Abstract

This paper examines Angola’s evolving economic and political status in Central Africa as of early 2026, arguing that the country stands at a critical juncture between inherited structural vulnerabilities and deliberate diversification strategies. Drawing on recent World Bank data, sovereign credit assessments, budgetary documents, and diplomatic reporting, the analysis demonstrates that while Angola remains fundamentally shaped by its petroleum endowment—with oil constituting 95% of exports and 60% of government revenue—significant headway has been made toward economic stabilization and regional leadership. The completion of João Lourenço’s African Union presidency coincides with historic milestones: the 2026 state budget projects non-oil revenues exceeding oil receipts for the first time, while the Lobito Corridor initiative has evolved from infrastructure project to comprehensive regional integration platform. Politically, Angola has consolidated its position as Central Africa’s indispensable diplomatic actor, securing a formal mediation mandate for the inter-Congolese dialogue amid escalating eastern DRC tensions. However, these achievements coexist with persistent challenges: inflation near 20%, fragile fiscal consolidation, and a political economy still heavily concentrated in presidential authority. The paper concludes that Angola’s trajectory embodies the possibilities and limitations of resource-dependent states seeking agency in an era of global energy transition and regional turbulence.

1. Introduction: Between Resource Wealth and Regional Responsibility

Few African states embody the paradoxes of resource wealth as acutely as Angola. With proven hydrocarbon reserves that have historically rendered it one of sub-Saharan Africa’s largest oil producers, the country has simultaneously experienced some of the continent’s deepest socioeconomic contradictions—ranking among the world’s most unequal societies despite its aggregate wealth . As of February 2026, Angola occupies a distinctive position in the Central African landscape: it is simultaneously an oil economy undergoing forced diversification, a post-conflict state seeking institutional consolidation, and a regional power projecting diplomatic influence across the Great Lakes region.

This paper assesses Angola’s contemporary status through two interconnected lenses. The economic analysis traces the country’s progress in reducing hydrocarbon dependence, examining fiscal trends, diversification indicators, and the transformative potential of the Lobito Corridor. The political analysis evaluates Angola’s regional diplomatic role, particularly its mediation efforts in the Democratic Republic of Congo (DRC) and its recently concluded tenure as chair of the African Union. Together, these dimensions reveal a state navigating the difficult transition from resource determinism toward more diversified economic and political agency—a transition whose outcomes will significantly shape Central Africa’s developmental trajectory.

2. The Economic Landscape: Oil Dominance and Diversification Imperatives

2.1 Structural Endowments and Persistent Vulnerabilities

Angola’s economic structure continues to bear the imprint of its hydrocarbon endowment. Petroleum accounts for approximately 20% of gross domestic product, 60% of government tax revenues, and an overwhelming 95% of export earnings . This concentration has historically rendered the economy highly sensitive to global oil price fluctuations, producing a growth pattern that closely tracks hydrocarbon markets. The 2014-2016 oil price crash precipitated a severe recession that persisted through 2020, with per capita income in 2024 remaining 24 percent below its pre-crash 2014 level .

The social correlates of this macroeconomic volatility remain deeply concerning. As of 2018, an estimated 39 percent of Angolans lived below the international poverty line, while the country’s Gini coefficient ranks among the world’s highest, reflecting extreme wealth concentration . Unemployment, though declining from 32.3 percent in mid-2024 to 28.8 percent in mid-2025, masks the predominance of informal employment, which encompasses approximately 80 percent of the workforce . These structural features create a political economy in which aggregate growth figures poorly predict improvements in ordinary citizens’ welfare.

2.2 Recent Macroeconomic Performance

The post-pandemic period has witnessed a modest growth recovery. Real GDP strengthened to 4.4 percent in 2024, driven by oil sector performance and supported by non-oil activities including diamonds, commerce, and fisheries . The external position has improved markedly, with the current account surplus exceeding 5 percent of GDP in 2024 and international reserves covering more than eight months of imports—a substantial buffer against external shocks .

