Is the ‘Angola model’ over as China buys more crude oil from Gulf and Russia than Africa?

Major African oil suppliers, including Angola and South Sudan, are struggling with declining production and exports to China as it finds other markets

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Angola in central Africa pioneered the concept of oil-backed loans as a way to get Chinese financing for infrastructure building. Photo: AFP

Published: 5:00pm, 7 Jul 2024Updated: 6:11pm, 7 Jul 2024

More than a decade ago, Angola was China’s No 2 source of crude oil. But it has fallen down the list as Beijing has increasingly turned to the Arab states of the Gulf Cooperation Council, Russia, and other Asian countries.

According to a report from the Carnegie Endowment for International Peace: “In 2010, Angola was the world’s second-largest exporter of oil to China, after Saudi Arabia. By 2023, Angola had been bumped to number eight on this ranking of oil suppliers to China.”

It is a long way from 2002 and the end of Angola’s 27-year civil war when the country was shunned by the West and China agreed to bankroll its reconstruction. In what came to be known as the “Angola model”, the central African country pioneered the concept of oil-backed loans as an easy way to get Chinese financing for the building of roads, hydroelectric dams and railways.

Angola used oil shipments to repay some of its resource-backed loans. But when prices fell, it was forced to pump more oil to service its debts, a policy that has become untenable.

According to Boston University data, between 2000 and 2022 Angola borrowed US$45 billion from China – about a quarter of total Chinese lending to African countries.

Crude oil production in most African countries like Angola has dropped over the years due to a lack of investment in equipment and new oilfields.