Angola Oil-to-Cash Payments Form World Bank Option to Aid PoorColin McClelland
Angola, Africa’s second-largest crude oil producer, could ease inequality by diverting 10 percent of petroleum revenue to the poor, the World Bank said.
Payments would amount to $326 per person a year for those living on less than $1.25 a day, Francisco Ferreira, the Washington-based lender’s chief economist for Africa, said in a March 21 presentation to the Catholic University of Angola in Luanda, the capital. The concept hasn’t been discussed with the government, Ferreira said in an interview afterward.
“Countries that generate as much revenue from oil as Angola should consider some kind of redistribution, whether they make it conditional or not,” Ferreira said in comments he described as personal and not necessarily the bank’s view. “Some version of oil-to-cash could very well find a place within the portfolio of things to be done.”
Angola pumped 1.69 million barrels of oil last month, second to Nigeria on the continent. The International Monetary Fund forecasts the country will earn $68.4 billion this year from petroleum exports based on a Brent price of $100 per barrel. More than half the 21 million population live in poverty as the nation recovers from a 27-year civil war that ended in 2002.
There are several versions of the oil-to-cash concept, including one featured in a 2013 Foreign Affairs article that suggested distributing revenue to all residents and taxing it as income. Ferreira said he preferred to target the poor, while he said the article’s model has merits.
“It’s citizenship-building because they will learn that oil money is their money if they have a constitutional right to it and that might make them more interested in what the big guys are doing in the big cities,” Ferreira said. “That version wants to build accountability.”
Companies including Total SA, Exxon Mobil Corp., Chevron Corp. and BP Plc operate mostly offshore oil fields as Angola attempts to diversify its economy away from the oil that accounts for about 80 percent of tax revenue and 40 percent of gross domestic product.
The southwest African country’s $122 billion economy is forecast to expand by 5.3 percent this year, and by 5.5 percent and 5.9 percent in the following two years before the rate slows to 3.3 percent in 2017 because of slowing oil output, an IMF forecast shows.