Fiscal consolidation represents one of the more significant achievements of recent years. Primary fiscal surpluses maintained since 2018 have reduced public debt from a peak of 116 percent of GDP in 2020 to under 59 percent in 2024 . This deleveraging has strengthened sovereign creditworthiness, with S&P Global Ratings in February 2026 affirming Angola’s long-term rating at B- with stable outlook, noting that “in the absence of major oil price or production shocks, Angola’s debt servicing capacity remains intact” . The successful November 2025 repayment of Eurobond obligations further demonstrated improved debt management capacity .

Yet significant vulnerabilities persist. Inflation, while moderating from 28 percent in 2024 to approximately 20 percent by mid-2025, remains elevated and erodes purchasing power . The central bank projects further deceleration to 13.5 percent by late 2026, but structural factors—including exchange rate pass-through and administered price adjustments—complicate the disinflation trajectory . Foreign direct investment remains weak despite macroeconomic stabilization, suggesting that structural and regulatory barriers continue to deter long-term capital commitments .

2.3 The Hydrocarbon Sector Under Pressure

Angola’s oil sector faces mounting challenges that intensify diversification imperatives. Production has declined substantially from its 2008 peak of approximately 2 million barrels per day, falling 9.3 percent in 2025 alone to average 1.06 million barrels per day . This contraction reflects maturing fields, infrastructure constraints, and insufficient exploration investment—structural issues that S&P projects will limit production to approximately 1.1 million barrels daily through 2028 .

The fiscal implications are significant. The 2026 state budget was prepared on the conservative assumption of an average oil price of $61 per barrel, down from the $70 assumption underlying the 2025 budget . This prudence reflects both global energy transition pressures and the recognition that Angola must plan for a future of potentially structurally lower hydrocarbon revenues. The budget’s preparation also coincided with the July 2025 reduction in fuel subsidies, which triggered significant social unrest and prompted a more gradual approach to further subsidy reforms—illustrating the political sensitivity of adjustment measures .

2.4 The Historic 2026 Budget: A Diversification Milestone

Against this backdrop, the 2026 General State Budget (Orçamento Geral do Estado) represents a potentially historic inflection point. For the first time in Angola’s history, the budget projects non-oil revenues exceeding oil revenues—a milestone that State Minister for Economic Coordination José de Lima Massano presented as evidence of “progress toward an economy less dependent on oil” .

The budget envisions real GDP growth of 4.17 percent, driven predominantly by the non-oil sector, which is projected to expand by 4.73 percent . Total state revenues and expenditures are set at 33.24 billion kwanzas, substantially higher than the 26.4 billion kwanzas approved for 2025 . The expenditure composition reflects stated social priorities, with emphasis on education, health, and housing sectors “placing citizens at the center of public policies” .

However, the budget’s expansionary character has attracted scrutiny from credit rating agencies. S&P notes that the 2025 budget was “significantly more expansionary than in recent years,” and while the 2026 budget “reflects the Ministry of Finance’s attempt to contain spending, it remains accommodative by historical standards” . The agency projects average general government deficits of 2.6 percent of GDP over 2026-2029, contrasting with average surpluses of 0.2 percent during 2018-2022, and warns that increased current expenditures—particularly wages—”could reverse previous gains in reducing debt vulnerability” .

This tension between diversification ambitions and fiscal sustainability concerns captures Angola’s broader economic predicament: the transition away from oil dependence requires investment and state activism, yet the fiscal space for such activism remains constrained by debt dynamics and revenue unpredictability.

2.5 The Global Economic Diversification Index: Benchmarking Progress

The Global Economic Diversification Index provides comparative context for assessing Angola’s diversification trajectory. The 2026 index assigns Angola a PCA (Principal Component Analysis) average score of 80.51, comprising sub-indices of 66.75 for output diversification, 76.70 for trade diversification, and 98.09 for revenue diversification .

