Economic and Social Development of Angola Due to Petroleum Exploration

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XVII INTERNATIONAL CONFERENCE ON INDUSTRIAL ENGINEERING AND OPERATIONS MANAGEMENT Technological Innovation and Intellectual Property: Production Engineering Challenges in Brazil Consolidation in the World Economic Scenario. Belo Horizonte, Brazil, 04 to 07 October – 2011

ECONOMIC AND SOCIAL DEVELOPMENT OF ANGOLA DUE TO PETROLEUM EXPLORATION

DANIELLE FERNANDES DO CARMO (UFRJ) [email protected]

The evaluation regarding the influence of petroleum production and exploration in a country is essential for a better usage of all the returns this commodity may generate. This article aims to explicit the current social and economic condittions of Angola in order to demonstrate if the country has improved its quality of life due to petroleum and gas exploration in the territory. The innumerable variables to be analyzed in this approach are: social and economic indices; and historic of the country’s development, which are divided into Human Development Index (HDI), Human Poverty Index (HPI), Child Mortality Rate, among others. Concerning the economic development of Angola, current economic indices will be applied, such as the Gross Domestic Product, daily production of oil and natural gas, oil and gas reserves which have been proved, among several others. This juxtaposition of social and economic indices will enable the evaluation of influences which Angola presents due to its insertion in the petroleum and gas production. It was concluded that petroleum and gas do not generate an even income distribution, however, they upgrade the country ratings in some social indicators (HDI, for example).

Palavras-chaves: Petroleum and gas; Angola; quality of life; economic development.

1. Introduction The Republic of Angola has approximately 1,246,700 km2 and is located on the west coast of Africa. The country is divided into 18 provinces and its capital city is Luanda. Angola has an extention of 4,837 km, its terrestrial borders are north on the Cabinda province with the Brazzaville Congo, north and east with the Democratic Republic of Congo (former Zaire), east with Zambia and south with Namibia. Angola is also gifted with a 1,650 km Atlantic Ocean seacoast. The country has an approximate population of 18,5 million inhabitants, of which, about 5 (five) million live in Luanda (Source: http://www.portalangop.co.ao/motix/pt_pt/portal/angola/index.html). In the historical context, Angola remained an enslavement country until mid 1876, continuing to be a typical exploited European colony. During that period it suffered foreign exploitation of the exportation of slaves and ivory until the abolishing of slavery. After 1876, the country lost a considerable portion of the market, particularly the international market, resulting from the end of the exportation of slaves. Thereafter, Angola directed its economy towards its internal interests, strengthening itself during the First World War and becoming less subject to the oscillations and dependencies of the international market. It was only a century later, in 1975, that the country obtained its independence. With the advent of its emancipation, the main focus of the country with the international market began to be petroleum, which until now represents one of the main sources of economic growth. After its independence the country underwent a civil war that lasted 27 years and affected 4 million people, generating immeasurable damage to their political and social institutions. The living conditions throughout the country, and especially in Luanda, reflect the collapse of its administrative infrastructure mainly caused by the conflict. Angola is still rebuilding its infrastructure destroyed during 27 years of civil war that ended in 2002. Despite the fact that the country is beginning to be recognized for its development and stability, the challenges persist, approximately 55 % of the population still survives on less than US$1,25 per day and the World Bank ranked Angola as one of the most difficult countries in the world to do business with due to its excessive bureaucracy, corruption and lack of transparency in public finances. Because of its severe economic situation, the Angolan government is limited in effective participation in its domestic social institutions. There are, however, many projects from the World Bank, UNDP (United Nations Developing Programme), and other organizations that anticipate a transformation in domestic policies, considering the economic development of the country. Regarding the constitutions, Angola had its first constitution elaborated in 2005, which dictated a semi-presidential system, in which the head of state was the one who had the power of the head of government. Currently, due to the elaboration of a new constitutional text in September of 2008, Angola presents a presidential system in which the President is the head of state. According to chapter II, article 56 of the Angolan constitution “The President of the Republic is the Head of State, symbolizing the national unity, representing the Nation in its domestic and international position, ensuring obedience to the Constitutional Law and is the Commander-in-chief of the Angolan Armed Forces.” A new constitution was approved in

