Corruption Threatens To Scare Off Foreign Investors In Angola’s Business Boom

Corruption Threatens To Scare Off Foreign Investors In Angola’s Business Boom

From Money Web

Hot to tap into Angola’s booming oil economy for over a decade, foreign investors are finally seeing the country open up new financial avenues.

But will woeful transparency and corruption thwart them?

Five-star hotel lobbies in the capital Luanda bubble with talk of deals to profit from the country’s economic success, with the government adding to the lure by announcing plans for a $5 billion sovereign wealth fund, a bourse and a Eurobond.

Buoyed by rising crude production that is already worth $70 billion a year and praise from the world’s main lending agencies, President Jose Eduardo dos Santos wants Angola to step on to the international financial stage.

“Angola is definitely trying to develop an international strategy,” said Alex Vines, an Angola expert at London-based think tank Chatham House. “That, however, has an impact in terms of transparency, given the demands of international markets.”

Africa’s biggest oil producer after Nigeria, Angola has posted rapid growth since the end of a long civil war in 2002 but has been beset by criticism of its opaque finances and pervasive graft. Transparency International ranks Angola as the 19th most corrupt country in its global index of 176 countries.

Campaign groups like Global Witness have urged the government to report how much oil revenue it receives and spends in a country where an elite has become vastly rich while over a third of around 19 million Angolans live in poverty.

In Luanda, one of the world’s most expensive cities, the elite travels to luxury compounds in top-of-the-range SUVs while the majority live in sprawling slums, often without electricity.

The ruling MPLA party says there has been much progress on transparency and cites praise from the International Monetary Fund and World Bank. It also points to new rules in a fledgling banking sector.

“The new rules are important, at the level of those in industrialized countries,” said Tiago Dionisio, research analyst at sub-Saharan investment bank Eaglestone. “There’s much to be done, but it’s progress.”

Read more at Money Web.