Economy of Angola

The economy of Angola remains heavily influenced by the effects of four decades of conflict in the last part of the 20th century, the war for independence from Portugal (1961-75) and the subsequent civil war (1975-2002). Poverty since 2002 has reduced over 50% and a third of the population relies on subsistence agriculture. Since 2002, when the 27-year civil war ended, government policy prioritized the repair and improvement of infrastructure and strengthening of political and social institutions. During the first decade of the 21st century, Angola's economy was one of the fastest-growing in the world, with reported annual average GDP growth of 11.1 percent from 2001 to 2010. High international oil prices and rising oil production contributed to strong economic growth, although with high inequality, at that time. 2022 Trade surplus was 30B/2012 $48B<br>Corruption is rife throughout the economy and the country remains heavily dependent on the oil sector, which in 2017 accounted for over 90 percent of exports by value and 64 percent of government revenue. With the end of the oil boom, from 2015 Angola entered into a period of economic contraction.

Top Sectors in Angola

Oil and Gas in Angola

Angola's economy heavily relies on its oil and gas sector, which accounts for the majority of the country's export revenues. Angola is one of Africa's largest oil producers and has significant offshore oil reserves. The oil industry attracts substantial foreign investment and drives economic growth.

Diamond Mining in Angola

Angola is renowned for its diamond mining industry, with substantial diamond reserves and production. The diamond sector contributes significantly to the country's export earnings and employment opportunities, particularly in regions such as Lunda Norte and Lunda Sul.

Agriculture in Angola

Agriculture plays a vital role in Angola's economy, employing a large portion of the population and contributing to food security. The country's fertile land supports the cultivation of crops such as maize, cassava, and beans, as well as cash crops like coffee and sugar.

Construction and Infrastructure in Angola

Angola has been undergoing extensive infrastructure development, including road networks, ports, and housing projects. The construction sector has experienced rapid growth, fueled by government investments and reconstruction efforts following decades of civil war.

Telecommunications in Angola

Angola's telecommunications industry has witnessed significant expansion in recent years, with increased mobile phone penetration and internet connectivity. Telecom companies provide services such as mobile and fixed-line telephony, internet access, and data services.

Banking and Finance in Angola

Angola's banking sector is growing, with commercial banks offering a range of financial services, including lending, savings, and investment products. The sector plays a crucial role in supporting economic activities and facilitating trade and investment.

Angola - Key Economic Indicators

Exports and Imports

Angola's exports are primarily dominated by crude oil, which accounts for over 90% of total exports. Other significant exports include diamonds, coffee, and fish products. Imports consist mainly of machinery and equipment, foodstuffs, and manufactured goods. Oil exports make up the majority of Angola's export revenue, contributing significantly to the country's GDP.

Infrastructure

Angola has been investing in infrastructure development to improve connectivity and facilitate economic growth. The total length of roads in Angola is approximately 51,429 kilometers, with ongoing projects aimed at expanding and upgrading the road network. Infrastructure projects also include investments in ports, airports, railways, and energy infrastructure.

Balance of Trade

Angola typically experiences a trade surplus due to its substantial oil exports, with exports outweighing imports by around 30% to 40%. However, fluctuations in global oil prices can impact the balance of trade, affecting the country's overall economic performance and foreign exchange reserves.

Fiscal policy

Angola's fiscal policy involves moderate government spending, typically accounting for around 30% to 35% of GDP. The government relies heavily on revenue from oil exports to fund its expenditures. Taxation primarily consists of indirect taxes such as value-added tax (VAT) and customs duties, supplemented by direct taxes on income and profits.

Monetary policy

The National Bank of Angola (Banco Nacional de Angola) is responsible for formulating and implementing monetary policy in the country. Monetary policy actions aim to maintain price stability, manage inflation, and support economic growth. The central bank regulates the money supply, sets interest rates, and oversees the banking sector.

Trade agreements

Angola is a member of several trade agreements and regional economic blocs, including the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). These agreements aim to promote regional trade, investment, and economic cooperation, providing Angola with preferential access to neighboring markets.

Environmental regulations

Angola has enacted environmental regulations to address various environmental challenges, including deforestation, soil erosion, and pollution. The government has implemented measures to protect natural resources, preserve biodiversity, and promote sustainable development. Environmental regulations cover areas such as forestry management, wildlife conservation, and waste management.

Tax System in Angola

Capital Gains Tax:Angola imposes a capital gains tax on profits derived from the sale of assets, including real estate, stocks, and other investments. The capital gains tax rate is generally 10%.
Corporate Tax Rate:The corporate tax rate in Angola is 30% for most companies. However, companies engaged in petroleum activities are subject to a special corporate tax regime with rates ranging from 25% to 50%.
Sales Tax:Angola levies a value-added tax (VAT) on the sale of goods and services. The standard VAT rate is 14%, applied to most goods and services. However, certain essential items may be subject to a reduced rate of 2%.
Property Tax:There is no specific property tax on real estate in Angola. However, there are registration fees and stamp duties applicable to property transactions.
Payroll Tax:Angola does not have a separate payroll tax. However, both employers and employees are required to contribute to social security funds. Employer contributions are typically around 8% of employee wages, while employee contributions vary depending on income level.
Tax Deductions and Credits:Angola provides certain tax incentives and deductions to promote investment and economic development. These may include investment allowances, accelerated depreciation, and deductions for certain business expenses.
Tax Compliance:Tax compliance in Angola faces challenges due to informal economic activities, administrative inefficiencies, and tax evasion. The government has been taking steps to improve tax administration and enforcement through digitalization, capacity building, and anti-corruption measures.
Tax Burden:The tax burden in Angola varies depending on the type of taxpayer and the nature of economic activities. Overall, the tax burden is considered relatively high for businesses, especially in sectors subject to special tax regimes like petroleum. However, the tax burden on individuals may be lower, particularly for lower-income earners, due to progressive tax rates and exemptions.

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