January 2010, and following the restitution of the constitutional process, a new government was put in place. Under the new constitution, the president will not be elected by popular vote, but will instead be the head of the party with the most seats in parliament. The prime minister’s position was replaced by a vice-president who heads the government under direct presidential control. The new text also elaborates that the president shall be elected by universal suffrage with the majority of votes. This new text represented and still represents a great political and economic advance for Angola, since the country can be envisioned as a more stable nation due to its presidential system, attracting more external investments. Angola was characterized until the 1970´s as a predominantly agricultural country. Coffee was its main crop, followed by sugar cane, sisal, corn, coconut oil and peanuts. Among the commercial cultivations, cotton, tobacco and rubber stand out. The production of potato, rice, cocoa, and banana are also relatively important. Angola has an abundance of minerals, especially diamonds, petroleum and iron ore. Despite the fact that most of the population lives in poor conditions, Angola is the second largest petroleum producer and diamond exporter of Sub-Saharan Africa, only following Nigeria. For that reason, this article approaches a social and economic analysis of Angola, focusing on the influence of petroleum on the economy and quality of life of Angolans. In 1966 important deposits of petroleum were found which allowed the country to become one of the most important nations producing the commodity, with a consequent economic development made possible by such activity. The location of the diamond mines is around Dondo, a district of Luanda. The petroleum deposits, however, are located in Cabinda, proceeding from the coast to the capital. This article aims to show the current social and economic conditions of Angola in order to identify whether the country has improved its quality of life due to petroleum and gas exploration.. The article is divided into three sections. Section 1 will deal with the quality of life of Angola, bringing out data about its development, such as HDI (Human Development Index), HPI (Human Poverty Index), DGI (Gender Development Index), among others. Such indices represent several social, health, economic and life conditions, which in a succinct manner end up characterizing the living conditions of a region. Section 2 will discourse on the development of Angola in recent years, especially in the post-war period, citing the influence of petroleum in the region, as well as the improvements which came about from the commodity. The main objective of this section is to explicitly present the current economic characteristics of Angola through GDP, GDP per capita, among others, and the country’s development which has had an unexpected growth in recent years. Section 3, the last, will have the role of concluding the article, juxtaposing the social and economic indices, presented in the previous sections, in order to clarify the influences of petroleum and technology on the daily life of Angolan citizens. 2. Quality of Life in Angola Angola currently represents one of the largest economies of Sub-Saharan Africa. The country obtained a high economic development derived mainly from its mineral abundance. However, it still stands in the low human development group concerning HDI, with 68% of the population living below the poverty line and 15% who live in an extreme poverty situation

(according bulletin nº IFAD/23/08), with a high consequent rate of social inequality which continues increasing. Table 1 appears below with a few values of HDI, allowing the comparison between Angola and Norway (best HDI rate in the world), Sierra Leone (worst HDI rate in the world) and also between other countries in Africa. The HDI in 2009 was based on information from the year 2007.

Country HDI 2005 HDI 2006 HDI 2007 HDI 2008 HDI 2009 HDI 2010 Norway 0.968 0.970 0.971 0.968 0.971 0.938 Togo 0.495 0.498 0.499 0.512 0.499 0.428 Uganda 0.494 0.505 0.514 0.505 0.514 0.422 Angola 0.541 0.552 0.564 0.446 0.564 0.403 Sierra Leone 0.350 0.357 0.365 0.336 0.352 0.317 Source: UNDP (United Nations Development Program) Table 1 – Comparison of the Human Development Index

As may be observed on Table 1, Angola has climbed 16 positions in the world rankings since 2005, even with a negative variation of 0.138 relative to its HDI. This oscillation, however, was not enough to remove the country from the block of countries with low human development, despite of the increasing rises of its GDP and GDP per capita. Below we can see the evolution of the HDI Angola since the year 2005:

Graphic 1 – Evolution of the HDI of Angola

HDI has the main objective of offering a counterpoint to other widely used indicator, the Gross Domestic Product (GDP) per capita, which only considers the economic dimension of development. In this manner, the social analysis of the country is performed in a wider range, reaching with greater focus on the social reality of the aforementioned country. Some variables used for the HDI calculations are demonstrated below:

HDI Life Expectancy Average years of Expected years GDP per capta (PPP US$) Country (years) schooling of schooling Norway 0.938 81 12.3 17.3 58.810,00 Togo 0.428 63.3 5.3 9.6 844,00 Uganda 0.422 54.1 4.7 10.4 1.224,00 Angola 0.403 48.1 4.4 4.4 1.224,00 Sierra Leone 0.317 48.2 2.9 7.2 809,00 Source: UNDP (United Nations Development Program)

Table 2 – Variables used for the calculation of HDI

From table 2 it is possible to observe the great social delay suffered in Angola. The number that stands out among all the above is the average years of schooling. The 146 the position occupied by Angola's ranking in the Human Development Report (IDH) for the year 2010, is linked to the fact that the education sector have stalled between the years 2000 to 2010 on the score 4.4. Other indicators used to calculate the HDI also reflect the poverty and lack of investment in the country’s social sector, nevertheless, not in such a manner as HPI1, for example, which considers the extreme situations that only exist in underdeveloped countries. This index is calculated only for countries with low and medium human development. Some HPI's are presented below along with the evolution of the Angolan HPI:

Uganda Togo Angola Sierra Leone HPI (%) 28.8 36.6 37.2 47.7 World Ranking 91 117 118 128 Source: UNDP (United Nations Development Program) Table 3 – HPI1 in the year of 2009

Graphic 2 – Evolution of the HPI of Angola

Graphic 2 displays Angola once more situated among the worst indices of the world, with a lowermost HPI variation of 0.2% along the first three years analyzed. However, in 2007 and 2009, the HPI1 in Angola had a great growth, and by that we could say that the government made some great investments trying to change this scenario. Nevertheless, such result reinforces the horrible life conditions which the Angolan citizens are still submissive to. On the following table such conditions are presented along with its respective rates:

HPI 1 Probability of Iliteracy rate in People with Rate of underweight the populatio adults (>15 no access to children (0-5 years) Year not reaching 40 years) potable water years of age (%) (%) 2009 37.2 38.5 32.6 49 31 2008 40.3 46.7 32.6 49 31 2007 37.2 38.5 32.6 49 31

2006 40.5 46.7 32.6 47 31 2005 40.5 46.7 32.6 49 31 2004 40.3 46.7 32.6 49 31 Source: UNDP (United Nations Development Program) Table 4 – Variables for the calculation of the HPI in Angola

The analysis of Table 4 demonstrates that the percentage of population who does not reach 40 years of age, as well as the rate of underweighted children are found under preoccupying numbers for the republic, until 2007, more than 40% of the country’s population will not reach 40 years of age, and 31% of 0-5 year old is underweighted. In 2007 and 2009 the percentage of population who does not reach 40 years presented a huge improvement, but even though they is still very high, showing the small number of investments in the health sector, which ends up being delayed, with no adequate technology able to solve the basic problems of the population. The exemplification of the lack of health resources for the Angolan population is represented on table 5, which displays the amount of investments on public sector:

Norway Lesoto Angola Togo Sierra Leone Public expense (% of GPD)-2004 8.1 5.5 1.5 1.1 1.9 Per capta expense (PPP E>U$)-2004 4.080,00 139,00 38,00 63,00 34 Public expense (% of GPD)-2009 17.9 7.8 5.0 6.9 7.8 Per capta expense (PPP E>U$)-2009 3.780,00 88 61,00 20 20 Source: UNDP (United Nations Development Program) Table 5 – Health expenses in 2004 and 2009 per country

