Ver Angola


Industrialists admit “great economic instability” with the devaluation of the kwanza

The president of the Industrial Association of Angola (AIA) admitted this Wednesday that the depreciation of the kwanza could cause “great instability” in the country's economy, which is still dependent on imports, criticizing the liberalization of exchange rates.


"For those who matter, it is evident that they are not very comfortable with this instability in the market either, but we will see if the Government manages to perceive that this would have great instability in Angola and there needs to be some kind of intervention", said this Wednesday José Severino, in statements to Lusa.

Angola, "lately, has tried to follow a liberal line, but we have already seen that the liberal line does not adjust very much to our objective reality", stressed the AIA president.

The leader of Angola's industrialists considers that the devaluation of the kwanza, which took place after the elections last August, "has a major impact" on the country's oil-dependent economy.

"In an international market that is turbulent, nervous, and that so much for the economy, as we feel in Europe, in which developing countries, like ours, are really subject to the international market", he pointed out.

"It is evident that while we have the perception that a cheap dollar would facilitate imports, this in a way combats the rate of inflation here in the country, combats the high costs that we had of imported goods here in the country that still lives a lot of importation", he underlined.

Consultant Fitch Solutions predicts that the kwanza will fall to 470 kwanzas per dollar by the end of 2022, a path that goes against its appreciation against the dollar.

"We anticipate that the kwanza will marginally depreciate in the rest of the year to 470 kwanzas per dollar, after having appreciated in 2021 and until the second quarter of 2022", wrote the analysts of the consultancy in a document that Lusa had access to.

According to the Angolan economic weekly Expansão, the national currency has been depreciating since the general elections last August due to the fact that the Government "forced the appreciation of the kwanza to lower food prices before the elections".

"With the Executive's measures applied before the elections in order to also achieve the reduction of the public debt-to-Gross Domestic Product (GDP) ratio no longer having an effect, the kwanza is now falling and adjusting to the interest rate. real exchange", says the Angolan publication.

José Severino also mentions that, as a result of the devaluation of the kwanza, new products are reappearing in the Angolan market, especially with the weak domestic production of goods.

But, for national production, he argued, "it is in fact a great challenge, because we really compete today with the international market, even with the inflation rates that prevail in the export markets to Angola".

"We are becoming less and less competitive and, naturally, for those who live in Angola this is a major concern", he pointed out.

The economist also said he was convinced, however, that the course of the Angolan currency should have an upward path, especially with the "stabilization" of foreign markets "since even the price of oil has been maintained".

Since, he argued, the United States of America "released a lot of its [oil] reserves against what would be the Saudi Arabia-Russia axis and with the Iran alliance and it has stabilized."

"Therefore, inflation rates in the foreign market will tend to decrease as of next year and I believe that from then on we can also have some stability", he said, admitting: "we dance to the music that others play".

He also regretted that the Angolan economy has not achieved diversification and "did not replace imports of raw materials" in the domestic market.

"It takes a very intelligent, very effective management, not hurting too much what are the international canons in which we try to insert ourselves, but it is necessary to look at the economy with more objectivity in the sense that Angola can continue to grow", he stressed.

The official also criticized the growth of the Angolan GDP, situated between 2 percent and 3 percent, below the rate of population growth, recalling that, in the "last two years alone, the population grew by seven million".

"And we have not grown at all from the point of view of GDP", a situation that "unemploys and brings poverty" because "the one who creates consumption is the salary and we have a very high youth unemployment rate", he said.

"And obviously the Government has to be very careful not to let the situation get worse" insisted José Severino.

The AIA argues that Angola has to grow at a rate of "double population growth to recover from those 10 years that had no GDP growth".

Agriculture "should be growing at 15 percent and 20 percent, but it grows at 6.5 percent. We clap our hands and we don't understand why we clap when we grow at 6 percent with all the conditions we have."

That's why "we proposed to the Government in this second legislature, we had some positive signs of indications from international agencies for growth of 2.5 percent to 3 percent, but it's not much", he noted.

"And yet, with the weight of the oil price, the real economy continues to be very fragile as it continues to be dependent on imports of raw materials, know-how, labor and technology, we are very oriented to what is the basic food basket", concluded the president of the Angolan industrialists.


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