Oil and gas fuel economic diversification

Transcrição

#AngolaTheWorldfolio
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Our World
Friday, April 17, 2015
ANGOLA
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Oil and gas fuel
economic diversification
Revenues from the sector are driving the efforts to advance alternative sectors such as manufacturing and agro-industry
T
he
Angolan
government is
working hard to
keep the country on track,
leverage its successes, and
prepare for positive, sustainable growth in the future. A
vital part of that process requires economic diversification with a view to reducing
dependence on oil, and reinforcing other sectors, such as
fisheries, construction, agriculture and energy – all of
which are growing as a result
of strategic investments and
increasing their contribution to GDP.
The government has used
the oil windfall to develop the
services sector, while also attracting considerable foreign
direct investment for real
estate projects. Fiscal policy
is expansive and focused on
boosting employment and
growth, as well as on macroeconomic stability. Meanwhile, public investment is
being allocated to telecommunications, agriculture and
hydroelectric power.
A major challenge Angola
faces is the so-called “resource curse”. Well-known
economists such as Jeffrey
Sachs and Joseph Stiglitz have
shown that countries that are
overly dependent on natural
resources, like oil, often underperform others with fewer resources in areas such as
long-term economic growth,
human development, and
governance. Countries affected by the curse suffer
from more acute inequality,
more conflict, more corruption and deeper poverty.
This situation is the result
of “Dutch Disease”, which is
where an inflow of foreign
aid or increased revenues
from natural resources leads
the national currency to appreciate, making the country’s exports more expensive
and, therefore, less competitive. Oftentimes the dominant sector also pays much
better wages, drawing talent
out of other potential sectors,
while crowding out the rest
of the economy.
Angola is working to combat the curse, but it is no
easy task. The civil war ended years ago and the government is focused on reducing its dependence on oil;
however, it is still the main
export and contributor to
GDP. Proper resource allo-
cation and appropriation of
funds into key catalyst programs, such as educational
facilities, is vital.
According to Augusto
Da Silva Tomás, Minister
of Transport, Angola is “an
imbroglio of necessities and
contradictions. We have to
work hard to strike the right
balance among all variables in
a positive and proactive way.”
The country lacks financial
resources and equipment,
technology, and skilled workers. Nevertheless, it is plowing ahead, determined to
make use of its strategic location as much as possible.
With that in mind, notable
efforts and funds have been
allocated to overhauling every segment of the transport
sector, the ultimate goal being to create a network that
connects the whole country,
from north to south and east
to west. According to Mr. Da
Silva, it is very important to
leverage Angola’s strategic
location vis-à-vis central and
southern Africa. To this end,
many short, medium and
long-term actions, projects
and programs have been
rolled out targeting roads,
airports, ports and railways.
In terms of roads, the goal
is to refurbish the main highways and secondary roads
in cities and villages, connecting the entire country.
The government has also
financed trucks, taxis and
bikes for citizens with a view
to promoting mobility. The
national aviation sector is
being restructured, first with
the reformulation of the sector’s legislative and regulatory
framework, and also with the
modernization of airports.
Ports are being refurbished
and modernized, starting
with the Port of Namibe, and
there are projects for an additional three ports. Several
passenger terminals are being
built in Luanda to facilitate
transportation by sea and alleviate congestion in the city,
and there are plans to build
additional ones along Angola’s coastline. The railways
have also been expanded, and
there are new trains to transport both people and cargo.
According to Mr. Da Silva,
“By investing in this infrastructure, the government is
paving the way for economic
diversification. Linking ports,
airports, railways, and fundamental road networks will
drive development in areas
such as energy, water, agriculture, fishing, and mining”.
The next step would be to
link those platforms to Congo, Zambia, Namibia, and
other nearby countries.
“We are working so that
Angola becomes a leader not
only in central Africa, but
also on the rest of the continent and in the world,” says
Mr. Da Silva. “We want to
benefit from our privileged
geostrategic location to become a transit platform for
passengers and merchandise
to the rest of Africa, Central
America, South America,
and Asia. We are at an advantage compared with
landlocked countries, and
with our refurbishment and
investment plans, we can enhance production not only in
Angola, but also in the region
as a whole.”
Mining is another sector
going through important
changes. Although the focus remains on diamonds,
this industry is also looking
to diversify. Serious efforts
began in 2014 to identify,
measure and locate the country’s vast geological resources
using the latest technology.
Francisco Queiróz, Minister
of Geology and Mines, emphasizes the importance of
mapping out the republic’s
resources underground in
order to attract investment in
the exploration of other prolific minerals, such as gold,
manganese, coal, iron, copper and phosphates.
In the meantime, another
focus is to better distribute
the benefits from diamond
mining activities to the
general population. Mining
companies currently pay
taxes that are used to develop the areas where the mines
are located. Additionally, the
sector has previously created many jobs and the goal
is to boost employment going forward.
Lastly, there is a focus on
corporate social responsibility, with the result that sector companies “are investing
in projects with positive impacts on the local population”,
and more rigorous CSR standards are in the pipeline.
Angola is not without challenges, but it is determined to
rise to the occasion and address its shortcomings, replicate its successes and leverage its advantages.
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2
ANGOLA
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Macroeconomic consolidation, foreign investment,
and support for SMEs to stimulate greater diversity
Economic development is being driven by structured public capital investment programs, widespread investment, easier access to capital and a united push for diversification
T
he U.S.-Africa
Summit, held
in Washington
in 2014, sought
to shift dialogue onto aspects about
Africa that are often overlooked. The event aimed
to shine a light on the continent’s new class of businesspeople and consumers,
on the important role the
U.S. can play to boost jobs
and mobilize capital, and
on Africa’s potential as a
driver of global economic
growth in particular. Angola is in a good position to
play a key role in this scenario, as the fifth-largest
economy in Africa (according to The Economist ) and
one of the fastest-growing
economies in the world.
Finance Minister Armando Manuel recently highlighted Angola’s “economic
viability” in the Angolan
press, but surely that is an
understatement. The country is committed to consolidating its macroeconomic
situation, and projections
are promising. GDP expanded by 4.4% in 2014,
according to World Bank
estimates, and is expected
to grow by 5.3% in 2015,
while inflation continues to
decline to single digits.
Economic diversification
To remain on the path toward growth, it is imperative that Angola continues
to diversify its economy.
At present it is the secondlargest oil producer in Africa, after Nigeria, and oil
production and related
activities account for 45%
of GDP and 80% of government revenues. Moreover,
mineral product exports
account for 95% of the
total. This situation has
negative implications for
the general population, offering few job opportunities and leading to higher
inequality. In fact, the oil
industry employs just 1% of
Angolan workers, and unemployment stands at 26%,
according to UN magazine
Africa Renewal.
As João Júlio Fernandes,
CEO of the Fundo de Garantia de Crédito (FGC), points
out, “We all know about the
volatility of oil prices, and we
can no longer depend on this
type of asset.”
In view of this panorama, Angola has developed
other contributors to GDP,
including energy, construction, and agriculture. The
latter, for example, contributes 11% but accounts
for 70% of total jobs, plus
it is a sector that is “growing impressively” and is
the “fastest-growing on the
continent”, according to Africa Renewal.
Economic development
is being driven in large part
by public capital investment programs focused on
a wide range of objectives,
including building new irrigation systems, improving
roads, adding energy distribution and generation capacity, and achieving goals
related to growth and additional poverty reduction.
Public investment spending is also being used to upgrade infrastructure and
shore-up employment. And
as the government works
to make the public capital
investment process more
efficient, it comes closer
to realizing its longer-term
development goals.
Hugo Teles, Manager of
Banco BIC, believes there is
still a lot to do and many areas in which to invest, “but
the government is trying to
propel the economy so we
can develop the manufacturing sector, the productive sector, fisheries, etc, as
well as energy and water.”
Angola is in a good position to diversify. It has very
fertile soils where almost
anything can be grown,
abundant water, other “enviable resources few countries in the world have”, and
others that have yet to be
explored, according to Mr.
ANGOLA IN NUMBERS
4.4%
GDP growth in 2014 (est.)
5.3%
World Bank forecast for 2015
$130bn GDP 2014 (est.)
60%
of the 2013 GDP came from
the non-hydrocarbon sector
7.5%
inflation in 2014 down
from 14.5% in 2010
Ba3 credit rating from Moody’s
B+ from Standard & Poor’s
BB- from Fitch Ratings
$26.2bn 7% of GDP,
in foreign currency reserves
average budget surplus since 2010
41.6%
$8,200 GDP
government total expenditure
as % of GDP in 2014
per capital in 2014
55% exports as percentage of GDP
Total exports: $68.25bn
Total imports: $26.34bn
Sources: National Bank of Angola, African Development Bank, and Energy Information Administration
“The National Bank of
Angola has implemented
a large number of new
regulatory rules for the
system that have helped
to balance overall activity
of the economy”
Amílcar dos Santos
Azevedo da Silva,
President of ABANC
Fernandes, who also believes that diversification
will “make Angola a regional, and perhaps a continental, power”.
Moreover, “The country
has solid macroeconomic
foundations, sound institutions and a banking sector
that is small but well capitalized,” says Rick Angiuoni,
Regional Director for Africa
and Global Business Development with the ExportImport Bank of the United
States (Ex-Im Bank).
That financial institution
is working closely with Angola to help provide funding for key sectors such as
infrastructure, transportation and industry. “We plan
on financing many other
sectors, such as aviation,
telecoms, etc.,” adds Mr.
Angiuoni. “Financing these
key industries will make
Angola more competitive
and will attract FDI to other areas.”
According to Fred Hochberg, Ex-Im Bank’s Chairman and President, the
bank is “working closely
with Angola’s expansion
plan to diversify the economy in oil and gas, but also
in transportation, infrastructure, power, mining
and agriculture.”
U.S. companies are already showing interest in
Angola’s assets beyond oil
and gas. In fact, “interest
has increased significantly,
given the current landscape,” says Mr. Angiuoni,
and the fact that it is a politically stable country. Large
non-oil companies, such
as Cummins and Kentucky
Fried Chicken, among others, are already investing in
the country. Amílcar dos
Santos Azevedo da Silva,
President of the Angolan
bank association ABANC,
highlights: “There are great
opportunities here for
American companies.”
Infrastructure is attracting the bulk of FDI at the
moment – specifically
roads, bridges, ports, railways, and factories. There
is also private and public
investment in hospitals and
healthcare, along with universities and schools, and
the government is offering
tax exemptions to further
develop Angola’s hospitality
sector. To attract additional
FDI, the government has
been working to enhance
transparency and efficiency,
while also offering incentives to foreign companies.
Angola is particularly
attractive for U.S. investment because it is a middle-income economy with
good prospects for growth
and the possibility of becoming a regional hub for
trade and exports from
southwestern Africa.
Working with the ExIm Bank has certainly improved Angola’s credibility,
as has its leadership of the
Executive Council of the
World Bank and its relations with the African Development Bank (AfDB).
As regards the latter, its
President Donald Kaberuka
recently underscored “the
bank’s interest in strengthening its ‘strategic relationship’ with Angola given the
growing role and importance of the country on the
African continent.” AfDB
has also congratulated Angola on its achievements
in reducing poverty levels
from 60% to 38%, and on its
efforts to develop transport
and energy infrastructure.
The financial sector
For its part, Banco BIC is
definitely going all out to
support
diversification,
firstly in terms of its geographic reach. The financial
institution operates in all 18
provinces of Angola, and
even has a presence in areas
where it is the only bank.
Moreover, Mr. Teles says
that BIC “supports the productive sector, cattle breeding and fisheries. In fact, we
support all business sectors,
from construction to industry, as long as they are
credible,
well-structured
projects for which growth is
feasible. We have so far supported all business directions in which we think the
country will advance.”
Another financial sector
player that is doing its part
to drive employment and
development is BANC,
Banco Angolano de Negócios e Comércio, a small
financial institution with
23 branches nationwide,
but which is dedicated to
reaching all segments of
the population, even opening offices in towns with
no electricity.
According to Chairman
of the Board of Directors
José Aires, financial inclusion is important for
BANC, and there has been
“considerable investment
in the consumer credit
portfolio”, mainly among
people with relatively stable incomes, which will in
turn provide the funding
the bank needs to create
products to further develop
the banking industry.
He adds that BANC has
been playing an important
role in supporting SMEs
and companies in construction and commerce. Despite its small size, efforts
are motivated by lofty aspirations. Mr. Aires wants
just one thing: “To be able
to help significantly reduce
poverty in Angola” and, to
that end, it “will continue
to support credible initiatives that can truly help
create a better country.”
Meanwhile, the banking
sector continues to expand,
in terms of the number of
employees, which exceeded
18,000 in 2013, and branches, which grew by 14.2% in
2013, with 164 new branches opening in the year. Assets under management
also increased, and positive
developments were seen in
payment means and electronic channels. The government is dedicated to
transparency in banking,
and has set up IT systems
that detect any actions
that aim to undermine the
proper functioning of commercial banks.
According to João Fernando Quiúma, Director
for Information Technology of the National Bank of
Angola (BNA), “No issues
related to security and computing crimes have been recorded to date, and we have
installed mechanisms to respond as necessary.”
