Logistical Improvements: the Backbone of Angolan Trade

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Demand for oil and gas is rapidly increasing, largely due to supply disruptions in international markets owing to the Russia-Ukraine conflict. Meanwhile, Africa’s domestic demand also continues to increase as the wider population and economies grow. Angola, as the second largest oil producer in sub-Saharan Africa, producing approximately 1.1 million barrels of oil in 2021, stands to benefit from this heightened regional and international demand. However, in order to capitalize on demand increases and enhance intra- and inter-African exports, improvements across the logistics and infrastructure sectors are required.

Representing all aspects of the Angolan supply chain, the logistics industry is not only a vital but sector-advancing industry in resource rich countries such as Angola. While the country’s resources offer the potential to meet both domestic and international demand, without adequate logistical improvements and infrastructure across the energy sector, this potential will remain untapped. Accordingly, the government has prioritized logistics improvement across its port, transportation networks, and internal procedures.

Revitalizing Port Infrastructure

Strategically located, Angola’s five operational seaports – namely, Luanda, Cabinda, Lobito, Soyo and Namibe ports – serve as enablers of Angola-global trade, providing a base and viable maritime transportation network for the country’s growing energy industry. However, ongoing strain on international ports, such as the Port of Luanda, act as barriers to trade, with operational delays and procedural disruptions restricting progress. In line with the country’s 2018-2022 National Development Plan, the government is looking at improving port infrastructure so as to position Angola as both a competitive and preferrable international and regional trade base.

Notably, plans are underway for the development of a sixth international seaport, the Barra do Dande Port, located 50km north of the capital city, Luanda. The $1.5 billion deepwater port will comprise 29 storage tanks, terminals for solid and liquid bulk materials, a container terminal, a multi-use terminal, and petroleum support zone. Additionally, with the aim of further developing and integrating the country’s trade and infrastructure sector, global supply chains company DP World will be investing $190 million to transform the Port of Luanda into a regional maritime hub. By prioritizing existing port expansion and new port construction, Angola is improving energy sector-related logistics and trade.

Creating Viable Intra-African Transport Corridors

While the adoption of maritime logistics remains at the forefront of many trade-focused countries in Africa, the role intra-African transportation networks play remains integral to boosting trade and connectivity. Africa still relies predominantly on infrastructure such as road and rail within its trade networks, and thus, the relevance and importance of these industries remains prevalent in Africa’s energy sector in 2022 and beyond. For Angola, a country with critical networks already established with emerging economies with growing populations such as the Democratic Republic of the Congo (DRC), the Congo, and Zambia, focus has been placed on improving transportation and road logistics to strengthen energy exports and trade.

In this respect, the government has announced plans to revitalize exiting road networks and improve interconnectivity across Angola and the sub-region. In 2019, the government launched a road upgrade plan that comprises the improvement and widening of 8,200 km of Angola’s road networks as well as the construction of additional links over a five-year period. The upgrades will not only improve connectivity in Angola but will improve linkages between the country as regional markets. What’s more, in March 2022, the China Tiesiju Civil Engineering Group completed the construction of a 76 km highway connecting Quitexe with Ambuila, expanding road access for Angola’s community. Additionally, in November 2021, the Angolan government announced an ambitious target of investing over $445.5 million for the construction of 21 logistics centers by 2038. As a country heavily reliant on road transport, these centers aim to reduce transportation challenges by offering diverse and inter-connected trade logistical hubs across the country. As African demand for Angolan products increases – particularly in countries such as the DRC, the Republic of the Congo and Zambia – these hubs will prove critical.

Meanwhile, another critical transportation system in Angola is rail, enabling the interconnectivity both within the country and between regional states. According to the International Trade Administration, Angola’s rail transportation capacity expansion is a high priority of the Angolan government’s development plans. With funding being provided by China, the government is accelerating the improvement and development of the country’s railways. Currently, the government operates three railway lines – the 425 km Luanda line, the 1,344 km Benguela or Lobito line and the 857 km Moҫamedes line. However, plans are underway to expand these networks. In 2021, the government allocated $90.2 million towards the rail sector. Networks such as the Benguela line – which provides a key distribution network between the Port of Lobito, the rest of the country and the regional destinations such as the DRC and Zambia – are key to Angola’s economic development. The route represents the fastest export route for land-bound countries as well as the gateway to southern Africa. With the government gearing up for rail enhancement as well as improvements regarding train-to-ship systems, Angola is poised to become a regional trade hub.

Enhancing Procedures and Maximizing Efficiency

Finally, enhancing internal procedures and trade mechanisms remains crucial to improving Angola’s logistics sector. The country has managed to establish a well-organized, modern customs system – utilizing technology such as the UNCTAD’s Automated System for Customs Data, an integrated customs management system for international trade and transport operations -, recognized as the backbone of Angolan trade. Despite the success of this system, the process of importing and exporting goods in Angola remains time consuming, with red tape and bureaucracy restricting productivity. Accordingly, in order to improve logistics and strengthen Angolan energy trade, urgent action is needed to establish simplified, efficient trade procedures regarding imports and exports. Regulatory reforms, market-driven policies and restructured systems will prove highly effective in this regard.

What’s more, with the implementation of the African Continental Free Trade Agreement (AfCFTA) in January 2021, countries such as Angola are better positioned to improve regional and international trade networks. The AfCFTA has created the opportunity for streamlined trade processes, reduced tariffs, and the simplification of procedures regarding the movement of people, goods and services. Angola, in particular, as one of Africa’s largest economies, stands to significantly benefit from the implementation of the agreement. While international exports remain top of the agenda, African demand for energy products is rising rapidly. By increasing the trade of petroleum products regionally, leveraging the AfCFTA to do so, Angola can improve African energy security while strengthening its own exports.

ANGOLA OIL & GAS 2022

Representing the country’s official energy event, AOG 2022, in partnership with the Ministry of Petroleum and Mineral Resources of Angola, will take place in Luanda on 29-30 of November and December 1st, 2022.

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Verner Ayukegba

Verner Ayukegba

Verner Ayukegba is a Senior Vice-President of the African Energy Chamber.

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