Central Bank Warns Angola to Clean up Its Act: Economy Remains Stagnant

Central Bank Governor Valter Filipe da Silva stated that Angola needs to rid the banking sector of money laundering and terrorist financing, according to Reuters. To Angola’s credit, the globally operated Financial Action Task Force removed the Southern African state from its blacklist after officials instilled various reforms, but additional policies are necessary.

Central Bank Governor Valter Filipe da Silva stated that Angola needs to rid the banking sector of money laundering and terrorist financing, according to Reuters. To Angola’s credit, the globally operated Financial Action Task Force removed the Southern African state from its blacklist after officials instilled various reforms, but additional policies are necessary.

Corruption has caused widespread consequences, such as Bank of America’s refusal to circulate dollars in Angolan banks and Standard & Poor’s cancelation of certain business operations. Angola is an oil-dependent nation, but has declined immensely due to lower oil prices.

Angola’s economy was once a prime example of Africa’s emerging market status. Angola has since fallen out of favor with many members of the business community, however, and leaders must strive for greater reforms within the banking sector to attract more companies from abroad. Angola is a stratified society racked with lacking opportunities and a large gap between rich and poor.

With that, the primary factor holding back Angola’s true potential is a corrupt system that allows tainted rule to fester with few consequences. While corruption is nothing new in countries around the world, emerging markets, such as Angola, can ill afford a blemished reputation, which repels the business community, stunting economic growth.

Oil Dependence

Another problem is an overreliance on the oil sector. The government plans to restructure its state oil firm and instill more regulations to foster efficient production, but an outdated economy remains the ultimate barrier. Angola is an OPEC member, but the Saudis have flooded additional oil onto the world market to cripple North American shale producers and other competitors.

OPEC officials thought little of nations such as Angola and Venezuela, where authorities rely on higher oil prices to maintain healthy economies. Moreover, Saudi Arabia underwent a change in leadership, as The Kingdom appointed a new Minister of Energy, but the Saudis intend to pursue aggressive policies that maintain market-share, much to the detriment of poorer OPEC countries, notes Channel NewsAsia.

China’s Integral Role

Angola’s destiny is also contingent on China’s success, as the Middle Kingdom comprises one of the largest consumers of Angolan oil and commodities. The Chinese slowdown, however, is another burden plaguing Angolan progress, including other emerging markets around the world that relied on China’s historically high growth rates.

Between China’s slow transition to a service-oriented economy and the persistent price dip in the oil market, Angola will remain stuck in a perpetual state of indebtedness and instability, which will inevitably lead to greater consequences if the status quo continues. Officials aim to receive financial assistance from the World Bank and International Monetary Fund.