Angola: Crony financing does not pave the way to long-term growth

The oil dependency

Angola’s economy is oil dependent and prone to boom-bust cycles. When prices are high capital flows, credit grows, and public spending is robust. And when the economy performs well so does re-construction of what used to be for many years a war ravaged country.

Yet an oil bonanza hinders the incentives that are crucial to reform the economy. As a result, Angola is ranked almost at the bottom of the World Bank Doing Business survey (182nd out of 190).

The country does not suffer sever financing issues, due to bilateral lending (mainly by China). Yet this kind of financing does not enhance growth. In fact, it supports the old oil-driven growth model. Under such unbalanced circumstances, public and external debt rise​