Angola considers finance offers from Europe and rival China to reform its economy

Angola’s finance minister stated on Tuesday that in order to increase the importation of Chinese-made products, such as solar panels and electric cars, the African nation must increase its financing from China. This statement was made as the former OPEC member contemplates competing for bids from Beijing and Europe.

China approved loans totaling $4.61 billion to Africa last year, the first annual increase since the peak of $28.4 billion in 2016, when 68% of lending was allocated to Angola. This occurred despite the fact that China began to reduce its financial flow and shift away from large-scale infrastructure projects in resource-rich regions. Africa is grappling with an expanding debt crisis and is in search of expedited financing solutions.

Vera Daves De Sousa stated in an interview with Reuters that Angola has been seeking methods to strengthen its finances and food security, expand its fisheries sector, and attract more job-creating investment inland since it withdrew from the Organization for Petroleum Exporting Countries (OPEC) in December. This was in anticipation of a significant China-Africa summit occurring in Beijing.

The littoral state has a plethora of agricultural resources, including sugar cane, coffee, cotton, and livestock, as well as a substantial supply of base metals. However, these resources have been overlooked in comparison to oil, which comprises 95% of its exports.

In exchange for increased imports of Chinese products, China has expressed its willingness to assist Angola in modernizing its agricultural sector, expanding its industries, and diversifying its economy. However, the West presents a competitive threat.

“This is a tough discussion, because in our case, this comes together with the financing solution,” Daves de Sousa indicated.

“If Angola’s fiscal revenues were strong enough to allow us to choose based on the criteria of quality and price, we would have a totally different discussion.”

COMPETITION FOR SOLAR PANELS

Daves De Sousa further stated that Beijing’s proposal would not only require additional financing to assist Luanda in reducing high inflation and increasing employment in the short term, but also to guarantee that Luanda had resilient industries that it could rely on in the future..

Daves De Sousa stated that Europe had been providing Angola with more readily available financing in exchange for purchasing its goods, which could result in China losing out to its competitors.

“We will buy more solar panels from Europe because the financing is coming from there.”

The United States and Europe maintain that the $19 trillion Chinese economy has an overcapacity in solar panels and electric vehicles.

In anticipation of the impending Western restrictions on Chinese exports, Beijing is prioritizing the identification of buyers for these products as it hosts the ninth Forum on China-Africa Cooperation Summit this week.

China, the world’s largest bilateral lender, has already begun to modify the terms of its loans to the continent. This includes allocating additional funds for solar farms and electric vehicle factories, while simultaneously reducing its support for large-scale infrastructure projects.

Daves De Sousa stated that Luanda is not seeking additional financing, but rather a “new paradigm” that emphasizes private-sector engagement and public-private partnerships.

“We need to think outside the box, because the plain vanilla solutions of ‘you give me money, I’ll give you collateral’ is done.”