| Country Profile: ANGOLA |
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| Monday, 23 November 2009 01:42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.Country ProfileTop Angolan CompaniesTop Angolan BanksFive years of riding high on double-digit GDP growth, Angola crashed back down to reality in 2009 with quite a bump. Depending on oil for around 90% of its income, the country was left extremely vulnerable to the fall in prices caused by the global economic slowdown. And yet, after harsh cuts in public spending and some progress in diversifying away from its habitual oil-dependence, the country enters 2010 with much better prospects than a year ago.
The MPLA’s old Cold War enemy and the main opposition party, the União Nacional para a Independência Total de Angola (UNITA), is still smarting from its parliamentary defeat in 2008 and has been highly critical of Dos Santos, accusing him of clinging to power on an illegitimate mandate. If Dos Santos’s idea makes it into law, there may not be another election until 2012, when the current parliament’s mandate expires. While opposition and civil society groups grumble and accuse Dos Santos of running a dynasty, international investors continue to be attracted by the stability of the president’s long rule. For most Angolans, two-thirds of whom live on less than two dollars a day, having the same president for a few more years when he has been in power for three decades, makes little difference to their lives.
The impacts of the downturn were severe all round. Oil tax revenues collected for the first two months of 2009 were just 31% of what was collected in the same period a year ago. The sharp fall in the price of oil plus OPEC production cuts, coupled with the downturn in diamond sales, caused international reserves to drop by nearly one-third in a matter of months at the start of 2009. This affected liquidity within the local banking system, triggering a run on dollars, weakening the kwanza and pushing inflation up to a four-year high of 14%.
Mid-way through 2009, the government cut its GDP growth forecast from an initial 11.8% to around 3%, while the IMF’s October forecast put growth at only 0.2% in 2009 before a recovery to 9.3% in 2010. Responding to the crisis, the government implemented a two-pronged approach, cutting public spending by readjusting the budget and formulating what many consider a long-overdue economic diversification plan. By investing in rural development and agriculture – with the help of Chinese credit lines – Angola also hopes to boost food security, reduce the reliance on imported products and create more jobs.
Angola was once a major agricultural exporter and the plan is to move from mostly subsistence farming to larger-scale ventures. One big hope is for coffee. Under Portuguese rule, Angola was the world’s fourth-biggest coffee exporter, but years of conflict and poor management led production to fall to 2,000 tonnes in 2007, compared to more than 200,000 tonnes a year in the 1970s. Various revitalisation schemes are underway, including giving local farmers free plants. Early signs are encouraging, with production set to hit 12,000 tonnes by the end of 2009. Local companies now report that they are close to signing export deals. Sugarcane planting has begun at a 30,000 hectare site in Malanje Province under the control of Biocom, a joint venture between state oil company Sonangol, Brazilian construction firm Odebrecht and the privately-owned Angolan group Damer.
New factories are being built, including a Chinese-owned car production line in Viana (the first of its kind in the country) and various food-production and cement plants. To reduce reliance on imported cement, the locally-owned GEMA group has announced plans for a $400m factory in Lobito, in partnership with Brazil’s Camargo Correa Cimento, to produce 1.6m tonnes per year. GEMA is also behind Angola’s biggest real-estate project, a $600m building complex, which includes a five-star hotel, a shopping centre and two 22-storey office towers overlooking Luanda. Work has begun and is expected to be completed in 2011, offering proof that even if the oil money is slowing there is still plenty of cash being splashed on construction. Another vote of confidence in 2010 is an IMF loan worth an estimated $1.3bn. The 27-month stand-by deal aims to help Angola tackle its liquidity problems and stabilise the kwanza, which in October 2009 was selling on the black market at 100 to $1, 22 points above the official bank rate of 78 to $1. The deal gives a credibility boost to Angola which in the past has been dogged by a poor fiscal reputation and allegations of corruption. Due to be finalised in November, the credit has been awarded on the basis that the government protects social spending and improves overall financial management.
The solicitation of aid from the IMF marked the continued diversification of Luanda’s partners. With officials worried about becoming too dependent on China for credit and the purchase of oil, of which Angola is the Asian power’s top supplier, there was a slight reorientation away from Beijing in 2009. In September, Sonangol invoked its right of first refusal on Marathon Oil’s 20% stake in Block 32, which was to be sold to Sinopec and the China National Offshore Oil Corporation.
The year ahead will bring in significant new oil projects that are likely to keep Angola above Nigeria as Africa’s top producer for the short-term at least. Chevron’s Tombua-Landana in Block 14 came on stream in August and aims to be producing 100,000 barrels per day by 2011. Other major projects due to start production in late 2010 are Block 31, operated by BP, and Pazflor in Block 17, which is operated by France’s Total.
2008 RESULTS IN THOUSANDS OF DOLLARS - *IN ITALICS 2007
RESULTS - ND: NO DATA Taken from the Top 500 Companies
FIGURES FOR 2008. US$ THOUSANDS. *2007 FIGURES. |






The economy may well find its way to recovery, but the political outlook is not inspiring. Following much-hyped and largely-successful parliamentary elections in 2008 – the first to be held in 16 years – the presidential poll promised for 2009 was put on hold due to delays in preparing the new constitution. The situation took a new twist when President José Eduardo Dos Santos publicly suggested adopting an indirect election system in which the president is elected from the top of the winning party’s list. His Movimento Popular de Libertação de Angola (MPLA), having previously denied any plans for an indirect vote, now says it is backing its president, but doubts remained about any resubmission of the constitutional proposals.
Despite continued concerns over Angola’s record on transparency and human rights, especially in the Cabinda enclave, President Dos Santos raised his international profile in 2009, attending the G8 Summit in Italy in July and hosting visits from Pope Benedict XVI, US Secretary of State Hillary Clinton, South African President Jacob Zuma and Russian President Dmitry Mededev, among others. The Zuma visit focused on an increase in business exchanges between the two countries, including possible refining and energy supply deals.
On one level, the diversification policy should start to deliver and the IMF deal has helped solve some liquidity and reputation problems, but a recovery in oil prices has to be the most positive sign. In September 2009, a barrel of Angola’s Girassol may have been 45% below its peak of $147 in July 2008, but it was still 80% above the December 2008 bottom price. With production also up (Angola disregards OPEC cuts, despite holding the chairmanship of the organisation), foreign reserves started to recover, which brings hope for a more stable kwanza.
