Non-Oil Growth

Angola: Private-sector agriculture partnerships are key to diversification, SEZ chief says

By David Whitehouse

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Posted on June 6, 2023 10:04

 © An arial view of the Luanda-Bengo Special Economic Zone. Photo supplied.
An arial view of the Luanda-Bengo Special Economic Zone. Photo supplied.

Agricultural partnerships between the state and private sector are crucial to diversifying Angola’s economy away from oil dependence, Manuel Francisco Pedro, chairman of the Luanda/Bengo Special Economic Zone (SEZ), tells The Africa Report.

More than 80% of Angola’s agricultural produce comes from small farmers. Diversification can be accelerated by reducing the bureaucratic hurdles to accessing state land for farming, Pedro says. Small-scale farmers find it difficult to get bank credit, and need more business-management skills, which can be best delivered by the state and private sector working together, he adds.

The tenure of President José Eduardo dos Santos, who stood down in 2017, was marked by privatisation of state assets for family benefit. The jury is still out on whether President João Lourenço, who was chosen by Dos Santo as his successor, has achieved a definitive break with the past. The current president has shown he “can open the country to the international private sector”, Pedro says. “We have the political framework to attract foreign investment.”

Lourenço is seeking to reduce the country’s dependence on oil, which accounts for about 50% of GDP, 70% of government revenue and over 90% of exports. Reliance on oil demand from China, which imported 80% of Angola’s crude oil exports in 2021, increases the risk of economic instability.

The government predicts economic growth of 3% in 2023, rising to an average of 3.6% between 2024 and 2027. Those forecasts are heavily geared to non-oil growth. The government predicts that non-oil growth will average 4.6% over the period, with the oil sector growing 1% a year. Pedro argues that progress is being made and that non-oil GDP is growing at three times the speed of the country’s oil economy.

The financial system is now strong enough to enable investors to get their money back, and the legal system provides protection, Pedro says. There’s no longer any need for foreign businesses to have a local partner in Angola, and there is no minimum investment, he says.

Coffee heritage

Angola in the early 1970s was the world’s third-largest coffee producer, with peak production levels of around 5 million bags per year. Most of it was the robusta variety, and the bulk was exported. Many of the plantations were abandoned during the civil war, which followed the end of Portuguese colonial rule in 1975. The sector today has the potential to help reduce reliance on oil, Pedro says. Maize, fisheries and agro-business can also contribute to non-oil growth, he adds.

Pedro was appointed to head the Luanda/Bengo SEZ in January this year. The zone, which extends over 4,700 hectares in Viana municipality, hosts more than 100 companies and has generated more than 6,000 jobs since its set up in 2009. Business registration takes place at a one-stop shop in the zone, which says it has attracted $3bn in investment since 2018.

A key task is to improve the zone’s infrastructure in terms of roads, electricity and water supply and Internet connectivity, Pedro says. Food processing will be key to growth in the zone and Pedro is aiming to attract international private-sector partners. Simplified bureaucratic procedures mean that the SEZ is able to make its own land-use decisions without referring to the central government, he concludes.

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