Country FilesSouthCountry Profile 2014: ANGOLA


Posted on Tuesday, 04 February 2014 12:12

Country Profile 2014: ANGOLA

Flag Angola Locked in a wealth trap

Angola’s next elections are not due until 2017, but the coming year will provecrucial for the ruling Movimen to Popularde Libertação de Angola (MPLA) if it is to maintain political and economic dominance in this oil-richcountry. Pressure on the government will increase in 2014 to start rollingout substantial public infrastructure works in time for the next vote. Expectations are high, given the economic recovery witnessed in 2013 after relatively slow growth in the wake of the global financial crisis.






Locked in a wealth trap   angola-infographie-2014

The failure to redistribute oil wealth has dented the ruling party’s majority

Despite some improvements Angola remains a difficult place to do business

Angola’s next elections are not due until 2017, but the coming year will provecrucial for the ruling Movimen to Popularde Libertação de Angola (MPLA) if it is to maintain political and economic dominance in this oil-richcountry. Pressure on the government will increase in 2014 to start rollingout substantial public infrastructure works in time for the next vote. Expectations are high, given the economic recovery witnessed in 2013 after relatively slow growth in the wake of the global financial crisis.

Anxieties pervade all echelons of the ruling MPLA over what the future might hold if Angolans, whose life expectancy at birth is 52 years and whose country ranks 148 out of 187 in the UN’sHuman Development Index, do not start to see palpable improvements and some redistribution of their massive oil wealth. At the very least, the MPLA’s political hold, which suffered in the last vote, could be further weakened at the next elections. An ambitious $23bn project to boost the under-performing electricity network could take years before impacting the lives of voters.


In 2012 elections, the MPLA’s seats in parliament fell to 175 from 191 of a total of 220. The small Convergência Ampla de Salvação de Angola-Coligação Eleitoral (CASA-CE), formed just months before the September vote, scored eight seats, while the former rebel group União Nacional para a Independência Total de Angola (UNITA) doubled their seats to 32.   

Sporadic protests witnessed in Luanda over the past few years have brought home the need for government to act quickly. An increased police presence in Luanda is said to have reduced crime rates in the capital but will not resolve the underlying economic problems nor force the hand of voters.

The legacy of Angola’s 27-year civil war no longer passes as an excuse for the rampant poverty and shoddy infrastructure in a country where the rich live in modern apartment blocks cheek-by-jowl with Luanda’s over-crowded slums. While new roads, schools, hospitals, railways and homes have been constructed since the end of the conflict in 2002, many Angolans feel more could have been achieved. For many voters who will be taking part in their first election in 2017, the war is not even a distant memory.

Angola’s GDP expanded an estimated 8.1% in 2012, according to the World Bank’s June 2013 Angola Economic Update. This was more optimistic than the International Monetary Fund’s October forecast (see graph), though both show significant growth spurred by high oil export prices and rising production. The Bank projected GDP growth at 7.2% in 2013 and 7.5% in 2014. Better macroeconomic management has resulted in large surpluses in fiscal and external accounts, and the formerly soaring inflation rates are now down to single digits.


With an improvement in the country’s financial position, the government has increasedpublic sector spending. It rose by about 15% in 2011 and 29% in 2012, innominal terms.The 2013 budget calls for a sharp increase of 60% in capital expenditures.

Banking sources say plans for a capital debt market look firmer and more credible now than ever, with 2014 floated as a year to watch. In spite of persistent talk, there is less certainty about Angola’s first
sovereign bond being issued on the international markets anytime soon. Amid concerns over disclosure of information, there are possibly unrealistic expectations regarding the terms.

The government will continue selling some of its state companies in 2014, several of which are asset-rich though inactive and costly to keep on the books. Yet it currently shows no sign of planning a
policy of privatisation on a grand scale, although this limited gesture may be a pointer to the future.

The economic upswing makes the slow pace of improvement inpublic services and infrastructure harder to justify. Despite the red-tape-cutting efforts of new finance minister Armando Manuel, who was appointed in May 2013, investors still complain of widespread bottlenecks. Some say endemic corruption and infighting within the rulingparty elite are the root cause. Angola rates 157th out of
176 countries in Transparency International’s Corruption Perceptions Index.

Accordingtooil minister José Botelho de Vasconcelos, national production of crude stood at 1.75m barrels per day (bpd) in October 2013, and he was quoted as saying exports would reach 2m bpd in 2014 or 2015. But oil sector sources say, while production will continue to rise, 1.8m bpd is a more realistic expectation. Oil accounted for 96% of Angola’s exports and 46% of its GDP in 2012.

