Daniel Swanepoel, managing director of Daniel John Consulting, recently shared some insights about doing business in Angola at a seminar in Cape Town. Below are the highlights from his presentation
On where to do business . . .
The capital Luanda, with an estimated population of 7 million, is an obvious business destination. There are, however, other cities and areas in the country that hold good potential.
The northern city of Soyo will soon be home to a new liquefied natural gas plant. According to Swanepoel, the plant will be a catalyst for further development in the area. “A new city will have to be developed . . . We have seen the plans for the new city. So in terms of development, in terms of the oil industry, that is a location where you would want to be.”
Benguela, situated on the coast south of Luanda, is another potentially important business destination. Lobito serves as the main harbour for Benguela. “In Lobito they are busy building a new refinery. Again, by building something like that, all the other development must come with it.”
“Then you go down to Namibe, [which] is also a major harbour. Namibe services the province of Huila, where the capital is Lubango. The government of Huila is really putting in a lot of effort into developing its province, in terms of all sectors. This is certainly a province where you would want to do business. It is highly organised, and it is fairly developed.”
On market access . . .
Swanepoel said that companies need to be well prepared before entering the Angolan market. “Make sure you understand your market first. As in your specific product . . . how to get it in, what your buyers on that side would prefer, what would be the best way to do it. Use business consultants or people that understand the market . . . It is really not a country where you just fly in on your own, and you walk around and try to do business with every second person on the street.”
For those not familiar with Portuguese, the lingua franca in Angola, it is essential to work through a translator. “If you don’t surround yourself with a good translator, you are going to struggle. But yet again, it is important to make sure that you’ve got a translator that you can certainly trust, so that you actually know what you are saying is indeed the message he gets across.”
On business culture . . .
He noted that it is important to abide by Angola’s business culture. “They have a very formal business culture. Where [South Africa] has a very informal business culture, in Angola that is just not done.”
On local partners . . .
“Make sure that you have a partner that understands your industry, that can move your product into the market. A partner with the right leverage in terms of getting contracts on a corporate level.”
On local manufacturing . . .
Companies should explore opportunities to export unassembled products and to do some of the assembling on the Angolan side. “It is seen then that a part of the manufacturing is done in the country, so you will be treated more favourably,” said Swanepoel.
On the legal system . . .
“They do have a very complex legal system . . . more in terms of time. Patience is the key word in Angola.”
On trade agreements . . .
Although Angola is part of the Southern African Development Community (SADC) it has not yet implemented the SADC trade protocol. Angola has, however, signed customs cooperation agreements with Portugal, São Tomé and Principe, and with neighbouring Namibia. Swanepoel said that companies looking to trade in Angola should consider establishing manufacturing operations in Namibia. “It is more favourable to move products out of Namibia to Angola. And if you are going to be working in the south of Angola, if that is going to be your focus area, it makes more sense from a logistical perspective.”
On risk . . .
“Even though you have higher returns in the Angolan market . . . remember, that with high returns come high risk. It is a market where the risk can be significantly high if you are not very careful in the way you do your business.”
On imports . . .
“At the moment imports from Portugal and Brazil are still favoured. Most of the imports do come from Brazil. It has something to do with the fact that they understand each other, the cultures are similar, and there are some historical ties that they also still like to honour.”