Last reviewed 11 May 2020

Oil-rich Angola has been a major investment hub for UK companies in recent decades, but a new diversification trend offers fresh opportunities for exporters.

One of West Africa’s big oil producers, Angola has been a hotspot for UK trade and investment across the energy sector for the past couple of decades.

BP is among the leading International producers with a clutch of mega projects in the country’s lucrative offshore sector. It is trailed by hundreds of smaller services firms and consultants bringing their expertise and know-how in support of the major oil firms, which also include the likes of Total of France and Chevron of the USA.

Yet, while billions of dollars worth of investment have gone into this industry, bringing with it associated development in factories, new hotels and other services, there is an argument that the majority of Angola’s 29 million-plus people have benefited little. Overall, poverty remains widespread in what is now the second largest oil producer in Africa, behind only Nigeria.

Many of these problems can be traced back to a protracted and debilitating civil war that ravaged the country for 27 years after its independence from Portugal in 1975. This left a lasting legacy on the nation’s physical, social and political landscape.

The late Princess Diana famously drew attention to the proliferation of landmines in Angola during the 1990s, a trip repeated by her son, Harry, years later, in 2019.

Still, with its vast oil and gas receipts, plus a huge diamond mining industry too, Angola has all the building blocks and resources to stand out from the crowd.

High potential

Located on the west coast of Africa, facing out to the Atlantic, Angola’s immense natural wealth and location make it ideally placed to supply North American and European markets. The Portuguese-speaking land is also well-placed to exploit developments within the region.

Africa’s seventh-largest country, Angola is bordered by Namibia to the south, the Democratic Republic of the Congo (DRC) to the north, and Zambia to the east. Efforts to boost intra-African trade should further open up markets and infrastructure links.

The capital city, Luanda, is the main business hub and the primary gateway for international arrivals, though much of the energy industry is concentrated at industrial sites along the coast, such as Lobito and Soyo. Much of the oil wealth sits in the northern Cabinda province, a tiny enclave surrounded on all sides, except the ocean, by the DRC, where a decades-long separatist conflict also simmers.

As an oil exporter emerging from years of war and chronic under-development, the country’s economic growth has been mightily impressive in recent decades, driven by the energy sector, averaging close to 8 per cent from 2000 to 2018. The flip side to this, of course, is that Angola remains extremely vulnerable to commodity price swings — from an all-time high of 23% growth in 2007, down to minus 2.6% in 2016.

The recent collapse in oil prices in 2020, on top of repercussions arising from the Coronavirus pandemic, are expected to have a major dampening effect on growth this year, though experts are predicting much the same for the rest of the world. Oil production and related activities contribute about 50% of Angola’s gross domestic product (GDP) and around 89% of its exports.


A post-pandemic return to normality may be a way off, but it would allow Angola to proceed with key diversification plans, as it seeks to wean the economy away from this oil dependency. This is already underway after prioritising local skills development and involvement across the energy sector, which has spawned a wave of new local enterprises.

It also includes a sweeping privatisation programme, which includes some of the non-core assets held by state oil giant, Sonangol, the country’s largest company. Officials at the bloated enterprise — which holds a stake in most of the country’s prized oil fields — have already confirmed that sales of some units will go ahead this year. These include local bank Banco BAI, as well as Sonamet, Sonatip and Sonadit, dedicated to metals, maritime services and the maintenance of offshore companies, respectively.

Angolan petroleum minister Diamantino Azevedo wants to see these and other peripheral units hived off before an eventual 30% sale in Sonangol itself by 2022. The giant oil company holds interests in everything ranging from hotels to aviation.

Sebastian Gaspar, chair of Sonangol, said earlier this year that the Angolan state will exit full or part ownership of more than 80 companies in 2020, with more to follow next year. Among the last to be privatised will be Sonangol itself, plus state diamond giant Endiama. In preparation for the upcoming sell-off, Sonangol has slashed its debts, while Angola itself is seeking to polish its reputation, plagued for years by allegations of corruption at the highest level.

An anti-corruption drive has gathered steam since 2017, when President Joao Lourenco ended former president Jose Eduardo dos Santos’ near 40-year grip on politics. One of those embroiled is the former president’s daughter, Isabel dos Santos, head of Sonangol from 2016 to 2017, who has been named as a suspect over alleged mismanagement and misappropriation of funds during her tenure at the state oil giant.

Oil and gas

For now, it remains oil and gas that squarely props up Angola’s budget. And it’s certainly hard to dispute its mineral wealth, which continues to provide a platform for long-term growth.

Proven crude oil reserves stand at some 8.2 billion barrels, with production currently curtailed at around 1.2 million barrels per day (bpd), reduced under OPEC (Oil Petroleum Exporting Countries) guidelines. Angola has been a member of the oil cartel since 2007, but has been capable of producing as much as 2 million bpd at times.

This production slump has been a factor that has dented Angola’s economy recently.

BP is one of those seeking to scale up capacity as the operator of two deepwater blocks (18 and 31), and further interests in various other offshore blocks. That includes offshore block 15, operated by Esso Angola, where it agreed further investment last year to create an additional 40,000 bpd via a multi-year drilling programme. The offshore block has already produced more than 2.2 billion barrels of oil since 2003.

BP is also a partner in the Angola LNG (liquefied natural gas) project in Soyo, which processes some of the gas associated with oil production for sale and export. It is also a key part of diversification efforts to shift away from crude oil receipts.

Other UK energy firms in the country include services companies such as Wood Group and GE Oil & Gas and temporary power supplier Aggreko.

Bilateral trade

This extensive involvement in Angola’s energy sector has fuelled an export trade that spans many other sectors, with local buyers highly receptive to British firms.

UK interests range from banks like Standard Chartered and drugs giant GSK, through to drinks conglomerate Diageo and security specialists G4S. The main exports to Angola comprise various types of machinery and chemicals products. But UK trade officials highlight opportunities in areas ranging from infrastructure and renewable energy to agriculture, as Angola seeks to diversify away from oil.

Homegrown initiatives such as Luanda 2030, an ambitious plan to make the city a 21st-century capital, illustrate Angola’s long-term vision. And the UK government is putting up hard cash to support new business too. In 2019, UK Export Finance (UKEF) put forward £83 million worth of government support for Glasgow-based IQA Group to install new electricity infrastructure in the north of Angola which will connect around 7000 homes to the power grid.

A further £60 million worth of support was issued recently to facilitate an agricultural project delivered by Cambridge-based consultancy INCATUK, aimed at reducing Angola’s US$1.5 billion annual spend on food imports. This three-year project, which kicked off last September, aims to boost livestock farming for meat production.

Sergio de Román, director of farming, fisheries and rural development at INCATUK, said the project “will contribute to economic growth in Angola through the construction of installations and infrastructures that will improve the country’s cattle meat production, with a focus on food safety and sustainable development”. It will also result in more than 730 direct and indirect jobs during its execution.

While Angola may not be an easy starter market for the smallest of exporters and struggles with bureaucracy and poor infrastructure among other challenges, it is increasingly receptive to UK firms.

The UK is now one of the country’s biggest foreign investors, and English is more widely understood in business circles, especially where the international oil companies are working. On a practical level, despite being an 11-hour flight from London, Angola’s time zone is GMT +1 and GMT during the UK summer, making communications with home comparatively simple.