Angola aims to reduce its heavy dependence on Chinese capital and diversify its sources of funding, the country’s energy minister said in a recent interview in Tokyo with Nikkei.
Joao Baptista Borges, Angola’s minister of energy and water, said the country plans to “receive loans from other countries,” in order to cut back on credit from China, which holds nearly 70% of its external debt. The southwest African country wants to attract more investment and loans from Japan, Europe and the U.S., based on a new private investment law enacted in June, Borges said.
In 2017, Angola’s external debt stood at $37.2 billion, equal to nearly 30% of its gross national income, according to data from the World Bank. China has extended loans to finance oil and infrastructure projects in Angola, which is a member of OPEC. A drop in crude oil prices since 2014, however, caused the country’s revenues to decline and its external debt to swell.
Borges said that although “China is a special country” to Angola, he wanted to strengthen its relationship with Japan, Europe and the U.S., adding that he wants to “prioritize countries that have capacity to transfer technology and expertise.”
Previously, Angola required local companies to hold majority stakes in joint ventures with foreign partners for infrastructure projects. The new law scrapped those rules.
Borges also stressed that Angola will work to “reduce dependency on crude oil exports,” adding that it will need to improve its basic infrastructure, including electricity and water, to attract industry.
He asked for technical assistance and capital investment from Japan to help his country build power stations, power grids and transformer stations. He also expressed hope for investment in “renewable energy, especially solar power.”
The Angolan government is soon expected to endorse an electricity development plan drawn up with help from the Japan International Cooperation Agency. The plan calls for raising the country’s power generation capacity by more than two and half times by 2025 and installing 5,100 km of new power cables. All told, Angola is thought to require $31.5 billion of investment by 2040 to reach its development goals.
Angola began leaning heavily on China for assistance under former President Jose Eduardo dos Santos, who ruled the country for nearly 40 years, starting in 1979. After the country’s long civil war ended in 2002, Angola financed reconstruction projects mainly through crude oil exports to China. President Joao Lourenco, who succeeded dos Santos in September 2017, is trying to reduce the country’s reliance on Beijing.
China has raised its profile in Africa by extending massive loans for infrastructure through the Belt and Road Initiative, but some participating countries are becoming heavily indebted to China, raising concerns about a debt trap for these recipients.
A survey by Johns Hopkins University’s China Africa Research Initiative found that Angola was Africa’s top recipient of Chinese bank loans between 2000 and 2015.