Angola and Mozambique are among the highest-risk African countries, albeit with an upward trend in returns for investors, according to the Risk-Return Index 2019, a study by consulting firms Oxford Economics and Control Risks.
In the study, Angola’s risk score is 6.16, an improvement of 0.13 points, but almost double that of highest ranked Mauritius and Botswana, while Mozambique scores 6.07, also an improvement over the 2018 edition (by 0.11 points).
Mozambique also scores better than Angola on return – 3.72 compared to 3.18 – although developments are less favourable than Angola’s (0.24 vs. 0.69).
In terms of improvement of return, Angola’s is only surpassed by that of Zimbabwe.
Angola is one of the highlights of the study, and its improvement is attributed to the “ambitious reform agenda pursued by President João Lourenço,” since coming to power two years ago, although the country’s situation is assessed with some reservations, recalling that risk and return levels are respectively higher and lower than the African averages.
“A number of budgetary, monetary and regulatory reforms have been accompanied by more significant structural changes that have challenged vested interests and introduced a degree of oversight in economic governance,” the study said.
This process has mainly involved interests linked to the former president, José Eduardo dos Santos, his family and political allies.
“Two years of reform efforts have had an impact, but they have also highlighted the intractable nature of many of Angola’s challenges. Currency shortages persist, the economy continues to rely excessively on oil and we expect 2019 to be the fourth consecutive year of recession,” the analysts said.
As in Ethiopia, they noted, “the grand plans and popularity of reformist leaders have lost momentum as they have come across complex party structures.”
Powerful party figures are unlikely to cease to exert their influence, even while the systems that have secured that same political and economic dominance are undergoing change, according to Oxford Economics and Control Risks, who said that sectors of the economy should be opened up, in an unequal way, based on political interests and considerations. (Macauhub)