Moreover, the Central Bank is focused on
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Agustina Bellsola
ANGOLA
avoiding the risk of fraud
by keeping its technology up-to-date and in line
with other countries’ systems. ABANC’s Mr. dos
Santos Azevedo also confirms that “the National
Bank of Angola has implemented a large number
of new regulatory rules
for the system that have
helped to balance overall
activity of the economy.”
As for lending practices,
he notes the large number
of companies with potential that request loans, but
whose needs are not met
because they are unable to
comply with bank requirements – a situation which
must be remedied.
The scenario is similar
for individuals. Loans are
the most profitable assets
for banks and the largest
component of their business, as banks are interested in improving the financial conditions of their
customers, adds Mr. dos
Santo Azevedo. Lending
must be more inclusive,
and especially include
small businesses, which
are a very important part
of the economy.
Overall, the financial
sector is getting a major
makeover, working hard
to implement world-class
operating and governance
standards with a view to
driving progress, expanding capital markets, and
modernizing the economy.
Developments on this front
include the establishment
of financial market regulations and a new stock exchange (expected to be operational in 2016), as well
as efforts to approve a securities code and financial
futures regulations.
The government is also
focused on attracting
new investors to diverse
sectors of the economy,
implementing solid regulatory systems, and promoting best practices in
corporate governance. According to the National
Bank of Angola and the
Capital Markets Commission, “Within the context
of Africa’s buoyant economic prospects, Angola’s
rapidly changing financial
system constitutes a critical component in the continent’s economic narrative.” There is no denying
that Angola is becoming a
powerhouse in Africa.
The country is looking
to issue a Eurobond this
year, “a milestone achievement,” according Ex-Im
Bank’s Mr. Angiuoni. This
will enhance credibility
and confidence in the African nation and reflects its
efforts to diversify sources
of capital. Analysts expect the bond to be well
received, “given Angola’s
positive economic growth
and geopolitical situation”,
says Anthony Lopes Pinto,
CEO of local brokerage
firm Imara Securities.
“Angola Investe”
Support for microenterprises, SMEs and the
entrepreneurial spirit of
Angolans through lending and other measures is
a top priority for the government, as visible in the
“We support all business
sectors, from construction
to industry, as long
as they are credible,
well-structured projects
for which growth is
feasible. We have so far
supported all business
directions in which we
think the country will
advance”
Hugo Teles,
Manager at Banco BIC
federal “Angola Investe”
program. The project aims
to facilitate lending to new
businesses and provide
support for future business owners.
However, says Carlos
Rosado de Carvalho, Editorial Director at financial daily Expansão, “After
two years, the plan has
not yielded very positive
results, despite low interest rates and government
guarantees. The truth
is that Angolan entrepreneurs are not taking
advantage of the credit
available, and the banks
say that projects are not
well presented. We must
analyze the plan, identify
its shortfalls, and make
appropriate changes.” Of
the total funding available,
just 10% was allocated to
projects. Halfway through
the program, just 362 projects had been approved
and fewer than 55,000
jobs created, representing
less than 20% of the established target, according to
Portal de Angola. Moreover, the program sought –
and failed – to rank Angola among the top 10 most
competitive economies in
sub-Saharan Africa.
Nevertheless, Mr. Rosado
de Carvalho believes the
program is a step in the right
direction, as it addressed
concerns by entrepreneurs
and responded with initiatives and detailed actions.
“The objectives are clearly
defined and implementation can be monitored. Now
we must be patient. Rome
wasn’t built in a day. The results will eventually appear,”
he says.
Another proponent of
“Angola Investe” is the
country’s Minister of Economy, Abraão Gourgel, who
expects the program to bear
fruit in 2015, with a notable
impact on direct and indirect job creation. “With
everyone’s support, we can
strengthen this program
and foster economic activity, which will lead to more
employment and wealth for
the country,” he says.
In addition to low-interest funding, “Angola Investe” also offers training
and consulting, capacity
building, and tax benefits.
It aims to ease the administrative burden that comes
with starting a business. As
an additional plus for future
business owners, the Guarantee Fund was created to
provide companies with
guarantees vis-à-vis banks
and, in the case of default by
the entrepreneur, the fund
repays the loan.
In this regard, the FGC
– Credit Guarantee Fund
– plays an important role,
“uniting two parties interested in working together
but which couldn’t, due
to a lack of guarantees,”
says Mr. Fernandes. “We
offer banks more security
and we facilitate access to
loans for companies. We
make business happen.”
Although the program
has fallen somewhat short
of expectations at the moment, it appears to be on
the right track, and there
is every indication that
if the government, banks
and entrepreneurs are able
to coordinate and work together, Angola and its citizens will reap the rewards
in the future.
These great strides and
aspirations aside, it is important to note that Angola is a relatively new
democracy, and that the
country has grown considerably in a short period of
time. “It is normal that we
still have weaknesses, but
it is important to allow the
country time to grow,” says
Mr. dos Santos Azevedo.
And grow it does.
Moreover,
the
economic diversification Angola needs will slowly take
shape if it is able to maintain its macroeconomic
stability, further improve
the business environment,
and make additional strides
with its infrastructure plan.
In the words of Carlos Alberto Masseca, Angola’s
State Secretary for Health:
“Angola is on the verge of a
new dawn.”
AO&PT
Messages
BANC
Who's there?
We’re BANC – Banco Angolano
de Negócios e Comércio, one
of the most highly regarded
retail banks in Angola.
Where are you?
We are located in 21 branches
in seven provinces across
Angola and we have a
representative office in Portugal
(Lisbon), but our objective is to
continue growing in order to
respond to the demands of
over 15 thousand customers.
What is your purpose?
To continue to expand our
network of agencies,
to enhance training, to
develop the academic and
professional skills of our 165
employees, while investing in
the safety of customer
operations and supporting
entrepreneurship.
Should I visit you?
Of course, our team of
qualified and motivated
professionals are waiting for
you in Angola and Portugal.
“The FGC unites two
parties interested in
working together but
which couldn’t, due to
a lack of guarantees
We offer banks more
security and we facilitate
access to loans for
companies. We make
business happen”
How can I contact you?
Please visit our website:
www.banc.co.ao
Our head office at:
Travessa da sorte nº12
Maianga, Luanda - Angola
or at any of our branches.
João Júlio Fernandes,
CEO of the Fundo de Garantia de
Crédito
Have a look into our QRcode:
Send
A BANC for life...
3
4
ANGOLA
D
iamond mining
began in Angola more than
a century ago,
but during the
27-year civil war between
1975 and 2002, mineral exploration and extraction,
like much else in the country, largely ground to a halt.
Since 2003, development of
the mining industry, and particularly diamonds, has been
a main priority for the government as it seeks to generate revenues from its mineral
resources and diversify the
economy away from oils.
“We have moved beyond
oil to exporting diamonds
and other minerals,” explains
Angola’s Minister of Trade,
Rosa Escorcio Pacaviria de
Matos. “And we think that
with the liberalization of the
market and the increase in
domestic production, we can
move towards expanding our
export balance.”
With less than half of the
country having been explored so far, the country still
holds big prospects for foreign investors.
“We have an enormous
diamond potential,” says Dr.
Antonio Carlos Sumbula,
CEO of Endiama, Angola’s
national diamond company.
“Ninety percent of kimberlite
diamonds remain to be discovered and I think that this
alone should be a factor that
will make any investor wish
to come to Angola.”
Growing at an average rate
of 5.3% a year, Angola’s mining industry is expected to
be worth $7.5 billion in 2018.
There has been increasing
international interest from
investors in new areas of
mining, including iron ore,
copper and phosphates, but
diamonds have and will continue to be the main contributor to growth. The country
is the world’s fourth largest
diamond producer by quantity and value.
Investment in diamond
mining dipped during the
financial crisis of 2008-2009
as demand for precious gems
fell. Big mining firms such as
South Africa’s De Beers cut
back operations, after a large
investment in prospecting
Mining industry to be
worth $7.5bn by 2018
Angola is seeking to not only add more variety to the minerals that are mined commercially, but also to
add value to its natural resources and build up a thriving industrial sector
failed to bring results. “During that period the diamond
price lowered beyond the
breakeven and led to the shutting down of many mines,”
explains Mr. Sumbula.
But the industry has since
recovered. In 2014 production of diamonds reached
a record 10 million carats,
generating $1.6 billion in
revenue. This figure includes
production by both industrial and small-scale artisanal miners, whose output
reached 8.75 million carats
and 934,500 carats respectively. Revenues from diamonds helped to offset the
impact of the rapid drop in
oil prices in the second half
of 2014.
Last year De Beers returned to the country and
was granted a new diamond
exploration license in April,
while the country’s largest
mining company Sociedade
Mineira de Catoca (SMC)
has stepped up production
and continues to explore
new areas.
A joint venture of Endiama,
Alursa of Russia, Odebrecht
of Brazil, and Israel’s Leviev
Group, SMC is responsible
for more than 75% of all diamond production in Angola.
It operates the Catoca mine
in the province of Lunda
Sul, which is world’s fourthlargest diamond mine by reserves. While production at
Catoca is expected to expand
6% this year, SMC is also exploring for gems at other
sites, including the Tchiuzo
project, which is expected
to begin production in two
years. The company also has
a majority stake in concessions in Luemba, Gango,
Quitúbia, Luangue, Vulege,
Tcháfua and Luaxe.
Kiala Ngone Gabriel, Secretary of Industry
Aside from SMC, Endiama
is also a partner in the Sociedade Mineira de Chitotolo,
which operates the Chitotolo
mine in Lunda Norte Province. While cheaper kimberlite diamonds are mined at
Catoca, the Chitotolo Mining Company (in which local
companies ITM and Lumanhe are the other shareholders) extracts diamonds from
alluvial deposits that fetch a
much higher price.
According to the Minister of Geology and Mines,
Francisco Queiróz, Catoca’s
diamonds are valued at
around $80 per carat, while
diamonds from other alluvial mines such as Chitotolo
are worth between $250 and
$300. Chitotolo currently
produces around 240,000
carats a year. The company
aims to increase production
by investing in further mineral exploration.
Endiama, ITM and Lumanhe are also behind another
joint venture, the Sociedade
Mineira de Cuango, which
produces around 400,000
carats from alluvial deposits
every year.
Up to now, both the government and investors have
focused on the exploitation
of diamond resources, but
the Minister of Geology and
Mines admits that there has
been too much attention paid
to these gems, while other
mineral resources and diversification of the mining industry itself has been forsaken.
“In Angola the mining industry is still too heavily concentrated around diamonds,”
he says. “This must change
not so much for political reasons but rather objectively
because the country has many
more natural resources and
minerals that can be explored.
“We need to map all those
available resources, undertake a strong campaign to attract investment and invest in
other minerals such as gold,
iron, manganese, coal and
still others such as phosphate
and copper that the country
has in abundance.”
Interest in Angola’s mineral potential has heightened
since the introduction of the
new Mining Code in 2011,
which was established to attract foreign investment and
boost exploration for diamonds and other minerals.
The new law ensures more
protection for investors, with
exploration and commercialization rights now granted
under one license. State participation has been reduced
from 50% to 10%, while royalties and taxes to be paid to
the government have also
been cut. “Our mining code
stipulates that 5% of the revenues collected by the state
should go towards directly
benefiting the zones where
mines are operating,” Mr.
Queiróz comments.
While utilization of mineral resources has helped to
lower Angola’s dependency
on oil, the mining industry
still only accounts for 5%
of GDP. The government is
aware that a truly diversified
and dynamic economy cannot rely solely on oil and raw
minerals such as diamonds,
iron and copper. It knows it
must also build a thriving industrial sector.
“I know of no rich country that is not industrialized,”
states Secretary of Industry,
Kiala Ngone Gabriel. “We
understand that by exporting unfinished products, we
miss out on great opportunities of employment. In the
last four years our manufacturing sector has been contributing to our budget with
a percentage of 6.25%. This
is unsatisfactory because we
would like to have a share of
around 15-20% since we do
have the ability to transform
and therefore add value to
our product.”
Adding value to mineral
resources by setting up local
processing facilities is a key
pillar in the government’s
economic
diversification
agenda and an interesting
prospect for foreign investors. Diamond processing
and jewelry production are
obvious opportunities highlighted by both Endiama
CEO Mr. Sumbula and Minister Queiróz.
“It is not Angola that retains value, but rather those
that perform the transformation abroad, which is why our
policy foresees the opening
of many diamond lapidating
factories, and that is a domain
where the American investor
is very much welcome,” explains the geology and mines
minister, while Mr. Sumbula
says that establishing partnerships with companies in
diamond cutting and jewelry
production is part of Endiama’s medium to long-term
plan. Value addition through
the processing of minerals
such as iron ore and copper
could also help to boost industry and create more jobs.
However, inefficiency and
the lack of skilled and capable
local workforce holds the
industrial sector back, says
General Kundi Paihama, current Governor of Huambo
and former Minister of War
Veterans. He stresses that
education development and
investment in the youth will
be key to economic diversification and tackling the lack
of capability in the industrial
sector. “We are opening up
more schools, universities,
colleges, and always seeking
to expand education,” he says.
