Angola reduced its 2016 economic growth forecast last month due to weak oil prices, which battered state revenues.
Angola, the third-largest economy in Sub-Saharan Africa, was expected to register an economic growth of 1.3 percent this year down from the previous forecast of 3.3 percent, according the finance ministry.
Luanda’s spending would be cut to $24 billion from $30 billion projected in the original 2016 budget while revenues were also slashed to $18 billion from $24.4 billion.
The southern African nation drew nearly all of its export earnings and 80 percent of government revenue from crude oil sales.
Despite the shrinking government revenues, the country is now dealing with a resurgent rebel group that operates in the oil-rich Cabinda enclave.
Ironically, Angola surpassed Nigeria as the continent’s top oil producer this year due to attacks by militants on pipelines and rigs in the Niger Delta.
The high command of the Front for the Liberation of the Enclave of Cabinda (FLEC), which wants independence for a territory that accounts for half of Angola's oil output, had hardened its stance since the death of its 88-year-old founder Nzita Tiago earlier this year in exile in France, according to Reuters. Death toll in Cabinda since a flare-up early this month in the conflict had reached nearly 40.
However, analysts say the group does not have the ability to affect oil output in Angola, nearly all of which was offshore.
Reuters reports that men claiming to be rebels boarded an offshore Chevron gas platform in late May and threatened foreign petroleum workers in a rare sign of the simmering instability in heavily guarded Cabinda.
The incident cast doubt on Luanda's assertion that FLEC had fizzled out since a 2007 peace deal.
FLEC recently warned the Chinese government to repatriate all its citizens in the oil-producing area as their presence "constitutes a provocation".
With the slump in oil revenues coupled with the resurgent FLEC, the focus had been on diamonds as a serious contributor of revenue to the nation’s treasury.
However, diamond mining in Angola, just like oil production in Cabinda, had faced threats from rebel activities in the past.
According to the Wall Street Journal, Angola's artisanal miners, known in Portuguese as garimpeiros, played a pivotal role in the country's civil war, which lasted for 27 years and left at least a half-million people dead.
It also noted that the U.S.-backed troops of the Union for the Total Independence of Angola, or UNITA, which fought to depose a Soviet-supported socialist government, controlled much of the country's diamond territory.
UNITA enlisted peasant diggers from the neighboring Zaire, now the Democratic Republic of the Congo to fund their war effort.
Although the end of the war saw an increase in diamond production, as large mining companies such as Odebrecht SA of Brazil and Russia's state-owned Alrosa, formed joint ventures with the government diamond company Endiama, illegal diamond miners – some from the DRC – continued with their operations, which were allegedly met with the brutal force of the state machinery.
An Angolan journalist Rafael Marques de Morais claimed in his 2011 book, Blood Diamonds: Corruption and Torture in Angola, that 100 people were killed while hundreds more were allegedly tortured at the hands of security guards and soldiers in the diamond fields of Angola’s Lundas region.
He was charged with defamation, but this was later dropped when reached an out of court settlement with the army generals he had accused of profiting from blood diamonds, accepting that they did not have direct knowledge of the atrocities.
However, his evidence of the atrocities themselves was not questioned.
Although, Angola was portrayed as one of the success stories of KP’s efforts to stem the trade in conflict diamonds, Amnesty International was of the view that the problem of conflict diamonds had not gone away in the country.
Whether that was the case or not, there was no doubt that diamonds had a considerable role to play in Angola as the slump in oil prices taught national leaders a lesson on how not to rely on one commodity for economic growth.
Angola’s diamond reserves are believed to be around 300 million carats and only 29 of the 108 potentially diamond bearing areas in the country had been explored.
Also the better part of Angola’s diamond fields were represented by placer deposits, where the quality of diamonds was high.
Mining costs were also among the lowest in the world, making it attractive to mine diamonds in the country.
According to the global diamond watchdog, The Kimberley Process, Angola produced 9,016 million carats of diamonds worth $1,18 billion in 2015.
With new operations set to come on stream soon, there was no doubt that output would certainly grow leading to improved revenue, given that stones from Angola usually attract higher prices per carat.
However, the convalescing of FLEC, was a clear indication that the demons of the past that tormented the diamond industry in Angola, can easily resurrect from the graveyard of anarchy, threatening a seemingly stable industry tipped to help improve the country’s economic fortunes.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
