[LINK] Claudia Gastrow at The Conversation on Angola after the oil boom

[rfmcdonald]

In "Why Luanda’s residents are asking: where did all the oil riches go?", doctoral student Claudia Gastrow notes the vulnerability of the established order in oil-rich Angola after the drop in global oil prices.

After the oil price crash Luandans are left wondering what was actually achieved. Between 2004 and 2014 Angola failed to diversify its economy significantly. Foreign reserves are drying up and inflation hit a three-year high of 10.4% in July this year.

This has been partially driven by a fuel price increase imposed after the fuel subsidy was slashed as a means of decreasing spending. This has led to a rise in food and consumer goods prices, negatively affecting even the small gains that the urban poor made during the boom years.

Ever stronger evidence is emerging of financial mismanagement and large scale corruption in the administration of oil funds. A 2011 IMF report identified that public funds of US$32 billion linked to the state oil company, Sonangol, were unaccounted for. Although it later found that $US27.2 billion was due to unrecorded expenditure by Sonangol on behalf of the Angolan government, this left open the question of what had happened to the outstanding amount.

China has also launched investigations into allegations of corruption involving its economic deals in Angola. This has led to the arrest of Su Shulin, former head of Sinopec, the Chinese state oil company responsible for oil investment in Angola, and of Sam Pa, the kingpin of the Queensway Group, who brokered many of the agreements between Angola and Chinese business.

While Angola is now searching for new sources of financing, seen in its issuing of $US1.5 billion of Eurobonds, the general feeling is that its economic problems are set to continue.