Index trend
Previous Quarterly Editions
Expropriation Risk: 64 63 63 64 ▲ Political Violence Risk: 49 48 48 48 ► Terrorism Risk: 21 21 21 20 ► Exchange Transfer and Trade Sanction Risk: 63 63 63 55 ▼ Sovereign Default Risk: 83 83 74 74 ►
Overall Risk Temperature: 60 (Significant -2) TREND ▼
Special topic: Political polarization
Angola emerged in 2002 from a 27-year-long civil war between two rival national liberation movements: the ruling People’s Movement for the Liberation of Angola (MPLA, backed by apartheid South Africa and the U.S.) and the opposition National Union for the Total Independence of Angola (UNITA, backed by the Soviet Union and Cuba). That Cold War-era ideological conflict has been followed by 23 years of bitter electoral competition.
Angola remains a highly polarized country, not least because of the failure of the MPLA to oversee a post-conflict national reconciliation process to help reconcile Angolans in the wake of multiple atrocities committed by both sides.
A belated reconciliation commission (CIVICOP) was established in 2019 by President Joao Lourenco, but it has been heavily criticized by UNITA and human rights observers for its lack of transparency, excessive government interference, “selective truth-seeking” and a failure to achieve its primary goal of healing families’ psychological wounds and fostering a spirit of national reconciliation. On the contrary, the MPLA stands accused of polarizing the national reconciliation process by seeking electoral advantage in the run-up to the 2027 presidential and legislative ballots.
Few families among the country’s population of 36 million were left untouched by the decades-long civil war, and memories of lost relatives remain raw. The MPLA suffered a marked decline in the number of parliamentary seats it won in the 2022 legislative ballot, securing only a slim majority. The 2027 election will be fiercely contested by UNITA, which has a very real prospect of winning. A failure by the MPLA to concede defeat could plunge the country into yet another round of civil strife.
Expropriation Risk 64 (Significant) TREND ▲
Under President Joao Lourenco, Angola has made great strides to cultivate inflows of foreign direct investment, creating economic free trade zones in several provinces, and is unlikely to embark on arbitrary expropriation of foreign assets or private property.
The Ministry of Economy and Planning has signed bilateral investment treaties with China, Japan and Mozambique and the European Union, offering signatories additional legal protection from national expropriation procedures and statutes.
Angola is soon expected to sign the Washington Convention, which established the International Centre for the Settlement of Investment Disputes. Under the 2022–2027 National Development Plan, the government seeks to diversify the economy away from overreliance on exports of hydrocarbons by growing the non-oil sector and moving toward a market-based economy.
Angola was added to the “grey list” of the Paris-based Financial Action Task Force (FATF) at the end of 2024 for shortcomings in its financial regulatory and legal regimes overseeing anti-money laundering and countering the financing of terrorism. It will now work with the FATF to enhance its anti-money laundering and terrorism financing risks.
Political Violence Risk 48 (Medium) TREND ►
The ruling MPLA is ramping up public spending and slowing down fuel subsidy reforms — clear signs that it is preparing for the 2027 elections. For the first time in its 50 years in power, the party faces a real risk of losing at the ballot box.
However, it is unclear whether the MPLA would accept defeat. There are growing fears that it could rig the vote or even refuse to step down, risking major unrest and political instability not seen since the civil war ended in 2002.
More than a third of Angola’s 36 million people live on less than $2.15 a day, and two-thirds of the population is under 25, most of whom work in the informal sector. With few formal jobs available, the conditions are ripe for unrest. The state wishes its monopoly on the legitimate use of force to remain uncontested, and would deploy security forces if it felt threatened.
Terrorism Risk 20 (Very low) TREND ► Angola’s main terror threat still stems from the Front for the Liberation of the Enclave of Cabinda separatist movement in the oil-rich northern province of Cabinda, although that risk is minimal, as the group last mounted an attack in 2010, even though the government refuses to take to its leadership.
There is little threat from Islamic extremism in the overwhelmingly Christian country, which does not recognize Islam. Two U.S.-designated Hezbollah financiers were found incognito in 2017 — one of whom was extradited to the U.S. — but they had no support structure.
Exchange Transfer and Trade Sanctions Risk 55 (Significant) TREND ▼
Angola enjoyed another year of economic growth in 2024 with a 3.8% increase in GDP, up from 1% in 2023, seemingly putting the painful 2014–2020 recession, when the economy shrank from $145 billion to $88 billion, firmly behind it.
The oil sector has recovered from a slump caused by depressed output and prices, although fiscal consolidation efforts have weakened as the government raises public spending in the run-up to the 2027 election.
Growth is forecast to reach 3% of GDP in 2025, but inflation (27.5% in December) and the kwanza exchange rate (down 10% against the U.S. dollar in 2024) are likely to remain high and weak, respectively. Inflation is not expected to fall below 20% until the end of 2025. The central bank raised the benchmark interest rate by 150 basis points in 2024 to 19.5% in an effort to rein in inflation and support the currency.
Oil exports continue to account for 90% of exports and 60% of fiscal receipts, while efforts to grow the non-oil sector of the economy under the government’s 2022–2027 National Development Plan remain slow. Continued overreliance on oil could signal turbulence ahead should oil prices weaken further on the back of a U.S. recession.
Then-President Joe Biden’s visit in December highlights Angola’s potential as a partner in the supply of critical materials to world markets.
Sovereign Default Risk 74 ( Medium high) TREND ►
Angola’s public debt-to-GDP ratio fell again in 2024 to 62.4%, down from 71.4% in 2023 — significantly lower than the peak of 139% in 2020 at the height of the country’s economic and financial crisis. Currency reserves remain in the region of $12 billion, offering some five months of import cover.
The International Monetary Fund (IMF) has expressed concerns that fiscal buffers built up during 2018–2021 are being eroded as the government embarks on the round of pre-election spending, while delaying the phasing out of fuel subsidies, which are expected to result in a 1% of GDP fiscal deficit rather than the forecast 1.3% fiscal surplus.
Debt servicing, while significantly lower than its 2020 peak, remains high, depressing non-oil sector investment and weighing on the exchange rate. Rising oil exports appear to justify the government’s decision to leave OPEC in 2024, although a sustained collapse in prices could lead to another economic and financial crisis.