Angola’s promise as an oil-rich growth market is shadowed by rising macroeconomic and governance risks that, the Sompa & Partners Africa Risk Report says, make large capital commitments hazardous without careful mitigation.
Presenting the firm’s multi-dimensional risk review, analyst Yaw Sompa flagged a mix of elevated inflation, sovereign financing pressures and weak governance that together create a fragile operating environment for foreign firms.
The report, part of the Doing Business in Africa series, points to structural concentration in oil, regulatory unpredictability and growing currency stress as the principal channels through which shocks are transmitted to investors and households.
Why Angola matters — and why it is risky now
Angola remains one of sub-Saharan Africa’s largest oil producers and has drawn significant foreign investment for that reason. But Sompa’s briefing highlights that the economy’s strength is narrow: oil accounts for the lion’s share of exports and government revenue, leaving public finances and foreign-exchange reserves highly exposed to price swings or production disruptions.
As Sompa puts it in the presentation, “the 2024 average inflation was around 28, which is high.” That inflation, he said, has moderated from peak but remains elevated, a drag on margins, working capital needs and real wages. At the same time, currency volatility is acute: “the currency, Kwanzaa, hit a 25-year low sometime around October.” The combination of high inflation and sharp FX moves raises the cost of inputs priced in foreign currency and complicates repatriation of profits.
Governance and regulatory concerns
Political power remains concentrated and governance gaps are evident. Sompa noted the government’s stated response, “an Angola national anti-corruption strategy with a view of strengthening transparency, accountability, and integrity in the country”, but cautioned that implementation and institutional trust remain uneven.
The report also highlights sharp legal-policy risks: in mid-2024 the authorities adopted tougher public-order measures, and Sompa flagged “a law which basically provides imprisonment for up to 25 years” for certain public disturbances, a development that has drawn scrutiny from rights groups and investors worried about regulatory overreach.
Sompa also warned that Angola is viewed internationally for elevated illicit finance risk: “Angola is on the top list of countries with increased risk of money laundering.” That designation complicates correspondent banking relationships and increases compliance costs for multinational firms operating in the market.
Social and structural constraints
Beyond macro and legal risk, the report emphasizes human-capital and social challenges. More than half of the population remains multidimensionally poor, and youth unemployment is staggeringly high, weaknesses that limit domestic demand and raise social-license risks for extractive or land-intensive projects. Drought, water stress and oil-related pollution further compound operational risks in certain regions.
What this means for investors
Sompa & Partners distill the implications into practical investor actions. Firms planning to enter or scale in Angola should:
- Treat foreign-exchange risk as a central planning variable: stress-test cashflows for abrupt depreciation and delays in repatriation.
- Price and provision for elevated working capital and higher input costs caused by persistent inflation.
- Build robust compliance and anti-corruption frameworks; do not treat compliance as optional.
- Localize governance by anchoring arrangements with trusted local counsel, advisors and delivery partners.
- Avoid single-asset or single-sector concentration where feasible; seek ways to diversify exposure across value chains.
Where opportunities remain
Despite the risks, Sompa notes that opportunity exists in services tied to energy, maintenance and logistics, as well as in infrastructure and skills development that support diversification away from oil. But entry, he argues, should be deliberate and patient: investors must combine financial hedges with deep local partnerships and rigorous governance controls.
Bottom line
Angola’s combination of high inflation, currency volatility, rising near-term debt pressures and governance fragilities mean that capital deployed without targeted mitigation is vulnerable.
The country remains investible but only for firms that plan systematically for sovereign, currency and regulatory stress and that build strong local compliance and partnership structures.
