Valdomiro Minoru Dondo believes Angola is ripe for investment. Here’s why.
One of Angola’s most enduring investors talks about his new bets on agriculture and mining
Valdomiro Minoru Dondo moved to Angola from Brazil in 1984, championing the country through Angola’s emergence from civil war, transition to peace and oil-driven growth, and current period of diversification and modernization. Initially a commodities trader, Minoru’s investments in strategic and structural sectors helped establish his conglomerate holding company, the VMD Group, as one of the most trusted and creative commercial ventures in the country. With a long-term vision and strategic foresight born of a deep belief in Angola’s potential, the VMD Group now directly employs over 4,000 people in Angola and has built a diverse portfolio of investments throughout the country, including the first shopping center, Belas Shopping Mall, the first nation-wide bus network, Macon Transportes, and Luanda Medical Center, a state-of-the-art private hospital in downtown Luanda.
Today, Minoru is working to further develop and strengthen the Angolan economy, which he believes could truly take off as travel and commercial trends return to their pre-COVID-19 levels. He is most at ease in Luanda, where he is in constant contact with the leadership of VMD Group’s portfolio companies, contributing capital where it will be most impactful and coaching a new generation of talented managers across a range of industries. He always welcomes a conversation about Angola, whether with executives and entrepreneurs looking to invest or journalists trying to understand the often-overlooked sectors beyond the energy industry.
Minoru talks about what drew him to Angola and what he sees as the future of the Angolan economy.
How did a Brazilian businessman, with Japanese heritage, find himself in Angola in the middle of the Angolan Civil War?
My interest in Angola was accidental. I was working in Brazil for a trading company associated with a major supermarket chain called Disco. I was pursuing a transaction to export instant coffee to Russia. The Russians wanted to pay for the instant coffee with vodka because they didn’t have liquidity, but there were various restrictions on importing alcoholic beverages to Brazil. The Canadians then stepped in and said they wanted to import vodka and could pay Brazil in telecommunications satellites.
So, we set up a novel transaction. We sent instant coffee to Russia, Russia paid with vodka that we sent to Canada, Canada sent two satellites to Brazil, and Brazil paid the difference to Canada with tropical fruit. It was complex way to make supply and demand meet, but it worked.
At the time, Russia had a strong military presence and relationship with the government in Angola, and so this transaction caught the attention of Angolan officials, who were seeking to buy food through similarly creative means. Quickly we became the main trading partner for the government. I began travelling to the country regularly and eventually moved here.
How has your investment strategy evolved since then?
My strategy has always been to follow the cycle and priorities of the market. When the market was reliant on imported products, our objective was to deliver those products to the market. Until recently, everything was imported, even mineral water. The VMD Group’s role was to provide what the market needed: food, parts, medicine.
The oil-led boom in Angola in the early 2000’s overshadowed the great potential of other industries in this country. The 2014 crash in oil prices then created serious foreign exchange constraints, which made importing difficult and forced the government to reevaluate our nation’s economic structure.
The Angolan government recognized that it had to diversify our economy, and it has since put in place several measures to facilitate investment in industries outside of the oil and gas sectors. Once we were convinced that the government was serious about reform, our business adapted and we began
creating companies to capitalize on the opportunity for greater competition, responding to the market’s deficiencies and needs.
Does that mean the Angolan economy will no longer be reliant on oil and gas?
For the foreseeable future, oil will be a major part of Angola’s economy. But it is not the only part of Angola’s economy, and it is not Angola’s only resource.
Angola is rich in natural resources, including iron ore, phosphates, copper, gold, and manganese, among others. Many of these resources have only begun to be mapped and extracted.
For example, three years ago the Buco Zau e Lufo Mining Societies, which we operate, started the search for gold in the northern province of Cabinda, where we were awarded two prospecting licenses, one of which has already been prospected and entered production phase and the other should enter production by the end of the year. Global mining companies have begun to take Angola more seriously, especially as more established operations are depleted and become more expensive to operate.
What other sectors are you exploring?
Agriculture is a major focus of mine. Angola is the land of sun, sea and water. The amount of arable land in Angola is estimated to be about the same as in France, but less than 10 percent of it is being used for agricultural purposes. We also have five major ecological zones, which have diverse climatic and soil conditions – meaning we can produce a variety of agricultural products. Angola’s coastal location also offers access to maritime transportation, while abundant inland water resources and dozens of river basins can sustain significant farming operations and facilitate the movement of crops to market. If we invest today in infrastructure, education and technology, Angola could quickly start producing enough food for domestic consumption and become a major exporter in the region.
As someone with varied business investments, why are you so excited about these two particular industries?
What many people don’t know is that Angola was one of Africa’s powerhouses in both agriculture and mining before the civil war broke out in 1975. Angola was self-sufficient in almost every crop besides wheat, and the Cassinga mine in Huila province was one of the largest iron ore exporters in the world.
Four decades later, the potential of these two industries in Angola remains unchanged. Reviving our economic advantages from the past may be the key to future economic diversification and development.
What are the main challenges associated with carrying out agricultural investments in Angola?
The main challenge is financing. This is particularly the case for companies looking for local financial support. Angolan interest rates reached 20% after the latest rate hike by the Central Bank, which makes investments in the capital-intensive agricultural sector very challenging.
However, there are several international financing agencies that are supporting agricultural and other sectors in Angola. Our government’s latest agreement with the IMF is going well, and because of that more organizations in the international financial community are willing to support investments here.
What about the challenges in the mining sector?
Financing is also an issue in the mining sector, but there are structural impediments to investing that are specific to that industry.
There is a technology and skills gap in Angola, which means that companies need to be able to train and upskill employees and make early investments in equipment and production.
There are also social and environmental considerations that must be central to mining plans and operations. The Angolan government has put in place strict rules and regulations to promote social responsibility and transparency, particularly in the diamond sector.
What additional steps should be taken to unlock the full potential of Angola’s economy, including these two sectors?
Angola is in great need of foreign investment, particularly from Western countries. We need technology and know-how in several sectors – metal mechanics, electronics, fertilizers, and technology. And we know that there are lines of credit and program development offered by a number of countries for these investments that have not been used.
I believe there is currently insufficient understanding in America and Europe about the potential of the Angolan economy. Numerous international financing organisations, including the International Finance Corporation and Deutsche Bank, have had significant success investing in Angola. In my experience, when foreign investors learn more about how dynamic and exciting this market is, they not only recognize the economic opportunity in Angola but – like me – also enjoy working here.
Valdomiro Minoru Dondo is the Founder and Chairman of the VMD Group, which manages a diverse portfolio of companies across Angola that include Macon Transportes, Belas Shopping, Luanda Medical Center, Banco de Investimento Rural and others.