China gains importance in Angola and Mozambique

China, as well as consolidating its position as a major buyer of Angolan oil and as a destination market for Mozambique’s natural gas, is emerging as an increasingly important financier of both countries.
The latest official data for Angolan oil exports, recently released, indicated that China bought more than 116 million barrels of oil last year, four times more than the second largest consumer, India.
The Economist Intelligence Unit said this data showed the “importance of the relationship with China,” because it is based on an energy supply and is therefore strategic, at the same time as trade with the United States has been losing its importance as it bought only 7 million barrels of oil from Angola in 2014.
The figures, according to the EIU also show a “shift to Asian markets” from customers in Angola.
At a time when the Angolan authorities are struggling with lack of revenue due to persistently low oil prices, which caused a shortfall of USD14 billion in the state budget, emerging partners, particularly China, are also taking on an increasingly important role as financiers.
The same trend was also noted by the Angolan Economy Minister, Abraão Gourgel, in a recent interview with the Financial Times, in which he pointed to China as one of the preferred partners for new financing lines, after state oil company Sonangol had recently obtained a credit of US$2 billion from Chinese banks.
“The main goals of Angola’s foreign policy will be the consolidation of relations with key strategic partners,” such as Portugal and China, and “diversification of access to international financing,” said the EIU in its latest report on the Angolan economy.
“Angola will continue to increase lines of credit and financing available from its partners, especially China and Brazil,” along with trying to issue debt through Eurobonds of between US$1 billion and US$2 billion,” Gourgel said.
The Financial Times recently reported that Angola had been granted a loan of US$500 million from the World Bank for the first time, and that it had been resisting the possibility of requesting funding from the International Monetary Fund (IMF).
As finance minister, the current governor of the National Bank of Angola, José Pedro Morais, was noted for resisting involvement with the IMF, preferring to establish credit lines of billions of dollars with China and Brazil, backed by oil exports, that were applied in infrastructure projects.
Given the current difficulties of the Brazilian economy, the probability of support coming from that country is more remote, so the importance of Beijing as a funding source is even greater.
Also in the case of Mozambique, analysts expect a strengthening of ties with emerging countries, particularly China as a source of liquidity.
“The investment by Brazil, India, Australia and China will strengthen ties with these countries,” and in the Chinese is also a “major donor to the Mozambican state,” said the EIU in its latest report on the Mozambican economy.
“The large gas reserves will attract more foreign investors, especially among Asian gas importing countries on a large scale,” it added.  MDT/Macauhub