Economic relations between Portugal and Angola are a “two-way street”

5 September 2011

Lisbon, Portugal, 5 Sept – The economic relations between Portugal and Angola are at a high and are increasingly a “two-way street,” with a greater number of exports and investments originating in Angola, said Portuguese analysts Paulo Gorjão and Pedro Seabra.

In an article for the South African Foreign Policy and African Drivers Programme, entitled “Crossroads: Portugal and Angola Rising,” the two analysts noted that in recent years the two economies, “have got considerably closer, with several mutual investments, helping to stimulate local growth.”

Trade, in particular, has shown “impressive progress” with Angola rising from Portugal’s ninth biggest export market in 2002 to the fourth, in 2009, when it became Portugal’s largest market outside the European Union (EU).

Investments totalled 693 million euros in 2009, almost 12 times the amount in 2002, despite falling in 2010, as did trade due to Portugal’s economic difficulties, said Gorjão and Seabra.

The banking sector has been a preferred target for these investments, and operations all five of Portugal’s major banks (Caixa Geral de Depósitos, SantanderTotta, Banco BPI, Banco Espírito Santo and Millennium bcp) have operations in Angola, as do the biggest construction companies (Mota-Engil, Teixeira Duarte, Soares da Costa, Somague and Edifer) and even telecommunications companies.

In the oil sector, Galp Energia has close ties with Sonangol, its shareholder, based on exploration of blocks on the Angolan coats and a partnership n Cape Verde, Enacol, which reflects a “growing convergence of interests,” they noted.

“There has also been an official push towards directing these investments to provinces other than Luanda. Angola plans to bolster the diversification of its economy and to combat desertification of the interior of the country. It also plans to take advantage of business opportunities that have been neglected by other international players,” they said.

This is the case of Huíla and Benguela provinces, which have a great need for infrastructure.

But, said Gorjão and Seabra citing a diplomat, the relationship between the two countries is now, “a two-way street,” with imports of Angolan products into Portugal totalling over 70 million euros in 2002 and rising to 560 million euros in 2010, almost entirely thanks to oil.

Angolan investments rose from 1.6 million euros in 2002 to 116 million in 2009, reflecting, “A sudden interest by Angolan companies in business opportunities in Portugal,” a trend that began in 2007.

Although there are several private Angolan companies behind these investments, the main investor is oil company Sociedade Nacional de Petróleos de Angola (Sonangol), which has accumulated a stake in Portugal’s largest private bank, Millennium bcp, that now stands at 12.44 percent and in Galp Energia, with Angolan businesswoman Isabel dos Santos.

The businesswoman has been the most active investors, taking part in the founding in 2008 of Banco Internacional de Crédito (BIC), buying 9.8 percent of Portugal’s BPI bank and 10 percent of telecommunications company ZON.

Both these players have led the “surge of Angolan capital,” in Portugal, which has mostly “been welcomed by Portuguese companies, which have sought to diversify their shareholder structure whilst opening themselves up to business opportunities in Angola.”

At the end of 2010, Angolan investment accounted for 3.8 percent of the Portuguese stock market, a total of 2.18 billion euros.

Growth in two-way trade officially encouraged and promoted has opened up the way for greater flows of mixed capital between Angola and Portugal, which has favoured the development of vast transnational companies,“ said the two analysts.

According to the authors, the developments in political and economic relations demonstrate that Portugal remains in a top position for Angola’s foreign priorities.

“Therefore, it is likely that these ties will be further deepened whilst Angola’s trajectory continues to rise within Africa,” they wrote. (macauhub)