The Entanglements of Natural Resource Funds: Fundo Soberano de Angola and Domestic Political Interests

Abstract

By conventional accounts, the Angola Fund should exhibit the highest level of transparency and accountability. The Fund is modeled around international best practices and internal and external audits and transparent investment reports. Yet, the Fund’s mandate remains highly politicized and has neither served Angolan citizens’ interests nor diversified the economy away from an almost exclusive reliance on oil. In order to understand this mismatch, we need to move beyond analyses that narrowly focus on institutional design and pay more attention to how the Fund is embedded in domestic politics, especially the office of the president. This chapter identifies three key issues that highlight the challenges due to the political entanglements of the Angola Fund. First, the combination of a strong President and weak opposition, along with a wealth of exploitable resources, produced a specific environment whereby the ruling party leveraged resource rents to its advantage and reinforced the use of the Fund as a source of goodwill for political elites and business interests. Second, the Fund functions as an appendage of the presidency. Third, the Fund has followed the path of existing financial institutions such as the Angola National Oil Company and has inevitably become embedded in patronage networks.