Imara African Cement Report Africa, the last cement frontier Angola ...

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On public financial management, a debt management unit is being staffed, and it is expected that a debt management strategy will be finalized, with assistance from an IMF resident advisor. The AfDB-assisted project to strengthen project appraisal capacity and monitoring has not yet been approved by the AfDB Board but nevertheless the authorities expect it to be underway by the beginning of February 2011, delivering usable analysis and input into the 2012 budget formulation process. Legislation to establish a framework for Public Private Partnerships is to be passed in the coming months, and internal capacity to manage such engagements is being built. The authorities are also developing a new framework for enhancing oversight of public enterprises, with the draft legislation already submitted to the National Assembly by end-March 2011. Inflation seemingly under control Despite the upward revision of fuel prices by 50% in AKZ terms and 20% in dollar terms in September 2010, cost push inflationary pressures have been somewhat diluted by the continued tight monetary policy and active sterilisation by the BNA. Inflation has been sticky at around the 15% level on an annualised basis and it is a stated policy intention to reduce this to single digit levels. In the run up to parliamentary elections in 2012, it is likely that fiscal expenditures will be pushed into overdrive. Already in June 2011, the National Assembly approved an across the board increase in civil servant salaries by 15%, while some of the lower ranking employees were awarded increases of up to 40%. Taxation reform underway to cut down widespread tax evasion With abundant oil revenues providing more than enough to satisfy the fiscal requirements, the taxman has not been too concerned with loopholes in the non-oil corporate tax environment. The pervasive nonaccountability and lack of the appropriate checks and balances, together with weak corporate governance structures makes the task even more difficult. A good example of the wide spread tax evasion/avoidance is clearly seen in the banking sector, where the average effective tax rate for the top six banks in 2010 was 12.1% versus a corporate tax rate of 35%. New legislation is currently being reviewed by the National Assembly and the finance minister has already stated the intention to tighten up on tax collection and reporting requirements. The authorities have commenced a multi-year overhaul of the tax system (both policies and administration). Draft legislation modernizing the legal framework is with the National Assembly. An international management consultancy has been engaged to help design a reform program and a road-map for implementation; a timebound action plan was submitted to the cabinet at the end of June 2011. New Private investment law to drive inward investment agenda The National Agency for Private Investment (ANIP) was created in 2003, with a specific mandate to support the development of the private sector. In the same vein, in 2006 the Angola Development Bank (Banco de Desenvolvimento de Angola, BDA) was created to help finance the country‟s reconstruction and development needs. The BDA manages a state sponsored investment fund - where 3% of annual oil revenues and 2% of diamond revenues are channelled into the non-oil economy. The new Private investment law was enacted into law in April 2011 and while it is not one of the most investor friendly laws, is light years ahead of the previous legislation. The main tenets of the new law include a minimum investment threshold of US$ 1m and a minimum investment period of 3 years before which repatriations of capital and dividends are permissible through official channels. With a backlog of licence applications in virtually every segment of the economy, Angola remains in a privileged position to cherry pick new entrants into the economy. Due to their recent establishment and immature structure, this deliberate protectionist strategy has been implemented, primarily to ensure that Angolan control is maintained, but also that locally owned companies are not disadvantaged and squeezed out of the market by leaner and more competitive international groups. The banking and retail sectors are slowly opening up to foreign competition, however vast swathes of the economy continue to be characterised by oligopolistic leanings, with telecommunications, cement, brewing and insurance being most notable. 9
