Angola Banking Industry Overview (Jul 2022)

Angola, with vast mineral and petroleum reserves, ranks as the third largest economy in sub-Saharan Africa after Nigeria and South Africa. The country is the second largest oil producer in Sub-Saharan Africa after Nigeria. According to the International Monetary Fund (“IMF”), over the last 5 years, crude oil and oil products have accounted for about 96% of Angola’s total exports, 56% of fiscal revenues, and 34% of Angola’s total real gross domestic product. Moreover, some non-resource sectors, such as the construction and agriculture sectors, have historically been correlated with the oil sector. The transformation of a state-led oil economy to a private-sector-led growth model is a complex and long-term process and the oil sector will continue to play an important role during this transition period according to the World Bank. Since 2016, Angola has experienced negative economic growth attributed largely to the significant drop in oil prices and a substantial reduction in oil production. Resulting national budget cuts, currency devaluations and high inflation levels slowed import levels and hindered economic growth. In 2020, the COVID-19 outbreak further exacerbated economic, social and health vulnerabilities on the heavily oil reliant economy, leading to a fifth straight year of recession. The economy contracted -5.4% in 2020 (the deepest yearly contraction in three decades), after contracting by 0.5% in 2019, on the back of weak oil production, the collapse in oil prices, and the spillover to non-oil sectors.

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