HAPSc Policy Briefs Series

This policy brief titled "Promoting Inclusive Economic Growth and Development in Angola: A Policy Agenda for Diversification and Innovation" provides a comprehensive analysis of the economic challenges faced by Angola and proposes a policy agenda to foster inclusive growth and development. The brief highlights the heavy reliance on oil exports and the need for diversification, identifies key challenges in sectors such as human capital development and infrastructure, and presents policy recommendations for economic diversification, enhancing human capital, improving infrastructure, and addressing governance and transparency issues. The proposed policy agenda aims to promote sustainable economic development, reduce poverty and inequality, and improve the well-being of the Angolan population. The brief offers valuable insights and practical solutions for policymakers, researchers, and stakeholders interested in addressing the economic challenges and unlocking the potential of Angola's economy.


Introduction
Angola, a country located in southern Africa, is currently grappling with significant economic challenges due to its heavy reliance on oil exports. With oil accounting for over 95% of its export earnings, Angola's economy is highly vulnerable to fluctuations in global oil prices, as was evident during the 2014 oil price crash that resulted in a recession (World Bank, 2022). Although some efforts have been made in recent years to diversify the economy, progress in this regard has been slow.
Consequently, the country faces persistent levels of poverty and inequality. However, Angola possesses several opportunities for economic growth and development. It boasts abundant natural resources, including mineral deposits, fertile land, and a lengthy coastline that could support a thriving fishing industry. Moreover, Angola's strategic location in southern Africa offers potential for regional trade and investment. To address the challenges and unlock its economic potential, Angola requires a comprehensive policy agenda for diversification and innovation. This policy paper aims to examine the Angolan economy and propose solutions that promote inclusive economic growth and development in the country. By leveraging its resources and adopting targeted policies, Angola can 1 To cite this paper in APA style: Garwi, J. (2023) achieve sustainable economic diversification, reduce poverty and inequality, and improve the wellbeing of its population.

Overview of Angolan Economy: Economic Challenges
The Angolan economy has been facing significant challenges, and its heavy dependence on oil exports has made it vulnerable to fluctuations in global oil prices. In 2014, the oil price crash and subsequent recession highlighted the risks associated with this dependence. Despite efforts to diversify the economy, progress has been slow, and the lack of diversification has resulted in limited job opportunities, particularly in the formal sector, with high levels of poverty and inequality.
According to the World Bank (2022), poverty rates in Angola remain high, with about 32.3% of the population living below the poverty line. Limited access to essential services such as healthcare, education, and social protection further perpetuates poverty and stifles human capital development.
Income inequality exacerbates social tensions and hinders social and economic cohesion, necessitating targeted policies and interventions to reduce poverty and promote inclusive growth public sector governance has also contributed to a lack of trust in the government and institutions, leading to reduced private sector investment and economic growth.
Inflation has been high over the years, with rates reaching as high as 27% in December 2021, which has led to a reduction in the purchasing power of the local currency, making imports expensive and affecting the country's balance of payments (International Monetary Fund, 2022). The exchange rate has also been unstable, leading to significant fluctuations and uncertainty in the economy.