These figures reveal an instructive pattern. The near-perfect revenue diversification score reflects the methodological reality that Angola’s revenue structure, while oil-dominated, is being measured against comparators; more substantively, it may capture the 2026 budget’s projected non-oil revenue milestone. The significantly lower output diversification score, however, indicates that production structures remain heavily concentrated—a reminder that revenue composition can shift faster than productive capabilities. Regionally, Angola’s aggregate score places it below most Southern and Central African comparators, including Botswana (95.07), Namibia (93.65), Zambia (90.60), and even the Republic of Congo (86.68), underscoring the distance remaining in the diversification journey .

2.6 The Lobito Corridor: Infrastructure as Transformation Strategy

If the 2026 budget represents fiscal diversification, the Lobito Corridor initiative embodies Angola’s spatial and structural diversification strategy. This multimodal infrastructure project, stretching from the Atlantic port of Lobito across Angola to connect with the transport networks of the DRC and Zambia, has emerged as the centerpiece of regional economic integration efforts .

February 2026 marked a significant milestone with the inaugural high-level coordination meeting in Luanda, bringing together senior government entities from the three corridor countries alongside multilateral partners including the World Bank, African Development Bank, European Union, and bilateral partners from France, Germany, Italy, Japan, and the United States . President João Lourenço framed the corridor expansively as “a development corridor, not merely a railway or logistics project—one that must translate coordination into measurable delivery, investment, and better livelihoods across the region” .

The meeting’s outcomes extended well beyond rhetorical commitment. Participating governments agreed to:

1. Develop a comprehensive Lobito Corridor Development Master Plan providing a shared implementation framework

2. Establish a joint investment platform to mobilize public and private capital at scale

3. Advance trade facilitation and border reforms to streamline procedures

4. Strengthen the Lobito Transport Trade Facilitation Agency’s institutional capacity

The corridor’s strategic significance operates at multiple levels. For Angola, it offers a mechanism to monetize its geographic position as an Atlantic gateway for landlocked neighbors, generating transport revenues while stimulating economic activity along the rail alignment. For the broader region, home to more than 30 million people across the three corridor countries, it promises to “catalyze agriculture, SME development, value-added mining, energy, and urban growth, while strengthening access to global markets through the Atlantic Ocean” .

Zambian Finance Minister Situmbeko Musokotwane emphasized the corridor’s transformative potential for his country, noting it will “diversify our exports, lower transport and logistics costs, and provide our producers with more efficient access to the Atlantic, strengthening competitiveness in mining, agriculture, and value-addition industries” . The second coordination meeting is scheduled to be hosted by the DRC, maintaining momentum toward execution .

The Lobito Corridor thus represents a sophisticated development strategy that leverages Angola’s resource wealth (the project has attracted significant international financing), geographic endowment, and regional diplomatic relationships to create infrastructure that can outlast hydrocarbon depletion. Its success will be measured not merely in rail tonnage but in its capacity to generate diversified economic activity and employment—precisely the outcomes Angola’s structural transformation requires.

3. The African Union Presidency: Regional Leadership and Diplomatic Capital

3.1 The Lourenço Chairmanship: Performance and Legacy

On February 14, 2026, President João Lourenço concluded his one-year term as chairperson of the African Union, transferring the rotational presidency to Burundi’s Évariste Ndayshimiye during the 39th AU Summit in Addis Ababa . The conclusion of Angola’s tenure provides an opportunity to assess the country’s continental diplomatic positioning and the specific contributions of its leadership year.

The AU chairmanship operates under a regional rotation system, with Lourenço’s term representing the Central African region’s turn at leadership . While the one-year term imposes inherent limitations on any chair’s capacity to effect structural change, the position affords significant agenda-setting influence and representational responsibilities on “major African and intercontinental issues, as well as coordinating the established for the respective year, with a focus on the areas of peace, security and development” .

