Oil’s Downturn and the Danger of a Non-Diversified Economy Amid COVID-19
Amid the coronavirus pandemic and ongoing fears of a price war between Russia and Saudi Arabia, Africa’s largest economy, oil, is in an increasingly precarious situation. The price of oil has fallen over 60% since the start of 2020, which can be detrimental for those countries who rely on the industry.
In my country of Angola, oil accounts for 90% of the nation’s exports and a third of the nation’s gross domestic product. This means that a slowdown in the oil industry has a very profound effect on the overall economy and those who rely on the industry for their livelihoods.
The coronavirus pandemic will likely have a global impact for months and even years to come. Since mid-January, oil demand began to slip as the coronavirus lead to travel cancellations, which have only increased in the following months as most of the world goes on lockdown.
Despite the hardships that a decline in oil will cause, Angola must use this as an opportunity to reevaluate its current economy. As of now, the country is over-reliant on oil, which needs to change if we wish to emerge from the current pandemic, and its aftermath, stronger than before.
The first step is to look at opportunities for growth outside of the oil industry. Moving forward, I suggest that Angola turns its focus to education, technology and renewable energy.
One of the first things Angola should consider, in thinking about its future, are the opportunities of its youth. Education provides individuals with the tools for success, and to help society in eradicating poverty, expand economic growth and increase the quality of life for all.
Africa suffers from the highest rates of educational exclusive across the world. Yet despite this, the continent has the youngest global population. Experts predict that more than half of the world’s population will be located in Africa by 2050. The poor learning conditions, inadequate materials and technological disadvantages facing young Africans are depriving the developing and bright minds of the continent from being able to reach their full potential. Angola has to provide higher education to its citizens as well. With the opportunity to attend universities and colleges within their own country, the diversification of the Angolan economy is all but guaranteed. We must invest in the future of Angola, its children’s education, to stand a chance of success.
Next, Angola must focus on technology and furthering our use of and contributions to technological innovations. Advancements in technology have the ability to propel the Angolan economy in a number of ways, from a connectivity standpoint to medical advancements and more. Africa has been slower than other regions to adopt many technologies but has made significant advancements in recent years. Technology is at the heart of almost every industry, and its tools that allow us to share information, connect with others and stay up to date with the latest innovations will not only improve the quality of life for Angolans, but our economy as well.
Tech giants such as Google, IBM and Microsoft have all taken note of the tremendous potential of Africa, investing in the continent in recent years. Now is the time for Angolans to focus on the opportunities that technology will bring us as we look toward the future of our economy.
Another sector of untapped potential is renewable energy, and Angola is home to several energy resources that can be used. The country has an incredible reserve of wind, sun, and water, all of which can be turned into renewable energy sources. Not only can these resources be easily harvested, but they will help prevent harm to the environment.
For one, wind energy, which is generated by wind turbines that convert the wind to electricity, can be used in a variety of ways. Utility-scale wind is harvested by massive wind turbines and supplies energy to power grids. Distributed wind is created by smaller turbines and powers homes, farms or small businesses. Offshore wind, constructed in bodies of water, supply power on a global scale.
Another form of renewable energy is solar energy, which captures the heat energy of the sun and uses it for the creation of electricity and heating. This is frequently used for homes and small businesses. These energy sources have the power to save not only the planet, but the economy as Angola looks for sectors outside of the oil industry.
In fact, Angola’s Minister of Energy and Waters has begun several renewable energy projects. The implementation of the Solar Energy systems is designed to electrify rural areas, while the mapping of the winds will eventually identify the country’s best sources of wind and solar power.
From education and technology to renewable energy, there are a number of areas that Angola should look to for growth and investment. The current coronavirus pandemic and its impact on oil will not go away overnight, and this provides Angola with the chance to think outside of the box and grow its economy.
Zandre Campos, CEO of ABO Capital.
ABO Capital is an international investment firm that invests in companies in the energy, transportation, hospitality, health care, technology, and real estate sectors. With its headquarters in Angola and offices in Dubai and New York City, the company’s leader, Zandre Campos, is planning to expand into more emerging markets throughout the globe.
The opinions stated in this piece are those of the author.