The major difference between public spending in Norway and Angola demonstrate the reason why this last is found in such a deficient manner regarding health, as seen on Table 5. It is even unjust the comparison between Angola and the country with the best HDI in the world, although, even in comparison with other counties with low HDI, such as Uganda and Sierra Leona, Angola still presents lower amounts of public and private investments. Some of the main diseases and health problems in Angola are displayed below; these are not attenuated due to lack of investment:

Norway Lesotho Angola Togo Sierra Leone Measles (% of population) 90 85 45 70 67 Tuberculosis (% of population) Eradicated 96 61 96 83 Source: UNDP (United Nations Development Program) Table 6 – Immunization – 2005

Children1 Birth Child- Doctors4 HIV5 Children6 Babies7 Tuberculosis8

Control2 births3 Iceland - - - 362 0,2 - 4 2 Lesotho 53 37 55 5 23,2 - 13 588 Uganda 29 20 39 8 6,7 - 12 559 Angola 32 6 45 8 3,7 63 12 333 Togo 25 26 61 4 3,2 60 18 753

Sierra 39 4 42 3 1,6 61 23 905 Leone Source: UNDP (United Nations Development Program) Table 7 – Indices of health

Note: (*) 1-Children with diarrhea who receive oral rehydration and continuous nourishment (5% under aged), 1998-2005; 2- Contraception rate of prevalence (% of married women between 15-49 years of age), 1997-2005; 3- Child-births assisted by qualified health staff (%), 1997-2005; 4-Doctors (per 100.000 people) 2000-2004; 5- Prevalence of HIV (in the 15 – 49 year old population) % 2005; 6- Children under five years of age with fever treated on anti-malarials (%), 1999- 2005; 7- Babies underweighted at birth (%), 1998-2005; 8- Cases of tuberculosis, the prevalence (per 100.000 inhabitants) 2005; Though, Angola is not only deficient in health and education, many citizens have no basic life condition, living under extreme misery, reflecting on data of malnutrition, infant mortality, sanitation and access to drinking water in the country. Such data is displayed below along with data of other countries for comparison only:

1990 – 2002 2004-2006 Lesotho 17 15 Togo 24 15 Uganda 33 37 Angola 58 44 Sierra Leone 46 46 Source: UNDP (United Nations Development Program) Table 8 – Undernourished population (% of total population)

1970 2005 2009 Sierra Leone 206 165 123 Angola 180 154 130 Lesotho 140 102 63 Uganda 100 136 85 Togo 128 78 64 Norway 13 2 2 Source: UNDP (United Nations Development Program) Table 9 – Child Mortality Rate (per 1000 born alive)

Population with access to sanitation (%) Population with access to drinking water (%) Country/Year 1990 2004 2008 1990 2004 2008 Lesotho 37 37 29 - 79 85 Uganda 42 43 28 44 60 85 Angola 28 31 57 53 58 50 Sierra Leone - 39 13 - 57 49 Togo 37 35 12 50 52 60 Source: UNDP (United Nations Development Program) Table 10 – Population with access to sanitation and drinking water

As may be observed on tables 6, 7, 8, 9 and 10, even with the reduction of some rates along the years, these still represent elevated numbers. Yet, in the country almost 1/2 of the undernourished population, 57% have no access to sanitation, about 15% of children still decease in the first few years of life, and about 50% of the population still has no source of drinking water in their routines. Such numbers are worrysome, and are a reflex of the Angolan historic process. Besides reflecting on the social indices, Angola’s past still afflicts the government weakening its economic, political and social strategies. The Angolan government experienced and still experiences strategic difficulties regarding the absorption and division of funds among the ministries. Its budget duplicated between 2005 and 2007, yet, several ministries, including Health and Education, are still incapable of absorbing the funds efficiently. There are, nevertheless, measures in course in order to reinforce capabilities in the areas of politics, planning, information systems and human resources. A plan initiated 5 years ago is now being developed, which will go through the years of 2009-2013. It is easily seen that even with great economic development, Angola is still under a process of organization, especially regarding its executive administration. The country is continuously receiving external aid for its reconstruction, counting with entities such as UNDP, Agencies related to the United Nations, Organizations of Civil Society, among several others. The aid of such agencies exemplifies the governmental inefficiency regarding the battle against poverty and inequality. Besides the great social-political problems, the country also has to deal with the demographic increases which arose from the end of the war. These increases are larger than expected, which hampers even more the control of social indices. Tables 11 and 12 below display the demographic development of Angola along with the fertility rate:

1990 2007 2020 Total population (millions) 10.7 17.6 24.5 Urban population (% of total population) 37.1 53,3 59,7 Population under 15 years of age (% of total population) 46,4 45,6 - Population of 65 years old or more (% of total population) 2,4 2,5 - Rate of annual growth (%) (1975 - 2005) 2,9 2,9 2,8 Total population (millions) 1990 2007 2020 Source: UNDP (United Nations Development Program) Table 11 – Demographic Tendencies

Iceland Togo Sierra Leone Uganda Angola 1970-1975 2,8 7,1 6,5 7,1 7,2 2000-2005 2,0 5,4 6,5 6,7 6,8 2005-2010 2,1 4,3 5,2 6,4 5,8 Source: UNDP (United Nations Development Program) Table 12 – Fertility Rate (births per woman) As may be concluded from the collected and displayed data in this section, Angola is under a great social difficulty. The development of its economy was able to soften some rates, however, many of those are still very high numbered, even in comparison to other African countries. Despite the increasing petroliferous power that is undergoing, Angola still needs to rearrange itself politically, as a manner to best distribute its income, creating more jobs, thus

improving health, education and the condition of life in the country. On the next section an economic analysis will be performed and the development of the country along the last few years will be demonstrated. 2. Economic Development of Angola

Angola is currently classified as an average to low income country, with a Gross National Income of 4,91 US$ per capita (World Bank 2010) and an economic growth of 18.6% in 2006, 20.3% in 2007 and 13.2 % in 2008. In 2009, however, due to the world recession, Angola suffered for the first time in many years a fall on its nominal GDP, of just 2.7%. Meanwhile, analyzing the years prior to the recession, it is noticed that the economic development influences directly the GDP and GDP per capita, which present a significant growth since mid 2002, when the civil war ended. It is possible to affirm that the atypical accelerated growth, since the country recently exited a destroying and long-lasting conflict, is specifically due to the abundant quantity of petroleum existing in its territory. The high prices and development of petroleum production (which duplicated in 5 years), until the world recession initiated in the end of 2008, made the country’s GDP increase, asides from turning the economy more dynamic, which attracted much foreign income to the country. Due to that fact, Angola is currently the greatest producer of petroleum in Africa. Its reserves are estimated in 13,5 million barrels. On the graphics below, graphic of the GDP and the petroleum production in the African countries are demonstrated, in which if a comparison is made, it is possible to notice the accelerated pace of Angola’s development:

Graphic 3 – Real GDP growth and per capta GPD of Angola and Africa

Graphic 4– OPEC Crude oil production by Country, 2009

The exploration and production of petroleum in Angola, as well as internationally, follows the commodity’s price variations, increasing or decreasing according to the rises and lows of the prices. These variations are demonstrated below for production, as well as exploration.

