Angola’s economic dependence on oil has long been a double-edged sword. While oil accounts for a significant share of GDP and export revenue, it has notably exposed deep economic vulnerabilities and environmental challenges. Recognising this, President João Lourenço has made economic diversification a cornerstone of his administration, declaring it “a matter of life or death” for the country, with the next National Development Plan (2023–2027) featuring economic diversification as one of three focus areas, alongside human capital and infrastructure.
The urgency to diversify has only intensified as climate change increasingly threatens livelihoods, infrastructure, and natural resources across Angola. According to the World Bank’s Country Climate and Development Report (CCDR), the revenues from the country’s remaining oil wealth must be used strategically to invest in climate resilience and support the transition to a more sustainable, diversified, and resilient economy. Shifting from an extractive, oil-driven economy to one rooted in renewable energy, sustainable agriculture, and resilient infrastructure is no easy task, but Angola is in an envious position: The country is endowed with abundant renewable natural capital, including agricultural land, forests, water resources, and a growing, youthful population capable of driving this transformation.
But how can Angola leverage its renewable resources, invest in sustainability, and mitigate the risks posed by climate change to transition towards a sustainable and diversified economic future? Three key areas of focus emerge as opportunities for low-carbon development and inclusive growth: Renewable Energy, Agricultural Land Use, and Water Resource Management.
Oil Dependency
Angola's history as a major oil producer dates back centuries, with Portuguese colonialists first identifying oil seeps and asphalt deposits near Luanda in the 1700s. However, the industry only began to take shape in the mid-20th century, with its first commercial onshore deposits discovered in 1955 and its first offshore field, Malongo, identified in 1968. Following independence in 1976, the establishment of Sonangol — a state-owned firm responsible for overseeing petroleum and natural gas production — marked a pivotal moment, as it centralised the management of Angola’s hydrocarbon resources. The discovery of the Girassol field in 1996 and subsequent ultra-deep pre-salt reserves in 2011 propelled Angola onto the global stage as a leading oil producer. In the past 10 years, Angola consistently ranked as Africa’s second-largest oil producer after Nigeria producing around 1.2 million barrels per day, with ambitions to stabilise output at 1.3 million barrels per day over the next three years.
The oil sector is key to the Angolan economy accounting for over 90% of exports, 75% of government revenues, and one-third of the country's gross domestic product (GDP). Despite its vast oil wealth, Angola’s heavy reliance on the petroleum sector has created significant economic challenges, leaving the economy highly vulnerable to fluctuations in global oil prices, which have hindered economic stability and long-term planning. Despite the oil-driven GDP growth in past decades, this wealth has not translated into inclusive development. By 2024, 36.1 per cent of the population lived below the national poverty line, GNI per capita — the amount of money earned by a nation’s own people and business, rather than foreign firms — fell from $4,830 in 2014 to just $2,130 in 2024, and Angola ranked 150th out of 193 countries on the Human Development Index in 2024.
Data Source: World Bank
Angola’s oil reserves, estimated at 2.5 billion barrels, remain a critical revenue source, but the long-term outlook is one of decline. Production has decreased from a peak of 1.9 million barrels per day in 2008 to 1.0 million in 2025, with low-cost reserves being exhausted and the global energy transition discouraging new investments. This economic reality underscores the urgency for Angola to use its remaining oil revenues to invest in diversification and sustainable development. Without reducing its reliance on oil, Angola risks further economic stagnation and missed opportunities to create jobs, alleviate poverty, and build a more inclusive and resilient economy.
The Case for Green Alternatives
The case for green alternatives in Angola is both economically and environmentally compelling. Economically, diversifying away from oil reduces the country's vulnerability to the volatile global oil markets, which have historically shaped Angola’s economic fortunes. As oil production continues to decline, the need for alternative income streams becomes ever more urgent. Green sectors such as renewable energy, agriculture, and water management offer promising opportunities to generate new sources of income, create jobs, and stimulate economic growth. Additionally, improving water management systems and fostering sustainable agriculture practices will increase national food security and bolster the rural economy, eventually raising the standard of living for rural households.
