In early February 2018, Angola signed a 70-million-dollar agreement with the World Bank to develop the nation’s local economy. The loan is specifically targeted at infrastructure construction of medical centers, staff residences and other public works. The African nation has unsuccessfully sought to attract investors and appears to be turning its aspirations inward. Like many nations on the continent, Angola has identified a real and pressing need to develop a local economy capable of sustaining a population of 30 million people.
With a GDP of nearly 90 billion dollars, a Focus Economics report brief indicates Angola’s per capita rate hovers around or above $3000 USD. Oddly enough, the economy saw its greatest growth in 2014, and massive deceleration in 2015 when it secured a major 600-million-dollar Word Bank Loan. Angola was the second largest oil producing nation in sub-Saharan Africa and third largest economy in 2015. While much has been blamed on mismanagement and political turmoil, when oil prices drop in 2015, the event sent an unexpected shock wave through oil producing sub-Saharan states like Angola and Nigeria.
Unfortunately, in financial downturns many citizens in limited-industry nations find fault with local and national government leaders. A common staple term among Nigerians was the dreaded “Buhari Period” when Nigeria’s president sought to weather a thin economy through tough austerity measures. Angola has seen similar fortunes, in fact, its annual growth rate has continued to fall into negative numbers since 2015. It now seeks to right itself by securing a new World Bank loan to diversify its local economy.
While foreign finance can be helpful, it is important to remember that over the past five years Angola has taken four loans totaling over a billion dollars from the World Bank. It then begs the question whether loans from the IMF and the World Bank are the only ways in which African states are able to resuscitate its economy and create projects that build durability and sustainability into its local markets.
In the past, African states have borrowed heavily from the IMF and the World Bank. But it is best to look at borrowing from a historical perspective to understand the World Bank’s largest borrowers. India, Brazil and China have been its top borrowers, with the borrowing landscape shifting dramatically due to the Euro-zone crisis. The IMF now lists its top three borrowers with amounts outstanding as Greece, Ukraine and Portugal. In fact, in 2016 Angola didn’t borrow anything from the World Bank following its worst economic year in recent times.