Angola’s ‘resource curse’ defeats an object lesson to Guyana

Angola is still ranked as the second largest oil producer in Africa, behind Nigeria. However, the country is populated by people, many of whom, these days, stage frequent protests against economic hardship.

Turning things around largely lies in the hands of a thirty-six-year-old Finance Minister involved in renegotiating the country’s road through her massive debt with key lenders. No one seems to be betting on when a country once thought to be heading in the direction of being one of the more prosperous on the continent is coming to the end of its rocky road.

One of Angola’s current occupations, which has serious economic and political implications, is to implement the compulsory tough economic reforms set by the International Monetary Fund (IMF) under a prestigious US $ 4.5 billion program. It was announced last week that Angola is in the process of starting a partial sale of what were once the economy’s two largest cash cows – SONANGOL and ENDIAMA – the state-controlled entities that manage its oil and gas and diamond resources, in respectively.

These days, much of Angola’s news merit stems from what economic and political analysts refer to as the ‘resource curse,’ after its economy has been wiped out by what analysts say has been the pressure of extravagant spending and large-scale corrupt practices.

In November, Finance Minister Vera Esperança dos Santos Daves De Sousa, commonly referred to simply as Vera Daves, announced the start of the partial disposal of the two state-run entities that administer oil and gas and diamond assets the country because of the beginning of next year or the following year. However, there does not appear to be an immediate plan for checking the rampant pollution that still exists. Daves has said that progressing the removal of the state-run oil and gas and diamond entities will “depend on how quickly we can reorganize those companies … to make sure the diligence process due we can hold investors high quality interest. ”

Assignments such as this one that the young finance minister must successfully complete if he is to have any kind of impact in taking forward the daunting task of regenerating an economy that he is projected to contract for a fifth year in successor in 2020. She is also leading efforts to renegotiate Angola’s debt with its major lenders and implement difficult economic reforms that are part of her country’s program with the IMF.

The performance of the Angolan economy over the last few years has therefore been staggering as Daves announced in a virtual forum last week that the country is reaching what it described as an “inflow point” as it approaches what is now zero-year growth security. next. before returning to moderate expansion in the following year.

Increasingly, Angola is being hailed as one of those rags to riches for economic cave stories brought about by the oil-related resource curse. The Angola experience has been touched upon and an object lesson for new children on the oil and gas block such as Guyana where the start of oil recovery along with substantial evidence of investor interest in the North American country, in particular, has created excitement.

The discovery of Guyana’s significant offshore oil and gas resources was followed almost immediately by intense internal discourse about how the country could avoid the so-called resource curse, though the months-long debate that related to elections reflects, among other things, the extent to which the country’s two leading political factions are keen to secure control of the country’s oil resources.

Ironically, last week’s assessment of the state of the Angolan economy in an article published by Bloomberg claims that the growth expected from Angola, going forward, will be driven by the non-oil ‘fall back’ sectors , including farming and mining. Interestingly, the discovery and subsequent recovery of Guyana’s offshore oil prompted a vocal lobby for the local agricultural sector, in particular, not to be left behind in the likely excitement over ‘oil economy’ prospects.

The resource curse theory holds that poor countries with large endowments of natural resources, especially oil, often do not achieve sustainable economic growth due to the fact that the pure volume of revenue accruing from oil, fuel pollution, mismanagement , and governments that are unable to invest for the future or provide for the welfare of the majority of their populations. A second critical consequence of the resource curse has been the manifestation of intense political competition and related conflicts in afflicted countries as the various factions struggle to control the state, the gateway to accessing countries’ economic resources.

For its part Angola has been mediated by the weight of what was considered a corrupt and authoritarian government since the country gained its independence from Portugal in 1975. Contemporary studies in resource course theory manifestations still cite Angola’s example -time. ‘First Family’. The Dos Santos family and in particular, Isabella, daughter of the now deceased former President, Jose Eduardo Dos Santos, is said to have used her influence as a state official to affect what one writer described as a “masterclass” in pollution along the value of natural resources. chain (NRVC) in Angola rich in oil and diamond.

A report last month noted that Angola has so far sold 30 companies through a program running through 2022 and is targeting early 2022 to begin the privatization of its two largest state-run natural resource entities, SONANGOL and ENDIAMA, possibly for sale of the private sector, possibly in 2022.