Index trend
Previous quarterly editions
Expropriation Risk: 63 63 64 63 ►Political Violence Risk:49 48 49 48 ▼Terrorism Risk:21 21 21 21 ►Exchange Transfer and Trade Sanction Risk: 64 64 63 63 ►Sovereign Default Risk:83 83 83 83 ►
Overall Risk Temperature: 64 (Significant) TREND ►
Special topic: Gray zone aggression
Degree to which the country relies on outbound gray zone action to achieve its strategic objectives1 = Not at all5 = Gray zone action is a core tactic
1
Impact of inbound gray zone attacks on the country1 = Negligible impact5 = Significant impact on economic growth and/or political stability
Far from the front line of current international tensions, there is little or no evidence of the Angolan authorities engaging in gray zone aggression against regional or international neighbors or of Angola being the target of such attacks.
The government of Angola has never admitted to carrying out a gray zone attack or being the victim of such an assault, although few observers expect such candor from the ruling Popular Movement for the Liberation of Angola (MPLA), a party renowned for its tight control of information.
As a member of the 16-nation Southern African Development Community (SADC), Angola is committed to resolving regional disputes by peaceful means, and relations with regional and international states are cordial.
Luanda maintains close ties with Beijing through oil-backed loans to help finance development and with the Western oil majors it heavily depends on to maintain its oil production. Diplomatic ties with Russia date back to the Soviet era and are also cordial, although Luanda has often complained of Moscow’s neglect and low levels of assistance and has been a vociferous critic of Russia’s war in Ukraine. The country’s foreign policy is focused on attracting international capital from whatever source to fund development and reduce the country’s overreliance on hydrocarbon exports.
In a country where internet penetration is still relatively low but growing at around 39%, cyberattacks appear to be more motivated by criminal rather than political intent — although the vulnerability of government information systems and critical infrastructure is glaring. Angola’s National Data Protection Agency fined the country’s National Electricity Distribution Company $225,000 in August over its failure to protect personal data from a ransomware attack last year, while the hacking collective Anonymous shut down more than 20 government websites following a government crackdown on political dissent in 2016.
TREND ►
The European Union (EU)-Angola Sustainable Investment Agreement represents one of the most effective protections against arbitrary expropriation offered to foreign investors by the government since the end of the civil war in 2002. The trade deal seeks to help compensate for the southern African country’s weak legal system and reputation for corruption by providing a framework for socially responsible investment, especially in the energy sector, with a dispute resolution mechanism operating at a state-to-state level in an effort to boost investor confidence.
One of the European Union’s aims is to counter Russia’s and China’s growing influence in Africa. A number of African countries are important sources of critical minerals, and Angola is seeking to become one such source. The country is believed to have substantial, untapped deposits of critical materials, and it is also developing the Lobito Corridor Project, which will facilitate the shipment of such minerals from the Democratic Republic of the Congo via Angola’s Lobito port.
TREND ▼
Angola faces a substantial risk of social unrest and political destabilization arising due to persistently high levels of inflation, the phasing out of fuel subsidies and limited employment opportunities, especially among the young (66% of Angola’s 33 million people are under 25). Any or all of these could trigger violent street protests.
Presidential and legislative elections are not due until 2027, and they are likely to be fiercely contested by the opposition National Union for the Total Independence of Angola (UNITA), which gave the MPLA a run for its money in the 2022 ballot and could well emerge the victor. In the event of a UNITA victory, it is unclear whether the MPLA would accept defeat or try to hold onto power by force. The latter could plunge the country into a renewed round of violence not witnessed since the end of the civil war.
A predominantly Christian country, Angola has been largely free of the domestic and foreign terror threats that have afflicted many states in West Africa’s Gulf of Guinea region, arising out of the decade-long insecurity threat posed by the Sahelian jihadist groups al-Qaeda and Islamic State.
Angola’s homegrown terror group, the separatist Front for the Liberation of the Enclave of Cabinda (FLEC), has not been active since 2010. Fears persist that opposition groups could resort to terrorist tactics should the ruling MPLA seek to remain in power without an electoral mandate.
The Angolan central bank kept its benchmark interest rate on hold in July at 19.5%, following a 50-basis-point rise in May and a 100-basis-point rise in March, citing a potential slowdown in inflation. The bank has fought a 10-year struggle with inflation, which reached 31% in June and 30.6% in May — although the rate appears to be slowing subsequently.
Despite the bank’s tight monetary policy, inflation has proved particularly persistent, due largely to the volatility of the kwanza currency. Under the 2018 – 2021 International Monetary Fund (IMF) financial support program, the government committed to key reforms, including the introduction of value-added tax, a floating exchange rate, the phasing out of fuel subsidies and the partial privatization of the national oil company Sonangol — which remains a work in progress.
The government announced plans in July to sell stakes in Seguros de Angola SA, the country’s largest insurer, and its holding in Standard Bank Angola by the end of the year. The government is also committed to offering an initial public offering in Unitel SA, the largest telecom company, and the sale of Banco de Fomento Angola, the second-largest lender. The four companies are among the largest of the almost 200 state-owned firms and assets that the government marked for disposal in 2019 before the onset of the COVID-19 pandemic. The government remains committed to a sale of 30% of Sonangol, but a timetable remains elusive.
Angola’s public stock of debt dropped from its peak of 139% of GDP in 2020 at the height of the country’s foreign debt crisis to around 85% in 2023 — up from an estimated 65% in 2022 as a result of a strong but short-lived strengthening of the kwanza — and is forecast to fall to 62% of GDP in 2025.
Foreign exchange reserves currently stand at around $13 billion dollars, the equivalent of five months’ worth of import cover, which represents a healthy liquidity. However, that picture could change rapidly if international oil prices continue to fall, given the makeup of Angola’s economy and reliance on hydrocarbons for export revenue.
Disposals of state-owned companies and assets have the potential to bring in fresh capital, which could be used to ease the sovereign debt burden, although such disposals have been subject to repeated and often unexplained delays.
