Angola’s Financial Crisis: A Tale of Two Currencies

Introduction

Luanda, Angola - Amidst one of Africa’s richest countries lies a crippling economic crisis. The local kwanza sells at two vastly different prices on the black market and in banks, making it a daily struggle for Angolans to access foreign currency.

The Black Market Solution

Women known as “kinguilas” have become entrepreneurs, exchanging currencies at inflated rates. They sit on plastic chairs and buckets, clutching purses filled with wads of local currency and coveted dollars. Donna Marta, one such kinguila, makes about $4 for every hundred kwanza she exchanges.

The Root Cause: Oil Dependence

Angola’s reliance on oil exports has led to a scarcity of foreign currency. In 2014, the price of oil plummeted, reducing the number of dollars Angola received by more than half. The country’s central bank refused to devalue its currency, fearing inflation, while international banks stopped buying kwanzas due to lack of confidence in the currency.

Consequences

• Businesses are stalled, with economic consultant Pedro Da Silva forced to close his office due to the lack of clients.
• Economic growth is hindered by the lack of foreign exchange, making it difficult for companies to import goods and services.

Challenges Ahead

Rebecca Engebretsen, an economist studying the Angolan economy at Oxford, points out that Angola’s biggest challenges lie in:

• Devaluing its currency to make imports more affordable.
• Finding alternative sources of income outside of oil.
• Improving transparency in financial transactions and potentially disrupting a lucrative black market.

Corruption: A Major Obstacle

Corruption is another major obstacle, with many businesses willing to operate in the shadows due to uncertainty and lack of trust in official channels. For now, Angolans are left struggling to access basic necessities, while the country’s economy remains stuck in limbo.