The United Nations delegates were shocked at the end last year when Angola offered economic advice to the UK.
It was quite audacious for the impoverished Angola to advise the powerful UK, which is ranked either fifth or sixth in the world, depending on how the measurements are done. The observers were confused, wondering if this was a reflection of the condition of Rishi Sunak’s country or an overconfidence by Angola.
Angola, however, recommended that the UK adopt a poverty-alleviation strategy urgently and implement new measures in order to protect its citizens from an escalating cost of living crisis. According to the World Bank this suggestion was made by a country in which roughly one third of the population lives in poverty, earning less than $2.15 a day. Angola is experiencing a rise in unemployment and rising household costs.
It is rare for a southern African nation to propose economic policy changes to an international northern state. The critics of the Conservative Government, led by Rishi Sunderak, welcomed Angola’s initiative. They argued that it showed the UK’s declining international standing.
Kartik Raj, from Human Rights Watch, stressed the importance of the message. He warned: “When a nation with an extremely high poverty rate asks such a question to the UK government, it should listen and not ignore it.”
Sunak, his allies, and the people of Luanda were equally divided. The opponents of Joao Lourenco’s government dismissed the proposal as a distraction from criticizing the MPLA ruling party and the fragile Angolan economy.
Lourenco and associates pointed to evidence of Angola’s economic recovery. As a major oil exporter, Angola is well positioned to reap the benefits of the expected sustained increase in global energy prices. Rating agencies have upgraded Angola’s creditworthiness, and commended the reduction of government debt. The IMF’s three-year agreement was successfully concluded, and COVID-19 has been lifted.
It is still a concern that the recovery will be fragile and there are many risks. Fitch’s low ratings for Angola in terms of political stability, rule of law and human rights, for example, prevent it from maximising oil revenue for all of its citizens.
A number of high-profile abuses of state power have undermined the rule of Law. After a win in the English High Court of Justice in 2018, Angolan-Swiss investor Jean-Claude Bastos, was jailed without trial for six months in order to pressurize him into making concessions to a dispute between the two parties. Venture capitalists were unnerved and international investors were discouraged long after Bastos’ release.
2019 saw LS Energia & APR Energy withhold payments of nearly $100 million for a long period. The Angolan officials settled the dispute, but the dispute caused Washington, DC to shake and the US relations were strained.
After the Angolan Government seized their assets and bank accounts, money was withheld in 2020 from US-based developer Africa Growth Corporation. The company builds affordable housing for expatriates as well as retail office space for other foreign companies. In a negotiated agreement between the Angolan Government and AFGC, the initial loss of $95m of AFGC has been reduced by half. This was part of AFGC’s frantic attempts to recoup investors’ funds. The Angolan Deputy attorney general has denied that any such deal was negotiated, forcing AFGC for now to absorb the losses.
Angola is a non-diversified oil producing nation whose economic strength depends heavily on energy prices. Angola is facing a future without oil, and it’s important to build up enough wealth to sustain future generations. To navigate the green fuels transition, it is necessary to have higher education, develop valuable skills, especially in digital technology and increase foreign direct investment.
Britain could provide assistance in these areas. It is currently vulnerable because of its lack domestic energy, but has historically been robust with technology and attractive to foreign investors. Maybe the two countries can learn from each other.
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