Autonomy, long term vision and understanding “details” seen as essential for investors in Angola

15 October 2007

Lisbon, Portugal, 15 Oct – The autonomy and long term vision of a business and particularly, “understanding the details” of the reality of Angola are considered by Portuguese business owners and managers to essential to the success of businesses in that market, which is one of Africa’s most promising.

Some of the main Portuguese players in Angola in a recent report in Portuguese magazine Exame noted the opportunities that the growth of the Angolan market offers. Angola has increased its importance in Portugal’s foreign trade and the business owners warned of the need to find a local partner in order to overcome the differences in procedures.

“The procedures are bureaucratic and slow and not always linear. We went there with the help of locals, people who were already working with Portugal and Angola. It was in the setting up phase that we flew with our own wings. It is a country with rules that are not linear for a European,” said Vasco Teixeira, a partner manager of publishing house Porto Editora.

Carlos Bayan Ferreira, chairman of the Portugal Angola Chamber of Commerce and Industry, also noted the need to be certain about the impartiality of the partner chosen, given that “law firms and banks that finance the projects do not usually want to get involved with parties in whom they do not have confidence.”

The most recent figures show that it can take 143 days to set up a company in Angola, which has led the government to set up the GUE – Gabinete Único de Empresa (Single Company Office), which promises to speed up the process.

Nuno Neves, director of fishing company Starfish (Espírito Santos Commerce (Escom) group) noted the need to invest intensively and understand the details of the market, as well as being prepared for the difficulties of setting up a company, particularly outside Luanda.

“When you invest here it’s like setting up a business on the moon. There’s nothing here,” said the Escom manager, which operates in Namibe in the far south of Angola.

He added that in the businesses of fishing and agriculture, “you have to be autonomous,” which is why Starfish produces its own ice, has its own medical center and generators, to get around the constant blackouts.

Arnaldo Figueiredo, the chairman of construction company Mota-Engil, which has been in the Angolan market for 60 years, noted that investors in Angola should be prepared for anything.

“The probability of landing in Luanda and not even being able to leave the airport are huge,” said the Portuguese manager, alluding to the fact that at the 4 de Fevereiro Airport there are few taxis and no car rental stands.

“Any investor should study the business potential carefully, if there is an internal market for the products and it is possible to sell to neighboring countries,” he told Exame magazine.

Despite not yet having joined the trade pact of the Southern Africa Development Community (SADC), Angola has advantageous conditions to access the markets of the regional organization, which also includes Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe as its members.

Many Portuguese companies with a significant presence in Angola, such as Portugal Telecom and Mota-Engil, have been focusing on growth within the region.

“You have to understand that the greater part of our projects is not short term,” which requires an ability to adapt and capacity to invest, said Bayan Ferreira, of the Luso-Angolan Chamber of Commerce and Industry.

Portugal has become Angola’s main source of imports, as well as being an important investor in the oil sector and the economy.

From US$11 million in 1996, Portuguese investment in its former colony rose to US$330 million last year, which was marked by a Portuguese government visit to Luanda, of which economic agreements were a highlight.

Currently there are several systems in place to support investment in the country from Portugal – the SIME Internacional (incentive for micro, small and medium-sized companies in the areas of industry, construction, retail, tourism, services and transport), the automatically renewable fund of the European Investment Bank, the 300 million-euro insurance credit line from Cosec, as well as specific funding set up by the main private banks, BES, BPI, Millennium BCP and Totta Santander.

Amongst the main difficulties in dealing with the Angolan market, the Exame report noted “expensive” real estate, noting that in Luanda the average cost of renting and office or store varied between 14 and 50 euros per square meter.

Buying the an office or store would cost between 1440 and 3600 euros per meter square the report added.

Once the space has been found it is likely to need renovation, generators, water tanks and pumps, as well as the services of a security company.

There is also a lack of labor, particularly qualified staff, who are highly sought after by the large companies in the country, and thus professional training is essential.

The financial sector is already quite developed as the country has 17 banks, and a good example of this is one of the youngest private banks in the country, Banco BIC, which is owned by Portuguese businessman Américo Amorim and by Isabel dos Santos, the eldest daughter of Angolan president, José Eduardo dos Santos.

“The bank is two years old and has opened up 71 branches. We started as the 12th bank and now we a4re the third largest in terms of loans granted. We are the fourth-largest in terms of deposits with around US$1.5 billion. We have approved loans totalling US$1.7 billion of which US$800 million have been used. We have granted a lot of credit to the real estate and hotel sectors,” said the chairman of the bank Fernando Teles, who previously led the successful project of Banco de Fomento Angola, of the BPI Group, which is now Angola’s largest private bank.

According to the Exame report, the upward trajectory of Angolan banking has piqued the interest of South Africa’s largest banks – Standard Bank, First national Bank and ABSA, which are looking into possible acquisitions.

As well as infrastructures and oil and gas, sectors whose growth is sustaining the Angolan economy, important sporting events promise to enliven the Angolan economy over the next few years, the magazine said.

These include the Africa Nations Cup in 2010, which will involve the construction of four soccer stadiums and building hotels all over the country. (macauhub)