China and Portugal’s trade relation with Angola increasingly important

13 May 2013

China and Portugal are becoming increasingly important for trade relations with Angola, whilst the United States and France are losing ground in the country’s balance of trade, according to Angolan figures cited by Portuguese bank BPI.

In the March report on the Angolan economy, analysts from BPI noted increased Angolan trade with China and Portugal. China purchases most of Angola’s exports, which are essentially made up of crude oil.

Figures from the Angolan National Statistics Institute (INE) showed that by the end of the fourth quarter of 2012 almost half of Angolan exports were sent to China, which was a rise in comparison to 36 percent of exports at the end of 2011.

The United States, India, Canada, Taiwan and France saw their relative weighting in Angola’s sales drop, a general trend that only South Africa withstood. In terms of Angola’s imports China, Portugal, Brazil and South Africa posted a rise, the United States saw its share drop and France’s share remained the same.

According to the latest estimates from the National Bank of Angola and the International Monetary Fund (IMF) Angola‘s exports in 2012 were in excess of US$67 billion, which was slightly down on 2011, and its imports totalled US$22.6 billion, leading to a trade surplus of US$44.4 billion, or 39.5 percent of GDP.

In its report on Angola BPI also said that the new legal framework for transactions in the oil sector, which requires payment for goods and services be carried out through Angolan banks, will increase the amount of foreign currency available to the Angolan banking sector.

Since October of last year payment of goods and services to residents by oil concession holders or operators, in both foreign and national currency, have had to be paid through an Angolan bank and, starting on 13 May, tax payments must also be made through Angolan banks.

Starting in July all payments of goods and services by oil sector players must be carried out in national currency, and the process will be concluded in October when all oil companies “will be required to process all their payments through accounts in an Angolan bank.”

“The law sets out that two accounts should be opened, one in dollars for payment of goods and services supplied by foreign entities and a second account, in kwanzas,” when the supplier is resident in Angola, said BPI.

As a result of this move BPI expects “a sudden increase in operations and volumes within the financial system,” in an initial stage, as in 2012 the estimated value of oil exports was around twice the amount of deposits in the Angolan banking system and even “a slight valuation pressure on the national currency,” the kwanza.

BPI projects growth of 6.8 percent this year for Angola, which is higher than projections from the IMF (5.5 percent), but lower than the forecast from the Economist Intelligence Unit (8.3 percent) and government figures (7.1 percent). (macauhub)