As oil prices drop, repression in Angola is on the rise
Investors should keep Angola’s history in mind during this time of civil unrest.
Economies across the globe felt the sharp drop in oil prices earlier this year, and no one felt the loss more keenly than Angolan president Jose Eduardo Dos Santos. A 35-year incumbent, Dos Santos is facing pressure on multiple fronts, being criticized for corruption, poor governance and repression of political dissent.
There is currently a larger trend in sub-Saharan Africa of protest and revolts against long time incumbents. Angola is experiencing its own version of this trend, where until recently the ruling elite, the Futungo (named after the area in Lunada where the president resides), was awash with enough oil revenues to keep the peace.
The sharp drop in oil prices earlier this year means that the Futungo are no longer able to dispense patronage and quell protests as easily. Taken together with wide spread public dissatisfaction, Dos Santos and his ruling class are starting to feel the pressure of well organized and persistent public protests.
The regime’s reaction, like in the Democratic Republic of the Congo, Burkina Faso, and Uganda, has been one of violent repression. Multiple activist have been detained by government security forces including a well known rapper, Luaty Beirão, who is on a hunger strike. Beirão became a national symbol of resistance to Dos Santos’ repression after he and twelve others were arrested at a book reading on non-violent protest.
This is emblematic of the Dos Santos regime’s treatment of dissidence. What’s more, the brutal treatment of protest and legitimate grievances could spell trouble for investors and Angola’s oil production. Despite being on the mend from a projected 1.77 million barrels per day in November to 1.80 million in December, the deep-seated political problems of Angola are primed to spill over into the economy.
Oil slump has left Angola vulnerable economically and politically
Evidence that Angola is not out of the woods financially is that its leaders are currently touring to secure a $1.5 billion Eurobond loan to shore up Angola’s economy.
It is unlike Luanda to court western creditors, as its recent backer of choice have been China, which has provided a generous of unconditional aid in return for oil concessions. China has been an enticing proposition for Luanda because of its lack of human rights and democracy conditions, which are usually attached to western aid packages.
Dos Santos’ attempts to secure western loans, while responding to protest with violence, appear to show the uncertainty of his position. The increasing tensions and smoldering instability invoke the ghost of Angola’s long and bloody civil war, which only ended with the death of UNITA leader Jonas Savimbi at the hands of Dos Santos’ government. However, Angola’s Arab Spring has yet to materialize.
Investors must keep this history in mind in addition to developments in the commodities sector as tensions between protestors and the Futungo escalate.
Civil unrest in one of Africa’s largest oil-producing countries — and one with a history of civil war — is sure to be far more high-stakes and combustible than in other African countries experiencing protests.
