29 October 2015, Luanda – A few years ago, Luanda, the capital of Angola, was on every ambitious investor’s lips. With large infrastructure and housing projects rapidly changing its appearance, the city seemed to be leaving behind the country’s 27-year civil war. But hopes for renewal are slowly dissipating as the price of the commodity on which Angola’s future was being constructed – oil – steadily declines.
Angola is Africa’s second-largest oil producer. It is one of the countries that have been hardest hit by the fall in oil prices. The oil crash forced Angola to slash its 2015 budget by US$17 billion (a25% reduction). Construction companies are having difficulties paying their workers, and the Angolan central bank has devalued the currency, the kwanza. Construction threatens to screech to a halt.
The fantasy built on oil is crumbling, showing that its benefits were barely felt outside privileged sites of elite consumption. As criticism of the government mounts and Angolans begin to ask what actually happened to the glut of oil dollars, Luanda acts as a lesson that spectacle is no substitute for substantial political and economic change.
The post-war oil boom
Angola’s economic challenges appear especially dramatic given the optimism the country inspired following the end of its civil war(1975-2002). The war left Angola shattered. Infrastructure was destroyed, an estimated 4.1 million people were internally displaced, and the economy outside of the oil sector collapsed. When peace was announced in April 2002, Angola’s future was uncertain.
This changed when the international price of crude oil rose from US$34.86 a barrel to US$146.12 at its peak in 2008. Combined withincreased oil production, this meant that Angola went from financially fragile to stable.
- The Conversation