Angola requires a reliable route towards strong economic expansion
News Article: World Bank Offers Solutions for Angola's Economic Growth and Financial Inclusion
The World Bank has presented a comprehensive report on Angola's economy, emphasising the need for a consistent path to robust growth and economic diversification to overcome a decade of stagnation and support poverty reduction. The report, titled 'Boosting Growth with Inclusive Financial Development', highlights a strong 4.4% growth in Angola's economy last year, the highest since 2014.
The slow growth in Angola's economy was due to structural challenges and heavy dependence on the oil sector, which is vulnerable to global price fluctuations. To address this, the World Bank recommends accelerating economic diversification away from the oil sector, supporting key non-oil sectors such as diamonds, trade, fishing, construction, and agribusiness. Large, long-term infrastructure projects like the Lobito Corridor and water supply initiatives are crucial to unlocking trade, improving services, and fostering an economic ecosystem.
Angola shows significant financial exclusion, especially in rural areas, with limited access to formal banking services compared to other regional countries. The World Bank advocates for promoting inclusive financial development to boost economic participation, resilience, and sustainable poverty reduction. Key reforms recommended include developing intuitive and accessible digital payment platforms in rural areas, promoting credit to small businesses, enhancing financial integrity through the International Financial Action Group’s plan, focusing on anti-money laundering and combating financing of terrorism (AML/CFT), and increasing access to insurance products, particularly those related to climate change impacts, for individuals and businesses.
The World Bank commits to supporting Angola with long-term projects that require sustained financial and analytical engagement, such as improving water supply where half the population lacks access. There is optimism that the economic reforms being implemented by the government will produce positive results.
However, the World Bank predicts that real GDP growth will average 2.9% from 2025 to 2027, but it is unlikely to significantly improve living standards. This year, growth is expected to slow to values of up to 2%. The economy of Angola contracted by approximately 10.4% from 2016 to 2020, with an average annual decline of 2.1%.
Juan Carlos Alvarez, the World Bank's Country Director for Angola, stated that Angola's economy urgently needs a consistent path to robust growth. The World Bank suggests developing the action plan of the International Financial Action Task Force and combating money laundering and terrorist financing (AML/CFT) to improve access to formal finance and promote growth in the financial sector.
In conclusion, Angola’s path to improved economic growth and financial inclusion hinges on economic diversification, infrastructure development, policy reforms to expand formal financial services, and persistent support for long-term projects. An update on Angola's economy, an economic memorandum, and a report on the role of the private sector are being presented by the World Bank today. Financial inclusion can boost economic participation, resilience, and lead to sustainable growth and poverty reduction in Angola.
- The World Bank recommends that Angola's government should support key non-oil sectors like diamonds, trade, fishing, construction, and agribusiness to diversify the economy and reduce dependence on the oil sector.
- To promote financial inclusion and reduce poverty in Angola, the World Bank advocates for policy reforms such as developing intuitive digital payment platforms in rural areas, expanding credit to small businesses, and increasing access to insurance products for individuals and businesses.
