Angola exposé: President João Lourenço breaks the mould

In this five-part series, exclusive to The Africa Report, Zoé Eisenstein and Patrick Smith report on the campaign to find the stolen funds and how it is changing the politics and economy of Angola.

Part 1: Angola exposé: Joining the dots

Part 2: Angola exposé: The money chase

Part 3: Angola exposé: Portugal connections

Part 4: Angola exposé: International implications

Part 5: Angola exposé: Luanda life

Angola’s economy was already weak going into the coronavirus pandemic. A tough economic restructuring programme at the beginning of the year focused on the sale of state-owned oil and diamond assets, reform of the national budget and a push to claw back a substantial amount of the over $100bn reckoned to have been stolen from state coffers during the four decade presidency of José Eduardo dos Santos. Those plans now face the harshest of realities.

President João Lourenço’s government is desperately trying to mitigate the effects of a regional public health emergency, layered on top of crashing prices for its main export of crude oil, mounting costs of servicing its debts and chronic disruption to supply chains.

“Restructuring Africa’s fifth biggest economy”

At the centre of the economic strategy is finance minister, Vera Esperança dos Santos Daves, who has the gargantuan task of restructuring Africa’s fifth biggest economy. She was tasked by President João Lourenço with pulling the economy out of a four-year recession, diversifying it away from dependence on oil and then presiding over one of Africa’s biggest privatisation programmes.

As the pandemic started coursing across Africa in March, Daves explained to The Africa Report how the government intends to navigate the financial damage that the public health emergency is wreaking on regional economies as well as its plans to develop other sectors of the economy, beyond oil and gas. The government wants to engineer a renaissance of the country’s agriculture and manufacturing sectors.

READ MORE Angola: Finance Minister Vera Daves has one of Africa’s toughest jobs

Leading the charge for this restructuring was the government’s privatisation programme which the finance ministry is running alongside the state oil company, Sonangol. Launched last year, the first phase of the programme will sell hundreds of state-owned assets and companies, seen as non-strategic, many through Luanda’s capital market.

All the entities in this country need to see that there are rules and they should be respected.

It will include stakes in telecoms, fisheries and industrial companies. The first sales were due in April but now they are on hold as the government monitors international market conditions.

Prices for Angola’s crude oil “crashing”

Angola’s economy has been in a lockdown since 27 March which has pushed up consumer prices further, on top of new 14% rate for value added tax.

With international prices for Angola’s crude oil crashing by at least 66% since the beginning of the year, NKC Economics in South Africa forecasts that Angola’s economy will contract by 2.8% this year, slowly recovering top 0.9% in 2021.

The turmoil in the markets has pushed up the yields on Angola’s Eurobonds to over 25% according to Barclays Bank. This has forced the government to postpone its plans to another debt issue this year to offset other financial pressures. All this makes the government’s search for stolen assets still more critical.

In December, Luanda courts froze the national assets of Isabel dos Santos, daughter of the former President, triggering moves in other jurisdictions against her corporate holdings and those of others linked to that government.

READ MORE Angola: Isabel dos Santos indicted for embezzlement and more

Financial experts have told The Africa Report that at least $100bn may have been taken out of Angola’s economy as illicit financial flows over the past two decades.

Daves says the government is determined to identify more stolen assets and expects to see substantial resources being returned to the country. “All the entities in this country need to see that there are rules and they should be respected,” she says. “That’s the most important fight at this point.”

Retrieving assets taken illegally and injecting accountability into the system will also help the economy, says Daves. “We are seeing a lot of people going into jail. It’s not good to see but it’s important to send a message.”