Constraints to the growth story Angola continues to rank at the bottom of the World Bank‟s Doing Business ranking, which tracks reforms aimed at simplifying business regulations, strengthening property rights, opening up access to credit and enforcing contracts. In „Starting a new business‟ category Angola ranked 164 out of the 183 economies analysed, unchanged from 2010. Deterioration was also recorded for the registration of properties, obtaining credit locally, the payment of taxes and closing a business. Undoubtedly, Angola remains one of the most difficult countries in which to do business. On the positive side, dealing with construction permits became easier, as did the protection of investors and cross border trade. Though progress has been made in rehabilitating Angola‟s war-torn infrastructure, must has still to be done. It seems ironic that a country with the capability to pump oil from wells 3 000 metres deep, cannot supply its largest city with running water and electricity. Commuting problems continue to harm businesses in the city and major problems also persist in the port of Luanda, which cannot keep pace with the rapid development of the economy and the huge volume of cargo entering the country. Delays at the port prevent the entrance of goods, which helps to inflate prices for goods and services. Initial start-up costs for businesses are prohibitively high, hampering local participation in the economy and power outages are common, especially in Luanda. Less than 20% of Angola's population has access to electricity and 68% of businesses generate their own power. An acute shortage of skilled staff also undermines private sector growth. Angola needs to do even more to improve the ease of establishing a business within its borders. To this end, priority should be given to creating a healthy business environment for domestic and foreign investors; implementing structural reforms, continuing to rehabilitate infrastructure, increasing transparency in government procurement, and reforming the legal system. Table 4: 2011 Doing Business Survey Rankings (out of 183 countries) Still one of the hardest places in the world to do business FY2010 FY2011 Starting a business 164 164 Dealing with construction permits 128 119 Registering property 173 174 Getting credit 109 116 Protecting investors 57 59 Paying taxes 135 142 Trading across borders 167 166 Enforcing contracts 181 181 Closing a business 144 147 Investing in Angola – SWOT Analysis Strengths • Strong Oil revenues • Resultant solid foreign reserve position • Political stability • Strong GDP growth • High capital inflows (FDI) • Bottom-heavy demographics; supports organic growth in consumption Weaknesses • Poor skills base; High level of expat dependency • Exorbitant operating costs • High unemployment • Poor infrastructure • Low productive capacity • Weak legal framework (particularly property rights) • Bureaucracy and red tape • Centrist government, overregulation • Operational inefficiencies; power/water shortages; clogged ports • High levels of corruption Opportunities • Agricultural growth potential • Expansion of oil sector • Tourism potential • Deepening of the financial sector and capital pool • Infrastructural rehabilitation and expansion Threats • Oil price shocks • Exchange losses arising from the US$:Euro cross rate; Oil revenues in US$; Imports from Portugal and Europe in € • Local currency weakness • Temporary shortage of US$ and hedging/speculation • Lack of political will to implement needed reforms Angola Sub-Saharan Africa OECD Procedures (number) 8 8.9 5.6 Time (days) 68 45.2 13.8 10
Page 1 and 2: Angola Imara African Country Cement
Page 3 and 4: Angola Country Map 11a 1 9a a 8 5 2
Page 5 and 6: Executive Summary Comeback post 201
Page 7 and 8: Table 1: Timeline for major policy
Page 9: Table 3: 2011 Budget and Q1 income/
Page 13 and 14: US$ Millions US$ per barrel over 10
Page 15 and 16: Chevron also holds a 38.1% interest
Page 17 and 18: Italy Although Italy‟s oil intere
Page 19 and 20: SONANGOL: Angola’s de facto Sover
Page 21 and 22: Oil Majors in Angola´s Petroleum S
Page 23 and 24: In January 2011, Eni was awarded ri
Page 25 and 26: BAI BFA BESA BPC Banco BIC BESA Ban
Page 27 and 28: Table 9: Regional Banking Comparati
Page 29 and 30: Arguments for and against the devel
Page 31 and 32: Orascom Mobinil TNM Safaricom Econe
Page 33 and 34: Telephonic listings of Angola (ELTA
Page 35 and 36: Millions of Hectolitres NB Delta Cu
Page 37 and 38: Hotels, Tourism and Construction Ov
Page 39 and 40: • Kinaxixi Shopping Center and Of
Page 41: Capital Securities Botswana Ground

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