Environmentally reducing carbon emissions through the adoption of renewable energy sources and sustainable farming practices aligns with Angola’s global commitments to climate change mitigation. Luckily, Angola’s natural resources and young, growing workforce put it in a privileged position to benefit from green alternatives. The country’s solar and hydropower potential, alongside its relatively low-carbon industrial base, offers an opportunity to lead the region in green energy production and innovation. The right investments in education and skills development can increase the productivity of their young, dynamic population, driving the green economy forward, creating jobs, and positioning the country as a regional leader in renewable energy and sustainable development. In light of these opportunities and the weakening of their oil reserves, the imperative for Angola to adapt and transition to a climate-resilient and diversified economy is urgent. Finally, building resilient ecosystems through sustainable land and water management practices will ensure the long-term sustainability of vital sectors like fisheries and agriculture, which are increasingly threatened by climate change.
Addressing Angola's dependence on oil requires a shift towards green alternatives that leverage the country’s abundant natural resources, such as water, fertile land, and renewable energy potential. Transitioning to a diversified economy requires building the resilience of key sectors to climate change, ensuring sustainable resource management, and fostering inclusive development. Renewable energy, agriculture and water resources are all interconnected pillars of this transition, offering opportunities to reduce import dependency, create jobs, and support rural development. By correctly strengthening these sectors, Angola can foster a more sustainable and equitable economic model. This section outlines key policy recommendations to build resilience and unlock the potential of these sectors as key engines of economic growth and diversification.
Renewable Energy
The Angolan government has recognised the growing energy demands of a rapidly rising population, with increasing electric power availability to support economic diversification and sustainable growth being among its highest stated priorities. As of 2025, 62.4% of Angola’s energy originates from renewable sources, a figure Minister of Energy and Water, João Baptista Borges pledged to increase to 73% by 2027 at the inauguration of a new power line connecting Cachiungo and Chinguar to the national grid. To achieve this target, the government has instituted a progressive infrastructure plan, which would ensure 50% of the population, or,
approximately 16 million Angolans, would have access to electricity by 2027.
Despite having an installed energy capacity of 5.7 GW, Angola only utilises 70 per cent of this capacity due to infrastructure and efficiency constraints. The country’s current energy mix consists of 61.8 per cent hydropower, 37.6 per cent other fossil fuels and 0.6 per cent hybrid (solar/fossil fuel). Studies and mapping show that Angola holds great unharnessed potential for renewable energy production, with the Ministry of Energy and Water (MINEA) expecting to reach 6.3 GW of generation capacity following the completion of several hydro and solar projects expected to come online over the next two to five years.
Data source: iea
The potential for solar power in Angola is immense, and it is imperative that the government capitalise on this opportunity to bolster its energy infrastructure and drive sustainable economic growth. One promising strategy is to accelerate the development of large-scale solar projects through collaborations with state-backed financial institutions, such as the Export-Import Bank of the United States (Exim). These partnerships can provide the necessary capital and expertise to scale up renewable energy infrastructure in Angola. For example, the US Exim’s US$900 million loan in 2023 for the construction of two solar plants demonstrates the significant role state-backed investments can play in expanding the country's renewable energy capacity. This investment should serve as a model for future partnerships with international financial institutions to secure further funding for solar initiatives.
Building on this momentum, Angola should aim to leverage and welcome additional financing from Exim, who again in 2024 pledged an additional US$1.6 billion loan supporting the construction of 65 solar mini-grids across four provinces, a critical project that will not only provide electricity to local communities but also power essential water collection, treatment, and purification facilities. Given the Angolan government’s ambitious goal of achieving 50% electrification by 2027, continued support for such projects is crucial to ensure that approximately 16 million Angolans have access to electricity. The government should continue to prioritise and streamline processes to facilitate the timely completion of these initiatives.
