Alternatives to African commodity-backed urbanization: The case of China in Angola

Abstract

With the collapse of oil prices through 2014 to 2016 the Angolan state budget has been drastically reduced, and the government will be unlikely to be able to provide investment and subsidies to continue building new housing and urban infrastructure at the rate of the previous decade. Since the end of the civil war in 2002, the government of Angola has used Chinese credit facilities backed by petroleum-based guarantees to build prestige urban projects. The private sector, both international and local, has been a major beneficiary of state construction subsidies. The private sector, however, has been reluctant to provide its own financing and invest in real estate due to weak land tenure and the lack of legislative reforms to make a functional land market. Solving the problems around land may be a way to stimulate the engagement of private-sector participation in providing financing for housing. The successes and failures of 'land-value capture', a method that provided financing for the growth of Chinese cities, should be studied and could be adapted to finance the large backlog in urban upgrading of basic service infrastructure and housing for the poor for cities like Luanda.