Angola - Overview of economy



Angola's economy is in disarray due to the near-continuous warfare that has been ongoing in the country since independence in 1975. The National Union for the Total Independence of Angola (UNITA) and the Popular Movement for the Liberation of Angola (MPLA) have struggled for control of Angola and its abundance of natural resources since Portugal relinquished its control of the nation in 1975. Although the MPLA has managed to stay in power for most of Angola's history, the effort it expends in fighting UNITA and other hostile forces prevents it from developing Angola's economy. The government is likewise hindered by the fact that UNITA controls much of Angola, including its valuable

diamond mines, the profits of which go towards UNITA's military efforts rather than the development of a stable economy. The result is that Angola is among those nations with the lowest output per capita in the world. GDP per capita in 1999 was estimated by the CIA World Factbook at US$1030, figured according to purchasing power parity .

The dominant force shaping Angola's economy today is oil and oil-related activities. These are essential to the economy of the country and contribute about 45 percent to GDP and 90 percent of exports. Thanks to oil production, the economy grew by 4 percent from 1998 to 1999. U.S. oil companies have invested heavily in Angola's oil production. In 1997, the United States bought 70-80 percent of all Angola's oil. In 2000, 7 percent of all U.S. petroleum came from Angola. This is expected to rise to 10 percent within 8 years. Unfortunately, the continual warfare has stifled investment in all other sectors. Diamonds are an important export product, but UNITA's control of this valuable resource limits its positive impact on the nation's economy.

Subsistence agriculture provides the main livelihood for 85 percent of the population, but larger-scale farming is difficult in Angola's landmine-ridden countryside. These mines remain throughout the country and hamper any development of the agricultural sector, even though the country itself is fertile. As a result, much of Angola's food must be imported. Coffee is one product that could be a large export opportunity, but the presence of so many minefields makes this development problematic.

Angola is severely indebted. The burden of debt on each Angolan is 3 times higher than the average for Africa. In 1999 the total outstanding debt was US$10.5 billion, more than two-thirds of which was owed to private creditors. In 1995 international donors (the World Bank, the European Union, and the United Nations' specialized agencies are the leading multilateral donors) pledged over US$1.0 billion in assistance to Angola. However, these funds have been held back because of the stalemated peace process between the MPLA and UNITA.

Also read article about Angola from Wikipedia

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