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ECONOMY-ANGOLA: (Responsible) Foreign Investment Welcome

Mario de Queiroz

LISBON, Feb 13 2008 (IPS) - A high-level mission from Angola visited Portugal to entice potential investors with new business opportunities arising from the newfound stability in the southwestern African nation, one of the fastest-growing economies in the world today.

But, they warned, foreign investors should forget about merely transferring profits abroad without leaving any benefits behind.

Deputy Prime Minister Aguinaldo Jaime, who headed the one-week mission to Portugal that ended Tuesday, said foreign capital is welcome, but only if it includes technology transfer and other aspects that help boost development in one of the world’s poorest countries.

Economic analysts in Portugal consider Jaime to be one of the Angolan officials most open to Portuguese capital. However, the deputy prime minister complained several times over the past week about companies which “perhaps do not believe in Angola” and that transfer neither technology nor decision-making responsibility.

Jaime told some 200 Portuguese businesspeople filling a conference room in the Lisbon Trade Association (ACL) that this approach would no longer be tolerated, and that in “this new phase, we must be clear about our partnership, while keeping our hearts open.”

Although partnerships with local companies are no longer obligatory under Angolan law, during the conference on “the internationalisation of the Angolan economy: challenges and opportunities” in the ACL, Jaime said that joint ventures between foreign companies and local businesses are the “best route” for foreign investment, in order to contribute to improving living conditions, rather than merely “earning a quick profit and repatriating capital.”

Businessman Manuel de Paula Calçada, who was born in 1962 in Angola, which was a Portuguese colony until 1975, told IPS that in 2006 he visited his land of birth because of “the big investment opportunities in different areas, and the greatly expanded facilities,” especially “for those of us who are seeking to form partnerships with Angolans.”

Calçada acknowledged that a foreign company interested in doing business in Angola “must clearly take into account the fact that the infrastructure reflects four decades of war,” which means there are “great difficulties in basic services like electricity and water, essential for carrying out any business endeavour.”

And although as Jaime said it is no longer mandatory by law to form partnerships with local businesspeople, “it is recommendable,” said Calçada, because it makes registration and other paperwork “much more simple.”

Angola, which has a territory of 1.25 million sq km and a population of 16 million, “is a country of vast opportunities, where practically everything has to be rebuilt and raised from the ashes of the war, and that translates into enormous economic growth, which last year exceeded 27 percent,” said Calçada.

In response to persistent questions by potential foreign investors on investment conditions in Angola, which was racked by 41 years of war – the 1961-1974 war of independence and the 1975-2002 civil war – Jaime gave his assurances that “Angola’s future will be one of political stability.”

He pointed out that after the February 2002 death in combat of Jonas Savimbi, the leader of the National Union for the Total Independence of Angola (UNITA), and the signing of the peace agreement later that year, high-level members of the governing Popular Movement for the Liberation of Angola (MPLA) called for “the decapitation of UNITA.”

But despite the military triumph, President José Eduardo dos Santos insisted on an agreement that would integrate the UNITA rebels into the democratic system, “a sign of magnanimity that is not frequently seen,” said Jaime. The 220-seat Angolan parliament is currently made up of 129 members of the MPLA, 70 members of UNITA, and lawmakers from several smaller parties.

Now that peace has been achieved, and a fully functioning parliament is operating, Angola has “a radiant future ahead, for the economy and for the country,” led by President dos Santos, who he described as “a worker for peace and reconciliation.”

The official also pointed to positive developments on the macroeconomic level, such as the recent exchange rate stability, balanced public accounts, a drop in interest rates, and a stable inflation rate of around 10 percent.

On several occasions during his visit to Portugal, Jaime sought to ease investors’ worries about China’s growing presence in Angola.

China “should not be a source of concern” for investors from Portugal or other countries, because in Angola “there is a huge flood of opportunities and no one should be afraid of the competition,” he said.

Asked by university professor Miguel Beleza in the ACL conference about Angola’s excessive dependence on oil, Jaime said he was pleased with the rate of growth of non-oil related economic activities.

He mentioned the case of the recently created Angolan Development Bank, which administers a fund for social projects financed by five percent of the country’s oil earnings.

“Oil is not an infinite source of wealth, one day it will run out. Besides, prices won’t always stay at the current high levels,” he said.

Angola is presently the largest supplier of crude oil to China and the seventh largest supplier to the United States. About 1.5 million barrels of oil are produced daily, a figure that is expected to rise to two million this year. Driven by oil production, it is Africa’s fastest growing economy, and one of the fastest growing in the world.

With respect to Portuguese Prime Minister José Sócrates’ repeated calls for Portuguese-speaking countries with strong economies like Brazil, or fast-growing ones like Angola, to invest in Portugal, Jaime told the Jornal de Negocios newspaper in Lisbon this week that the challenge had been taken up by Luanda, pointing out that the Angolan state-owned oil company had invested in the southern European country.

“Sonangol’s entry into Portugal is a response to Sócrates’ challenge,” said the Angolan official, who also mentioned Angola Telecom as “a good potential partner that is in a position to go international.”

Indeed, Portuguese drivers can now fill up their tanks at Sonangol gas stations along highways and freeways throughout the country, as well as at the stations run by the Portuguese state-owned oil company GALP, Britain’s BP, the Anglo-Dutch Shell, France’s Total, Spain’s Repsol, Italy’s Agip, or the U.S.-based Esso.