Assessment of Lourenço’s tenure from within the AU apparatus has been notably positive. In his summit address, AU Commission Chairperson Mohamed Ali Youssouf stated explicitly that the Angolan president’s mandate “boosted the continental organization and strengthened the implementation of its strategic priorities,” adding that “the mechanisms for the implementation of the Union’s strategic priorities became more coordinated and efficient” during this period .

Youssouf specifically linked Angola’s leadership to enhanced implementation of Agenda 2063—the AU’s continental development framework—characterizing the current decade as featuring “a more rigorous implementation plan, focused on institutional consolidation, promoting peace and security, and responding to the economic and social challenges affecting member states” . This endorsement, delivered publicly at the summit handover, suggests that Angola’s chairmanship was perceived as substantively engaged rather than merely ceremonial.

3.2 Institutional Reforms and Continental Priorities

The 39th Summit addressed a comprehensive agenda including “water security, sanitation, continental peace and security, regional integration, economic cooperation, and the mobilization of innovative resources for the implementation of Agenda 2063” . Deliberations also encompassed AU institutional reforms, reports on regional crises in Sudan, South Sudan, and the Sahel, and strategic appointments to the organization’s councils and committees .

For Angola, this agenda intersected with several national priorities. The emphasis on regional integration aligns with the Lobito Corridor strategy and Angola’s broader engagement with the African Continental Free Trade Area (AfCFTA). The attention to peace and security reflects Angola’s deepening involvement in regional mediation, particularly in the Great Lakes. And the focus on institutional consolidation resonates with Angola’s own governance reform agenda, however uneven its domestic implementation.

3.3 The AfCFTA and Continental Economic Integration

Angola’s engagement with continental economic integration has accelerated during Lourenço’s presidency. In October 2025, the government announced that its National Implementation Strategy for the African Continental Free Trade Area (AfCFTA) would be completed by the first half of 2026, positioning the country to operationalize its participation in the continental common market .

Secretary of State for Trade and Services Augusta Fortes articulated the strategic stakes clearly, describing the AfCFTA as assuming “particular relevance for the future economic of our continent and, in special, for Angola, in the context of the profound transformations that the world faces” . She positioned the initiative within broader globalization dynamics, asserting that “Angola recognizes, with determination, the importance of following the dynamics of globalization, where economic integration constitutes essential element of interdependence and progress between states” .

The AfCFTA framework, established by the 2018 Kigali Agreement, aims to create a single market for goods and services facilitated by free movement of businesspersons, investments, and capital, while strengthening intra-African competitiveness . For Angola, Fortes emphasized, the agreement represents “a historic opportunity for economic diversification, integration into regional and continental value chains, and the expansion of market space, constituting a strategic instrument for inclusive industrialization and reduction of economic vulnerability associated with oil dependence” .

This articulation directly links continental integration to domestic diversification imperatives, recognizing that Angola’s non-oil sectors require expanded markets to achieve scale and competitiveness. The timing of the AfCFTA strategy’s completion—coinciding with the post-AU chairmanship period—suggests that continental engagement will remain a priority beyond Lourenço’s formal tenure at the AU helm.

4. Regional Diplomatic Brokerage: Angola and the Great Lakes Crisis

4.1 The Eastern DRC Conflict and Angolan Mediation

If economic diversification represents Angola’s internal transformation challenge, regional conflict mediation constitutes its most visible external diplomatic role. Nowhere is this more evident than in Angola’s intensive engagement with the escalating crisis in eastern Democratic Republic of Congo, where M23 rebel advances have precipitated a humanitarian and security emergency with profound regional implications.

On February 9, 2026, President Lourenço convened a high-level meeting in Luanda bringing together DRC President Félix Tshisekedi, Togolese President and AU mediator Faure Gnassingbé, and former Nigerian head of state Olusegun Obasanjo . The meeting’s outcome was unambiguous: African leaders “conferred on Angola the mandate to initiate consultations with all interested Congolese parties, with a view to creating the necessary conditions for the realization of an inclusive inter-Congolese dialogue” .

