Angola

Global Economic Downturn Vs Angola’s Development

Luanda, 25 July 2009 - The impact of the global financial crisis on the development of Angola, was subject to a debate in the 2nd edition of the “Jango do Desenvolvimento” (Development Jango) space held July 24 in the United Nations building, in Luanda, promoted by UNDP.

Invited to speak about the crisis and its effects in Angola, the World Bank Senior Economist, Mr. Ricardo Gazel, called the participants to reflect on “the mother of all crises”, the progress achieved during the last years and the impacts of the crisis on the Angolan economy, as well as on the social impacts and the perspectives for the future.

In his analysis, the impacts of the crisis in Angola have three slopes, the first being related with the Finance Market and Foreign Investment, the second with the remittances and Foreign Aid, and the last with the Real Economy, reflected on the prices of primary products.

He added that the impact of the crisis in Angola was smaller than in other countries due to the absence of a Stock Exchange and to the little connection of domestic banks with the International Finance Market. Other factors were the small market of interbank credit and a low ratio between loans and deposits.

“The emigrants' remittances are small, if compared with other African countries. The money exit is substantially larger than the entrance and the Foreign Aid participation in the budget is marginal. For those facts, the social impact is reflected in the increase of poverty, with a retreat in the human development indexes, in the possible increase of hunger and child mortality”, he said.

According to Mr. Gazel, the future perspectives are of improvements and there is indice that the global crisis might have reached the bottom of the well, however the economic recovery would be slow, resulting in the increase of unemployment and rise in the price of petroleum.

In Mr. Gazel's opinion, Angola can prepare for the future through diversification of the economy and through reforms. He justified that the Angolan economy was extremely dependent of petroleum, which is marked with price instability, added to the fact of the petroleum sector hardly generating jobs.

“To diversify, there is need to identify the sectors with comparative advantages, such as agriculture, construction, cement and plastic industries, agro-industry and services, to identify the barriers, the incentives, the fiscal and work reforms, and the regulations”, he recommended.

For the Economist, “the mother of all crises” consisted in the collapse of Stock Exchanges in both the advanced and developing economies, as well as in the bankruptcy of banks and insurance companies and in the decline of liquidity. He noted that prior of the current global financial crisis, the world registered significant progresses in the social field.

It should be recalled that UNDP, through the “Jango do Desenvolvimento” space, intends to reinforce the debate on themes related to the development of Angola. Within this framework, monthly debates take place, in which experts and leaders are invited to present their thesis on a series of relevant themes that share the lines of Angola’s development.