‍Background

Over the past several years, Angola has made considerable progress in reforming the parastatal oil company Sonangol. Sonangol is the largest company in Angola, generating over a third of the country’s GDP and 90% of the country’s exports. Since the conclusion of the Angolan civil war in 2002, Sonangol’s reputation has been marred by corruption scandals. Sonangol has long been a means of funneling wealth to allies of the ruling People’s Movement for the Liberation of Angola (MPLA) administration, perhaps most notably to former President José Eduardo dos Santos’ daughter Isabel, who held the title of Africa’s first female billionaire. All the while, the average Angolan only earns $65 USD per day, almost 2 million people suffer from food insecurity, and unemployment sits at 30.8%. Since 2017, though, President Laurenço has attempted to curtail some of the most egregious aspects of Sonangol’s business practices; despite being an MPLA member and an ally of dos Santos, Laurenço has taken legal action against some people involved in corruption campaigns (Mouan, 2024). He has also made moves toward improving transparency in Sonangol’s business dealings, partially privatizing the enterprise and establishing a separate government entity to manage drilling and exploration (Mouan, 2024). Sonangol still retains its power as a concessionaire, establishing and maintaining partnerships with foreign governments and companies (Mouan, 2024). In spite of the promise of these reforms, Angolan oil production has steadily declined over the past decade. Causes for this are multivariate, but are primarily driven by many key oil fields reaching maturity. Declining oil production has also accompanied a significant decline in GDP, to $84.82 billion USD, from its peak, $135.97 billion USD, in 2014. Interestingly, despite much of the government’s fiscal revenues coming from Sonangol, they have consistently increased in the past decade, despite the decline in production. This indicates that the capacity of the government to invest in infrastructure projects and economic ventures should be higher than it was during Dos Santos’ presidency.

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Broadly, the resource extraction industry in Africa is not an effective job creator, employing less than 1% of the African population (Cooper, 2024). The oil industry in Angola outperforms Africa in this area; Sonangol provides some safeguards to protect domestic labor, including requiring that multinational oil companies have a 70% Angolan workforce in all domestic operations (Cooper, 2024). Still, only 3.6% of the Angolan population work in the oil industry (Cooper, 2024). While it is commendable that Sonangol has implemented protective measures for its citizens in the petroleum sector, these measures only help a tiny fraction of the population. And while less capital intensive than oil and natural gas extraction, the mining industry also tends to be ineffective at creating jobs at a wide scale. That is not to say that there is no room for job creation within the petroleum sector in Angola. The oil production sector creates opportunities for numerous service sector jobs, categorized as either backward or forward linkages (Teka, 2012). Backward linkages include the provision of transportation, raw materials, maintenance, and other goods and services which act complementary to the oil extraction process. As of 2012, 80% of domestic backward linkage jobs were controlled by Angolan businesses (Teka, 2012). Forward linkages, most prominently, include the refining process, an area in which Angola is quite underdeveloped. Currently, there is only one operating refinery in the country, though its refining capacity continues to increase year over year. Developments in this area could bring benefits to Angola’s employment and its self-sufficiency in the global economy. 

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However, these benefits are likely to be marginal, especially in the short term, and would also require high capital investment. As such, it is difficult to advocate for a nation with such a volatile economy to invest heavily in a sector that employs so few of its citizens. It is doubly difficult to make such an argument when contrasted with the Angolan government’s total and utter failure to develop its agricultural industry since the end of the civil war. Like many African countries, agriculture dominates Angola’s workforce, employing about 55% of the population. Despite this, it only contributes to around 9.5% of Angola's GDP. Angola’s agricultural sector is nowhere near as efficient nor as developed as it could be. According to the World Bank, this is a direct result of the government’s prioritization of the petroleum sector. The process of agricultural development is complex, and it is not obvious what direction the government should take in its agricultural investments. This article will examine the viability of agricultural investment for international trade as a tool for lifting Angolans out of poverty. 

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Angolan Agriculture

Angola’s agricultural industry possesses an incredible amount of untapped potential. The country possesses 58 million hectares of available agricultural land, and prior to the civil war, was a major cash crop producer, exporting significant quantities of coffee, sugar, bananas, and cotton. It was also fully agriculturally self-sufficient, barring cereals. Production was done primarily by small scale family farmers, just as is the case today; however, the civil war displaced many farmers and destroyed much of their land, and post-war Angola has not recovered to this level of agricultural productivity. Half of Angolans’ food is imported, primarily from the EU, U.S., and Brazil, while only 10% of their potential agricultural land is actually being utilized. Moreover, overharvesting and anthropogenic climate change bring additional challenges to Angola’s agricultural sector (Correia, 2024). Cassava is Angola’s primary agricultural product, and, despite being a perennial crop, is grown annually to meet local demand. Long term annual cassava production leads to lower soil fertility and erosion, and in particular, extremely high levels of potassium depletion relative to other crops (Howler, 1990). Climate change is also projected to lead to a 7% reduction in crop production by 2050 (Correia, 2024). These long term problems serve to exacerbate Angola’s most pressing security risk today: its overreliance on oil exports to support the economy. Oil is a volatile commodity, and recent hits to oil prices, such as in 2014 or 2023, resulted in fiscal revenue shocks that hit Angola’s capacity to import the food that it relies on. The goals of Angolan agricultural investment are therefore trivariate: it must increase sustainability through expansion and preservation of soil fertility, it must improve the income and livelihoods of people in rural areas, to whom it is effectively the only employment option, and it must alleviate the security risks associated with being a petrostate.

