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Angolan president’s son talks about the country’s new sovereign wealth fund

In October 2012 Angola’s sovereign wealth fund, Fundo Soberano de Angola (FSDEA), was officially launched, and has received a mixture of approval and criticism. The fund was set up with US$5 billion in initial capital and will receive $3.5 billion a year in Angolan oil proceeds.

José Filomeno de Sousa dos Santos

José Filomeno de Sousa dos Santos

A sovereign wealth fund consists of financial assets – usually coming from budget surpluses and revenues from commodities – which are used in a state investment fund. In Angola’s case, the FSDEA consists of surpluses predominantly from its oil revenues, a sector that the country is currently relying on for its economic growth.

One of the three directors of the fund, José Filomeno de Sousa dos Santos, met with me in Cape Town to talk about the fund’s plans for Angola. As the son of Angolan president José Eduardo dos Santos – who has been in power for over 33 years – dos Santos’ involvement in the fund has sparked some criticism and suspicion.

In person, dos Santos was not what I expected. With a father who has ruled the country for over three decades, I had not anticipated someone who seemed so – dare I say it – humble. He was soft spoken, reserved, and answered my questions with a calm tone. For half an hour he told me about Angola’s business environment, his belief that Africa should invest in its people, and what the FSDEA plans to achieve.

Introducing the FSDEA

“The primary aim of the fund is to promote the development of infrastructure in Angola and to increase the state reserves,” explained dos Santos who oversees the FSDEA’s investment strategy and manages its portfolio. “So this gives us a two-fold potential. We can basically invest anywhere in the world to increase the state reserves, but we also have the responsibility to invest locally to stimulate business growth through investment in infrastructure. We are expecting for the investment policy to be disclosed by the government over the coming weeks.”

The investment policy, which dos Santos states will be made public, is still being considered by the Angolan government and no new developments have been made public in this arena since the fund was launched in October last year. Dos Santos said this is because the government is still in the process of approving several other things such as the national budget. “But we understand that fairly soon this investment policy will be made clear and its going to give everyone a clearer focus on where we will invest,” assured dos Santos.

Angola was devastated by an armed struggle for 27 years up until 2002, when the conflict ended. During the war, the country’s infrastructure, particularly in transport, was left devastated.

“The war left millions of displaced people,” explained dos Santos. “It destroyed the arable lands and the transport infrastructure so the country was really concentrated in the capital cities which were by the sea border, and the hinterlands basically became isolated islands from the rest of the development. Today, 10 years ahead more or less, there has been a lot of investments in infrastructure, airports, ports and roads, all with the aim of bringing investment from the capital cities from near the sea, into the hinterlands where there used to be the farming and the industry.”

“That’s a process that started right after the war,” he continued. “The government contracted several loans which was somewhat interrupted because of the financial crisis and the liquidity shortage that brought about, and that was actually one of the reasons why the sovereign wealth fund was created. Because at that stage the parliament decided to set up a reserve account and, going forward, the account was regulated by the government and they created a special entity that would manage these reserves.”

Dos Santos said that the Angolan government is now starting to implement a development programme that will focus on cultivating the local business community, improving employment and attracting foreign direct investment (FDI). “So we have a lot of potential there and one of the roles of the sovereign wealth fund is going to be to stimulate business in industries that did not receive a lot of investment over the last few years.”

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  • Kate Douglas

    LATEST PRESS RELEASE: Angola’s Sovereign Wealth Fund Announces Investment Policy

    Asset allocation to support preservation of capital, maximisation of returns and infrastructure development José Filomeno dos Santos appointed FSDEA chairman.


    Luanda, Angola, 21 June 2013 – The Fundo Soberano de Angola (FSDEA), today announced the publication of its Investment Policy by the Angolan Government, which outlines clear guidelines in relation to all operational matters and investments necessary for the Fund’s activities. The FSDEA also announced the appointment of José Filomeno dos Santos as the new Chairman of its Board of Directors.

    The International Monetary Fund (IMF) in a report issued on June 20 about Angola’s progress on improving transparency has called for the Fund’s mandate and governing framework to be clearly specified. The approval of the investment policy is key to meeting these requirements.

    “The Angolan government’s ratification of the FSDEA’s Investment Policy is a significant step towards securing Angola’s wealth and future prosperity. The approved policy, along with our commitment to accountability and transparency, will ensure that we make the best and most considered investments that support the country’s long-term economic future,” commented José Filomeno dos Santos.

    The FSDEA’s diversified asset allocation will support three key criteria: preservation of capital, maximisation of returns over the long-term and infrastructure development. Representing 50 per cent of the Fund’s investments will be fixed income instruments and cash, issued by sovereign agencies, supranational institutions, large companies with investment grade credit ratings, financial institutions and additionally, in equities issued within the G7.

    The remainder of the funds will be allocated to alternative investments, including, but not limited to, emerging markets, high yield, commodities, agriculture and mining, infrastructure, property, BRICS and frontier market stocks, assets and depreciated opportunities.

