Amid faltering economy, Angola looks up to diamond industry for rescue

The economy of Angola, Africa’s second-largest producer of crude oil, has suffered due to the reduction in oil prices and  to secure higher government revenue. Now, the country looks to its diamond industry for support.

Following a slump in crude price, Angola is actively working towards diversifying its economy by changing the mode of operations of its secretive diamond industry works in a bid to attract more investment and increase production President João Lourenço stated.

Diamonds are Angola’s second-most-important export commodity, after oil and gas. However, a huge gap exists between the oil and gas industry, responsible for 91 percent of the country’s exports, and diamond industry, responsible for 4.9 percent. Angola is the world’s fifth-largest producer of diamonds, but there have been complaints of low profits from miners. These miners complain that they are forced to sell their diamonds below international prices to politically connected middlemen, dragging on profits.

Acknowledging the complaints, Lourenço stated that, “We recognize that the policies for this sector, established by us, do not best serve the interests of the country nor of the producers.”

In 2017, the country’s diamond exports brought in gross revenues of $1-billion (€811-million) a 4 percent increase compared to the previous year, according to Mineral Resources and Petroleum Minister Diamantino Pedro Azevedo. Although the country’s diamonds fetched $121.1/ct in 2016, this figure fell to $117.23/ct in 2017. Meanwhile, tax revenues increased by 5% over the same period, because of the royalties and industrial tax paid by the mining companies.

As the government looks to attract even more investment in the diamond sector for beneficiation, Lourenço said, “We will soon announce the new framework for the diamond industry and we believe that with this, the big diamond mining companies will return to Angola.” Currently, Angola exports 70 percent of its diamonds to the United Arab Emirates.