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Pro-Poor Agricultural Development

This article primarily utilizes the 2004 text by Dorward et. al, A Policy Agenda for Pro-Poor Agricultural Growth. Andrew Dorward was an expert in agricultural economics, who unfortunately recently passed away in January of 2025. This paper draws from diverse perspectives on what are the best agricultural practices and investment strategies to improve the lives of rural citizens. The primary emphasis of the paper is on the importance of cereal grain production and the establishment of linkages between rural communities and urban centers. Dorward et. al emphasize the importance of government intervention in the early stages of agricultural development, and they also advocate for the use of irrigation, local level specialization in crop production methods, and the expansion of road networks.

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Agriculture for Comparative Advantage

Given how much of its arable land is not utilized, Angola has enormous potential to break into global markets as a major crop producer. Plant and animal products currently make up less than 1% of Angola’s total exports, relative to the petroleum industry’s 80-90+%. This disparity means that in the context of global trade, Angola has a high comparative advantage in petroleum production and low comparative advantage in agricultural production (Tomas, 2013). The consequences of this, particularly in Sino-Angolan trade, have been a high degree of foreign investment into the petroleum sector and minimal foreign investment into the agricultural sector. Advocates for Angolan investment to gain comparative advantage in the agricultural sector argue that it would afford the country new opportunities to develop partnerships for infrastructure development and capital investments that do not rely on the petroleum industry. Agricultural investment for the purposes of comparative advantage certainly appears promising, at least on the surface. Chinese partnerships have resulted in a multitude of positive infrastructure developments in Angola, and if similar, extensive infrastructure projects were undertaken to aid the agriculture sector, they would be enormously beneficial in developing linkages between impoverished rural communities and urban centers. Improved road and rail networks could facilitate mutually beneficial trade between rural and urban areas, affording rural communities better access to technology and urban centers with food (Dorward et. al, 2004). Expanding the cash crop sector also would create new job opportunities, helping to address the unemployment crisis.

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However, the realization of these benefits is unlikely. To reach the level of export revenues generated by the petroleum sector, or even the mining sector, agricultural exports would have to increase by a completely unprecedented amount. When the actual export data is taken into account, we can see that in reality, agricultural exports as a proportion of total exports have only trended downward in recent years. While this data should not be construed as meaning that Angola could never be a major agricultural exporter, it does imply that agriculture is not currently a profitable area to invest in. Low profitability is likely driven by rural Angola’s low population density and the lack of existing communication and transportation infrastructure currently in place, which contribute to market failure and high investment risk (Dorward et al., 2004). Reliance on market investment to develop the agricultural sector in these areas therefore leads to cyclical poverty, in which poor communities do not gain access to the infrastructure they need to engage in markets, and are in turn less likely to receive private or foreign investment in the future. Furthermore, if foreign markets are not investing in existing agricultural communities, it’s doubly unlikely that they would invest in uncultivated areas, therefore failing the objective of expanding Angola’s agricultural land use. In addition, firms who might invest in uncultivated land do not tend to generate benefits for the surrounding population, with these sorts of developments often being used to grow food for rich nations scarce of arable land, like the United Arab Emirates (Dorward et. al, 2004).

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Furthermore, even if foreign investment were a viable option, relying on it would likely discourage investments into cereal grains, which are more sustainable and affordable than Angola’s cash crops. Currently, Angola is only globally competitive at producing a few crops, most notably cassava, which as previously mentioned is a major contributor to soil degradation. Cash crop production and monocrop farming generally is known to have devastating impacts on soil health in the medium to long term. Investing in cash crops could therefore exacerbate food insecurity and agricultural unemployment in the long term. Other crops that Angola is notable for producing, such as pineapple, can actually improve soil health through their cultivation, though only through rotational cropping practices. Research should certainly be done on optimal ways for Angola to rotate its crops to best match market demands and preserve soil fertility. Regardless, though, investments in cash crops would do next to nothing to address Angola’s dire scarcity of cereal grains. Cereals are considered the most important crop for impoverished communities due to being inexpensive, calorie dense, and promoting soil fertility. By instead prioritizing tubers, fruits, and other less efficient crops, the Angolan government makes the goal of food security increasingly difficult to achieve.

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In summation, investing in cash crop exports is not the best strategy for Angola to adopt to address its poverty crisis. It will not sufficiently encourage the development of pro-poor agricultural practices, and the benefits that it could bring regarding infrastructure are tentative and risky. Instead, Angola should focus its government budget on developing infrastructure to improve agricultural trade and providing subsidies so that Angolans can produce cereals at competitive prices.

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References

Dorward, A., Kydd, J., Morrison, J., & Urey, I. (2004). A policy agenda for pro-poor agricultural growth. World Development, 32(1), 73-89. https://www.sciencedirect.com/science/article/pii/S0305750X03001931?fr=RR-2&ref=pdf_download&rr=9226cc36d95de0bb

Mouan, L. (2024). Spotlight on Sonangol: oil, corruption, and the politics of state-owned enterprise reform in Angola. In Capitalism and Economic Crime in Africa: The Neoliberal Period (pp. 1936-1943). Routledge. https://books.google.com/books?hl=en&lr=&id=rs4OEQAAQBAJ&oi=fnd&pg=RA3-PA1936&dq=sonangol&ots=l-JfRANYnu&sig=T41WH0KolEBZLfHZoOK5QWvvdLA#v=onepage&q=sonangol&f=false

Teka, Z. (2012). Linkages to manufacturing in the resource sector: The case of the Angolan oil and gas industry. Resources Policy, 37(4), 461-467. https://www.sciencedirect.com/science/article/pii/S0301420712000451?ref=pdf_download&fr=RR-2&rr=92b559d6ae83a934

Tomas, J. d. A. S. (2013). Agriculture as a tool for development in Angola. African Journal of Agricultural Research, 8(50), 6642-6650. https://academicjournals.org/article/article1387378562_Tomas.pdf

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