Inefficiency is being addressed through investment
in infrastructure. Roads, railways, ports and airports that
were severely damaged during the civil war have been
rebuilt, upgraded or newly
constructed. Industrial de-
velopment hubs are being
built and connected to the
upgraded power and transport networks.
The manufacturing sector
is – slowly but surely – beginning to take off. Companies
producing items such as cement, processed metals, detergents, gases for hospitals,
foodstuffs, and beverages, are
expanding and providing jobs
for local communities.
One such company is
France’s Grupo Castel, a beverage producer that has been
operating in Angola since
1994. “At that time, in 1994,
the capacity of production
at the local level was limited,” explains Grupo Castel’s
General Director in Angola,
Philippe Frederic. “Pierre
Castel (the company’s founder) was one of the first investors willing to invest outside
the oil industry. This is probably the basis of his success;
he believed in Angola earlier
than many others that came
much later. The beverage industry gives a lot of employment. We have got many local employees, and we train
lots of people.”
Angola is hoping more
foreign investors will share
Pierre Castel’s belief in the
country and come to invest in
industry, be it in beverages or
mineral processing. By doing
so, investors could potentially
enjoy the success that Castel
has had in the country for
more than 20 years.
“We need to map all
those available resources,
undertake a strong
campaign to attract
investment and invest in
other minerals such as
gold, iron, manganese,
coal and still others such
as phosphate and copper
that the country has in
abundance”
francisco Queiróz,
Minister of Geology and Mines
“It is our concern for the
future of the country and
its youth that underlies
the decision to diversify
the economy and rely
to a lesser extent on the
extractive industries”
General kundi paihama,
Governor of Huambo
ANGOLA
5
A plan to precisely map out mineral resources
In its efforts to diversify beyond gems, under Planageo, Angola is conducting geophysical surveys to improve precision and certainty in locating mineral resources
F
or years Angola’s
mining industry,
which
currently
contributes around
5% to GDP, has focused on the exploration and
extraction of diamonds. The
government aims to attract
investment in the exploitation of other mineral resources in order to diversify an
economy heavily dependent
on oil and diamond exports
and to create more jobs.
“We want to make Angola a
mining country,” says Minister
for Geology and Mines Francisco Queiróz. “We have the
natural set of circumstances
to compete with the oil sector
in terms of collectable revenue, and of actually surpassing the oil sector with regards
to job creation, for which mining has a greater potential.”
Aside from diamonds,
Angola currently produces
cement, granite, gypsum,
marble and salt. The cement
market has enjoyed four
years of double-digit growth
on the back of the country’s
construction boom. In January, the government banned
the import of cement as it
claims that local production was now adequate to
meet national demand. Gypsum production, which was
around 200,000 tons a year
in 2011 (latest figures available), also supports the local
construction industry, as well
as agriculture, since it used to
make cement and fertilizer.
The country has several
other undeveloped mineral
resources. These include
copper, gold, iron ore, lead,
nickel, phosphate rock,
quartz, and silver. In 2011 a
new Mining Code was established to attract foreign investment and boost exploration for diamonds and these
other undeveloped minerals.
There is no doubt that the
country has a rich and vast
Special planes, fitted
out with radiography
equipment that can
gather information
about mineral resources
up to a depth of nearly
1,000 feet, are carrying
out geophysical surveys
“We want to make
Angola a mining country.
We have the natural set of
circumstances to compete
with the oil sector in terms
of collectable revenue,
and of actually surpassing
the oil sector with regards
to job creation, for which
mining has a greater
potential”
Francisco Queiróz,
territory, with attractive mining potential. But what has
held investors back in the
exploitation of these undeveloped mineral resources is
lack of adequate geological
information, which makes
exploration too high-risk.
To address this, the Geological Institute of Angola
(IGEO) established the National Geology Plan (Planageo). Launched in 2013,
Planageo will conduct geo-
physical analysis that will
give a better understanding
of the location and quantities of mineral deposits. The
information collected by
Planageo will be available, in
addition to state agencies, to
potential investors, academics and other interested parties. Aside from encouraging
investment by facilitating
prospecting, the geological
data will be used to manage
the rational and sustainable
exploitation of minerals.
The plan will take five years
to conclude at a cost of $410
million. It is envisioned that
this investment will help to
boost revenues in the mining, encourage private investments and create more jobs.
“This survey will be carried out with the latest technology. It will be a thorough
radiography of the location
of all the geological resources
available to us. This will provide potential investors with
well-founded
information
they can use when it comes
time to decide whether they
would like to invest,” says
Mr. Queiróz, while Diogo do
Carvalho of the Diamonds
Association of African Countries (ADPA) explains that
Planageo will allow investors
“to better apply their financial resources with greater
precision and certainty of an
expected profit.”
Under Planageo, aero-geophysical surveys will be conducted using special planes
fitted out with radiography
equipment that can gather
information about mineral
resources up to a depth of
300 meters. In order to carry
out the surveys, Angola has
been split into three areas.
Planes have been provided by
three private service providers, CITIC (China), Impulso
(Spain) and Costa Negócios
(Brazil), each of whom are
concessionaires and will be
responsible for surveying one
of the three areas.
Planageo will take five
years to conclude at a
cost of $410 million. It
is envisioned that this
investment will help
to boost revenues in
the mining, encourage
private investments, and
create more jobs
The inaugural flight took
off in May 2014 in Luanda
province, which is under the
responsibility of CITIC. In
June, Costa Negocio began
flights in Area 2, which comprises the diamond-producing provinces of Lunda Norte
and Lunda Sul. June also saw
Impulso’s two planes take off
in the southern region. Following the aerial surveys, rock
and soil samples will be taken
from potential deposit sites.
However, geological data
collection is only one part of
this comprehensive plan. Planageo also covers the building of centers for analysis
and the hiring and training
of high-skilled local staff to
perform data collection and
analysis. In Luanda, new geochemistry laboratories and a
new headquarters and central laboratory for the IGEO
are being built, along with
regional IGEO departments
in Huíla and Lunda Sul provinces. These laboratories will
be responsible for evaluating
the data gathered by CITIC,
Impulso and Costa Negocios,
and samples taken from geologists on the ground in order
to form a detailed mineral
map of each region.
Planageo is training hundreds of Angolan nationals to
work in laboratories and on
data collection. According to
Mr. Queiróz, 276 senior staff
will be hired by 2018, 148 of
which under contract with
Planageo service providers.
There are also initiatives to
strengthen the capacity of
the IGEO, with the Japan
International Cooperation
Agency providing training
for personnel of the institute
in a two-year programme in
2012-2013.
Angola’s vast mineral potential is certain, but lack of
extensive geological data has
deterred mining companies
from exploring this unknown
frontier. Once Planageo is
completed in 2017, investors
will be given a clear picture
of Angola’s mineral landscape, which should lead to
an influx of investment that
will put Angola on course to
becoming one of the world’s
mining superpowers.
The Kimberley Process
returns to its roots
The 2003 UN resolution to stop the blood diamond trade, known as the Kimberley
Process, has come full circle, as Angola – the birthplace of the concept – has now
taken chairmanship for 2015
T
he issue of conflict diamonds
was brought to
the attention
of the general
American public back in
2006, with the release of
the Hollywood blockbuster
Blood Diamond. Starring
Leonardo DiCaprio, who
received an Oscar nomination for his performance,
the movie is set during the
Sierra Leone Civil War
1996–2006 and deals with
the issue of diamonds sold
by armed groups to finance
conflicts.
During the 1990s and
height of the civil war, Angola was another hotspot for
the blood diamond trade.
Between 1992 and 1998,
the rebel group UNITA illegally sold more than $3
billion worth of diamonds
to fund its war against the
government. Aside from
Sierra Leone and Angola,
blood diamonds have been
used to finance conflicts in
the Democratic Republic
of Congo, Liberia, and also
Zimbabwe.
The end of the Leonardo
DiCaprio movie depicts
a historic conference that
took place in Kimberley,
South Africa in 2000, when
several diamond-producing
countries, including Angola, came together to discuss measures to stop the
blood diamond trade. This
led to the establishment of
the Kimberley Process Certification System (KPCS) by
the United Nations in 2003.
The main aim of the
KPCS is to certify diamonds as “conflict-free”,
thus to prevent conflict
diamonds from entering the mainstream rough
diamond market and to
ensure that diamond pur-
chases are not financing
violence by rebel groups.
The Kimberly Process
(KP) now has 54 participants representing 81
countries, which together
are responsible for 99% of
world diamond production. Aside from committing to trade in diamonds
that are certified “conflictfree”, participating states
must put in place national
legislation and institutions; export, import and
internal controls; and also
commit to transparency
and the exchange of statistical data.
“Angola sits at the very
birth of the Kimberley
Process and played an
important role working
with the United Nations
to normalize the
certification system for
diamond trade”
Francisco Queiróz,
The concept of combating conflict diamonds that
would give rise to the certificate of the Kimberly
Process began in Angola.
“It sits at the very birth of
the Kimberly Process and
played an important role
working with the United
Nations to normalize the
certification system for
diamond trade,” says Minister of Geology and Mines
Francisco Queiróz.
“We created a system
that was then adopted internationally as the Kimberly Process, but that
originated in Angola. The
country now wishes to have
a larger impact and play
a more active role. It is in
our best interest to position
ourselves actively within
those processes and not be
mere observers.”
Angola now has a unique
opportunity to make a larger impact. In January the
country assumed the presidency of KP. During its
one-year term as president,
its agenda will focus on issues related to the international sale of diamonds,
as well as to use its own
experience to support diamond-producing counties
affected by conflict in order
to bring them to the certification process. As chair,
Angola has also pledged
to strengthen the unity of
the three pillars of the KP:
governments, industry, and
civil society.
“The presidency will enable Angola to contribute
towards a continuation of
diamonds as a force for
peace and development.
As vice-president (in 2014)
we had the responsibility,
given our vast conflict resolution experience, to positively influence the way
the institution operates,”
says former general manager of the Catoca Mining
Company Dr. José Ganga
Junior, who was recently
replaced by Russian Sergei
Mitiukhin in March.
Speaking on Angola’s
presidency, Avi Paz, President of the World Diamond Council, said, “It is
a proud moment for the
Kimberly Process that a
country which, once afflicted by civil conflict, has
now regained political and
economic stability and, as a
consequence, is able to assume a position of leadership in the very institution
that helped set it on its way
to recovery.”
RESPONSIBLE MINING
The Sociedade Mineira do Cuango – a crucial diamond producer in Angola – is a partnership
between the mining companies ITM, ENDIAMA and LUMANHE, in which ITM holds 38% equity
capital, ENDIAMA 41% and LUMANHE 21%. As a key actor in the Kimberley Process, the
Sociedade Mineira do Cuango cares a lot for its corporate social responsibility. Investing in areas
such as local education and infrastructure development, the organization looks to empower the
communities of the Cuango River region and better the lives of the people who live there.
SOCIEDADE MINEIRA DO CUANGO LDA
SOCIEDADE MINEIRA DO CUANGO LDA
6
ANGOLA
‘We want to make Angola
a mining country’
Our contribution to the
general state budget, although not as significant as
the oil sector’s, is extremely
important if we take into
consideration that our activity is mostly focused on
eastern Angola. We want to
believe that, with the IGEO
plan (Planageo) and with the
ongoing efforts by the Ministry of Geology and Mines,
other projects will be implemented so that the contribution of the diamond industry
and the mining industry itself
will be greater.
H
ere in this
roundtable
discussion on
the mining industry, United
World brings together the
opinions of Artur Gonçalves
of the Sociedade Mineira do
Cuango, Antonio Carlos Sumbula of Endiama, the former
head of the Chitotolo Mining
Company Dr. Wola N’toni-aMambu, Minister of Geology
and Mines Francisco Queiróz,
Diogo do Carvalho of the Diamonds Association African
Countries (ADPA), Carlos
Silva Aguincha of explosives
company Maxam CPEA, and
former general manager of the
Catoca Mining Company Dr.
José Ganga Junior.
How do you assess the contribution of the diamond
sector to the development
of Angola’s economy?
Francisco Queiróz: The
diamond sector will for some
time continue to be the core
of Angola’s mining industry. Five to 10 years could be
enough time to set the country on course to being a mining player at a global level. For
now, revenue from the sector
comes only from diamonds,
“It’s always better,
economically speaking,
to count on local labor.
To this end, Catoca has
created an academy
to bring out the full
professional potential of
the local human capital,
thereby also facilitating
future recruitment.”
Dr. José Ganga Junior,
Former General Director of Catoca
Mining Company
which is not enough, as we are
just at 5% of GDP, and therefore we need to aggressively
increase the sector’s contribution to the general state
budget. We want to make
Angola a mining country, one
that goes beyond just oil.
Artur Gonçalves: The diamond subsector plays a very
important and strategic role
in the development of Angola, because we are extremely
important for what amounts
to the development of the
country. We contribute by
providing jobs in communities where there are few other
industries capable of generating formal employment opportunities.