Additionally, in the eyes of Carlos Katsuya, a representative of the International Finance Corporation (IFC) and Head of Mission for Angola, “the private sector has an important role to play in ensuring that Angola builds a diversified, resilient, and inclusive economy” being key in expanding renewable energy alternatives. Successful projects, like the partnership of the Italian energy company ENI and Sonangol to build a 50 MW solar plant in Namibe province, highlight the importance of fostering a conducive environment for foreign investment in the renewable energy sector. For Angola to attract more investment, it must actively engage with international partners and adopt policies that incentivise such collaboration to complement state-driven initiatives. By fostering an environment that welcomes both state and private sector collaboration, Angola can effectively expand its solar capacity, improve energy access, and support broader economic diversification goals.
Hydroelectric energy is one of Angola’s most promising resources for diversifying its energy sector and economy. As noted by African Development Bank Group head Dr Akinwumi Adesina, “Angola is sitting on a gold mine of clean hydro energy”, with an estimated 1.5 GW of unused hydroelectric potential, which is projected to grow to 3.5 GW by 2027. This could not only meet Angola’s growing energy demands but also potentially place the nation as a regional power exporter, providing energy solutions to neighbouring countries such as Zambia, Namibia, and South Africa. However, to realise this potential, substantial investment from the private sector is essential to develop the necessary infrastructure and maximise production capabilities.
A number of notable large-scale hydroelectric projects are already underway that will significantly enhance the country’s power generation capacity. One of the most notable projects is the Caculo Cabaça Hydroelectric Power Station, which, when completed, will add 2,172 MW to the national grid, surpassing the Laúca Hydroelectric Power Station as the largest power station in Angola. large-scale projects will be key drivers of economic diversification, with smaller-scale projects also supporting Angola’s electrification goals, enabling access to electricity for remote populations and offering a flexible and scalable solution to Angola’s energy needs and fostering regional development, particularly in rural areas where large-scale infrastructure may not be feasible. Indeed, the Ministry of Energy and Water (MINEA) has identified over 100 sites suitable for mini hydro projects, with the potential to generate 600 MW. The expansion of the Matala mini hydro plant in Huíla province, for instance, will increase its capacity from 27 MW to 40.8 MW, providing a reliable energy source for local communities and industries.
The Baynes Dam hydroelectric plant project highlights the regional collaboration that Angola can leverage to expand its energy footprint. This joint initiative with Namibia will see the construction of a 600 MW hydroelectric plant, with each country receiving 300 MW of power. This is a critical step towards enhancing energy security for both nations, with Angola poised to increase its renewable energy capacity as it diversifies its energy portfolio while reinforcing its position as a regional energy player. Simultaneously, the project equally serves to support Namibia’s energy needs, a nation which has long struggled with energy supply challenges. Angola's participation in this cross-border energy project exemplifies its potential as a key energy exporter in Southern Africa, and it is an essential step in its broader strategy of diversifying its economy through renewable energy development. This project reinforces the necessity for Angola to continue prioritising regional collaboration as a means of expanding its energy footprint and strengthening its economic position.
Finally, biomass offers Angola a significant opportunity to diversify its energy base and reduce its reliance on fossil fuels. With its extensive forests, agricultural resources, and potential from livestock farming and municipal solid waste, Angola has the capacity to generate over 3 GW of biomass energy. The Central and Eastern regions, specifically Huambo, Bie, Benguela, Moxico, Lunda Sul, and Lunda Norte, are particularly well-suited for biomass production due to their rich forestry and agro-industrial potential. Given these favourable conditions, it is crucial for Angola to fully explore and invest in its biomass potential to create a more sustainable and diversified energy mix.
Currently, the country’s only operational biomass project is in Malanje, which generates 30 MW of electricity from sugarcane industry waste. While this is a step in the right direction, it is essential that the government takes proactive measures to scale up biomass energy production across the country. The privatisation of the Mulenvos Landfill in 2022 under a public-private partnership to transform it into a waste valorisation centre demonstrates the potential for innovation in the waste-to-energy sector. This initiative should serve as a model for similar projects in other regions. Furthermore, the upcoming Catenguenha Landfill project in Huambo Province indicates that the government is starting to recognise the value of waste-to-energy projects, but more such ventures are needed to tap into Angola’s full biomass potential. Thus, expanding the biomass sector will not only help meet the country’s energy needs but also create new economic opportunities, such as job creation in rural areas and increased agricultural productivity. By prioritising biomass energy, Angola can further diversify its energy resources, reduce its carbon footprint, and strengthen its energy security, all while contributing to sustainable economic growth.