This mandate formalizes Angola’s central role in Great Lakes mediation efforts, building on previous diplomatic engagements including the December 2025 Washington Agreement and United Nations Security Council Resolutions 2773 and 2808, which provide for the withdrawal of Rwandan troops from Congolese territory and the neutralization of the Democratic Forces for the Liberation of Rwanda (FDLR) . The leaders also appealed for a ceasefire, to enter effect at a date and time to be agreed, while encouraging accelerated implementation of verification mechanisms previously established in Doha .

4.2 Strategic Interests and Diplomatic Credibility

Angola’s mediation role reflects multiple intersecting factors. Geographically, the country shares a lengthy border with the DRC and has historically maintained complex relationships with Congolese political actors. Economically, stability in eastern DRC is essential for the Lobito Corridor’s viability, as the railway’s Congolese segment and the broader regional economic ecosystem depend on predictable security conditions. Politically, successful mediation enhances Angola’s continental standing and reinforces its claim to regional leadership status.

The mandate also positions Angola advantageously relative to other potential mediators. By securing formal AU endorsement through the February 9 meeting, Lourenço’s initiative gained multilateral legitimacy that unilateral intervention would lack. The involvement of Gnassingbé (as AU mediator) and Obasanjo (as a respected elder statesman) provides a supporting cast that buffers Angola against accusations of hegemonic overreach while maintaining its central role.

4.3 Challenges and Limitations

The mediation mandate, while diplomatically significant, confronts formidable obstacles. The eastern DRC conflict involves deeply entrenched armed groups, complex regional rivalries (particularly involving Rwanda), and profound humanitarian suffering. Previous mediation efforts have foundered on implementation failures, spoiler violence, and the difficulty of translating elite-level agreements into local-level peace. The February 9 meeting’s appeal for a ceasefire acknowledged these challenges by calling for “acceleration of the implementation of verification mechanisms”—an implicit recognition that past agreements have suffered from monitoring and enforcement deficits.

Moreover, Angola’s mediation credibility depends on perceived even-handedness. Any appearance of bias toward particular Congolese factions or regional actors could undermine its effectiveness. The reference to both Rwandan troop withdrawal and FDLR neutralization in the meeting’s outcome document reflects careful balance, but maintaining this equilibrium amid shifting conflict dynamics will test Angolan diplomatic capacity.

5. The Political Economy of Reform: Continuity and Change

5.1 Governance Structures and Decision-Making Concentration

Angola’s political system remains characterized by significant concentration of decision-making authority. S&P’s assessment notes that “political decision-making in Angola remains highly centralized” —a characterization consistent with the country’s presidential system and the dominant position of the MPLA (People’s Movement for the Liberation of Angola) since independence.

President Lourenço, who succeeded José Eduardo dos Santos in 2017 after the latter’s 38-year rule, has pursued an agenda combining anti-corruption initiatives with economic reform efforts. His administration has secured IMF programs, implemented exchange rate liberalization, and advanced the diversification strategies discussed above. Yet the pace and depth of reform have drawn mixed assessments, with critics arguing that anti-corruption efforts have sometimes targeted dos Santos-era figures without fundamentally transforming the political economy of patronage.

The 2027 election cycle, approximately one year distant as of February 2026, introduces political uncertainty. S&P explicitly notes the risk of “further fiscal slippage ahead of the 2027 elections” , reflecting historical patterns of pre-electoral spending increases across African democracies. The agency’s projection that “interest payments will average 35 percent of government revenues in 2026-2029” while “debt service will remain below 50 percent of government revenues” suggests fiscal space for such pressures, but also highlights the opportunity cost of election-driven expenditure .

