By Zandre Campos, Chairman and CEO of ABO Capital
Angola has the potential to become a major exporter, as the country has seen fairly stable intercontinental and global trade growth in the past 20 years. Africa’s top trade partners have included China, the United States, and the European Union, but with variables like politics, pricing, and availability of resources, Angola must continue to allocate the time and funds needed to keep up with supply and demand of its current exports, and start expanding into new sectors.
Africa’s dominant sources of revenue are oil and metal, which account for approximately 90 percent of the continent’s total exports. Angola is one of the few African countries that relies almost solely on these two commodities as its main exports, but the country is taking great steps to invest resources in opportunities with high manufacturing intensity, like food production. According to the 2017 African Economic Outlook report, agriculture provided jobs for more than 60 percent of Africa’s workforce, but accounted for less than a quarter of total exports.
Technological advancements, from motorized equipment to biotechnology like seed modification, have widely contributed to the worldwide growth of agriculture. However, Africa’s farming and processing capabilities are still underdeveloped, and this may be due to the continent’s low import percentage of heavy machinery and transport equipment, as well as climate change patterns. Organizations like ETG, one of the fastest growing integrated agricultural supply chain groups, and a venture that I currently support, are working to ensure the rapid growth of procurement, processing and manufacturing of finished goods, and product distribution through machinery, irrigation, warehousing, and transportation methods. Advancements in computers and the Internet also facilitate trade deals among long-distance business partners.
While technology is critical to the continued development of agricultural commodities, it’s important to note that factors like trade policy, infrastructure, and education impact Angola as an exporter. The African Continental Free Trade Area (AfCFTA), for example, is said to boost African economies by harmonizing intercontinental trade liberalization, removing tariffs on 90 percent of goods once the policy is in effect, and establish free movement of business people and investments. Through the AfCTFA, Africa will see more trade liberalization and enhanced competition with more opportunities with high manufacturing intensity. Technology will be a key driver in maintaining production and ultimately competition.
On the infrastructure side, roads, vessels and flight paths should be readily available in order to move a high volume of product across the border. Fortunately, according to the African Development Bank, the Angolan government had previously committed to allocating nearly $5.5 billion to finance private sector projects in areas with high export potential, like food and agriculture. This includes electricity projects, construction of a new international airport in Angola’s capital Luanda, and a new commercial port north of Luanda. Lastly, farmers, warehouse workers, transportation staff and others closely involved in the supply chain might require additional technical training when there are changes or advancements in equipment.
By investing resources in agricultural and technology, along with the proper infrastructure and education, Angola can become a major exporter in oil, metal and food, fostering healthy economic development in the country, and in Africa as a whole.