Reforms to Promote Inclusive Economic Growth and Development
To promote inclusive economic growth and development, the government has implemented several reforms in various areas. One such area is economic diversification, where Angola has initiated reforms to stimulate non-oil sectors and reduce its heavy dependence on oil exports. The government has implemented investment incentives, regulatory reforms, and infrastructure development projects in sectors such as agriculture, manufacturing, tourism, and renewable energy. While there have been some positive outcomes, progress has been mixed. The agriculture sector has shown promise, with increased production and exports, but challenges such as limited access to finance and inadequate infrastructure hinder further growth (Republic of Angola, 2021). Similarly, the development of manufacturing and tourism sectors has been slow, requiring sustained efforts to attract investment and enhance competitiveness (African Trade Observatory, 2022).
Another important area of reform is support for small and medium enterprises (SMEs). The government has implemented reforms to improve access to finance, simplify business registration processes, and provide training and mentoring programs for entrepreneurs. These initiatives have led to increased formalization of SMEs and improved access to credit (Republic of Angola, 2021).
However, challenges remain, including limited access to finance for smaller businesses, inadequate business development services, and an unfavorable business environment. Addressing these challenges requires ongoing efforts to enhance the capacity of SMEs and create an enabling environment for their growth (US Department of State, 2022).
Angola has also implemented reforms to improve the quality of education, enhance healthcare services, and promote vocational training programs as part of its human capital development efforts.
Efforts have been made to increase access to education and healthcare, resulting in improved enrollment rates and expanded healthcare facilities (Republic of Angola, 2021). However, the quality of education and healthcare services remains a concern, with limited resources and infrastructure.
Vocational training programs need to be better aligned with market needs to enhance employability. Infrastructure development is another area of focus for the government, with reforms to improve road networks, expand electricity access, and enhance telecommunications infrastructure. While some progress has been made, particularly in the construction of new roads and power generation capacity, the pace of infrastructure development has been slow, and the quality of infrastructure remains inadequate in many areas (EIU ViewsWire, 2022). Continued investments, public-private partnerships, and effective project management are essential to address infrastructure gaps and improve Angola's competitiveness.
Angola has also taken steps to combat corruption, streamline bureaucracy, and improve transparency in public institutions as part of its governance and transparency reforms. However, corruption levels remain high, as indicated by Angola's low ranking in the Corruption Perceptions Index. Addressing corruption requires comprehensive reforms, including strengthening anti-corruption institutions, promoting transparency in public procurement, and implementing effective oversight mechanisms (Transparency International, 2021). Additionally, efforts to improve the efficiency of public administration, reduce red tape, and enhance the rule of law are necessary to create an enabling environment for private sector investment.
Despite the reforms implemented, Angola continues to face various challenges to its economic development. Poverty rates remain high, and access to essential services such as healthcare, education, and social protection is limited (World Health Organisation, 2021). The country struggles to generate sufficient formal employment opportunities, particularly for urban areas and the youth population. Infrastructure deficits and institutional weaknesses also hinder economic activities in Angola. To address these challenges, sustained efforts are needed to enhance economic diversification, support SMEs, improve human capital development, and address governance and transparency issues. The government should also focus on reducing poverty and inequality, promoting job creation, and enhancing infrastructure development to improve Angola's competitiveness and foster inclusive economic growth and development.

Policy Recommendations
Based on the challenges and opportunities identified in the previous sections, this policy paper proposes a comprehensive policy agenda for promoting inclusive economic growth and development in Angola. The policy recommendations can be grouped into four main areas: economic vol. 4 | no. 1 | June 2023 52 diversification, human capital development, infrastructure development, and governance and transparency.

Economic Diversification
To promote economic diversification, the Angolan government should: • Develop a comprehensive strategy for economic diversification that identifies priority sectors and implements targeted policies and initiatives.
• Provide investment incentives and support for non-oil sectors such as agriculture, manufacturing, tourism, and renewable energy.
• Address challenges such as limited access to finance and inadequate infrastructure that hinder the growth of non-oil sectors.
• Encourage private sector investment in non-oil sectors through public-private partnerships, streamlined business registration processes, and a favorable regulatory environment.
• Promote regional trade and investment through regional integration initiatives, such as the African Continental Free Trade Area (AfCFTA).

Human Capital Development
To improve human capital development in Angola, the government should: • Increase the budget allocation for education and healthcare and prioritize the provision of quality education and healthcare services.
• Develop vocational training programs that are aligned with market needs and provide opportunities for skills development and entrepreneurship.
• Improve access to education, particularly for girls, rural populations, and vulnerable groups.
• Develop social protection programs that target the most vulnerable and marginalized populations, including the elderly, disabled, and children.
• Address the mismatch between skills and labor market demands by developing a comprehensive job creation strategy that targets high-growth sectors and promotes youth employment.

Infrastructure Development
To address infrastructure deficits and enhance Angola's competitiveness, the government should: • Improve the quality and coverage of road networks, particularly in rural areas, to facilitate the movement of goods and people.
• Expand access to electricity through investments in renewable energy and grid expansion.
• Enhance telecommunications infrastructure to improve connectivity and reduce the digital divide.

Governance and Transparency
To improve governance and transparency in Angola, the government should: • Strengthen anti-corruption institutions and promote transparency in public procurement.
• Improve public sector governance by reducing bureaucracy and enhancing the efficiency of public administration.
• Enhance the rule of law and promote judicial independence.
• Promote citizen participation in decision-making processes and increase public accountability.
• Develop a comprehensive communication strategy to improve public awareness of government policies and initiatives.

Conclusion
Angola faces significant challenges to its economic development, including limited diversification, high poverty rates, inadequate human capital development, infrastructure deficits, and governance and transparency issues. To promote inclusive economic growth and development, the government must implement targeted policies and initiatives that address these challenges. The policy recommendations proposed in this paper aim to support economic diversification, enhance human capital development, address infrastructure deficits, and improve governance and transparency. These policies require sustained efforts and investments over the long term to foster innovation, entrepreneurship, and job creation, reduce poverty and inequality, and improve the quality of life for all Angolans.