Graphic 5– Total Oil Production

Graphic 6– Petroleum Proved Reserves As displayed in graphics 5 and 6, there was a great increase of production in 2006, around 13.71%, derived from the rises of petroleum prices and new discovered fields. In 2007 there was also a great increase, of almost 20%, which caused the production to reach 1.7 million barrels a day. In 2008, following the prior tendencies, the production achieved 1.88 million barrels a day. In the years 2009 and 2010 Angola had a production of 1.9 million barrels/day. For the current year, a greatest production was expected, however, Angola had to meet the quota required by OPEC, which corresponds exactly to the 1.9 million barrels/day. Angola still possesses a great potential of production in deep water, foreseen to initiate in 2012, fact which will enable the continuity to this quota of production, once the decline of which will happen due to the progress of production and consequent production of mature wells. The Angolan economy has one of the highest rates of economic growth of recent years, driven by the oil sector. Even with the crisis of 2009, the country has maintained growth of 14.3% of Gross Domestic Product (GDP), with expansion of international partnerships and investments in the sectors of construction, agriculture and general trading (manufactured goods), which achieved increases in the years 2006 and 2007, approximately 25.7% and 21% respectively. Brazilian exports to the country reached its peak in 2008, with U.S. $ 1.974 billion, making Angola's largest trading partner of Brazil in Africa. In 2009, these values decreased and reached U.S. $ 1.333 billion. In 2010 totaled U.S. $ 771.9 million, representing a decrease of 32.9% over 2009. The Angolan government approved in 2009, the National Plan of Geology, which has as main objective to establish the geological and mining potential of the country. This plan is considered an "essential tool" to define the development strategy for the mining sector. The intention in the genesis of this plan is to ensure that the mining sector can be an instrument of "sustainable" development, participating "actively" in the process of national reconstruction. The increases are the result of investments from home state in these sectors; however, with the oil boom there has been a diversification of investments and attraction of foreign capital, which facilitated the growth of non-oil sectors, and the country as a whole. The rural sector also showed a significant increase of about 9.3% in 2005/06, 12.5% in 2006/07 and 13.1% in 2008/09. This was due to the increase in security in rural areas, the improvements made to roads and transport, responsible for draining the rural production, the increase in area (due to the removal of mines remaining from the civil conflict) and by improved weather conditions, with increased rainfall, which provided a better harvest. The growth of this sector represented a significant gain for the country, since agriculture is the main responsible for the creation of jobs and consequent reduction of poverty in the country (Source: The World Bank). Following the tendency of other Angolan sectors, natural gas had its production increased around nine times in 2006, with enough remains in its reserves to guarantee a production for more than 30 years.

Graphic 7 – Proved Reserves of Natural Gas – Sub-Saharam Africa As may be observed on graphic 7, Angola detains the greatest gas reserves in Sub-Saharan Africa. Taking advantage of that situation, Sonangol, Angolan state company, signed a consortium contract a while ago with the Chevron company for the production of GNL. Around 1 billion cubic meters of gas associated to the production of offshore blocks will be received. Therefore, 5,2 million tons of gas are expected for 2012, destined to domestic consumption and foreign market. Currently, all production of Angolan natural gas is directed to domestic interests. Besides the Angolan omnipotence regarding gas and oil, it may also become one of the most important African countries in the production of biofuel. Recently, Sonangol has signed a contract with the Brazilian company Odebrecht, and the Angolan company Dimer. Such agreement portends the creation of a new biofuel state company, called Biocom. The agreement mandates a US$200 million investment (which is the present currency being used in Angola,) in an area of approximately 30,000 hectares of sugar cane plantations. Biofuel production is estimated to provide 140 MW of energy. This agreement will represent a great advance for the country, since currently, Angola does not provide any energy from biofuel, from EIA we know that in a total energy of 0,15 quadrillion of BTUS, 69% comes from oil, 20% from natural gas and 11% from hydroelectricity. After the analysis of all the above data, it is possible to conclude that Angola has been consolidating a great economic importance in Africa, characterized by the huge development the country went through after the civil war. The main cause of its development is due to the enormous capability the country has of generating energy, whether it is through exploration or production of petroleum, production of natural gas, by hydroelectricity and thereafter by biofuels. In the next section a conclusion will be drawn, which aims to overlap the two previous sections as a way to demonstrate the influences of petroleum on the economic and social development of the Angolan society. 3. Conclusion The main motivator for writing this article was the peculiar historic and economic character of Angola, even though the country independence was delayed, due to internal conflicts and civil