Dr. José Ganga Junior:
Diamond production is
nothing new in Angola – it’s
been going on for 100 years,
with Diamang being the
first company to explore alluvial diamonds.
Catoca is one of the main
players in the diamond subsector today. In 1997 it first
experimented with the exploration of kimberlite, and
did very well. Although its
prices are relatively low, production volume is significant,
thereby allowing for a certain
degree of stability in production. Catoca today represents
around 80% of Angolan total diamond production in
terms of quantity or carats,
and about 50% in terms of
value and employment.
Dr. Wola N’toni-a-Mambu:
Regarding diamonds, the extraction process is relatively
simple and the returns are
high and fast. In my view,
those two factors explain the
historical growth and prioritization of the industry. Diamonds represent the secondgreatest source of revenue for
the state, obviously trailing
behind the oil industry. This
will not always be the case,
because as other mineral re-
sources are mined, there are
some that will surely become
more important.
As we continue to work,
we gain more knowledge. In
Angola, we have experienced
technical personnel who
know all there is to know
about diamonds. But let me
tell you that the diamond
market is complex, and increasing production is not
what it is all about. Nor is it
always the ideal solution. We
have to strike a balance between demand and supply.
What are the prospects
for developing other mineral resources?
Carlos Silva Aguincha:
Angola has other mineral
resources beyond oil and
diamonds, such as copper,
iron, uranium phosphate,
and many others. At the moment, we have the conditions to meet the demands
of the market, but the truth
is that if there is a boom in
the mining of other mineral
resources, we will have to
quickly reinforce our capacities. Obviously, it will all depend on private investments,
especially from abroad, and
on lifting the current restrictions to oil and diamond
extraction at a time when
the country has plenty more
mineral resources to explore.
But as I said, this requires
a lot more money and a lot
more technology that Angola
does not yet have – and that
is why it must collaborate
with foreign companies.
Dr. José Ganga Junior: Angola has enormous potential
in geological mining and is
a country that is mainly still
untouched with pockets of
all sorts of minerals. As such,
it represents a sizable op-
portunity for investors. I do
not see any likelihood that
a company investing here
in prospecting should leave
empty-handed,
because
there will always be some
minerals to extract. I therefore urge investors to come,
because Angola is certainly a
land of opportunity.
Francisco Queiróz: We are
pursuing mining diversification, so long as the expansion
of exploration does not have
negative consequences for the
environment and future generations do not directly have
to pay the price of our potential irresponsibility. In fact, we
are creating a new directorate
at the Ministry of Geology
and Mines to work directly
with the Ministry of the Environment, to address environmental protection in the area
of mining exploration.
How can Angola add value to mining, particularly
in relation to processing
diamonds?
Antonio Carlos Sumbula:
We are fully aware that selling uncut diamonds is quite
lucrative. But if we sold cut
diamonds this would be
much more lucrative. And
if we sold them designed
as jewelry it would be even
more lucrative. We have
never worked with jewelry
and we need to develop a
plan for the medium to long
term, which implies that if
we wish for more lucrative
options, Endiama will have
to establish partnerships
with companies that have already worked in this area for
a long time.
Dr. José Ganga Junior:
Within the scope of expanding the diamond value chain,
certainly adding value would
be positive. But we prefer to
take things slowly, to consolidate what we have achieved
and then expand out into
other areas.
Within that value chain
we are more concerned with
perfecting our sales system,
A SHINING EXAMPLE
Sociedade Mineira de Catoca Lda is the largest company in the diamond
sub-sector in Angola and the operator of the country’s largest diamond mine
(the fourth largest in the world). Responsible for the extraction of more than
75% of Angolan diamonds, Catoca aims to be one of the top three companies
in the world for diamond production using innovative technology and
techniques, not only to produce diamonds that are internationally distinguished
by high value and quality, but ensuring environmental responsibility and
sustainable development based on safe, ethical values and practices.
www.catoca.com
ANGOLA
7
primary to vocational to higher education, and promoting
entrepreneurship at the heart
of communities.
Catoca’s intention is to always employ best practices
in the domains of social responsibility, safety and environmental responsibility. It
is important to mention that
the nature of the business entails direct and indirect risks.
The safety aspect should be
present every day. On the
other hand, mining activity
can be quite aggressive. Catoca adheres to a strong philosophy of sustainability. The
company is mindful of risks
that it causes, and this is why
it works on prevention to
mitigate risks across all areas.
What would be your final
words on Angola itself as a
country?
since that is where we still
have deficiencies – selling more and selling better,
through our actions in the
external market and being
closer to the consumer.
We have been considering
diamond cutting, but this is
already a very narrow and
specific business, and naturally our recommendation
is to take one step at a time.
Preferable, we should first
specialize with a company
from that business segment
so that we can do it right.
Just as diamond cutting may
emerge, so too could other
additional activities.
Artur Gonçalves: With regard to cutting and polishing,
those are projects that, in due
time, may be given further
thought. What I mean is
that each step and each stage
must be completed, because
I do not believe that they can
be all done at the same time.
My understanding is that
we are still at a stage of production and consolidation,
of studying our reserves and
production capacities. In due
time, I think the government
authorities will address the
issue of adding value that
would go beyond the sale of
uncut diamonds.
It is possible that we have the
capacity to do it. The question
is: what do we have to gain
from it? That has to be taken
into account. We must study
if this is of interest for our
market, specifically for the
consumers, and what can be
gained from it. At the moment
I would not suggest setting up
a cutting and polishing factory without first conducting
a study to learn more about
who will buy the product.
Can we speak about local
human capacity and how
the mining industry is
working to develop it?
mining. How is this industry being supported today
and can it coexist with industrial-scale mining?
Carlos Silva Aguincha: At
Maxam, our staff is 100%
Angolan. Our policy is to
transform and train Angolan
workers. I can even add that
the salaries we pay our employees are among the highest in the local market. In addition, we provide them with
education, incentives and
continued training.
Artur Gonçalves: As a
principle, we support artisanal production because it
represents a way of creating
income on a small scale for
certain tiers of the population that live in specific areas. So far, we see that it is,
in fact, possible for the two
to coexist. The areas are
clearly defined and the type
of equipment used by artisanal extraction is quite different from the one we use.
We can even say that we have
a peaceful coexistence.
Dr. José Ganga Junior: Catoca has always had a professional training center and the
company pays close attention
to training because it is of the
opinion that people with the
right qualifications, specifically for Catoca’s needs, are
becoming increasingly hard
to find. In Angola, regarding
the mines and their locations,
we have to make tremendous
efforts to find such a highly
skilled workforce.
It’s always better, economically speaking, to count on
local labor. To this end, Catoca has created an academy to
bring out the full professional
potential of the local human
capital, thereby also facilitating future recruitment.
We placed great emphasis on the training center
because for a long time, the
state was the source of employment. That is what inspired us to prioritize training the people who work in
Catoca today. Around 70%
of the company’s employees
have participated in internal
training and, over time, Catoca will continue to improve
its training scheme.
Angola has a long history
of informal and artisanal
Diogo do Carvalho: With
regard to artisanal diamond exploration, we give
permission to the local inhabitants to explore their
land, and not to newcomers
who have no history in that
area. Today we have a large
number of permits granted
for artisanal exploration,
and this goes beyond our
10% quota established by
the government. Angolans
must benefit from their own
resources; this is a fact.
How important is corporate social responsibility?
What are you doing to give
back to the communities
where you work?
Artur Gonçalves: Sociedad
Mineira do Cuango is focused on satisfying the basic
needs of local communities
through the development of
social projects. We contribute by building roads, equipping or supporting hospitals,
and providing electricity,
running water, ambulances
and school lunches.
Although my message will
be published in an American newspaper, I would not
narrow that message only to
Americans. I would address
my message to the entire
world, since today’s world
is truly global. Our arms are
open wide and this is a good
country to live in. We are an
extremely welcoming, pleasant and understanding people. We have no problems related to tribalism, ethnicities
and religions, as happens in
many African countries.
We are also committed to
the rehabilitation of roads
that are outside the government program, including
earthmoving works, repairing potholes, etc. But, fundamentally, the cornerstones of
our community outreach are
education and health.
We have clinics that were
built to help the workers and
their families, as well as some
members of the community.
In terms of infrastructure,
we complement the action
of the Angolan state, providing our support where we
can. We never act in place
of the state, but always in
cooperation with local and
provincial authorities.
The Chitotolo Mining Company contributes to improving
the living conditions for the
people around the mine. Generosity is part of the intrinsic
nature of the Angolan people,
and it is no different here.
As a locally based company, it sees that the needs
of the population are many,
but cannot always satisfy
them the way it would like
to. So Chitotolo systematically contributes wherever
possible, in the construction
“Diamonds represent the
second-greatest source
of revenue for the state,
obviously trailing behind
the oil industry. This will
not always be the case,
because as other mineral
resources are mined, there
are some that will surely
become more important”
Dr. Wola N’toni-a-Mambu,
Former Chairman of the Board,
Chitotolo Mining Company
of schools, hospitals, etc.
The company also contributes by ensuring healthcare
for its employees and their
families, which tend to be
very large.
Dr. José Ganga Junior: We
do not feel completely contented yet because in Angola
the needs of the people are
still great and poverty levels
are still too high. The Catoca
Mining Company is focusing
its energy on reducing the
impact of such deficiencies by
setting up means for people to
have dignified employment
and be able to self-sufficiently
acquire their own wealth. The
company has been working in
education on all levels, from
Artur Gonçalves: There
is this idea that Angola is a
world of corruption. The
first thing I would like to say
is that Angolans are capable
of being honest and of having money at the same time.
The second thing would be
what is best about us: kindness, humility and the way
we welcome those who visit
us. Lastly, I would take our
culture as a whole, because it
is unique and very beautiful.
We are the most Westernized of all Africans; we are
very similar to the Europeans, yet we never forget our
roots. We have a great cultural
strength, and that can be seen
in the way we have been capable of bringing our music and
our dance to the world.
Dr. José Ganga Junior: I
would inform Americans –
and indeed the world – that
in our opinion Angola possesses the necessary conditions for secure investment,
given its political, social and
legal environment, which ensures that investors can enjoy
their earnings and repatriate
their dividends.
As the main diamond consumer in the world, the United States should be interested
in joining us and contributing
to the development of the entire value chain of natural resources, that is: prospecting,
exploration, production, and
all the way through to retail.
8
ANGOLA
Oil price slide adds fuel
to the diversification fire
Despite the challenges it faces, the republic has weathered the oil price storm and has big plans for its vital energy
sector that include raising output, tapping LNG and more than doubling electricity production by 2017
“We feel Egypt
is ready for a big
campaign; we are
ready to welcome
tourists with open
arms, like we have
been doing for
thousand of years”
Hisham Zaazou,
Minister of Tourism
S
ince oil was initially
discovered in Angola, the industry
has grown notably,
and almost all production comes from offshore
fields off the coast of Cabinda
and from deepwater fields in
the Lower Congo basin. Onshore production remains
limited at the moment.
According to January 2015
estimates from the Oil & Gas
Journal, the country is home
to 9 billion barrels of proved
crude oil reserves. Angola
also produces natural gas,
and is working on developing
the infrastructure required to
boost this segment.
Although oil production
boomed from 2002 to 2008,
with Angola’s GDP expanding by on average 15% per
year, according to the World
Bank, the country suffered
when the effects of the global
crisis hit in 2009.
Oil is the primary component of the nation’s economy,
accounting for almost half of
GDP, 80% of tax revenues,
and 90% of export earnings,
according to The African
Report. Therefore, it comes
as no surprise that falling oil
prices, together with a slowdown in production, have had
a notably negative impact. Oil
prices have essentially halved
in the past six months, and
“income has already been
impacted by the drop in oil
prices, [with the result that]
we need to create measures to
mitigate the impact of falling
oil revenue on public spending”, said Angola’s President
José Eduardo dos Santos in a
state-of-the-nation speech in
October 2014.
Although the economy expanded in 2014, growth did
not offset slides in oil revenue.
Tumbling oil prices will have
widespread effects on the
country, and has already led
to budget cuts of 1.8 trillion
kwanzas ($16.5 billion).
This scenario will indubitably have an impact on Angola’s ability to fully grow its
GDP. Other effects include a
rise in inflation, a weaker currently, a budget deficit, and a
possible current account deficit. This will, of course, affect
the government’s efforts to
diversify the economy, and
public spending will have to
continue to be cut. A large
number of programs are
expected to be postponed,
and future projects will most
likely be cancelled, such as
those to build roads, provide
access to drinking water, and
increase electricity coverage.
Investments in education,
including teacher training
and classroom construction,
have already been scaled
back. The Finance Ministry
had originally projected 9%
growth for 2015, but that was
before they were forced to
slash the budget.
Angela Bragança, the Secretary of State for Cooperation of the Angolan Ministry
of Foreign Affairs, says these
measures aim “to preserve currency and price stability and
economic and social growth.”
According to analysts at NCK
Research, while the budget revision “is certainly positive and
will allow authorities to contain the impact of the oil price
shock to an extent, the budget
deficit [is expected to] be significantly wider than what authorities predict.”
