Angola: Luanda reconsiders international investment portfolio after Sonangol investment losses

9 December 2008

Luanda, Angola, 9 Dec – Luanda is reconsidering Angola’s overseas investments model, which from now on will be made from a sovereign wealth fund rather than Sonangol, whose investments have devalued sharply in recent months.

The devaluation of assets acquired by Sonangol in Portugal over the last year and a half could reach 935 million euros, according to figures appearing in the Diário Económico in Lisbon.

If the average price per BCP Millennium share was 2.3 euros, Sonangol’s 9.99 percent share in Portugal’s biggest private bank cost them 1 billion euros, yet the current market value of the bank’s shares (0.837 euros) gives a potential loss of 686.15 million euros.

In Galp the potential loss is 248.8 million euros, over the last year and a half, taking the total losses to 934.97 million euros.

Nor have other public funds, from the Banco Nacional de Angola and the Banco Africano de Investimentos, some of them invested in the US, escaped the “black” year on European and North American markets, according to other sources.

Sonangol CEO, Manuel Vicente, admitted last week the need to slow the current pace of investment in the face of the sudden change in the economic climate.

“We will reduce the pace of these investments, given the current situation,” he told Radio Apostolado.

These accumulated losses, the effects of the fall in oil prices on Angola’s liquidity and no end in sight to the international economic crisis have led Luanda to set up the Angolan Sovereign Wealth Fund, managed by a set up committee chosen by the President.

With the creation of the Fund, it is hoped that mechanisms will be put in place which “guarantee the efficient management of resources and protect the country from outside threats and unsettling economic cycles,” he wrote recently in the AngolaPress.

Africa Monitor said that the Fund should remain directly dependent on President Jose Eduardo dos Santos.

His main economic and financial advisors are currently Manuel Junior and Ricardo Viegas de Abreu.

The latter is the son of a former Sonangol executive, coordinates the Set-Up Committee for the Sovereign Fund and is tipped to be its future president, according to the same source. (macauhub)