It was reported last week that new legislation on private investment is set to help Angola attract overseas investors, with a return to growth this year ensuring the economy has left its payment problems behind, according to the head of the country’s investment agency.[hidepost=9][/hidepost]
Angola announced last August that it owed US$6.8 billion – twice what was previously estimated – to foreign firms involved in the southern African country’s post-war reconstruction.
“Angola cannot face its huge economic challenges on its own. We have to bring in private, foreign capital, so we have just approved new laws which will come into force next week,” Aguinaldo Jaime, head of the Anip investment agency said. He said the new private investment code will provide incentives such as tax breaks, reduced red tape and giving his agency more authority to approve the incentives. The law would also help tap huge interest in investment opportunities in a country where the primary infrastructure was mostly destroyed during a 27-year civil war that ended in 2002, Jaime said.
According to the UN Conference on Trade and Development’s 2010 World Investment Report, in 2009 Angola had a total inward stock of foreign direct investment (FDI) of $16.5 billion, or 22% of GDP, and an outward stock of $3.5 billion. UNCTAD reported the 2009 FDI inward flows at $13.1 billion, or 19% of GDP, and outward at $8 billion.
Although Angola rivals Nigeria as Africa’s biggest oil producer and is the world’s fifth biggest diamond exporter, growth slowed sharply in the last two years due to a slump in oil and diamond prices. Jaime said that the crisis had depleted the country’s foreign reserves and led to the payment problems, but added that a return to growth this year will ensure they are not repeated. “Fortunately we are overcoming the effects of the crisis and international financial institutions forecast Angola to grow around 6% this year,” he said.
“This means that Angola will return to the robust growth path it had before the crisis and will honour its commitments,” he added.
This will prove good news for foreign investors including the likes of SABMiller, who have been invested in Angola for a while now, as well as more recent investors such as Nampak Bevcan, which this year commissioned its $160 million beverage can factory in the Viana Industrial Zone in Luanda, and South African bank Absa which is considering returning to the country, which it left a few years ago under the bank’s previous management.
We ourselves as Imara have maintained our operation in Angola because we believe the country offers huge potential, and this development should add to its attractiveness.
Article written by the Imara Africa Securities team. Imara is an investment banking and asset management group renowned for its knowledge of African markets.