For the past six years, the country’s president has been trying to cut its reliance on oil and Chinese debt

Luanda used surging crude prices to pay down some borrowings but Chinese lenders are still the main players

Since becoming Angolan president in 2017, Joao Lourenço has been trying to diversify the economy away from oil and to reduce the country’s dependence on China.

To that end, Lourenço has been trying to align more with the United States and Europe, than China – as was the case with his predecessor, the late José Eduardo dos Santos, who attracted Chinese capital for the reconstruction of the economy after the 26-year civil war ended in 2002.

But observers say it might take decades to reduce the country’s reliance on China, the key destination for Angolan crude petroleum, petroleum gas and asphalt mixtures.

“The process of diversifying the economy away from a reliance on oil and Chinese debt will take decades to achieve, but the government is on the right track,” said Gerrit van Rooyen, an economist at Oxford Economics Africa in South Africa.

China-built hydropower station in Angola enters main construction phase

Recent investment from the United States includes US$900 million in funding for a solar plant and a US$250 million proposal to fund the Lobito Atlantic Railway Corridor – an open access rail line from Lobito Port in Angola to the border with the Democratic Republic of the Congo.

But Luanda is also the continent’s biggest recipient of Chinese financing, having borrowed US$42.6 billion from Chinese lenders – more than a quarter of China’s total lending to African countries between 2000 and 2020.

Angola still needs China to fund the construction of the major infrastructure projects such as the 2,172 megawatt Chinese-built Caculo-Cabaca hydropower station in the north-central province of Cuanza Norte.

The project will be funded by Industrial and Commercial Bank of China (ICBC), while the Lobito oil refinery, along the Atlantic coast, will be built by China National Chemical Engineering.

Nevertheless, the situation is a long way from 2020, when crude oil prices slumped to below US$30 per barrel at the height of Covid-19 and Angola’s debt situation reached a crisis.

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