Market Overview

Lucrative Investments In Angolan Economic Sectors

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Lucrative Investments In Angolan Economic Sectors

Angola is a mineral-rich African nation, with extensive natural resources including crude oil and diamonds. In fact, Angolan economic activity far outstrips that of any other sub-Saharan African nation by a long margin. The economic growth rate has exploded thanks to vast crude oil reserves which are now being tapped. Angola shares a particularly profitable business partnership with its former colonial ruler, Portugal. Various tax incentives are advanced to encourage the two-way business partnerships between Luanda and Madeira.

Over the years, several enterprise surveys have been conducted in Angola. These surveys indicate interesting trends. For example, the business sector is dominated by other services, manufacturing, and to a lesser degree, retail. Firm sizes in Angola are typically small, with between 5 and 19 employees. A large minority of firms are medium-sized businesses employing 20 - 99 employees, and a minority are large-scale corporations with 100+ employees. There is a heavy concentration of business activity in the capital city of Luanda, with a minority of firms surveyed operating in other territories such as Benguela and Huambo. 

Recently, the Germany Africa Business Forum, otherwise known as the GABF endorsed the Angola Oil & Gas Conference 2019 taking place in Luanda. German investment enterprises will be able to showcase their technological advancements to Angola, engaging in the continent's largest oil producing market. Angola has undergone transformative change, thanks to widespread government reforms. Now, foreign investment has grown alongside a strengthening oil and gas sector. Angola's economic engine is being fuelled by a resurgent economy with plenty of lucrative opportunities for investors. Oil investors are drawn to Angola for many reasons. Reforms have been taking place, allowing German investment firms to tap into the resource-rich Angolan oil reserves.

Stats suggest that the Angolan annual GDP growth rate has increased 2.2% year-on-year for Q4 2018. This reversal follows multiple quarters of negative growth rates (contractions) in the country. The strongest growth drivers in the Angolan economy include internal trade, finance and insurance, construction, real estate, post and telecommunications, manufacturing, and extraction of diamonds and other minerals. Oil represents 47% + of Angola's total GDP. It is also responsible for 75% of government revenues, and 98% of the country's export earnings. Outside of oil, there are also major economic drivers such as wholesale and retail sales. These accounted for 21% of GDP, agriculture & fishing 10% of GDP, construction 7.7% of GDP, and manufacturing 6% of GDP.

Foreign investments in Angola are increasing, thanks largely to a more favourable government/business environment. However, foreign direct investment (FDI) has not always enjoyed bullish activity in Angola. In 2016, FDI amounted to $4.1 billion. By 2017, those investments slowed sharply and resulted in $-2.25 billion in inflows. The total value of FDI stock is pegged at around $12 billion which is approximately 10% of Angola's GDP. This information was published in the 2018 World Investment Report by UNCTAD. Most of the investments in Angola are channeled directly into the oil sector. China is largely responsible for these FDI flows, followed by other countries such as the Netherlands, the US, France, and Portugal.

Beyond oil, Angola is also a hub for other economic activity such as hydroelectric potential, agricultural land, minerals, fisheries, and hydrocarbons. Leading entrepreneurs and business moguls routinely tout the significant investment opportunities in Angola. One such entrepreneur, Isabel Dos Santos is deeply committed to Angolan growth and development through her corporations including Unitel, ZAP, Sodiba, Candando, and Efacec. 

Dos Santos has deep connections to her home country and is widely regarded as one of the game changers driving economic and social change with young Angolans. Dos Santos is actively involved in social entrepreneurship, with grass-roots initiatives aimed at upgrading social and economic systems throughout the country. She funded a strawberry plantation which provided work for 120 women in Angola, runs anti-malaria efforts, clean water initiatives, and educational and skills development training programs too.

Angola's strengths for investment purposes

The country now has a strong and stable political infrastructure. The current leadership is backed by the political majority and this brings tremendous calm to the financial markets. With its large market, Angola can generate substantial revenues internally. Among others, Angola is also home to vast mineral resources such as crude oil and diamonds. It's also an agriculture-rich country with tremendous tourism potential. On the flipside, oil price instability always needs to be factored into the equation. Infrastructure growth and development is continually taking place, and there are high entry costs for new market entrants. Stakeholders looking for investment opportunities in Angola have several options available. Foremost among them is the Agency for Private Investment in Promotion of Exports of Angola Economic Developments and Prospects in Angola (AIPEX). The economic engine of Angola is alive and investors are actively ploughing funds into this country’s markets.

Image sourced from Pixabay

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