poorest and underdeveloped countries in the world, but recent discoveries about the extent of its wealth in oil, diamonds and other commodities changes the outlook for the country’s ability to fix its economy and rebuild after the devastating civil war that wiped out 70 percent of the country’s infrastructure.
However, relying on the extraction of natural resources as the only source of a country’s revenue is not an excellent long-term economic strategy, strategy, and when that dependence is confined to a single product like oil, there is too much wrong for instability and volatility.
Even though the prospects for the oil market look good in the short to medium term, what with the situation in the Middle East deteriorating, the smart thing to do in the long term will be for Angola to lay the foundations for an economy that is diversified as possible. The other positive sign is that Angola sees this resource boom as an opportunity to re-invest in its economy by developing other sectors that have been dormant in the past.
This is excellent planning and will ensure that Angola’s economy will be in good shape long after its oil resources have been exploited. – Political Analysis South Africa