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

Improving sovereign credit risk will pave the way for the issuance of international bonds in the near future, and
eventually the creation of a local equities market.
Banking sector set to expand with new Energy sector legislation
The licensing of South Africa‟s Standard Bank in December 2010 marked the first steps towards the deepening of
the banking sector and the development of a more competitive environment in order to improve the product
offering, efficiency and quality of service. Standard Bank is the first Anglophone bank licensed to operate in
the country, and as Africa‟s largest bank (with a significant Chinese shareholder), access to international capital
markets should lower the cost of debt funding for Angolan companies.
New legislation requiring all international oil majors to process all receipts and payments through the domestic
banking sector is on the cards and has the potential to at least double the size of the banking assets, currently
at circa US$45bn. This will boost revenues for players in the local banking sector and increase tradability of the
Kwanza, which is in line with stated policy initiatives.
Other areas that will grow in the financial sector include retail banking (with market penetration at a mere
10%), micro-finance, for which new legislation has just been published, short term insurance, which is now
compulsory for vehicles, and the long awaited launch of the equities market.
Stable political outlook and increasing international influence
Following the changes made to the constitution in January 2010, with a current parliamentary majority of 82%
and a weak and fragmented opposition, the MPLA is assured of victory in the forthcoming 2012 general
elections. According to the new constitution, voters are now required to vote for a political party rather than a
presidential candidate. Consequently, no changes are envisaged to the status quo and political stability should
be maintained.
Through the African Union, CPLP and SADC, Angola was particularly critical of NATO‟s role in the deposition of
Libya‟s Muamar Gadaffi and is playing an increasingly important role in regional conflict resolution. Cote
d‟Ivoire, DRC, Madagascar and Zimbabwe are hot political spots in which Angola is playing a diplomatic role.
More spatially Angola‟s oil diplomacy has been extended to Cameroon, South Sudan, East Timor, Namibia,
Equatorial Guinea, Cape Verde, Liberia and Iraq among others. Coincidentally and unsurprisingly, the large
majority of these countries are known to have petroleum reserves and there is no doubting, Angola‟s continued
increasing stature in global geopolitics.
Commencement of gas production in 2012 will see US taking China over as the largest trade partner
The commencement of gas exports to the US and Europe 2012, will further buttress the country‟s balance
sheet. Enhanced gas export revenues should tilt the scales in favour of the United States, which should
overtake China as the largest trade partner (US$11.2bn in 2009, WTO).
With proven technology enhancements in Blocks 18, Angola possesses one of the most sophisticated ultra-deep
water petroleum extraction industries in the world, after Brazil. With the licensing of 11 new oil blocks in the
eastern Atlantic waters, to the south of existing extraction activities (Figure 15), the focus on developing the
country‟s deep water pre-salt oil deposits has been intensified.
Conclusion: Poised for yet another decade of growth
Already one of Africa‟s richest developing countries, the stage has been set to usher in yet another decade of
aggressive growth, from a high base (in an African context). The preponderant focus continues to be on the
energy sector, where Sonangol runs a very tight ship. The non-oil sector is growing at a faster rate, however,
from a lower base, it will take a while to reduce the country‟s dependence on the energy sector.
Obstacles to the strategic thrust are numerous and varied and include the poor legislative environment, poor
infrastructure, a weak human resources base, water and power problems, which all contribute to making Angola
one of the most expensive and inefficient places in which to do business. Not least is the legacy (and culture)
of vested interests, nepotism and hegemony structures which pervade virtually every aspect of Angolan life,
and ensure a less than level playing field. There is a growing acceptance that the private sector needs to play a
greater role if the growth momentum is to be maintained, however, and Angola is now on its way to opening up
to foreign investors. Certainly, this will go a long way in job creation and the improvement in living standards
for the lower echelons of the society, who have yet to benefit from the country‟s wealth. Angola remains one
of the most dynamic of Africa‟s emerging markets, and the most credible candidate to deliver on the abundant,
pent up potential, to the benefit of Angolans and Africa as a whole.
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