Angola’s recent shift toward renewable resources is a bold, future-driven vision, marking a major turning point in the nation’s economic trajectory. This strategic reorientation, led by Minister of Mineral Resources, Oil, and Gas, Diamantino Azevedo, represents a commitment to a sustainable, resilient economy that can adapt to the challenges of the 21st century.
Historically, Angola has been heavily dependent on oil, with oil export revenues in 2012 accounting for a staggering 97% of the government’s total export revenue. The volatile international oil market has left Angola vulnerable to global economic shocks. Its economy, which has suffered six consecutive years of recession, was hit particularly hard by the sharp fall in oil prices resulting from decreased energy demand amid the Covid-19 pandemic. The impact was such that the nation’s debt was expected to balloon to over 130% of GDP by the end of 2020.
A recent study by the Carbon Tracker Initiative further underscored the need for Angola to diversify its economy. The study found that countries reliant on fossil fuel income could experience a 46% average drop in oil revenues over the next 20 years due to initiatives aimed at meeting the Paris Agreement’s emission targets. This economic reality serves as a stark wake-up call for Angola and other oil-dependent nations.
However, in the face of these challenges, Angola is demonstrating resilience and foresight. In recent years, oil’s share of the country’s GDP has begun to decline, from 33% in 2018 to 28.9% in 2021. Furthermore, the World Bank predicts that non-oil activities, supported by its $300 million Accelerating Economic Diversification and Job Creation Project, will continue to grow in the coming years.
Angola’s current energy mix reflects its commitment to renewable energy, with hydropower comprising 68%, fossil fuels 31.3%, and a hybrid of solar and fossil fuels 0.7%. But there’s room for growth, particularly in solar energy. At the G7 summit in Germany in June 2022, US President Joe Biden announced a partnership between Angola and US-based project development firms to mobilize $2 billion for a solar project in Angola. This ambitious project includes the development of solar minigrids, home power kits, and solar power for telecommunications.
The potential for solar power in Angola is vast. With abundant sunshine and a global annual horizontal solar radiation estimated at 1,370-2,100 kWh per square meter per year, the country could potentially harness as much as 55GW of solar capacity.
Hydropower also holds significant promise for Angola. Despite only 20% of its estimated 18.2 GW generating capacity being utilized, hydropower is expected to contribute a substantial portion of the country’s energy supply. The Angolan government’s commitment to ensuring that renewable energy makes up 70% of the country’s energy mix by 2025 would not only harness this underutilized potential but also help reduce carbon emissions by up to 14% by 2030.
As one of Africa’s emerging economies, Angola’s renewable energy sector also serves as a catalyst for job creation. The International Energy Agency estimates that by 2030, the renewable energy sector will have created 25 million jobs globally. As Angola continues to invest in renewable energy, it stands to benefit significantly from this trend. However, the development of a local workforce with the necessary skills and knowledge to support the renewable energy sector remains a critical challenge.
Investing in education and training will be crucial for bridging these knowledge gaps and ensuring that Angola can fully benefit from its renewable energy revolution. This could lead to the creation of jobs in a wide range of fields, from engineering and construction to maintenance and operations, fostering inclusive growth and reducing income inequality.
Angola’s shift toward renewable resources also has the potential to redefine its international economic relations. While China has been a significant trade partner, particularly for oil exports, the shift to renewable energy could open new partnership opportunities with Western countries. In 2021, the UK’s Trade Envoy to Angola, Laurence Robertson spoke about how the UK supported Angola’s transition to a green economy and how it could create new opportunities for British businesses.
President João Lourenço’s recent visits to France, Portugal, and Italy in the last few months underscore Angola’s growing ties with European nations. These relationships could facilitate the transfer of advanced technologies and expertise needed to further develop Angola’s renewable resource potential.
Angola’s focus on renewable resources positions it uniquely within Africa. As many African countries remain dependent on a narrow range of exports, Angola’s diversification could become a model for sustainable economic development in the region.
Angola’s shift toward renewable natural resources represents a beacon of hope in a challenging economic landscape. The country’s commitment to sustainability, economic diversification, and global partnership are critical pillars of a robust and resilient economy and other African nations should start taking notes. The journey ahead is undoubtedly fraught with obstacles, but with strategic planning and international cooperation, Angola is well-positioned to navigate its path towards a prosperous, sustainable future.