In the past, lower oil prices
in 2008 posed a problem for
Angola in the form of delayed
payments to construction
firms. However, in recent years
the country has had better relations with the World Bank
and the IMF, and its banking
system is more sophisticated.
Moreover, in spite of the situation, “Angola is in a better
position to finance itself in the
external markets,” says AECOPS, a Portuguese construction
lobby group.
As for future oil prices, that
is the biggest guessing game.
They could plunge or they
could soar; the truth is that
predicting something so vola-
force in Angola’s economy
in the near future. However,
the country has successfully
reduced its dependence on
that resource and other sectors have emerged which are
now contributing more to
the economy, thanks to proactive policies by the government. Revenues from oil as a
percentage of the total have
declined, and its share of
GDP has also been reduced.
Oil and diamonds account
for a very high percentage
of exports, around 98%, but
there are notable efforts to
increase the contribution
from other minerals.
Meanwhile, Angola’s oil
sector continues to evolve.
Although it has, to date, been
dominated by international
players, small local companies
are finally getting in on the action. According to Mr. Botelho
de Vasconcelos, tenders are
being organized for onshore
concessions, with a view to
increasing the participation
tile is nearly impossible. But
analysts try anyway, and most
mainstream forecasters expect prices to “remain more
or less where they are, which is
around $52 per barrel,” according to Yahoo! Finance.
One of Angola’s objectives
for combating this situation is
economic diversification. “Our
economy should not be permanently held hostage to oil sector
revenues, and so we must take
advantage of other resources to
re-launch our economy,” says
Petroleum Minister José María
Botelho de Vasconcelos.
He adds that other sectors,
such as agriculture and energy, are starting to increase
their contributions to the
economy, with the result that
there is redistribution in the
production of wealth. “This
is contributing to the diversification and socio-economic
development of Angola,” the
minister says, with improvements becoming visible. The
benefits of oil need to extend
throughout the social strata
of Angolan society, with a
view to further reducing poverty. This is a priority, and the
UN has already made positive
assessments in this area in
Angola. The country has also
made strides in increasing life
expectancy and in reducing
infant mortality and malariarelated deaths.
Despite this long-term objective, petroleum is likely
to be the dominant driving
“Our economy should
not be permanently held
hostage to oil sector
revenues, and so we
must take advantage of
other resources to relaunch our economy”
José María Botelho de
Vasconcelos,
Minister of Petroleum
of local firms and fostering
the creation of partnerships
with companies abroad – the
goal being to provide support
in terms of financial resources
and also expertise. Additionally, given the industry’s complexity, there have primarily been three or four national
companies operating as services providers; however, local
companies are also stepping
up to participate in this area.
The U.S. continues to be a
very important strategic partner for Angola, and the two
nations have a history of cooperating in this area. Exxon,
Halliburton and Chevron,
among others, have successfully worked with Angola in
mutually beneficial partnerships, and Angola has a reputation for having coordinated
and participated in initiatives
promoted by both countries.
Compared with other African countries, Angola is one
of the most competitive in
oil and gas, mainly due to the
“mechanisms used in contrac-
tual relations, which attract
investments to the country,”
says the petroleum minister.
The country takes great pride
in rigorous relations with partners, which it believes sets it
apart from other nations on
the continent.
There have also been efforts to develop human capital
within Angola’s oil industry,
with the National Eastern Petroleum Institute in Sumbe,
among other higher education
institutions. A small portion of
revenues from each barrel of
oil goes toward training for future oil sector workers and to
fund scholarships. A major focus is also to funnel proceeds
to the rest of the population.
Domingos Francisco, Director of the National Petroleum
Institute (INP), states the best
way to use the proceeds from
oil is to invest in health and
education programs for Angolans, which is another government priority.
Angola also has strict oil
and gas sector requirements
vis-à-vis international oil companies that seek to increase
the number of Angolans hired
and in management positions,
known as its Angolanization
policy. A threshold in this
regard has been created. Additionally, those companies
must contribute to training
programs in Angola and use
local banks for their business.
Despite the challenges it
faces, Angola has big plans going forward, setting a target of
pumping 2 million barrels per
day in 2015, up from 1.87 million, and aiming to more than
double electricity production
to 5,000MW by 2017, as new
hydroelectric dams are built.
The country’s $10 billion
Angola LNG project aims to
process, sell and deliver 5.2 million tons of liquefied natural
gas per year from one of the
most modern facilities in the
world, a plant in Soyo, some
215 miles north of Luanda. It
includes seven LNG vessels
and three loading jetties, and
the project has several shareholders, among them Chevron,
BP, Eni, Total and Sonagol. This
venture uses solutions that reduce emissions and its mission
“is to eliminate flaring of gas,
provide clean and reliable energy to customers, and maximize the return on investment”,
according to Angola LNG.
The plant has been temporarily closed to resolve a
series of pending issues, but
is expected to be operational
again in 2015. There are also
many crude oil projects slated
to begin in 2015, 2016 and
2017, among them Mafumeira Sul, the East Hub Project,
Greater Plutonio Phase III,
and Kaombo.
Angola may be able weather
the storm and ride out volatility in oil prices, but it is imperative that the focus be placed
on diversifying the economy,
as overdependence leaves it
very vulnerable. The government must find new engines of
growth to ensure a more stable
situation for the economy, the
people and the future.
ANGOLA
9
Goal: 2 million barrels per day
By reaching output of
2 million barrels of oil
per day by 2017, Angola
will overtake Nigeria
as the number one oil
producer in Africa
Sonangol is the stateowned corporation responsible for overseeing
oil and gas exploration and
production within Angola,
including offshore. The
nation’s hydrocarbons reserves represent its major
natural resource, with revenues from oil and gas sales
being key to national development. From Sonangol’s
revenues, 86% goes to the
national treasury to fund
the government’s revenue
and capital spending. Sonangol thus plays a critical
role in Angola as an agent
of economic and social
change and in transforming resources into national
well-being.
Since the early 1990s,
Angola has focused increasingly on deepwater wells,
which now provide the bulk
of the country’s production.
Output more than doubled
between 2003 and 2008
with the coming on-stream
of several new deepwater
wells, but has stagnated
since then because of persistent technical problems.
Programs to resolve these
challenges, in such areas
as water injection systems,
gas cooling and floating,
production, storage, and
offloading units, are in progress with the international
companies who operate the
concessions. In addition,
the U.S. Energy Information
Administration lists 10 new
projects scheduled to start
production within the next
four years.
Sonangol’s ambition is
to boost production from
the average of 1.73 million
barrels per day achieved
in 2013 to 2 million bpd in
2017. Besides Sonangol EP
itself, the group’s own exploration and production
unit, international companies that have announced
major new investments to
increase output include BP
from Britain, Total from
France, and Chevron from
the U.S. Bidding in respect
of up to 15 new exploration blocks is also due to
take place this year. Longerterm, tremendous potential
exists to harness or sell Angola’s natural gas reserves,
Client-centric focus
Excellence in performance
Teamwork
Quality, health, safety and environment
Ethical conduct
Effective communication
at present mostly vented,
flared or re-injected since
the country lacks the infrastructure to commercialize
the gas.
Achieving this target of
2 million barrels per day
would enable Angola to
leapfrog Nigeria and become Africa’s top producer,
a fittingly ambitious goal
for an ambitious nation.
However, for Sonangol, it
represents rather more, it is
a target with a purpose, one
of broadening further the
contribution the company
can then make to fulfilling
national goals and to generating economic and social
development opportunities
for the country’s citizens.
Growth with a purpose is
the clear aim.
“Transforming
national
resources into
social progress
and opportunity
by raising
production
and enhanced
efficiency, along
with far-reaching
CSR initiatives,
form the core
of operations
at Angola’s
national oil
guardian,
Sonangol”
Sonangol’s ‘no-spills’ policy
Sonangol has never suffered a major oil spill accident
Sonangol is proud of never having suffered a major oil spill accident. The
company’s policy is to
integrate QHSE (Quality, Health, Safety, Environment) thinking into
every aspect of its operations. For Sonangol, QHSE
programs are not seen as
burdensome and costly
obligations, but instead as
opportunities to involve all
staff in taking ownership of
aspects of their work that
protect them and their colleagues and the environment around them. Daniela
Matos, Director of Sonangol’s QHSE Department,
goes even further, adding,
“QHSE should translate instinctively into productivity, quality and benefits to
the environment”.
For Ms. Matos, the aim of
Sonangol’s QHSE program
is that “all company personnel will have greater knowledge and a better perception of how to best perform
their roles”. The approach is
clearly one of QHSE thinking adding value, not only
through the prevention of
accidents but also through
the development of safer
and better operating procedures. Meticulous analysis and understanding of
work methods are followed
by intensive training to inculcate safety awareness.
They also provide metrics
to continuously judge performance, individually and
collectively, twith the aim of
achieving best practice by a
process of continuous monitoring and improvement.
Ms. Matos amplifies Sonangol’s holistic QHSE philosophy. She says, “Quality, safety and environment
have the same origin. The
same causes which lead to
problems in quality also
lead to problems in safety
and environment. As such,
creating a culture of QHSE
in the organization is important because doing so
also allows you to solve
problems at their origin.”
It is a mature corporate
management
approach
recognizing the risk of human error and emphasizing prevention. Sonangol is
determined to maintain its
proud no-spills record way
into the future.
Attention to detail benefits productivity, quality, health, and the environment
Comprehensive program
to resolve Angola’s housing
crisis takes shape
Government acts vigorously to transform housing availability and accessibility
Angola’s rapid growth since
the turn of the century has
inevitably put tremendous
pressure on both the availability of housing and its
cost. Nowhere is this more
evident than in the capital, Luanda, where rents
rival those in Paris, New
York and Tokyo. Add to
that issues of land tenure
in a country coming out
of a long civil war and an
inadequate housing credit
system and it becomes
clear why resolving the
housing crisis is one of the
government’s major priorities. Angola’s burgeoning
middle class is ever more
eager to get on to the housing ladder as they aspire to
a lifestyle in line with their
ambitions and aspirations.
Therefore, since 2008 the
government has been promoting a comprehensive
program to both increase
the stock of housing and
improve its accessibility to
ordinary citizens. This program covers all corners of
the market, including public
and private housing developments, cooperatives, and
self-builds, the latter being
the biggest sector. Public
funding has been injected
into housing projects across
the whole country, including several developments
around Luanda which will
become the nuclei for new
towns and thus go some way
toward providing a longterm solution to the overcrowding and congestion in
the capital.
Among these is Kilamba, around 12 miles from
Luanda and described by
President José Eduardo dos
Santos as “the largest housing development ever undertaken in Angola and an
outstanding example of social policy carried out in the
country to solve the housing
deficit.” The government’s
program has radically overhauled the country’s land
legislation process and made
mortgages more accessible.
Income tax relief is also
available for people building
homes. The housing crisis is
a consequence of Angola’s
economic success and the
government’s program aims
to respond to the challenge.
Education comes
first: natural
resources powering
human potential
Sonangol invests in education and in the
growth of knowledge assets to empower
Angola’s ambitious youth
Sonangol is an oil company with a difference.
Entrusted with overseeing the development of
Angola’s major natural
resource, the company
consistently
demonstrates its commitment to
effectively employing the
revenues from its oil and
gas activities to enhance
the knowledge and skills
of the country’s citizens.
This link between the use
of natural resources and
the enhancement of the
well-being of Angolans
guides the company’s
corporate social responsibility (CSR) policy and
is very clearly evident in
the areas of education,
arts and culture. Sonangol, like many companies,
finances educational programs for staff members,
however the scope of the
company’s commitment
far exceeds what would
be needed simply to fulfill its own operational
requirements.
The company supports
education at all levels of
Angolan society, from
building schools and kindergartens in the most remote parts of the country
to providing hundreds of
grants for study overseas
each year. For Sonangol,
however, education goes
beyond simply training
for work, with the company’s website proudly
stating: “We believe in
the power of ideas”. Thus,
the group also invests
in the creativity of artists, supports numerous
cultural projects as well
as the Paz Flor Cultural
Center, and sponsors the
prestigious Sonangol Literature Award. Neither is
the scope of this commitment limited to Angola itself, with Sonangol having
also sponsored schools in
other less well-endowed
African countries, such as
São Tome e Principe.
One outstanding example of the group’s commitment to building the
nation’s knowledge assets
base is the $80 million
investment in the Angola
Maritime Training Center (AMTC), opened in
February 2014 and operated in collaboration with
the City of Glasgow College in Scotland. Providing a world-class training
facility not only for Angolans but also the maritime industry in the wider region, the center will
provide complete training for maritime ratings,
as well as the first year
of training for deep-sea
deck and engineer officer
cadets. The second academic year for the officer
cadets will continue to
be provided by the College in Glasgow while the
ATMC develops its own
capability in this area.