Recent exploration suggests oil reservesmaybe larger thanoriginally believed, and within the industry there has been excitement about the possibility of lucrative pre-salt formations off Brazil extending to Angola. Exploration and drilling will continue into 2014 with announcements of commercial discoveries
or dry wells determining the oil sector’s future.If they prove successful, oilsources say Angola’s output could double within the next 10 to 15 years.

angola-infographie-2014-2LNG INDUSTRY SETS SAIL

Angola LNG’s first cargo of 160,000 cubic metres of liquefied natural gas was shipped in June 2013 aboard the SS Sonangol Sambizanga and arrived in Brazil in July. The $10bn LNG project, led by oil giant Chevron, will a im to produce 5.2m tonnes of LNG a year from its Soyo plant. The project, which has anexpected lifespan of 30 years, encountered some teething problems but, with those now resolved, is expected to be running at full capacity throughout 2014.

Despite the buoyantoil sector, public and private investments remain mediocre. Angola’s total investment rate is currently about 13% of GDP, well below sub-Saharan Africa’s three-year average
of 24%. Public investment accounts for about 10% of GDP, while private investment
represents just 3%.

The agriculture sector – employing two thirds of the Angolan workforce – grew by 7.3% in 2012, down on the 10- year average of 13%. Agriculture may be key to changing the fortunes of the rural population, but less than 30% of arable land is cultivated and productivity is among the lowest in the region. Infrastructure improvements in rural areas have improved output in the sector, but a
lot more is needed. Growth in the manufacturing sector was down to 1.3% from 13% in 2011 and 10.7% in 2010.

According to the World Bank, the authorities have taken significant steps to improve the transparency and accountability of public financialmanagement. The central bank is expected to continue bringing the financial sector more in line with the increasingly tight regulatory conditions prevailing in Europe
and the US. Yet government continues to face criticism regarding its opaque finances. Details of its mysterious $5bn sovereign wealth fund, chaired by one of President José Eduardo dos Santos’s sons, may become clearer in 2014.

Angola is always a difficult place to do business and access to finance is never easy. Banks made fewer loans available in 2013 after late payments by the finance ministry resulted in some companies defaulting on loans. A process for payment of arrears has been promised which could reassure banks and increase access to financing in 2014.

Over the longer term, the prospect of a large increase in oil production is likely to give rise to a more prosperous middle class. Demands for a piece of the pie could eventually make the ruling party’s hold on the political and economic system more problematic.



THE OIL INDUSTRY has continued to send the cost of living soaring in Luanda. In 2013 the city overtook Tokyo to become the world’s most expensive city for expatriates, according to Mercer’s Cost of Living Rankings of 214 cities.

Downtown Luanda now boasts a five-star hotel, a newly rehabilitated six-lane sea-front highway with freshly mown grass, children’s play areas, a promenade, and increasing numbers of beachside restaurants on the city’s peninsula Ilha, serving food of near international standards at astronomical prices.

According to a 2013 report by real estate firm Colliers, the total stock of office space tipped over the one million square metres mark in 2012, with costs of $150 per square metre per month. A two-bedroom apartment with access to a generator, water tank and secure parking can cost between $7,000 and $10,000 a month, according to a real estate source.

Many middle-income Angolans who grew up in the capital are now looking outside the city to Chinesebuilt housing projects such as Kilamba Kiaxi where they can access better quality and cheaper homes. The downside is that the local infrastructure remains pitifully under-developed and travelling into Luanda can take hours. Some of the new estates are said to be for social housing, but many stand empty.




Rank 2012Rank 2011CompanySectorCountryTurnover (Thds $)Turnover changeNet profits



Rank 2013Rank 2012Bank nameCountryTotal assetsNet interest incomeLoansDeposits
2528BANCO ANGOLANO DE INV. (Ex-Banco africano)ANGOLA1076389057914626786368486270
3532BANCO DE FOMENTO ANGOLAANGOLA792444639287314238466955060
3847BANCO BICANGOLA691422617655225785405473426
10597BANCO MILLENNIUM ANGOLAANGOLA1827232873346425751227920
111126BANCO DE NEGOCIOS INTERNACIONALANGOLA1692075595727912801305516
125120BANCO SOL*ANGOLA1395441603703438871241175
157169BANCO REGIONAL DO KEVEANGOLA89552919360304988737069
184-STANDARD BANK DE ANGOLAANGOLA6451811768299185541552

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