Angola

Angola, officially the Republic of Angola, is a country in South-Central Africa bordered by Namibia to the south, Zambia to the east, the Democratic Republic of the Congo to the north, and the Atlantic Ocean to the west. Angola is made up of 18 provinces, with Luanda as its capital. Portuguese is the official language of Angola, and the official currency is the kwanza (AOA).

Angola is run by a multiparty regime, with its President as the chief of state. Its legal system is based on Portuguese civil law and customary law, modified to accommodate political pluralism and increased use of free markets. 

Angola’s climate characteristics, the quality and richness of its soils, its young and growing population, and its high potential for diversification and growth of the economy that is not dependent on oil position it as one of the main countries in Africa and the world in which to invest. Angola is country that can, in fact, respond to some of the global difficulties the world is going through, with the potential to become a leader in some products and sectors of activity.

Since 2018, under President João Lourenço, Angola has been actively pursuing economic reforms aimed at diversifying its economy and reducing dependence on oil. Key initiatives include selling state stakes in various companies to attract foreign investment and boost economic efficiency (privatisations), efforts to simplify bureaucracy and enhance transparency, including adherence to the Extractive Industries Transparency Initiative (EITI), and promotion of sectors such as agriculture, mining, and tourism through infrastructure investments and fiscal incentives.

Despite an international climate of high prices for raw materials and food products, Angola has shown signs of economic recovery in 2023 and 2024. The Gross Domestic Product (GDP) grew by approximately 1.5% to 2% in 2023, with forecasts indicating further acceleration in 2024. This growth is driven by a combination of increased oil production and recovery in non-oil sectors. Foreign direct investment (FDI) also saw an increase in investment in sectors such as agriculture, mining, and telecommunications, contributing to economic diversification. Fiscal stability has also helped the Angolan economy to overcome challenges. Improvements in inflation control, tax reforms, and the reduction of public debt reinforced macroeconomic stability.

As of 2024, inflation in Angola has moderated compared to previous peaks but remains a concern. The inflation rates have shown a declining trend, dropping to around 10% to 12% in early 2024. This represents an improvement from the high levels seen during the peak of the economic crisis and pandemic period.

Angola has overtaken Nigeria as the biggest oil producer in Africa. As of 2024, Angola’s oil production averages approximately 1.1 to 1.3 million barrels per day (bpd). This represents a decline from peak levels of over 1.8 million bpd in the late 2000s, attributed to maturing fields and underinvestment in new projects. Oil production plays a crucial economic role in Angola, contributing significantly to national revenues. It remains the cornerstone of Angola’s economy, accounting for around 90% of export revenues and over 50% of GDP. The sector is also vital for government revenue, despite ongoing efforts to diversify the economy. Additionally, oil production is fundamental for employment and local content development. Although direct employment in the oil sector is limited, there is increasing emphasis on local content policies to boost Angolan participation and employment in the industry.

However, the oil sector presents several challenges and opportunities. Many of Angola’s key oil fields are reaching maturity, leading to natural production declines. This necessitates enhanced recovery techniques and increased investment in new field development and exploration. Also, the ageing infrastructure and the need for maintenance and upgrades pose challenges to sustaining and increasing production levels.

Angola’s oil production continues to play a pivotal role in the country’s economy, but challenges such as maturing fields and the need for diversification present ongoing issues. With strategic investments and reforms, Angola aims to stabilise and potentially increase its oil production while fostering broader economic development. The focus on local content and sustainable practices is expected to shape the future of Angola’s oil industry.

Angola is the second largest producer of diamonds in the world. Angolan diamonds are mainly mined in the province of Lunda Norte and represent about 20% of the world’s diamond production. The global demand for diamonds is increasing, especially in China and Japan. China is currently the largest market for Angolan diamonds. Angola’s diamond industry is well positioned to benefit from these growing markets. Looking ahead, Angola's mining sector will continue to be dominated by diamond exploration and production, which accounts for around 90% of total mining revenues. 

With demand for strategic minerals, non-ferrous metals, and rare earths increasing dramatically due to the global energy transition and the use of strategic minerals in lithium-ion batteries, the sector is expected to significantly increase its contribution to the country's GDP growth. In 2023, Angola's diamond production reached 9.772 million carats, marking a 12% increase compared to the previous year. This growth is attributed to industrial recovery and improvements in mining operations. In 2024, the diamond sector in Angola is expected to continue growing, with projected production reaching 10.5 million carats, reflecting an estimated increase of 7.5% compared to 2023. This growth is driven by ongoing investments in exploration and development, improvements in infrastructure, and a general economic recovery.

PwC in Angola 

PwC Angola is organised around industries, including oil and gas, financial services, industrial manufacturing, energy, utilities, and mining, to share the latest research and points of view on industry trends, develop industry-specific expertise, and share different methodologies and approaches in each area.

PwC Angola offers a range of tax services to assist taxpayers with tax structuring, tax compliance, oil and gas taxation, mergers and acquisitions, indirect taxation, financial services taxation, individual taxation, tax litigation, etc.