The initial intake was
of 14 students, eight being deck cadets and six
engineer cadets. Cadet
numbers are expected
to double this year with
the center eventually offering courses for 192
students. All the courses
boast international accreditation and approval
from the UK Coast and
Maritime Agency or the
South African Maritime
Safety Authority. Four
of the initial intake of
students are female, perhaps destined in time to
join the 20 women, one
officer and 19 cadets already working on Sonangol vessels, such as Arlete
Jandira Ginga Fastudo, a
marine engineer who
emphasizes the determination and ambition of
Angolan women and the
opportunities open to
them within Sonangol.
The investment in
AMTC is only part of
Sonangol’s commitment
to higher education. Last
year, more than 500 students received grants for
study overseas, principally (but not only) in the
areas of geo-sciences, engineering and technology.
Sonangol takes its commitments to the nation
and its people seriously,
seeking to ensure that the
benefits of necessarily finite natural resources are
carried through to future
generations. What better
way to achieve this than
through education.
Sonangol’s 2015 target of being an integrated and
competitive oil company with international projection is
to be met through a high level of performance using the
best practices of corporate governance. It has recently
reaffirmed its commitment to promote sustainability and
growth of the national petroleum sector, increase revenues for the state, and develop the industry’s indigenous
human resources.
More intense exploration and production
of crude oil and natural gas in 2015
Gradual increase in crude oil production
Development of resources
Increase in domestic LNG use
A liberal fuel market and competition
Promote investment, protect employment
and stimulate productivity
The expanding middle class is increasingly eager to get on the housing ladder
10
ANGOLA
Agro-processing to give rise to a new,
more competitive agriculture sector
Sodepac is helping to transform agriculture in Angola as it strives to create a sector that is more productive, environmentally sustainable, socially inclusive and competitive
“We have a social
development plan that
covers three main areas:
the issue linked to the
income of the population
through agricultural
production, treatment of
health issues and living
conditions, and finally
the aspect related to
citizenship – the
organization of
communities and the
creation of cooperatives
and associations”
Carlos Fernandes,
Chairman of the Board of
Directors of Sodepac
B
efore the civil war,
Angola’s agriculture sector flourished. Fully selfsufficient for food,
Angola was also the world’s
third-largest producer of coffee and sisal. When the war
ended in 2002, things looked
radically different. Not only
did Angola’s agriculture sector
lie in ruins, but Angola was
now heavily reliant on both
costly international food imports and on revenues from
its main export – oil.
The return of peace and
political stability has since
provided the ideal circumstances to change this situation. Recognizing the need to
end oil dependency, reduce
food imports and diversify the
economy, the government has
focused on transforming the
country’s agriculture sector.
With ambitions of full food
self-sufficiency and a revived
agricultural export industry,
the country has embraced a
brave new rural development
model. Sustainable, economically viable, socially inclusive
and environmentally sound,
it aims to release the largely
untapped potential of the agricultural sector in Angola,
helped greatly through the
work and stewardship of the
Sodepac Company.
Sodepac (the Society for
the Development of Capanda Agro-Industrial Unit) is
charged with the important
task of organizing, managing
and developing the Capanda Agro-Industrial Growth
Point (PAC) Zone in northern
Malanje. The 411,000-hectare
facility produces corn, soya
beans, cassava, cotton and
dairy, and includes the farms
of Pedras Negras, Biocom,
Pungo Andongo, and the
Food Company of Malanje.
A publicly funded limited
company, Sodepac’s work
is a key part of the Angolan
National Development Plan
for 2013-2017 and is crucial
to the realization of the rural development model that
promises to transform agriculture sector and make the
republic more competitive
and self-sufficient.
Earlier this year, Carlos
Fernandes, Chairman of
the Board of Directors, announced plans to convert 186
villages into 12 agro-towns as
part of the company’s social
betterment program in rural
areas. The aim is to combine
the villages and create better
housing, sanitation, cultivation and drinking water conditions for the population.
Six foundational principles
underpin Sodepac’s mission,
which include the establishment of supply chains of
production and leadership
by anchor companies. As Mr.
Fernandes notes: “More than
70% of current production in
the country is in the hands of
family farms.” Presently, these
family farms or small to medium-sized enterprises (SMEs)
are not successfully integrated
into the agricultural supply
chain. To remedy this, largescale, publicly funded, longterm investment is needed.
Anchor companies can
perform this role. “The country needed to start large
companies with public capital, as you can see in Cuando
Cubango province and in
Pungo Andongo located in
the Pedras Negras area,” Mr.
Fernandes says. “The intention is for these companies
to manage and complete the
production chain.”
The use of advanced technology and increased competitiveness are intrinsic
to Sodepac’s work and are,
Mr. Fernandes notes, interconnected. “The key to competiveness is precisely the
technologies used,” he says.
“Without these technologies adapted to the tropical
climate, the cost structure of
firms may be very high and
the final price will not be in
any way competitive with the
international market.”
Preservation of the environment as well as social development and inclusion complete
the list of the company’s foundational principles. As Mr.
Fernandes explains, “We have
a social development plan that
covers three main areas: the
issue linked to the income of
the population through agricultural production, treatment
of health issues and living conditions, and finally the aspect
related to citizenship – the
organization of communities
and the creation of cooperatives and associations.”
Sodepac is already starting
to deliver results. Productivity
at Biocom, one of the farms
located in Cacuso, has so far
proved successful. Run by
the Angola Bio-energy Company – a partnership between
Odebrecht, the Angolan company Damer Industria, and
the state-run petroleum company Sonangol Holding – it
covers over 162 square miles.
Focused on the production
of sugar and ethanol, Biocom has so far produced over
18,000 tons of sugar and over
3,000 cubic meters of ethanol.
This success can be attributed to the completion of supply
chains through anchor companies, according to Mr. Fernandes. “Biocom for example,
in Capanda, is coordinating
the sugar production chain,”
he says. “Biocom is building
capacities to assist small businesses and country workers.
It is providing technical asThe ‘Kukula Ku Moxi’
family farming program
has improved living
standards for more than
2,500 farmers
sistance, ensuring the market,
transforming the product, and
putting it in the market.”
The Pedras Negras farm
has successfully demonstrated how new technologies can
be developed in agricultural
production by showing the
technological potential for
producing, harvesting, drying
and storing maize and soya.
The 24,700-acre farm currently has a stock capacity of
10,000 tons of grain.
Another success story for
Sodepac has been social development and inclusion.
The family farming program
‘Kukula Ku Moxi’ at Pedras
Negras was launched in 2010
and has since delivered a
number of positive impacts
for Pungo Andongo’s rural
communities. As a result of
this program, a substantial
rise in family income for local
families has led to living standards improving for at least
2,500 country farmers. In
addition, more than 11,000
people gained access to
drinking water and another
3,500 people benefited from
improved diets. There was
also a drop in infant mortality
from 118 to 33 deaths a year.
Results are therefore very
promising. As Sodepac continues to transform Angolan
agriculture, the investment
opportunities opening up
are not only huge but also
very welcome.
“Angola is a stable country
both politically and socially,”
Mr. Fernandes states. “We
have favorable legal instruments for private investment,
particularly foreign. My message is that investors should
come and focus their attention on Angola and particularly its agri-business.”
ANGOLA
11
Wireless penetration rate of 65% means
huge growth potential for ICT
By extending and upgrading telecom networks, the government expects businesses to become more efficient and for e-commerce to become a more prominent feature of economic growth
A
ngola is banking
on the ICT sector
becoming one of
its new chief engines of growth.
Aside from increased sales of
smart phones, digital TV and
broadband, it is anticipated
that modern ICT services will
improve the efficiency of companies and organizations across
the entire economy, create a
thriving e-commerce industry,
and significantly improve access to health and education.
There has been substantial
public and private investment
in telecommunications infrastructure in recent years, and
Angola, like in many other
parts of Africa, has witnessed
tremendous growth in the
telecoms segment. Angola’s
wireless market is one of the
fastest growing in the world.
The number of cell phone users has doubled in five years to
14 million, translating to a penetration rate of 65%. Internet
penetration is much lower at
20%, leaving significant room
for expansion.
The mobile market consists of two players: Unitel and
Movicel. Unitel is the dominant
player with a 70% market share
and around 10 million customers. The company has been one
of the main investors in the expansion of the country’s fiberoptic cable network.
“We are continuing to expand both our coverage and
our technology, which includes
building a national fiber network across the country. Nine
thousand kilometers (5,600
miles) of fiber have been deployed not only with the intention of supporting our own
networks, but also to provide
support to the national infrastructure and improve broad-
band communications across
Angola,” explains Unitel CEO,
Tony Dolton.
“We are also deploying metropolitan fiber networks in the
capitals of the major provinces
that are going to provide high
quality and high-speed broadband and Internet connectivity to areas that are currently
starved from this sort of technology, or rely on slower, more
expensive technologies for
these services.”
Unitel has helped to put
Angola at the forefront of telecoms in Africa by establishing
its 4G LTE-A services. While
the service is quite limited at
the moment, Mr. Dolton expects speeds will eventually
reach 60-70MB thanks to this
new technology.
“At the moment there are
limited affordable LTE-A devices in the market so we are not
planning a full network roll-out
of LTE-A until that situation
improves,” he says. “Our focus
today is to expand our overall
network coverage across the
country, as well as expanding
the LTE network.”
However, it was the smaller
player in the mobile duopoly,
Movicel, in partnership with
Chinese phone giant ZTE,
that first introduced fourth
generation LTE technology to
Angola in 2012, putting the
country ahead of many parts
of the United States, Britain,
and most countries on mainland Europe in the rollout of
4G wireless services.
“Movicel was the first operator to release 4G technology in
Africa,” says the company’s
General Director, José Paulo
Dias Henriques. “Today all
the Luanda metropolitan area
benefits from this technology.
Providing this important data
Tony Dolton, CEO of Unitel
service is one of the main contributions of Movicel. At the
moment we have 4G in greater
Luanda, in Cabinda and in Benguela, and we are also looking
at changing our networks in the
rest of the country.”
Angola’s fixed-line market is
dominated by the state-owned
enterprise and former parent
company of Movicel, Angola
Telecoms (AT). Like Unitel, AT
has invested in the telecommunications network to bring
coverage to once-unreachable
parts of the country. CEO João
Adolfo Martins points out:
“With this expansion in coverage we are raising the social
standards of Angolan citizens
across the whole country.”
AT has been undergoing an
enormous restructuring process
that will eventually lead to the
privatization of the company. As
João Adolfo Martins, CEO of Angola Telecom
part of the process, the government injected more than $300
million in 2012 to pay off debts,
increase revenue collection,
boost sales, and extend and repair fiber-optic cables.
Mr. Martins says that restructuring has allowed the company “to become self-sustainable
and take its place as one of the
main players in the market.”
“This restructuring process
has been a success and we
know we are on the right path.
We had advisors that have
helped us in this process and we
aim to see positive results at the
end of 2015,” he adds.
The state-owned telecom
company is also behind one of
the industry’s landmark projects. AngoSat, the country’s
very first satellite, is due to be
in orbit by November 2016 and
will help to bring down prices,
improve services and extend
broadband Internet to places
that are not connected to the
fiber-optic network. “We will
be able to achieve one of our
goals, which is to give universal
access to our services,” remarks
Angola Telecom’s CEO.
The establishment of improved services at lower prices
will also be supported by the
monumental South Atlantic
Cable System (SACS), a multibillion-dollar project which will
establish a cable that will stretch
more than 3,700 miles across
the Southern Atlantic from Luanda to Fortaleza, Brazil.
SACS will have an enormous impact in Africa, South
America and Asia. With data
traffic no longer having to pass
through Europe and the U.S.,
it is expected that costs could
come down as much as 80%,
and that cheaper services will
lead to increased mobile penetration of around 85% in Angola within two years. The new
trans-Atlantic cable will also
provide the shortest distance
between the São Paulo and
Hong Kong stock markets, as
well as providing a faster route
from Europe to South America.
Unitel CEO Mr. Dolton
says that with SACS, Angola
“has the potential to become
a connectivity hub for West
Africa”, adding that in preparation “Unitel is extending the
fiber network to the borders of
neighboring countries.”
The project was made possible thanks to successful collaboration between Unitel, Movicel
and AT. The three companies
are shareholders in Angola Cables, which is covering the total
costs of the SACS’ construction.
12
ANGOLA
Aviation upgraded to first class
With a brand-new international ariport to be
unveiled in 2017, and
the overhaul of national
carrier TAAG, Angola is
on course to become a regional, if not international,
centre for aviation
A
ngola is in a
hurry and in almost no other
place in the
country is this
quite as evident as at the vast
construction site some 25
miles southeast of Luanda,
where thousands of workers
are busily putting the finishing touches to the brand-new
Angola International Airport,
scheduled to open in 2017.
Designed to handle 15 million passengers and 35,000
metric tons of cargo a year,
the facility will channel flights
to and from such far-flung
destinations as Houston and
Beijing, reflecting Angola’s bid
to become a major regional
and even international aviation transport center.
In its efforts to ensure that
dream takes off, the government of President José Eduardo Dos Santos has carried
out a series of measures such
as reaching the necessary
agreements with international
aviation agencies to guarantee
air safety and other concerns,
launching a multi-billiondollar campaign to upgrade
airports around the country
and overhauling Angola’s once
poorly-run flag carrier, TAAG.
