The Angolan economy is opening up to international investors like never before, with the recent acceleration of its diversification drive attracting interest from foreign companies active in a broad range of industries and sectors. Long reliant on oil revenues to fund socioeconomic development projects and programs, the country of 33 million people is embracing privatization through the sale of stakes in state-owned enterprises and exploring investment opportunities with the support of solid partners from many of the world’s most advanced countries, such as Japan.
This strategy is working relatively well and received a boost a few months ago when a pair of U.S. companies signed a contract with the Angolan administration for a showcase $2 billion solar project in four southern provinces. The announcement was made by U.S. President Joe Biden, who said: “The project will help Angola meet its climate commitments, including generating 70% (versus around 60% today) carbon-free power by 2025.”
The announcement matched pledges by Angolan President João Manuel Gonçalves Lourenço, in the run-up to this August’s election, in which he promised to oversee a massive infrastructure spending spree that will address energy issues through investment in new power capacity, particularly in the field of renewable energies, given its favorable climate and natural resources, meaning a particular focus on solar and hydroelectric projects. Improvements will also be made to transport and logistics networks, such as highways, ports and aviation infrastructure.
Angola’s certain strategic elements combine to make the country an attractive market to international investors, with political stability, high hydrocarbon and mineral wealth and access to large, populous markets across southern Africa among its leading assets.
Oil price spike boosts foreign earnings
Ministers and leading analysts are confident higher oil prices in the international market will not affect the paradigm of the diversification of the Angolan economy. The oil sector is currently responsible for less than a third of Angolan gross domestic product, versus 43% in 2011, when the economic diversification strategy was launched.
This progress is welcome and will act as a solid foundation for subsequent phases of focus on nonoil activities, said Angola’s Minister of Finance Vera Daves. Asked what sectors will help the republic achieve this goal in the medium-to-long term, the minister is unequivocal: agriculture, fisheries and industry.
“Agriculture is the champion and we are growing in the fisheries sector, too, while significant growth in the transport segment has also been registered in recent months,” she said. “All three sectors should be the engines of growth of the nonoil economy, but agriculture tops them in terms of investments, effort, commitment and motivation.
“In the oil sector, investments will keep coming in order to maintain stable production. With time, we should see interesting things happen in the gas field as well. We are seeing that the private sector is making moves in that direction. In renewable energies, solar farms are also arousing plenty of interest, but they are public investments, whereas funding for gas projects is centered on private investments.”
Daves drew parallels between the oil sector and the banking and financial services industry, noting both enjoy decent levels of competition and operate and are regulated in line with strict international standards. This impressive standard of compliance is a further reassurance for investors that their funds will be processed efficiently, securely and transparently. Angola now boasts the third-largest banking industry in sub-Saharan Africa, behind South Africa and Nigeria. The sector has become more robust, better capitalized and helped accelerate the digital transformation process and stabilization of the currency.
“Whether in Angola or overseas, when talking about the oil and financial sectors, they are relatively similar,” Daves explained. “In terms of law, compliance, demands, service quality, we can improve, but still, we are getting better at the quality of our service. The National Bank of Angola has been working hard to align with good international practices and demanding the financial system also reach this alignment.”
Financial services streamline flow of FDI
Over the past couple of decades, the performance and growth of the financial sector has improved through government measures that have encouraged the lending of additional monies to manufacturers and entrepreneurs. Angola’s profile has also benefited from the 2019 hosting of the Tokyo International Conference on African Development. “Our experience with Japan is one of the best,” noted Mário Augusto Caetano João, Angola’s Minister of Economy and Planning. “We have had key investments and financing from Japan over the years, mainly in the restructuring and rehabilitation of our textile factories. We have been resorting to Japanese machinery, mainly for the automobile industry.”
With a focus on providing solutions and services to large corporations and high net wealth individuals, BCS Bank is well positioned to tap into Angola’s potential and support local and foreign investors in their aims.
Since launch in 2015, BCS has boldly chosen to be different, mainly by concentrating on niche areas like transactional services, including trade finance, project finance, merchant and corporate banking.
“Our bank plays a vital role in the economy as it actively contributes to the diversification of the economy by financing local production projects,” stated CEO Rafael Kapose. “Angola’s balance of trade is still compelled by imports, and we serve as an important partner to importers. The diversification of the economy has led to an increase in exports of diverse products. Many enterprises are now adapting to the new reality and trying to benefit from the expansion of the export sector.”
Boasting a very strong presence in Angola’s towns and cities, Banco BIC is the largest private bank in the republic in terms of the number of branches, with 250. The firm is also a leading figure in terms of the amount of credit provided and deposits held. In addition, Banco BIC is one of the few banks involved in an initiative dedicated to the support of manufacturing, export diversification and import substitution.
“Angola should welcome the entrance of Japanese companies,” said CEO Hugo Teles, who over nearly 20 years has worked his way up from teller to the boardroom. “They have an efficient and productive way of working, and we need that. Japan has an industry that transforms everything; we have the raw material.
There are many things to be done and whoever comes first will take the lead. There are many opportunities and Banco BIC is here to support them.”
This report was produced by Global Insight and can also be read here:
https://info.japantimes.co.jp/international-reports/pdf/20220826-GI-Angola.pdf
Read full interviews here: www.angola.global-insight.net
www.global-insight.net
