Angola: Oil & Housing

By William Minter | 10 August 2009

“Government revenues from oil and gas are set to rise strongly, giving [the top ten oil-exporting countries in Africa] the means to speed up economic and social development and alleviate poverty. The government take in the top ten oil- and gas-producing countries is projected to rise from some $80 billion in 2006 to about $250 billion in 2030. Nigeria and Angola account for 86% of the $4.1 trillion cumulative revenues of all ten countries over 2006-2030.” - World Energy Outlook 2008

With Secretary of State Hillary Clinton’s visits to Angola on August 9-10 and to Nigeria later this week, the spotlight is on U.S. geo-strategic interest in Africa’s oil and potential rivalries with China in access to the oil. But the dominant theme of oil industry developments is likely to be collaboration, as illustrated by the $1.3 billion deal announced in July, in which the U.S. oil company Marathon sold a 20% stake in offshore Block 32 to Chinese companies Sinopec and CNOOC. Marathon retains a 10% stake. Block 32 is operated by Total SA of France, which owns a 30% stake and acts as the operator. Sonangol E.P., Angola’s state-owned oil company owns 20%, while Exxon Mobil Corp. holds 15% and Galp Energia, a Portuguese company, 5%.

For Angolans, as for others in oil-producing countries, the primary concern is less how the oil is shared among oil companies, including Angola’s own Sonangol, than how the revenues are spent. Angola is now booming with construction, and its GDP grew by an average of 16% a year between 2006 and 2008. But the gap between national revenue and conditions for the majority of Angolans remains enormous. In housing, for example, the Angolan government has announced plans to build one million houses over four years, but estimates of those lacking proper housing in the capital alone range from three to five million people.

New housing projects such as Copacabana Residencial, a 720-apartment complex valued at $100 million announced last week, contrast with forced evictions of slum dwellers, with 15,000 displaced in the latest incident in late July,

This AfricaFocus Bulletin contains three selected documents relevant to the complex nexus of oil with political economy and governance in Angola. One is an overview of oil & gas revenues in African countries from the OECD World Energy Outlook 2008, contrasting rising exports with the continued energy needs within the oil-exporting countries. Two are on the issue of housing rights and forced evictions.

A supplemental AfricaFocus Bulletin today, on the web but not sent out by e-mail, contains excerpts from a recent analytical report by David Sogge (http://www.africafocus.org/docs09/ang0908s.php).The report explores the historical roots and the current prospects of Angola’s contradictions, including the complex intersection of
national and international political economies of oil and governance systems.

Sogge explores not only the present and near-term prospects linked to expanding oil revenues, but also the likelihood of a medium-term decline in oil revenues. That decline, he notes, may begin as soon as 2015, posing new challenges for the collaborative arrangements between international capital and local elites and new opportunities to raise questions about democratic accountability and more inclusive development.

For previous AfricaFocus Bulletins on Angola, see http://www.africafocus.org/country/angola.php

For additional background data on oil in Angola, see http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=AO, the summary of a third quarter Companies and Markets report at http://tinyurl.com/lgo5p2, and a recent article in Forbes magazine (http://www.forbes.com), available at http://tinyurl.com/lnwpkc

A just-released 75-page Chatham House report, “Thirst for African Oil: Asian National Oil Companies in Nigeria and Angola,” asserts that Neither Nigeria nor Angola fits into the stereotype of weak African states being ruthlessly exploited by resource-hungry Asian tigers. Angola, however, has managed its relationship with Asian companies much better than has Nigeria. See
http://www.chathamhouse.org.uk/publications/papers/view/-/id/768/

Also of particular interest, with respect to the use of oil revenues is a 2008 report from the Open Budget Initiative. Angola ranks close to the bottom in international comparisons on the Open Budget Index, with a 3% score on ratings of 91 questions about budget transparency. See http://openbudgetindex.org/files/cs_angola.pdf In comparison, the United Kingdom, with 88% and South Africa with 87% rank at the top. Botswana scores 62%, Kenya 57%, and Nigeria 19%.