“Our national aviation sector needed to be completely
restructured and after careful
study the first thing we did
was to reformulate its whole
legislative and regulatory
framework,” explains Transport Minister Augusto Da
Silva Tomás.
This involved hammering
out more than 3,500 pages
of comprehensive agreements and accords with
such bodies as the European Union, the International
Civil Aviation Organization
and the International Air
Transport Association.
“Our entity for regulating
and supervising the sector, the
Instituto Nacional de Aviação
(or National Aviation Institute) has also been restructured,” the minister says.
In another move, airport infrastructure, equipment and
staff training were modernized at well over a dozen airports from major cities such
as Luanda, Cabina and Soyo,
to provincial capitals. “And
then there is the new Angola
International Airport which
will be among the largest ones
in Africa and the largest in
Central Africa,” explains Mr.
Da Silva.
“As is known in the aviation
sector, TAAG was blacklisted
and forbidden to fly to Europe,” he continues. “So we
started with what we called
the ‘Turnaround’, the program
to rebuild TAAG, aimed at
thoroughly reorganizing the
company at the technical,
organizational, financial, economic and social levels with
the ultimate aim that the airline could be taken off the European Union blacklist.”
Instrumental in putting
TAAG right is the agreement
the flag carrier signed with
highly-successful
Emirates
Airline of Dubai under which
the Middle Eastern company
is to manage the Angolan partner for a period of 10 years.
Under the terms of the accord, Emirates is to name a
new CEO, appoint four senior staff members to work
for TAAG, review operations,
design a business plan, seek
synergies between the two
airlines, train TAAG staff and
carry out other tasks, but without taking an equity stake.
According to analysts, these
measures would help the Angolan carrier eventually compete on routes with foreign
airlines currently serving Luanda such as British Airways,
Lufthansa, KLM, Air France,
Iberia and others.
Airline industry analysts
said that while TAAG certainly benefits from the arrangement, it can also be good
for Emirates as Angola is a
restricted, but high-yielding
market and will strengthen the
United Arab Emirates’ trade
ties to Africa and especially, of
course, Angola with which it
shares an oil-based economy.
The Arab carrier began
flights to Angola in 2009 and
last year increased its flights
from three times a week to
daily, while most intercontinental airlines are restricted
to two or three flights a week.
“Emirates is a worldwide
reference company that can
bring us huge benefits,” argues TAAG Chairman, Dr.
Joaquim Teixeira da Cunha.
“With this agreement, we
expect our airline to become
more capable and, at the same
time, it will support our government’s intention to transform the new Angola International Airport into a regional
aviation hub.”
“Over the next several years,”
he adds, “we expect TAAG to
grow 14%, but from 2017,
when the new airport begins
operations, we predict larger
growth due to the increase in
traffic from regional flights to
Luanda connecting with international flights to Latin Amer-
ica, Europe and probably Asia
and the Middle East.”
One of the key steps in
transforming the Angolan airline was the purchase of new,
more fuel-efficient passenger
jets from Boeing, the giant
U.S. aircraft manufacturing
company with which Dr. Teixeira says the country has been
working since it bought its
first new, one-source aircraft
fleet following independence.
“For so many years, TAAG
operated with very old airplanes and all kinds of aircraft
from different sources,” recalls
João Miguel Santos, Boeing
International’s Vice President
for Africa.
“Finally, the president made
a decision that TAAG needed
to grow and after an intense
competition, we were fortunately selected as the preferred airplane supplier and it
was an honor.”
Just over 10 years ago, Boeing delivered the first two
777s and three 737s and about
five months later, another 737.
“The airline continued flying a couple of small airplanes
because there were some little
airports that couldn’t cope
with larger airplanes like the
737,” says Mr. Santos. “But
under the leadership of the
transport minister, they have
improved the majority of An-
golan airports and the 737s
can now land there.”
Since then, the U.S. manufacturer has delivered more
777s, which the executive
maintains are just right for
TAAG’s non-stop routes with
full passenger and cargo loads.
And it is air cargo capacity
which will go towards helping
the Angolan government in its
ambitious drive to diversify the
economy away from the heavy
dependence on hydrocarbons
and other extractive resources,
according to the executive.
Says Mr. Santos: “Agricultural products are best
shipped to long-distance foreign markets by cargo jet and
you just have to look at the
example of another African
country, Kenya. You go to a
supermarket in London and
all the green beans are from
Kenya which need to be air
freighted from source to market in two or three days.
“Angola could export cut
flowers from the province of
Huambo to Europe but you
need an airport that can handle such products. Right now,
airports there can’t do that but
the minister has a plan to develop Huambo into an international airport.”
Mr. Santos boasts that he
is proud of his company’s
long-term relationship with
Angola. “Angola is my home
country and I think we at Boeing have established ourselves
very well as a partner to both
TAAG and the country. We
don’t just sell airplanes; we
work with the ENANA airport authority and with the
civil aviation authority, or National Aviation Institute (INAVIC),” he says.
This latter agency has undergone what Secretary of
Civil Aviation Mário Miguel
Domingues describes as an
“enhancement process” since
2008 to improve its functions
as a regulatory body that provides airports and airlines with
the required certifications.
“This means,” explains Mr.
Domingues, “that it controls
all activities in the aviation
sector, guarantees operational
safety and strictly applies all
the rules and practices of the
International Civil Aviation
Organization (ICAO).”
“And even though the modernization program and technical empowerment that the
INAVIC has gone through is
constantly maintained, it remains permanently audited
by the ICAO to correct occasional problems and to improve its international credibility,” he adds.
Among INAVIC’s other
important tasks are overseeing air traffic control, carrying
out medical checks of aviation
personnel, ensuring the rights
of passengers traveling to and
from Angola and licensing
flight instructors.
Angola’s second big step to
ensure its international “air
worthiness” was the overhaul
of TAAG to get it off the European blacklist.
“We made all the efforts to
bridge the gaps detected during the audit by the ICAO
and the International Air
Transport Association and
we worked intensely to bring
TAAG back to sufficient civil
aviation safety levels,” boasts
Mr. Domingues.
Now off the blacklist, Angola’s flag carrier flies to a
number of European cities,
especially in Portugal, as well
“Our national aviation
sector needed to be
completely restructured
and after careful study
the first thing we did was
to reformulate its whole
legislative and regulatory
framework”
Augusto Da Silva Tomás,
Minister of Transport
ANGOLA
as to Beijing, Dubai, Havana,
São Paulo, Rio de Janeiro,
Johannesburg, Cape Town,
Kinshasa, Harare, and other
African cities.
“It now has all the qualifications required to fly
anywhere, including to the
United States,” says the secretary of civil aviation. “Service
quality has been raised across
the board and we’ve ordered
new aircraft and other equipment which will make TAAG
even better.”
Mr. Domingues maintains
that with Angola’s economy
booming thanks to oil and
gas revenue, the country
sorely needed to radically upgrade its air links, infrastructure and state-run carrier.
And the country is not only
attracting the international
business community but foreign tourists as well, drawn
by Angola’s stunning natural
beauty, wildlife, rich culture
and adventure destinations.
Angola’s Kissama National
Park, just 43 miles from the
capital, covers 3 million acres
of jungle, savanna and grasslands and counts among its
denizens zebra, antelope,
buffalo, elephants, and the
many exotically colored birds
native to Africa.
In the southwest of the
country, the province of
Huila offers visitors stunning
mountain views, thundering waterfalls, volcanic landscapes and fascinating tribal
cultures, while those seeking
adventure can travel to the
southern coastline for deepsea shark fishing, diving, hiking, parasailing, and whalewatching cruises.
And for surfers, Cabo
Ledo, one of the longest point
breaks in the world, is just an
hour south of Luanda and perfect not only for veteran wave
riders but beginners as well.
Beachfront cafes serve up icecold beer and giant lobsters.
“Given this country’s amazing potential, we couldn’t just
sit on our hands so we did
all this, plus we began building the new Angola International Airport, which will be
a reference in Africa,” says Mr.
Domingues. “In fact, we are in
a more central location than
South Africa for becoming a
regional hub, for example.”
According to the secretary, all the African countries
are working hard to develop
and better integrate their
transportation infrastructure
through increased cooperation. In recent years, African air transport has grown
strongly and it is not true
anymore that the quickest
and most convenient way to
get from the east to the west
of the continent, or vice versa,
was to fly via Europe.
New passenger services are
satisfying the demand by the
increasing number of tourists
heading to Africa, while more
freight services are helping
boost those exports vital for
earning badly needed foreign
exchange.
However, analysts say challenges for African aviation
remain, such as the expense
due to the until-recently high
fuel prices, a lack of convenient connections and safety
issues. And for the airlines
themselves, landing fees are
higher than most of the rest
of the world and there needs
to be more regulatory oversight as well as more “open
skies” policies which would
reduce airfares.
Mr. Domingues says he
hopes these obstacles can be
reduced as African nations
up their aviation game for the
benefit of all and that was the
reason that Angola has put
such resources into getting its
own house in order.
“Our intention has been
to create a civil aviation sector in line with the economic
development taking place in
everything else in the country
by making tremendous investments in human capital,
technology and the environment,” he remarks.
While many foreign governments and companies are
helping Angola in this endeavor, the secretary notes that
the United States is “without a
doubt, the best strategic partner for us”, highlighting the
country’s long reliance on the
Boeing corporation to supply
the state airline’s passenger jets.
“All in all,” he concludes,
“I would say that for Angola
our aviation sector is going
to be one of the best, if not
the best, in all of Africa. We
have the resources, will and
determination to see this
through. As they say: ‘The
sky’s the limit!’”
“Over the next several
years, we expect TAAG to
grow 14%, but from 2017,
when the new airport
begins operations, we
predict larger growth due
to the increase in traffic
from regional flights to
Luanda connecting with
international flights”
DR. Joaquim Teixeira da Cunha,
Chairman of TAAG
“Given this country’s
amazing potential, we
couldn’t just sit on our
hands so we... began
building the new Angola
International Airport,
which will be a reference
in Africa”
Mário Miguel Domingues,
Secretary of Civil Aviation
13
Insight from the
aviation industry
As a native Angolan and businessman with long experience
in the region, the Boeing Corporation’s Vice President for
Africa, João Miguel Santos
shares his unique insight into
where his country is now and
where it is heading, its agricultural potential, and its relations with the U.S.
What is your vision about
the economic climate in
Angola and its future potential?
Angola is a country with enormous potential. When people
think of Angola today, they
think of a rich country which
has some challenges but there
is so much more to the place.
After 27 years of civil war,
the reconstruction task was
huge and it has taken a while
to get the economy working
and we see major improvements. Inflation has dropped
to single digits, the government is collecting taxes in a
more regular manner, and it
is to the government’s credit
that those policies took hold
and continue.
In my opinion one of the
chief challenges facing the
country is reversing the massive influx of people to Luanda, which does not have
the infrastructure for 6 million inhabitants. So we have
to ask ourselves how to give
these people the reason and
the wherewithal to return to
their villages where we must
provide them with a good
standard of education, housing and health care, and a way
to make a living by developing
the rural agricultural sector.
So along with its mineral
resources, Angola also has
agricultural potential?
Very much so. Not many
people know this but Angola
was a net exporter of agricultural goods years ago and
João Miguel Santos, Vice President for Africa at the Boeing Corporation
now it is a net importer. We
have to import coffee these
days whereas in the past we
were one of the largest coffee
producers in the world.
The Plateau of Huíla, for
example, has a Mediterranean
climate and you can produce
two crops a year. Where else
could you do that except in
the Mediterranean? But we
can do that in Africa. And not
far from Luanda, there are vast
areas ideal for cattle ranching.
We have the human resources for this kind of thing,
projects to generate the right
results for the economy. The
government is doing everything it can, from my point
of view, but it takes time. It
takes a lot of effort and a lot
of hard work.
2013 marked the 20th anniversary of diplomatic rela-
tions between Washington
and Luanda. How has the
United States helped Angola in foreign investment,
which is key to creating
jobs for the African nation’s citizens?
Speaking from my experience
with Boeing, the U.S. ExportImport Bank has been key in
securing financing for Angola’s purchase of our passenger
jets which will do so much to
boost the economy.
What the bank does is provide a loan guarantee for airlines so they can go to a bank
and get financing. Without
that guarantee backed by the
U.S. government, the airline
would not be able to get the
loan. The Export-Import Bank
is critical for foreign companies
to be able to acquire American
products, thereby also helping
to create jobs in the U.S.
ANGOLA
$22.6bn for land transport infrastructure through 2025
14
Angola is developing a modernized intermodal transport system that will connect with the rest of the region, the continent, and indeed the world
A
ny modernizing
economy needs
state-of-the-art
transport, and
Angola – with
its reliance on natural resources, sheer size, ambitions
to improve the lot of the people, and aspirations to play a
leading role in Africa and the
world – is no exception.
Another reason that it is
imperative that the country
rebuild its transport infrastructure is because this was
shattered over the course of
40 years; decades in which
Angolans first struggled for
their independence and then
subsequently fought one another in a long civil war.
