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. [hidepost=9][/hidepost]
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.
“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.”