Agriculture
Angola's agricultural sector is often considered a sleeping giant, with the potential to become a major player in Africa's agricultural landscape. Despite its vast arable land, diverse climate, and natural resources, Angola currently only cultivates around 10 per cent of its 35 million hectares of arable land, having one of the lowest per-acre productivity in sub-Saharan Africa. Thus, agriculture contributes just 9 per cent to GDP despite two-thirds of the population depending on agriculture for food, income, and employment. Historically speaking, Angola was a major exporter of crops such as coffee, bananas, sisal, and sugar cane before the civil war devastated its agricultural infrastructure.
Farmers in Huambo received loans for the production of improved varieties of Irish potato. Source: USAID
Today, the nation currently imports more than half of its food, with some estimates putting the figure as high as 90 per cent and costing an estimated $3 billion annually, despite having the resources to achieve food self-sufficiency and even become a net exporter. With the right investments, Angola can harness its immense potential to increase food production, reduce reliance on imports, and boost exports, thereby enhancing its food security and contributing to its economic diversification. It must be acknowledged before addressing how to do so; however, the sector faces significant challenges, including outdated farming practices, a lack of irrigation, and climate change impacts. Agriculture in Angola remains largely subsistence-based, with about 90 per cent of farms being small to medium in scale. Unsustainable practices, including deforestation and loss of biodiversity, have further hindered agricultural productivity. Against the backdrop of these challenges, the Angolan government must also make substantial reforms to modernise its agricultural practices and build resilience against climate change.
To address Angola’s high reliance on food imports and unlock the potential of its vast arable land, the government must prioritise the modernisation of agricultural infrastructure and practices. Currently just 2 percent of Angola's cultivated land benefits from modern machinery or irrigation systems. Rehabilitating neglected irrigation infrastructure left in disrepair after the civil war and developing decentralised, farmer-led irrigation systems are critical steps to boost productivity. Regions like Cuanza Sul, Bengo, and Benguela, which have the largest irrigated areas, should be prioritised for such developments. Expanding irrigation is not only essential for combating Angola’s vulnerability to climate change but also for enabling year-round farming, particularly in areas affected by inconsistent rainfall.
In addition to irrigation, Angola must focus on introducing mechanisation and precision agriculture technologies to small and medium-sized farms, which currently account for 90 per cent of agricultural activity and remain predominantly subsistence-based. A key enabler of this transition is electrification, particularly through solar-powered agricultural systems, which offer a sustainable solution to power precision farming tools, mechanised equipment, and irrigation systems in rural areas with limited electricity access. Providing training and extension services for farmers, alongside subsidies for equipment and climate-resilient inputs such as drought-resistant seeds, will empower farmers to increase productivity while minimising environmental impact. The government should also repurpose existing agricultural subsidies to benefit smallholder farmers equitably and encourage practices that enhance soil fertility and biodiversity. These measures would not only improve food security but also reduce Angola’s dependence on costly imports and create a foundation for the sector to contribute more substantially to GDP.
Developing agro-processing industries and enhancing the agricultural value chain are essential for transforming Angola’s agricultural sector from a subsistence-based system to a commercially competitive and export-oriented one. Despite its abundant agricultural resources and favourable climate, Angola remains highly dependent on raw commodity exports, such as bananas and melons, while importing grains, oilseeds, and livestock products like poultry and pork. Establishing Special Agriculture Processing Zones — supported by institutions like the African Development Bank — is a key strategy to unlock the potential of value-added production. These zones can act as hubs for processing activities such as food preservation, packaging, and agro-industrial manufacturing, reducing post-harvest losses, increasing exports, and enhancing domestic food supply.