war, the country was able to reach an atypical economic development, mainly originated from the mineral abundance existing in its territory. This article made possible to affirm that the petroleum exploration was the main booster of such scenario, which is held responsible for the fortification of the internal market. In section 1, it was concluded that Angola is found in a precarious social scenario. The economic development was able to soften several social rates, yet many of them are still very elevated, even in comparison to other African countries. So, it is possible to affirm that despite the great petroliferous potency which has been transforming itself, Angola needs to rearrange itself politically, as a way to better distribute its income, creating new jobs, which will improve health, education and conditions of life of the Angolan citizens. In section 2, it is possible to affirm that Angola has been consolidating a great economic importance in Africa, characterized by the huge development of the country after the end of the civil war. The main cause of the development is due to the country’s great capability of generation of energy, whether it is through exploration and production of petroleum, through production of natural gas, through hydroelectricity and soon by biofuels. The joint analysis of both sections allows to affirm that the perspectives for Angola should be considered not only due to its new reality of wealth and security, mainly originated from petroleum, but also in which measure the government applies this new reality for the benefit of Angolan citizens. The Government budget duplicated between 2005 and 2007, yet, there have not been significant improvements on the social indices. The nearly stagnated situation of the social development in Angola reflects the poor distribution of income generated by petroleum. While the GDP per capita increases to relatively high rates, the HDI and HPI remain relatively stable. It is known that Angola presents itself on the world scenario as a strong petroleum and gas potency, however, this potentiality is not reflected in the population. From the analysis made in this article it is possible to affirm that petroleum is not bringing forward the social development expected for the country. It may be concluded that the income generated by petroleum remains in power of a minority, and the government is responsible for such fact. The delayed political reconstruction process of the country, which had its first presidential elections only in 2008, hampered the effective implementation of social governmental measures. Due to the lack of effective measures, the country underwent poor conditions of life generated by war, becoming the 146nd HDI in the world, ranking higher than 23 countries only, most of them also in Africa. As a last analysis, on graphic 9, the difference between production and consumption of petroleum in Angola in the last few years is shown, and represents the variation of quantity of petroleum exportation of the country. As a last analysis, on graphic 8, the difference between production and consumption of

petroleum in Angola in the last few years is shown, and represents the variation of quantity of petroleum exportation of the country. Graphic 8 – Angola’s Oil Production and Consumption, 1999-2009 The increase of exportation directly reflects an increase of quantity of resources which is entering the country, and is being partially invested in the non petroliferous sector, which also influences the real GDP. The comparison between real GDP, petroliferous sector GDP and non-petroliferous sector GDP for 2003 to 2010, showed below, makes it possible to analyze the range of investments regarding Angolan petroleum. It is worth emphasizing that a decrease on the non-petroliferous sector GDP represents an effective investment in the exploration and production of petroleum. As a result of economic and financial crisis that was felt around the world, Angola was deeply affected by the collapse of oil prices in 2009. The sharp fall of the same, which began in late 2008, caused a considerable deterioration in the macroeconomic situation in the first half of 2009, making Angola the following year with an increase in GDP in the oil sector had a negative growth.

Graphic 9 – Comparison between real GDP, GDP in the oil sector and the non-oil sector It is known that due to the recent entry of Angola on OPEC, there has been a limitation in the production, restricting the country to a maximum of 1,900 billion barrels per day. In that manner, there will not be a significant increase on the exportations, resulting in a lack of direct influence on the balance of trade and consequently on GDP. Despite that fact, the oil keeps influencing indirectly the GDP and the Angolan balance of trade through price variations of the barrel. So, it is possible to conclude that the petroleum has been a great lever for the Angolan economy, in order to recover and reconstruct itself after war, as well as to resist the recession, because despite of the world’s recession scenario, the country presents a clear economic development for an African country. References Angola Xyami, News of Angola, Africa and the World; Angolan Constitution – September of 2008;

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