Can Angola step away from the oil?

Angola is currently third biggest economy in Africa, behind only South Africa and Nigeria.[i] Since the discovery of oil in 1955 in the Kwanza basin, the commodity has come to represent the country’s great success story, despite the setback of a devastating 27-year civil war. Angola is the second-largest oil producer on the continent, with estimated gross reserves of 9bn barrels. Oil currently makes up around 60% of government revenue and 98% of exports.[ii] Oil production is now mostly offshore, around Cabinda and in the Lower Congo basin, mostly because the war made onshore exploration so difficult.[iii] It’s likely that there is still great potential in Angolan soil.

It’s not surprising then, that the recent drop in the oil price has badly affected the country’s economy, combined with volatile currency fluctuations. The oil wealth has, as in most places, also not been of widespread benefit and Angola needs a massive amount of investment in basic services such as healthcare, education, infrastructure and agriculture.[iv] The non-oil economy, amounts to only 10% of government revenue.[v]

The government does appear to be responding to this however, and has launched a policy of diversification and reforms to encourage foreign investment.

There is significant work to do. Despite the oil wealth, only around a third of Angolans have a reliable electricity supply; power outages are frequent and disruptive. Foreign investors receive tax breaks – which impact the government’s ability to raise the revenue needed to fund essential reforms – but a complex bureaucracy and foreign currency restrictions still make investing less attractive.[vi] Overall it has been a lose-lose situation for most Angolans.

The government has developed a new National Energy Power Security Strategy Policy to try to make some inroads in basic living standards. It is hoped that it will lead to structural reform, public private partnerships and basically, a transformation of the power sector. In conjunction with this, their Electricity Sector Transformation Program aims to increase the power access rate so that it reaches two-thirds of the people by 2025, and up the overall power generation capacity to 8,742 megawatts.[vii]

Reforms to the private investment law and changes to a credit scheme for local businesses should also start to turn things around for the economy.[viii] But is it enough? With more than 30% of Angolans still living on less than $1.25 a day,[ix] can these changes make a difference when investors still face delays, inefficiency and corruption?

[i] Angola, Japan : Signing of First Japanese ODA Loan Agreement with Angola, TendersInfo, 18 August 2015

[ii] Oil and Gas: Oil and Luanda’s best-laid plans, The Africa Report, 4 May 2015

[iii] Angola Energy Profile: Second-Largest Oil Producer In Sub-Saharan Africa – Analysis, Eurasia Review, 21 March 2015

[iv] Report – Angola – Sovereign Wealth Fund – Angola’s Wealth of Options, The Banker, 1 June 2015

[v] Angola economy: Moves to boost non-oil sector, EIU ViewsWire, 7 April 2015

[vi] Angola, Japan : Signing of First Japanese ODA Loan Agreement with Angola, TendersInfo, 18 August 2015

[vii] Angola, Japan : Signing of First Japanese ODA Loan Agreement with Angola, TendersInfo, 18 August 2015

[viii] Angola economy: Moves to boost non-oil sector, EIU ViewsWire, 7 April 2015

[ix] Angola Energy Profile: Second-Largest Oil Producer In Sub-Saharan Africa – Analysis, Eurasia Review, 21 March 2015

Eritrea and the UK

The Battle of Keren was a decisive moment for the UK and Eritrea in the Second World War, marking a turning point in the war against Italy and the beginning of the UK’s occupation of Eritrea.  The successful storming of the apparently impenetrable Italian position on high on the ridge at Keren comes to mind when contemplating the plight of many Eritreans currently languishing in the refugee camp at Calais.  The crossing to the UK may be less dangerous, but the feat must seem equally impossible.

The UK government is taking a hard-line approach to Europe’s refugee crisis – and it’s a politically intractable problem: how to balance the moral case which calls for the assistance of those in need, with the reality that immigration is a hot potato in British politics and the Conservative party cannot afford to lose votes to rivals such as UKIP.

European Commission figures show that of the 185,000 people who applied for asylum for the first time across the EU in the first three months of this year, only a very small proportion applied in the UK. Most of those lodging applications in Britain were from Pakistan, followed by Eritrea and Syria.[i] New government figures show that net migration to the UK is at record levels, and Ipsos Mori’s August issues index poll reported the highest ever level of concern about immigration – 50% of respondents gave immigration as one of the most important issues facing Britain. Ipsos Mori attributed this rise in concern to blanket media reports of the “migrant crisis”, creating a climate of fear, rather than a reflection of the number of migrants in the country, which have not changed significantly for many years.[ii]

However, statistics released last month showed that only a third of Eritreans that applied for asylum in the UK in the second quarter of 2015 were granted it, compared with nearly two-thirds in the previous quarter.  The reason for this sudden drop is that the government redefined the rules for Eritreans after Isaias Afwerki’s government insisted that escapees can return home if they sign an apology and pay a penalty.  The government also stated that the national service programme would be capped at four years.[iii] Considerable scepticism surrounds these promises, although the Eritrean government may actually be feeling under some pressure from this unprecedented publicity.

It is easy to criticise those against giving asylum to refugees, but for those working in menial, low paid jobs, new entrants to the market (both for jobs and housing) are a threat in a way that they just aren’t for middle class commentators who call for mercy.  Greater investment needs to be made in putting the case for assisting refugees, many of whom have a greater connection to the UK than many British people realise.  The UK’s occupation of Eritrea after the Second World War was a footnote in English history that many are totally unaware of.  The UK was a benign dictator in comparison to the Italians, yes, but we still looted most of the equipment at the port of Massawa, carrying off most of the industrial facilities as war booty when the country was clearly in need of support.  British indifference to the Ethiopian annexation and the subsequent war of independence was unsurprising.  But we can’t always deal with the world on our own terms.

[i] 6 charts and a map that show where Europe’s refugees are coming from – and the perilous journeys they are taking: Record numbers of people fleeing war, persecution and poverty are entering the EU, Lizzie Dearden, The Independent, 2 September 2015, http://www.independent.co.uk/news/world/europe/refugee-crisis-six-charts-that-show-where-refugees-are-coming-from-where-they-are-going-and-how-they-are-getting-to-europe-10482415.html

[ii] Migration figures: what do the numbers really mean? Although immigration causes concern among half the public, it is a key ingredient in economic success and draws in highly skilled workers, Alan Travis, The Guardian, 28  August  2015, http://www.theguardian.com/uk-news/2015/aug/27/migration-figures-what-do-the-numbers-really-mean

[iii][iii] Eritrea is Africa’s North Korea – but UK bureaucrats won’t accept its citizens are refugees, Ian Birrell, The Independent, 30 August 2015, http://www.independent.co.uk/voices/eritrea-is-africas-north-korea–but-uk-bureaucrats-wont-accept-its-citizens-are-refugees-10478885.html