Angola Successfully Navigating Rough Business Climate

Angola Successfully Navigating Rough Business Climate

From Business Day Live

Angola is a land of promise and plenty. Richly endowed with minerals, water and arable land, its citizens laid down their weapons little more than a decade ago, after 27 years of mostly unremitting civil conflict that followed a long struggle against Portuguese colonialism.

Now the more than $100bn economy is showing the effects of peace – and the curse of the country’s oil wealth. Since the death of National Union for the Total Independence of Angola (Unita) guerrilla leader Jonas Savimbi in 2002, the nation of about 20-million has gone from boom to bust. Between 2009 and 2010, frenetic building activity in the capital, Luanda, ground to a halt. Foreign civil engineering contractors were not paid in sums amounting to billions of US dollars, while emerging cityscapes turned into white elephants.

Still, it is hard not to be impressed with the renewed energy of the sprawling capital. There are no obvious beggars, only hawkers of airtime, cold beverages and household bric-a-brac. The slums and spaza shops press up against small fashion stores and cellphone outlets, new high-rises and old Portuguese colonial buildings.

Luanda was built for about 750,000 people. During the war at least another 5-million arrived. But many of the city’s shantytowns are now being demolished, making way for commercial and residential developments. These include swathes of upmarket businesses, hotels and houses in suburbs such as Talatona, and many square kilometres of reclaimed bush being turned into gigantic industrial estates.

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The pace of the activity, despite the uncertainty in the wake of the brutal civil war, is extraordinary. Outside China, few places in the world have seen such growth in such a short time, and South African companies are stepping into the breach to tap Angola’s peace dividend.

While setting up and operating a business in the country is not easy, increased per capita wealth — much of it from oil production — has led to soaring demand for consumer products. Nampak Bevcan, the only beverage can maker in sub-Saharan Africa providing steel cans with easy-open aluminium ends, began exporting empty tinplate cans to Angola from its plants in South Africa in 2005. However, demand for Angola’s Cuca beer and Coca-Cola soft drinks was so high that it decided in 2006 to build a R1bn factory in Luanda.

Since April 2011, the plant in the new Viana industrial area, about 30km from the centre of the capital, has produced 700-million beverage cans a year. It generates about R850m of revenue annually and employs nearly 200 people. The plant is funded from cash resources and borrowings in South Africa, and within about 18 months a new production line will be installed, enabling it to make 1.5-billion cans each year.

Looking beyond resources

Angola’s Secretary of State for Industry, Kiala Ngone Gabriel, says the country’s vision is to add value to its resources, which include marble and timber. “We don’t want to just depend on oil and diamonds,” he says. “We want to transfer some capital to the manufacturing sector and education. Our mainstay is oil. The oil sector is not a good employer. We want to produce, train people, add value and create jobs.”

He says Angola offers business incentives for restoring capacity lost to war, and for developing rural areas. This includes new mining activities, deriving industrial chemicals and fertiliser products from oil, and expanding the country’s agricultural potential. Along with road and railway rehabilitation, and improved energy and water use, Mr Gabriel says the government is keen to support the private sector.

Read more at bdlive.co.za