The chief economist of Banco Fomento Angola (BFA) has told Lusa that there is no alternative to using oil to finance economic diversification in Angola and that capital investment is needed to sustain the energy transition.
“There is no great alternative for the Angolan economy, it has to rely on oil revenues to finance diversification and allow the development of an economy in which there are other exports besides oil,” said José Miguel Cerdeira in an interview on Tuesday.
Speaking to Lusa at the Angola Oil & Gas conference taking place this week in Luanda, the BFA chief economist said that although the energy transition and economic diversification are progressing in Angola, the country is still very dependent not only on oil revenues in terms of value, but also on what it represents for the quality of life of Angolans.
“Oil is important because of what it represents and the foreign currency it brings in, because if there is less foreign currency, the exchange rate depreciates or there are shortages and this worsens the quality of life and the purchasing power of Angolans,” he pointed out, adding that such a situation also has a negative impact on companies.
“The ability of companies to finance their activity is greatly conditioned by lower oil revenues,” he emphasised, noting that although exports of Angolan goods and import substitution is increasing, this process will take many years.
“I hope there are still fifteen or twenty years of significant oil exports in terms of value, because if non-oil and non-diamond exports are worth fifty million dollars [around €44 million] a month, that’s very little compared to imports of 1.2 billion dollars a month,” he noted.
The economist explained that “if these exports grow at the rate they did until 2021, they will need five years to reach a hundred million dollars [€89 million], which is the level of diamonds, and ten years to represent a third of current imports.”
Oil, therefore, will continue to be central to the Angolan economy, he argued: “If it doesn’t, the living conditions of people who need to import goods and services will be even worse, in addition to the very difficult conditions in which Angolan families now live, it would be worse and a crisis, because the country is dependent on what the market dictates about the price of oil.”
The Angola Oil & Gas Conference will be held at the Talatona Convention Centre on Wednesday and Thursday. It is Angola’s main event for the oil and gas sector, with the support of the Angolan Ministry of Natural Resources, Oil and Gas, Sonangol, the African Energy Chamber and the Oil Derivatives Regulatory Institute.
With the theme ‘Boosting Exploration and Development Towards Increased Production in Angola’ this year, the conference brings together the sector’s entire value chain to debate the way forward for the industry, according to the conference website, which recalls that last year more than 2,200 delegates from 41 countries attended and seven agreements were signed.