Angola’s foreign investment quadruples in 2008

21 September 2009

Luanda, Angola, 21 Sep – Angola’s foreign direct investment reached US$1.2 billion last year, around four times more than in 2007, reflecting the unprecedented expansion in oil revenue.

According to data from the Economist Intelligence Unit, last year the FDI in Angola represented US$1.9 billion dollars, three percent of the GDP, but the main development was in Angola’s foreign investment.

Data from the United Nations Conference on Trade and Development (UNCTAD), quoted in a study by the Portuguese agency for overseas trade (AICEP), indicate that in 2007 Angolan FDI was US$331 million, over three times higher than in the previous year.

“Until 2004, Angola played a significant role as a destination for foreign investment, but since 2005 the pattern has completely changed, and there is currently a movement to strengthen Angolan foreign investments,” said the AICEP.

These investments by Angolan economic agents, such as the Sonangol oil company, have been directed mainly to Portugal, whether in the purchase of shares in the banking sector (Millennium Bcp, Banco BPI) or in the energy sector (Galp Energia).

With the recent opening of the Banco Privado Atlântico – Europa, the number of Angolan banks operating in Portugal has risen to three, including BIC Português and Banco Africano de Investimentos – Europa.

This process of internationalization via significant investments in strategic sectors is related to the expansion of the country’s oil wealth, which reached its highest level last year, thanks to record oil prices on the international markets.

This development has meant that, between 2004 and 2008 Angolan exports rose by about 400 percent and that imports grew by 193 percent.

“The stability of the kwanza and the availability of foreign currency from exports and strong growth in the GDP have led to high import growth rates (…) and it should be remembered that constraints in terms of road and port infrastructures have significantly conditioned the growth” in imports of foreign goods and services, said AICEP.

The US is the main destination for Angolan exports (34.9 percent in 2007, according to the EIU), due to oil supply, though China, in second place, “is getting increasingly close.”

In 2007 Portugal regained the place as Angola’s main supplier it had lost in the previous three years to the US (2006) and South Korea (2004 and 2005), in this case due to the supply of oil rigs.

Currently, energy products represent approximately 97 percent of all Angolan exports, while consumer goods account for 60 percent of the country’s imports.

“Despite the peace process having created the basic conditions for the normalization of economic activity in the country (enabling internal mobility, stimulating commercial activity and investment), the lack of physical infrastructures and human resources continue to condition the country’s economic development,” says the AICEP in its report on Angola, published in July.

“Within this context, and continuing the work that has been done, the main challenge for the Angolan government is in the relaunch of sectors outside the oil and diamond industries, so as to increase internal supply and diversify exports, creating employment and reducing poverty,” it said.

The report says that recent years have shown “significant improvement” in economic policy, reflected in most indicators, particularly the increased pace of growth in the GDP and reduction of inflation.

Over the last three years inflation has remained at around 12 percent and should continue at this level in 2009, whereas in 2005 it reached almost 25 percent. (macauhub)