What is the current investment appetite in the region?
Angola is a lucrative investment destination and attracts significant international attention in the energy sector.
Notably, there has been foreign investment in photovoltaic projects, which will bring significant benefits to Angola's power supply and mark a turning point in the diversification of energy supply and its economy. Angola has abundant sunshine, with one of the highest irradiances in Africa.
The opening of Angola to foreign investment in recent years has been well documented. It has led to new public procurement policies with the modernisation of the legal regime, the regulation of the visa scheme, and the launch of investment programs through public-private partnerships. In addition, the government's privatisation program has been carried out in various areas of the economy, including the banking sector, insurance and several other public companies.
Other sectors of the economy have seen similar benefits, including agriculture, oil and gas, mining, telecommunications, heavy industries and real estate.
It is expected that in 2022 public policies to attract foreign investment will be maintained, including legal reform. As there is a great effort to diversify the economy, we will continue to see foreign investment in the structural sectors of the economy (fishing, agriculture, insurance).
In which sectors do you expect to see increased investment and/or financial movement in the next 18 months?
The oil and gas sector continues to be an attractive investment. Investors entering the Angolan market are not only interested in the proven reserves of over 8.2 billion barrels of oil, but also in the decades of industry experience and ongoing exploration campaigns.
Despite being a major oil producer, Angola still has limited refining capacity and imports about 80% of its refined products. The government and Sonangol (the public company that oversees petroleum and natural gas production in Angola) are now refocusing attention on the downstream sector, with plans to expand the Luanda refinery and build three additional refineries – in Lobito, Cabinda and Soyo. Angola aims to have a refining capacity of 400,000 barrels per day, enough to supply the domestic market and export to regional markets.
The Angolan government is turning to natural gas to diversify the energy mix and facilitate a transition to cleaner fuel sources, increasing spending in this area. There is also a greater focus on solar energy projects. The country has 11 billion cu. ft. of proven natural gas reserves and, with the right policies and proper investment, can benefit significantly from the energy transition.
In an attempt to monetise resources and drive socio-economic growth, the government has directed the focus to gas-to-power projects (turning gas into electricity) and associated downstream infrastructure.
There is also a strong focus on the agri-food industry, not only to create jobs, but also to increase domestic production capacity and the supply of domestic products.
Where do you see the key areas of growth or opportunity for businesses?
There is great potential for growth in the fishing, water and agriculture sectors.
With a coastline of about 1,650 km, Angola has rich reserves of fish, shellfish and crustaceans. There is great diversity of species characteristic of cold waters and also of warm tropical waters, respectively in the province of Namibe and off the coast of Benguela. The main commercial marine fish stocks available in Angola indicate an exploitable potential of 360,000 tons.
Given these reserves and taking into account that domestic demand for fish has grown in recent years (partly due to population growth of around 4% per year), it is seen as a priority of the Angolan state and may contribute to the diversification of the economy. Apart from this, there are several opportunities in the salt industry and in the construction of infrastructure to support the sector in general.
Water is an especially sensitive issue, as many Angolans do not have access to clean drinking water, as infrastructure has been destroyed in recent decades (due mostly to the use of landmines during the war). For this reason, the water sector is a priority for Angola. The state is committed to investing in the development and improvement of water access and supply, creating opportunities for investors interested in Angolan water development projects.
Agricultural production has been one of Angola's biggest growth sectors in recent years. In 2020 the agricultural sector saw positive growth of about 5%. Even with the constraints caused by the COVID-19 pandemic, the Angolan government continues to develop initiatives to increase investment in agriculture. Privatisations, rural extension programs and concessions for financing rural and agribusiness operators have been developed, with subsidised interest rates for loans granted to the private sector. The government has announced that it intends to decrease the country's imports by about 50%. The decrease in imports should be compensated by an increase in national production. Tax and exchange incentives are planned for the diversification of exports and support for the promotion of industries considered a priority for Angola, including agriculture.
These measures are included in the Production Support and Export Diversification and Import Substitution Program, which aims to improve the functioning of export support services, the country's competitiveness and to promote the substitution of imports by national production in agriculture, and also in livestock, fisheries, industry, health, training and education.
What is the most relevant regional or pan-African economic trend that you expect to see in the next 18 months?
It is important to note that the International Monetary Fund (IMF) maintains a growth forecast of 3.4% for sub-Saharan Africa. This estimate maintains the April 2021 forecast, in which the IMF predicted a 3.4% recovery for 2021 and 4.1% for 2022.
Angola, boosted by higher oil prices and a gradual post-pandemic recovery, should improve macroeconomic prospects in the near term. The IMF estimates that the country's GDP will grow by up to 2.4% in 2022.
However, Europe is still hesitant with regard to large investments in Africa. China's relationship with Africa is neither recent nor transitory, nor based on exclusively economic interests. It is based on three fundamental pillars: economics, coordination in the multilateral context, and cooperation for development. New big players could emerge in Africa, such as Japan, India and Russia, and there may also be an increase in US economic interest.
We can expect more transnational projects in which Angola can be integrated with neighbouring countries, especially in terms of infrastructure and transport.
In terms of the legal services market, what growth are you seeing on the horizon in the next 18 months?
In the last few years, the trend in imports has been slowing down. This is not only because of increased domestic production capacity resulting from investments in the productive sector, but also a combination of economic factors such as measures in the foreign exchange market and policies to support the domestic industry.
In general terms, the economic impact of implemented projects is positive. There are even clear signs of a focus on national production with a growing trend of investments in the manufacturing industry with emphasis on agriculture, food processing, trade, and the services sector.
The diversification of the economy requires betting on this type of investment. In the near future, the government's efforts are focused on attracting investment for agriculture (production of cereals, oilseeds, legumes), and those directed at certain links in identified productive chains such as the textile industry (production of raw materials), industry, fisheries and mining.
By the end of 2022, under the terms of the privatisation program, there will be a strong increase in the number of Angolan state assets that will be privatised. This includes assets in the banking, insurance, hotel and tourism, industry, telecommunications and oil sectors.
The government intends to partially privatise (up to 30% of the share capital) Sonangol – considered the crown jewel of the Angolan economy. It will be privatised through stock market dispersion in 2022. According to government estimates, the stock market dispersion of 30% of Sonangol’s capital could earn the state between EUR5 billion and EUR7 billion.
In this scenario, in terms of legal services, there will be greater demand in areas related to public procurement, corporate services, mergers and acquisitions, restructuring, finance and projects, energy and infrastructure.