    The FSDEA will firstly focus on the hospitality sector by establishing a “Hotel Fund for Africa” in order to capitalize on the significant undersupply of hotel management capacity while addressing the urgent need for skilled local talent by supporting the establishment of a Hotel School. The Fund has issued a tender to a number of leading hotel operators to develop and operate a portfolio of three to five star business hotels across sub-Saharan Africa. The FSDEA is also in advanced discussions with a leading international hotel school to undertake feasibility studies to best determine the roll-out of the proposed Hotel School in Africa. The ultimate objective is to train and equip the Africa’s youth with industry level hospitality know-how so they can build promising careers in the continent’s service sector.

    First Social Charter Initiative:

    As a key component of the Investment Policy, the FSDEA will make a commitment of 7.5 per cent to social development and socially responsible projects in the areas of education, income generation and off-the-grid access to clean water, healthcare and energy.

    As part of the FSDEA Social Charter, the Fund unveiled details of its first community initiative, which consists in an education program designed to empower school children in economically vulnerable areas of Angola. This multi-year project, called “Kamba Dyami”, is part of the One Laptop per Child international program and encourages computer-based learning in traditional classrooms at an early age. It was launched in 2011 by the Dom Bosco Schools, located in the outskirts of Angola’s capital city.

    Padre Santiago Christophersen SDB, Director, Dom Bosco School, Luanda, commented “Empowering our children with knowledge is fundamental and the Kamba Dyami Project has shown the progress children make through computer-based learning. We have seen a tremendous impact on the learning process through the use of the computers and the children are very enthusiastic to work with this interactive education tool. We are therefore very pleased that the FSDEA also recognizes the importance of not only the project but its future expansion. We look forward to working closely with the Fund’s leadership to expand the education system in Angola.”

    “We intend to extend this initiative to additional schools in sub-urban and rural areas of Angola to enable the next generation to fully embrace our country’s future opportunities. From 2013 to 2015, 1,200 additional laptops will be availed, which will allow 2,400 more children to benefit from computer-based learning,” explained dos Santos.

    A key focus of this computer-based learning program will be enhancing human capital to guarantee the sustainable success of the project and ensure that teachers are adequately trained to develop innovative educational practices in their schools.

    “Since the Fund’s launch last year, we have been actively evaluating both social and economic development opportunities. As the Investment Policy is approved, the Fund is now in a position to drive forward our mandate to promote the economic and social development of Angola,” concluded dos Santos.

    About the Fundo Soberano de Angola:

    The Fundo Soberano de Angola (FSDEA) is a Sovereign Wealth Fund wholly owned by the Republic of Angola. The Fund, established according to international governance benchmarks, will gradually diversify its investment portfolio across a number of industries and asset classes in accordance with its investment policy and guidelines. By pursuing investments that generate long-term and socially enhancing financial returns, the Fund will play an important role in promoting Angola’s social and economic development and generating wealth for its people.

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  • Staff Writer

    PRESS RELEASES SENT TO HOW WE MADE IT IN AFRICA: Fundo Soberano de Angola Provides Investment Policy Update

    Angolan Government is reviewing a possible segregation in fiscal stabilisation and the creation of non-oil wealth reserves

    Luanda, Angola, 11 June 2013 – The Fundo Soberano de Angola (FSDEA), has today confirmed a number of updates surrounding its Investment Policy, in line with the need of the Angolan Executive to have a coexistent stabilization fund to support their activities, separate from the FSDEA.

    Once this review is complete, and subject to the approval of the President of Angola, the FSDEA will set out realistic spending priorities that will support Angola’s economic growth and additional wealth creation for the State.

    The existing $5 billion fund remains under the sole custody of the Central Bank of Angola as no investment has been made to date. The Investment Policy, once approved, is likely to initially focus on the infrastructure and hospitality sectors as they represent significant job and wealth creation opportunities across Sub Saharan Africa.

    José Filomeno de Sousa dos Santos, Member of the Board of Directors, Fundo Soberano de Angola, said: “We have faced a number of challenges that have unfortunately led to a delay in the approval of the FSDEA’s Investment Policy, namely the late approval of the 2013 National State Budget by the Parliament and the entry into office of the members of the National Assembly and the Executive following the elections in the last quarter of 2012. Whilst the Government revises the Fund’s investment strategy, we will continue to move forward in our efforts to consolidate the required operational bases for the efficient management of a sovereign wealth fund of this size ($5 billion).”

    “In line with our commitment to operate in a transparent manner, we will provide the markets with regular and updated information. In the near-term, we are looking at strengthening our team with recruitment and training of local staff and continue to define the Fund’s role in Angolan society as a promoter of sustainable development for the country, in line with the wishes of our people,” José Filomeno de Sousa dos Santos concluded.

    In its efforts to build solid foundations, the FSDEA can confirm the following:

    – Appointment of Chairman – the Angolan Government is working closely with the Fund’s Advisory Board to appoint a new Chairman. A further announcement will be made once this selection process is complete
    – Recruitment – the FSDEA is continuing its recruitment drive to employ Angolan nationals
    – Knowledge building – as part of the FSDEA’s commitment to improve the lives of everyday Angolans, the Fund is in discussion with several leading African influencers, who will guide and lend expertise in meeting this objective
    – FSDEA mid-year updates – during the next quarter the FSDEA will provide a material update on applicable investment activities

  • claudio jesus

    I hope so much that this guy has success in this new challenger.
    that’s not a easy work but he looks very intelligent and optimist to face and work positively through the objectives of the FSDEA. On the paper things looks so easy but in the real world things tend to be very complexes. Go ahead and good luck

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