Category Risk Management

Angola : Poster children for Africa’s export dependency on China

29 November 2017 Coface

Angola had a very high export dependency on China in 2016, and has systematically ranked among one of the top five most China-dependent countries in Sub-Saharan Africa over the past decade. The country’s dependency on China is almost solely due to crude oil exports to the world’s largest oil consumer.

Angola has always been one of China’s top suppliers of crude oil even before the civil war ended in 2002. The relationship transcends trade flows. Just months after Beijing approved a US$2 billion loan to Angola, Sinopec, one of China’s oil and gas producers, entered into a partnership with Sonangol, the Angolan public oil company.

The structure, also known as ‘resources-for-infrastructure’, whereby the repayment of loans for infrastructure development granted by China is made in terms of Angolan exports of crude oil, became a reference for other emerging markets in Africa and beyond. However, the ‘Angolan model’ has one caveat: the slump in oil prices in 2014 hit the bilateral relationship harshly.

Trade between the two countries more than halved in terms of USD. Nevertheless, Angola’s dependency on China remained high as the volume of oil barrels exported to China remained buoyant. Cheaper oil led to an increase in Angolan exports to China to a record 872,000 barrels of crude per day (b/d) in 2016. Monthly data from China Customs indicates that Angola is poised to beat this record again in 2017 (1 million b/d on average between January and August 2017).

However, increased export volumes have not compensated for the slump in oil prices from the 2014 peak. This increase could also prove short-lived, especially if the Chinese government decides to restrain imports in order to tackle overcapacity in the refining sector.



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