“Connectivity” is the buzz
word heard around the halls
of government, whether officials are speaking of linking
Angola’s far-flung provinces
or connecting with neighboring countries and beyond.
“Our main objective is to
create a transportation network that would articulate the
whole country, from north to
south and from the sea to the
east,” explains Transport Minister Augusto Da Silva Tomás.
“Moreover, we’d like to increase our geostrategic situation in Central and Southern
Africa and in the continent in
general, and all of this through
projects and programs over
the short, mid and long terms
for highways and roads, railways, the maritime sector and
the ports, and the airways.”
It’s a big job. Angola measures almost half a million
square miles or twice the size
of Texas, and its varied terrain includes dense rain forest, rugged hills and mountains, sand dunes, coastal
lowlands and high plateau. In
short, all of Africa’s landscape
in one country.
And according to the minister, there are other challenges. “The greatest hurdle
is the lack of human capital,
financial resources, equipment and technology,” he
notes. “We finance our projects with our own funds and
with foreign capital through
foreign investment.”
“First of all, I would say that
ground transport is perhaps
the most important so we
can move people and goods
throughout the whole country
and this includes main highways, secondary roads between cities and villages, links
between areas of production
and those of consumption so
farmers can bring their crops
to market, for example,” the
minister says.
By land and by sea
Over the past decade, the Angolan government has spent
transport routes between the
Atlantic and Indian Oceans.
$12.7 billion on refurbishing,
building and maintaining
highways, road and bridges,
and officials say they expect to
allocate another $22.6 billion
between now and 2025.
Add billions more for overhauling the country’s railroads, sea ports and airports,
plus the money to be spent on
transport conveyances such
as locomotives, rolling stock,
airliners, ferries and ships.
Many foreign companies are
involved in these projects,
whether supplying materials,
equipment or expertise to rehabilitating all aspects of Angola’s transport infrastructure.
“We are also achieving great
success with our railroads,”
Mr. Da Silva explains. “Just
two examples are the 300-mile
Caminho de Ferro de Luanda
that passes through Luanda,
Bengo, Kwanza Norte and
Malanje, and the Caminho de
Ferro de Benguela linking Lobito, Humabo, Bié and Moxico over a route of 850 miles.
“We also bought new locomotives, passenger cars and
freight cars to move people
and cargo.”
With its long Atlantic coast,
modernizing sea transport
is also a priority for the government. The country’s four
main harbors – Luanda, Cabinda, Lobito and Namibe –
“We’d like to increase
our geostrategic situation
in Central and Southern
Africa and in the continent
in general, and all of
this through projects and
programs over the short,
mid and long terms for
highways and roads,
railways, the maritime
sector and the ports, and
the airways”
Augusto Da Silva Tomás,
Minister of Transport
“With these 44 logistics
platforms around the
country, the business
sector will be able
to distribute cargo
throughout the network
no matter how far away
they are from each other,
even in places where no
railways exist”
Dr. Francisco Agostinho M.
Itembo,
Director of the National Council of
Shippers (CNC)
have all been rehabilitated and
enlarged, while small ports
are being upgraded.
“On a small scale, we would
like to develop a passenger
ferry system in Luanda using catamaran vessels being
built in Spain, and in the next
phase we’ll work on passenger transport along the coast
from Cabinda in the north
to Namibe in the south,” the
minister says.
The National Network of
Logistic Platforms and the
Lobito Corridor
All these transport sectors
come together, literally, in
the government’s almost $4
billion National Network of
Logistic Platforms (NNLP)
which is aimed at driving regional and national growth
through the development of
an integrated transport web.
“With these 44 logistics
platforms around the country, the business sector will
be able to distribute cargo
throughout the network no
matter how far away they are
from each other, even in places where no railways exist,”
says Dr. Francisco Agostinho
M. Itembo, the director of
Angola’s National Council of
Shippers (CNC).
“There is a real need to have
this intermodal system being
implemented to reach a desirable level of development
and ensure that everyone in
the country will have access to
whatever service or product
they need.”
At the NNLP conference,
Finance Minister Armando
Manuel said: “Creating accessibility of transport networks
and services, along with construction of strategically located infrastructure also creates
a window for macroeconomic
and social inclusion, as well
as a foundation for achieving
regional economic diversification, creation of wealth,
competitiveness, and greater
economic stability.”
And, of course, the new
transport networks will connect Angola’s 18 provinces in
a way never before accomplished, bringing its 21 million
people closer together and
providing them ready access
to all the new economic opportunities being created.
And along with the domestic benefits for Angola, the
logistics platforms project will
boost the country’s regional
cohesion across Southern Africa, advancing stability and
social and economic development throughout the region.
“We’ll take advantage of
these smart logistics networks
not only to serve Angola but
neighboring countries as well,”
claims Dr. Joaquim Teixeira
da Cunha, the administrator
of state-owned airline TAAG.
“Regarding railroads, for
example, we have agreements
with the Democratic Republic
of Congo (DRC) and Zambia with the transport link
through the port of Lobito so
they can ship their mineral
exports, primarily copper, to
world markets.”
Known as the “Lobito Corridor”, this link is one of Angola’s most ambitious and most
promising transport projects
and replaced the once-famous
Benguela Railway which was
destroyed during the civil war.
Running between Lobito,
through Benguela and across
central Angola to the DRC
(formerly Zaire), the route will
also have a spur to the border
post of Jimbe in the northwest
corner of Zambia. It is to include roads, airports and logistic platforms.
According to researchers,
around 40% of Angolans live
within the catchment area of
the corridor and the project is
expected to create a significant
number of jobs at all levels.
“The Lobito Corridor
has the potential to drive
development not only in
Angola but also for the
whole southern region of
Africa”
José João Kuvíngua,
Secretary of State for Transport
“The Lobito Corridor has
the potential to drive development not only in Angola but also for the whole
southern region of Africa,”
explains Secretary of State
for Transport José João Kuvíngua. “And it is a prime example of intermodality.”
“By linking our port in Lobito with the DRC and Zambia,
the corridor cuts by a third
the distance that exporters in
those countries would have
to transport their goods to
the sea, eliminating the need
to go all the way to Durban in
South Africa or Walvis Bay in
Namibia,” he adds.
Planners say that the corridor could be a stepping stone
to connecting other countries
such as Tanzania, Zimbabwe,
the Central African Republic,
Rwanda, Burundi and others,
and eventually establish direct
Private investment
opportunities
Mr. Kuvíngua is quick to point
out that while the government
is taking the lead in the corridor project and others, there
is room for private players.
“Infrastructure capital investments require a large outlay,
and obviously, while the government shoulders the burden of financial obligation on
most projects, we can only extend ourselves so far and thus
there will be a big role for the
private sector.”
Of particular interest to
the central government is for
private investors to establish
partnerships with the provinces and the transport secretary highlights how private
concerns are carrying out
operations through concession contracts at the country’s
main maritime ports.
Different forms of project
financing, public-private partnerships and build-operatetransfer, were used for some
building and improvements
of several seaports.
“We have recently instituted and approved the necessary legislation changes that
open the same opportunities
to the private sector in the
provision of our railway system and airport management
structures and there is more
room for the private sector
in building the logistic platforms,” says Mr. Kuvíngua.
“In short, the opportunities
for successful public-private
partnerships are vast.”
U.S. investors are particularly welcome, he says. “My message to Americans and indeed,
investors around the world is
that the time to participate in
the development of Angola is
now; in fact you may even be
arriving late to the party.”
“But there is still much
scope for investment as the
country is in many cases a
greenfield site with many
projects available for the private sector,” continues Mr.
Kuvíngua. “The sooner you
come and join the efforts of
the Angolan people towards
creating sustainable development, the better. The time to
invest is now!”
Meanwhile, Dr. Itembo of
the CNC predicts that American companies will soon
move beyond their focus on
the oil and gas industries.
“At the recent U.S.-Africa
Summit, the U.S. Secretary of
Transportation said there was
a desire and need for the United States to reinforce its relationship with Angola and that
it should be based on balance
and respect from both sides.”
ANGOLA
$1bn AfDB loan to light
up more of Angola
With better access to electricity and clean water, Angola will be able to spur development across more sectors and provinces
P
ower and water
are two key elements to Angola’s
ambitious plans
to not only prosper and spread the country’s wealth and well-being
among its citizens, but also
to diversify the economy
from its heavy reliance on
petroleum and deliver these
essential amenities to the
business sector.
Although officials have
initiated programs to increase electrical power and
ensure the reliable supply of
water, much still has to be
done in these areas before
the country can meet its
goals, explains Minister of
Energy and Water João Baptista Borges.
“Our government approved a national development plan for the current
five-year period in which
energy and water are to be
the top priorities and their
development will have significant cross-over effects
on the other economic sectors,” he says.
“So we established an ambitious program to increase
power generation from 1
gigawatt of installed capacity to 5 gigawatts, and to improve and expand the power
transport and distribution
system throughout the country to create conditions conducive to not only economic
development, but social development as well.”
Last year, the African Development Bank (AfDB)
signed a $1 billion agreement
to support financial and institutional reform in the Angolan energy sector and encourage private investment.
Under the accord, the
bank is to focus its efforts on
supporting Angola’s reforms
for improving the operational efficiency, competitiveness and sustainability of
the energy sector and ensure
greater transparency and efficiency of public finance
management.
According to the AfDB,
Angola needs to invest some
$23 billion through 2017 to
implement the necessary reforms in the energy and water sectors alone.
In the electrical power sector, major improvements are
already underway with the
expansion from 180 to 960
megawatts from the Cambabe
Dam, the construction of the
2,067-megawatt producing
Lauca Dam, and the building
of the combined cycle power
plant dam at Soyo turning out
750 megawatts.
“In order to accomplish
all that needs to be done,
we will not privatize assets
but rather create public-
private partnerships (PPPs)
for specific projects,” Mr.
Baptista says.
“But we’re not interested
in establishing these PPPs
for large generation projects
because the risk is higher
and the negotiation process
more complex. So for the
large projects, the state will
finance the investment, but
for small hydroelectric projects, the state will seek private capital.”
However, there are several challenges to overcome
before Angola’s energy sector can fulfill all the government’s plans. One is the lack
of highly-skilled local staff.
“We definitely must improve the qualifications for
Angolan employees and to
train people to cover the
needs of the short and medium terms. For our longterm requirements, we will
have to raise the level to
provide deeper and more
specific training,” Mr. Baptista argues.
“Angola has an energy
production cost of around
$220 per megawatt/
hour when the average
in our region is $160 per
megawatt/hour.
To improve this situation
we will have to generate
more clean energy,
reduce the use of diesel
in our generators, and
build more dams as we
are doing”
João Baptista Borges,
Minister of Energy and Water
Also needed is a concerted effort to reduce government energy subsidies by
establishing a pricing policy
so that costs and tariffs will
eventually be matched by
the planned date of 2022, but
with safeguards for the poor.
“Angola has an energy production cost of around $220
per megawatt/hour when
the average in our region is
$160 per megawatt/hour.
To improve this situation we
will have to generate more
clean energy, reduce the use
of diesel in our generators,
and build more dams as we
are doing,” the minister says.
“We also have to improve
the commercial performance of companies by investing in accounting systems and accounting and
business management. With
commercial success, we will
be able to improve salaries
and wages for those working
in the sector.”
Along with benefitting
industry, the country’s electrical power program is also
aimed at providing electricity for Angola’s vast rural areas where the electrification
rate is only 6%, according to
the latest available data.
Indeed, an estimate by the
International Energy Agency
indicates that only around
30% of Angolans have access
to electrical power, leaving
some 15 million people literally in the dark.
Another plan envisages
linking the government’s
three independent systems
that supply electricity to different regions of the country
into a national grid which
could eventually connect
with the Southern African
Power Pool (SAPP).
Composed of 11 member
nations, SAAP promotes
regional cooperation in the
power sector and is designed
to create a common market
providing reliable and cheap
electricity for its members.
Angola is fortunately
blessed with the water resources needed to run its
massive hydroelectric projects and the water is also
needed to not only irrigate
the country’s expanding agricultural sector, but to also
meet the daily drinking,
bathing and cleaning demands of its citizens.
“Water is a more difficult
task because, first of all, it is as
– or more – important than
energy in many regards and
the sector is less developed
from an institutional and governmental point of view,” Mr.
Baptista claims. “However, it
is a very abundant resource
and its development requires
less investment.”
In a bid to provide clean
water to around 80% of the
population by 2017 through
collective systems, the government in 2007 launched
the “Water for All” initiative
with a planned investment of
$5 billion.
“This is especially aimed
at boosting the quantity and
quality of water for the rural
areas of the country and I am
pleased to say we now have a
67% coverage rate,” the minister boasts.
But whether powering the
nation so it can fulfill its lofty
economic ambitions or supplying electric light to tiny
villages in the hinterlands so
school children can study at
night, these projects will take
time, Mr. Baptista cautions.
“What is needed is for
people to have the patience
to see the results and even
more important is for us to
have a clear direction and
focus so all of us together
– the government, the private sector and the Angolan
people – can pursue these
vital goals.”
15
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Oil and gas fuel economic diversification

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