Sunday 19 Aug 2018 | 03:49 | SYDNEY
Sunday 19 Aug 2018 | 03:49 | SYDNEY

Angola fuelling China


Fergus Hanson


23 July 2008 10:43

It wasn't too long ago that Angola was a complete basket case. A quarter century civil war, involving the US, the then-USSR, China, Cuba and South Africa backing different sides of the conflict (and then switching allegiances), claimed over 1.5 million lives and wrecked what should be a highly prosperous country. This Council on Foreign Relations piece shows things have started to change. Almost overnight (its civil war ended in 2002) it has become Africa's largest oil exporter, with GDP growth expected to top 16 per cent this year. Fuelling this boom has been the country's oil wealth, with China, a key player.

 According to the CFR:

Angola is China's largest trading partner in Africa, and it is also China's single largest source of oil. Oil exports to China have increased sevenfold since 2002 (twice the growth rate of Angolan oil exports to the United States over the same period).

China has backed up its interest in Angolan oil with financing for the Angolan government and has extended three multibillion dollar lines of credit: two loans of $US 2 billion (2004 and 2007), and one in 2005 of $US 2.9 billion for development and infrastructure purposes.  

All of which might suggest Angola is, at long last, on the path to success. But Angola hasn't had a happy past with its resource wealth. During the civil war the two main opposing sides used oil and diamonds to fund the long and bloody conflict. Now there are reports that the president, José Eduardo dos Santos, who has held the title since 1979, operates an extensive patronage system outside official channels. The $US2.9 billion credit line cited above and administered by a group headed by a close presidential adviser is not a picture of transparency. Oil wealth is having flow on effects in related sectors, but many are missing out. It's also raising the cost of business for other sectors, with investors looking to lower cost Mozambique instead. The war may be over, but it's a long road ahead.