Angola - Economy
Angola is a potentially rich country of abundant natural resources, a surplus-producing agricultural sector and a sizable manufacturing potential. This promise has remained unfulfilled due to the effects of the war for independence and a 27-year-long civil war that only ended in April 2002 when the army signed a peace agreement with the UNITA rebels.
Having both temperate and tropical zones, Angola had the potential for producing a wide variety of agricultural products. Prior to the outbreak of hostilities, Angola produced major surpluses of coffee, sisal, cotton, and maize. Cassava was the staple food crop and the leader, though consumed almost entirely domestically, in terms of volume of agricultural output. The civil war resulted in famine conditions in many parts of Angola, especially during the 1990s. Although the civil war ended in 2002, farmers have been reluctant to return to their farms, and the country is littered with land mines. As such, food must be imported.
Petroleum production and diamond mining have led Angola's industrial sector. Economists estimated that Angola's alluvial reserves of diamonds totaled between 40 and 130 million carats. In addition, there were untapped diamond reserves in volcanic pipes called kimberlites. Angola's six known kimberlite pipes, among the ten largest on earth, held an estimated 180 million carats worth several billion dollars. Diamond production (official and unofficial) was estimated to be worth $1 billion per year in 2002.
The petroleum sector benefited from major investments, totaling over $2 billion since 1987, and from a relative immunity from the civil war. Producing around 950,000 barrels a day, in 2002 Angola was the second largest oil producer in sub-Saharan Africa. Crude oil accounted for 90% of total exports, more than 80% of government revenues, and 45% of the country's GDP. Known recoverable reserves were estimated to total several billion barrels, but Angola was not a member of OPEC at the time. In 2000, Angola was one of three countries to receive the largest amount of global and US foreign investment to the sub-Saharan region (the other two were Nigeria and South Africa). Inflation, always a problem, ran at approximately 150% in 2001. The IMF has recommended a slate of reforms, such as increasing foreign exchange reserves and encouraging a more transparent accounting of government spending.