With the African Development Bank already investing $212 million in Angola’s agricultural sector and finalising an additional $100 million investment to boost production in the eastern region, the country has a strong foundation for developing these agro-processing initiatives. Encouraging local and international investment in agro-processing requires targeted incentives, including tax breaks, grants, and infrastructure support. For example, the Angola Commercial Agriculture Development Project (PDAC), co-financed by the World Bank and French Development Agency, has successfully provided financial assistance, grants, and technical support to producers and SMEs, helping them transition to more market-oriented farming practices.
Expanding similar initiatives nationwide would provide the financial and technical resources necessary to develop a robust agro-industrial sector. High-value crops like avocados and speciality agricultural products should also be targeted for export, capitalising on Angola’s favourable agro-climatic conditions. Investments in transport infrastructure, such as roads and cold storage facilities, are essential for improving supply chain efficiency and accessing both domestic and international markets. By focusing on agro-processing, Angola can significantly enhance the contribution of agriculture to GDP while creating jobs, reducing food imports, and increasing exports. This approach also addresses rural-urban disparities by providing economic opportunities in rural areas, mitigating the mass exodus to urban centres like Luanda, and supporting sustainable rural development. With strategic investments and policy support, Angola can transition from being a net food importer to becoming a leader in agricultural innovation and value-added exports in Southern Africa.
Water Resources
Angola’s abundant water resources are a cornerstone of its potential for economic diversification, offering opportunities to drive growth across the energy, agriculture, and urban development sectors. However, water distribution in Angola is uneven, with high seasonal variability and projections indicating a decline in overall availability due to climate change. Currently, nearly half the population (49.3%) lacks access to clean drinking water, and only 73 per cent have access to improved sanitation facilities, with significant gaps remaining in irrigation and water storage infrastructure.
This lack of infrastructure undermines urban development, public health, and human capital growth. Investments in clean water and sanitation infrastructure are therefore vital for creating livable cities that can support industrialisation and economic activity. A $2 billion investment to expand clean water access across rural and peri-urban areas, as well as urban centres like Luanda, would address the immediate needs of Angola’s growing population while supporting long-term economic diversification. Desalination plants should be prioritised for coastal cities, providing a reliable water supply for households and industries in areas with limited freshwater availability. At the same time, decentralised water purification and sanitation facilities should be developed in rural areas to ensure equitable access across the country. Public-private partnerships can play a key role in financing and maintaining these systems, particularly when paired with innovative technologies like solar-powered water pumps to reduce operational costs.
Improved water access will enhance public health, reduce migration pressures on urban centres, and strengthen Angola’s labour force, allowing the country to better harness its human capital for economic development. By ensuring water security, Angola can unlock the full potential of green alternatives like sustainable agriculture and hydropower, supporting its transition to a more diversified and resilient economy.
Conclusion
Angola’s economic future is inextricably tied to its ability to transition from an oil-dependent economy to one that embraces green alternatives. The country’s historical reliance on oil has exposed it to significant vulnerabilities, including market volatility, declining production, and the environmental degradation associated with extractive industries. The shift towards a green economy is not only a strategic necessity but also an urgent imperative, as climate change increasingly affects Angola’s agricultural productivity, energy generation, and urban infrastructure.
With oil production on the decline, the country must use its remaining oil revenues to invest in sustainable industries that can provide long-term growth and job creation. Renewable energy projects, such as solar and hydro, as well as reforms in agriculture and water management, offer promising pathways for reducing carbon emissions, creating jobs, and ensuring food and water security. In addition, Angola’s youthful and growing population is an asset that, with the right investments in education and skills development, can drive the green economy forward.
The country’s abundant natural resources, such as solar energy, hydropower potential, fertile agricultural land, and water resources, present a unique opportunity to diversify its economy and build resilience against the mounting threats of climate change. These new income streams can enable Angola to pave the way for a more inclusive and diverse economy, positioning itself as a leader in sustainable development in Southern Africa.
banner image shows a 4 km TCP Flowline for water injection in Angola, 40 km offshore. Photo by Strohm Thermoplastic Composite Pipe, licensed under the Creative Commons Attribution-Share Alike 4.0 International license.