5.2 Social Contracts and Reform Sustainability

The July 2025 fuel subsidy reduction and its attendant social unrest illuminate the political economy constraints on reform . Subsidy reform is economically rational—reducing regressive transfers that disproportionately benefit higher-income households while straining fiscal accounts—but politically hazardous, as price increases directly affect urban populations with protest capacity. The government’s subsequent “more gradual approach” to further reforms reflects recognition of these political realities.

This episode encapsulates a broader tension in Angola’s reform trajectory: macroeconomic stabilization and diversification require adjustment measures that impose short-term costs on populations already experiencing poverty and inequality. The 2026 budget’s emphasis on social sector spending—education, health, housing—can be interpreted as an attempt to construct compensating mechanisms that maintain reform momentum while addressing distributional consequences . Whether these investments will suffice to sustain political support for reform remains uncertain.

5.3 The Demographic Dividend Imperative

Angola’s demographic structure presents both opportunity and urgency. With half the population under age 18, the country possesses “large demographic dividend potential” . Realizing this potential requires employment creation at a scale that current economic structures cannot generate. The informal sector’s 80 percent employment share  reflects not merely regulatory conditions but fundamental insufficiency of formal job opportunities.

This demographic reality intensifies pressures for successful diversification. The Lobito Corridor’s promise to “sustain private-sector activity in freight handling, mineral processing, agri-logistics, and industrial parks”  speaks directly to job creation needs. The AfCFTA’s potential to expand markets for Angolan producers similarly addresses employment constraints. But these are long-term structural transformations, while the demographic imperative operates in the present tense. Managing this temporal tension—delivering near-term employment gains while building toward structural change—constitutes one of the Lourenço administration’s most consequential challenges.

6. Conclusion: Angola at a Crossroads

Angola in February 2026 presents a study in strategic ambivalence. The economic data reveal genuine progress: debt reduction from crisis peaks, the historic non-oil revenue milestone in the 2026 budget, external buffers sufficient to weather moderate shocks, and a signature infrastructure project with genuine transformative potential. The political indicators similarly demonstrate enhanced regional standing: successful AU chairmanship, formal mediation mandate for the DRC crisis, and deepening engagement with continental integration frameworks.

Yet the structural constraints remain formidable. Oil dependence, while reduced at the margin, continues to shape fiscal and export profiles. Production declines in maturing fields threaten future revenues even as diversification efforts proceed. Inflation erodes living standards and complicates poverty reduction. The political system’s centralized character raises questions about reform sustainability beyond the current administration. Regional conflicts threaten both humanitarian catastrophe and Angola’s economic investments in integration.

The Lobito Corridor meeting’s framing of infrastructure as “development” rather than merely “transport” captures a broader strategic shift: Angola is attempting to leverage its resource endowment and geographic position to construct economic structures that can outlast hydrocarbon depletion. The AfCFTA strategy similarly reflects recognition that Angola’s future lies in diversified production for expanded markets rather than continued reliance on extractive exports. And the DRC mediation mandate demonstrates that Angola seeks to translate resource wealth into diplomatic influence—soft power that can complement hard economic assets.

Whether these strategies will succeed depends on factors both within and beyond Angolan control. Implementation capacity, political stability, and continued reform commitment are domestic variables subject to policy influence. Global energy prices, investment flows, and regional security dynamics are external forces that Angola can influence at the margins but cannot control. The interaction between these domains will determine whether the Lusitanian lion realizes its considerable potential or remains trapped in the resource curse it has so long endured.

For Central Africa, Angola’s trajectory carries profound implications. A successfully diversifying Angola would provide regional growth poles, infrastructure connectivity, and stability-enhancing diplomatic engagement. A stagnating Angola would export instability, constrain regional trade, and foreclose developmental opportunities for neighbors. The stakes extend well beyond national boundaries—a reality that explains the international attention focused on Luanda’s policy choices and the regional engagement symbolized by the Lobito Corridor’s multilateral partnership. Angola’s transformation, if achieved, will be not merely a national accomplishment but a regional public good.

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