STiR coffee and tea magazine

22 STiR coffee and tea / Issue 2, 2022 (April / May) How Can Angola Diversity Its Economy? Oil accounted for about 33% of the Angola's GDP and 93% of its exports in 2019. "Productive capacities are the engine of sustain- able economic growth and the key to transforming Angola's economy," said Paul Akiwumi, director for Africa and least developed countries at the Geneva- based UN Conference on Trade and Development (UNCTAD). Those capacities – beyond food pro- duction and manufacturing – include an array of as- sets: the productive resources, the entrepreneurial capabilities, the production linkages which, taken to- gether, determine the economy's capacity to produce desirable goods and services. "They are essential for Angola to put in motion the process of structural transformation, gradu- ally shifting towards more sophisticated products and services with higher added value," Akiwumi said. "This has knock-on effects for poverty reduction, job creation and other benefits." UNCTAD's recently launched Productive Ca- pacities Index (PCI) gave Angola a score of 22.03 out of 100 – which is lower than the average for sub- Saharan Africa – and ranked the nation 177 out of 193 countries. "The Covid-19 crisis has only heightened the urgency for Angola to diversify its economy and re- duce its dependency on oil exports," Akiwumi said. As the virus spread, companies around the world slowed production, and in March 2020 crude oil pric- es tumbled to an 18-year low, causing more turmoil for the nation's economy, which was already reeling from the 2014-2016 oil crash that halted more than a decade of breakneck growth. Since 2018, and with funds from the European Union, UNCTAD has supported the government in its quest to transform the economy through the "Train for Trade II Program", by helping Angolan government authorities identify promising non-oil sectors, train en- trepreneurs and business owners, weigh investment promotion policies and improve trade infrastructure. The Program's results have prompted the EU to inject even more funds into the work and extend the work until July 2023. Angolan coffee bean harvested by small family grower. Over-dependence on a single export item (in this case oil) discouraged the country from incorporat- ing into global value chains and participating more fully in the export of manufactured goods and value-added services. With the Covid-19 crisis, the country faces in- creasing challenges arising from dependency on a single commodity. The pandemic will also reverse the modest gains in poverty reduction which An- gola achieved during the last decade. The situa- tion prompted the country to seek an extension of the preparatory period preceding its "graduation" from the LDC category, which was to happen in February 2021. The UN General Assembly's most recent resolution extends the preparatory period by three years, until February 2024. Hindering this "graduation" is a major challenge: building economic re- silience to help weather external shocks. The country needs new policies and new institutions that will diversify its economy, maximize regional opportuni- ties ,and accelerate global trade. The EU funds "Train for Trade", the UN's Joint Program for Angola, which supports export diversification by through building productive capacities in different areas. By 2002, with the civil war's end, more than 800,000 people died. More than one million Angolans were internally displaced. Despite this, and the weakened (or non-existent) infrastructure, hard-working coffee growers and the other key players – service providers, ag input providers, intermediaries like transport companies –somehow managed Among the countries of sub-Saharan Africa, Angola is not too dissimilar from others. It's been ruled by the same party since independence, and au- thorities systematically repressed political dissent. What remains common is the corruption, political oppression, and violence perpetrated by arms forces. Since the current president's 2017 election, the government listened to in- ternational criticisms. Looking back over the course of 2020, Transparency International, the global non-profit and corruption watchdog ranked the country as 142 of a total of 180. That's close to the bottom. In response, the government took steps to crack down on endemic corruption. It eased up a bit on press and civil society restrictions. But the fact is that the serious chal- lenges persist, especially in governance and human rights. As a result, business investment slowed. Arabica is one focus of Angolan producers and exporters. According to Statista, "In 2020/21, worldwide arabica coffee production amounted to about 102.1 million 60 kilogram bags. The global production of arabica coffee is ex- pected to decrease to just under 88 million bags the following marketing year." Climate change is bearing down hard on coffee producers, and not sim- ply because of rising temperatures. Of course, high temperatures decrease the quality of the bean and increase water requirements. The global shift of weather systems also increases the activity and threat of pests and diseases. How is Angola being affected? While robusta coffee is predominant in Angola, this variety tolerates higher humidity and more sunlight. But it needs heavier precipitation, and thus may require increased use of irrigation, in order to keep soil moisture as droughts become more frequent and severe. Small and medium scale coffee farmers now need to adopt a series of agriculture practices to increase resilience and minimize the negative effects of climate change on yield and quality. (Photo credit: Mwanzo Millinga.)

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