Angola Rise of a new African superpower?
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FOCUS ANGOLA Angola Rise of a new African superpower? 48 African Business | June 2012
The Angolan economy is replete
with contrasts: on the one hand, Angola
with its treasure trove of natural Area 1,246,700 square km
resources, the country has Geographical Bordered by the Atlantic
been registering record levels features Ocean, Namibia, the
of growth; on the other hand, DRC, the Republic of
it remains one of the poorest Congo and Zambia.
countries in Africa. While its Angola’s most important
main cities sprout skyscrapers river is the Cuanza, from
which the country’s
seemingly by the week and real
currency derives its name
estate prices are some of the
Capital Luanda
highest in the world, the cost of
living for most of the population Population 19.6m
is astronomical. Perhaps Angola’s System of Presidential republic,
hitherto lopsided development government multiparty democracy.
reflects the long and destructive The National Assembly
(Assembleia Nacional)
years of the civil war. With peace has 220 members, elected
now firmly entrenched, Angola for a four-year term.
is making up for lost time with
President President José Eduardo
vast infrastructural projects and dos Santos, Head of State
a strong attempt to diversify and Head of Government
the economy. It has become a since 1979
magnet for investors from all GDP $115.9bn (2011)
corners of the world, with China GDP per capita $5,900
leading the charge. Will Angola
Industry (% of GDP) 65.8%
be able to punch at its correct
weight and stand among the Services (% of GDP) 24.6%
continent’s economic giants as its Agriculture (% of GDP) 9.6%
vast natural resources suggest it Oil and oil-related 80% of GDP
should? activities
Diamonds 5% of GDP
Inward FDI 13.8% of GDP
GDP growth 2010 1.7%
Angola’s
GDP growth 2011 7.9%
Expected GDP 10.5%
economic growth 2012
Agriculture: Bananas, sugar cane,
contradiction Produce coffee, sisal, corn,
cotton, cassava (manioc),
tobacco, vegetables,
O
plantains; livestock;
n paper, Angola’s potential is glar- forest products; fish
ing. In 2008, the country startled Industries: Petroleum; diamonds,
many when it temporarily overtook iron ore, phosphates,
Nigeria as Africa’s biggest oil pro- feldspar, bauxite,
ducer. Its GDP, which is estimated to grow uranium, and gold;
by around 11% this year, has been in double cement; basic metal
figures for several years over the last decade. products; fish processing;
Angola’s demographics are also impres- food processing, brewing,
sive: its population flirts with the 20m mark tobacco products, sugar;
and, for Africa, it is strikingly urbanised – textiles; ship repair
nearly 60% of the country’s citizens live in Projected $122.5bn
towns and cities. Its oil sector is booming GDP 2012
African Business | June 2012 49
FOCUS ANGOLA
and interest in its diamond-mining potential
is reported to have reached record-breaking
levels. Infrastructure development projects
have also been thriving, with roads, bridges
and railways being revamped at a breakneck
speed. And, unsurprisingly, foreign interest
in Angola with respect to all these sectors is
intensifying.
“The outlook is very bright for Angola: we
anticipate double-digit economic growth
over the next few years, thanks largely to a
number of sizeable oil projects which will
be coming online,” says Lisa Lewin, head
of sub-Saharan Africa Analysis at Business
Monitor International (BMI), capturing the
mood well.
“However, there are several other factors
which should also prove growth-supportive:
investment from international oil companies
into Angola’s sub-salt resources, various
infrastructural development programmes,
and increased government spending in the
run-up to elections,” she adds.
10%
Yet Angola’s economic progress is precari-
ous and it remains one of the world’s poor-
est countries. “Despite the rapid headline
growth rates, poverty remains widespread,
with around two thirds of the population
living on less than $2 a day, and the gap be-
tween rich and poor has been growing,” says
Lewin of BMI.
Indeed, the World Bank’s last poverty Economists have projected around
head-count ratio for the country found that 10% GDP growth for Angola this year,
nearly 55% of the population live on less than due to the hike in Angola’s exports of its
$1.25 a day. And around two thirds, as men- most lucrative natural resource: oil
tioned above, live on less than $2 a day. The
richest fifth of the population hold almost
two thirds of the country’s total wealth. the government is still engaged in a daunting
Life expectancy is depressingly low, at struggle to reintegrate them properly back
51 years, and Angola has one of the world’s into society. In some ways, the zeal with
highest infant mortality rates. Accusations which Angola has bounced back since the
of corruption are frequently levelled at the conflict has been remarkable. In other ways,
country’s government, headed by the long- there have been some serious rehabilitation
standing President dos Santos. failures.
Angola is also a recovering economy. This all makes economic analysis of the
Its infrastructure, production and labour country tricky. Both chimerical optimism,
pool were left annihilated by a civil war that infused with utopian visions of Angola stand-
racked the country for more than 20 years, ing alongside South Africa and Nigeria as a
and only came to an end in 2002. It is difficult potential African superpower, and gloomy
to exaggerate the effects the war has had on despondency that Angola is yet another Afri- President dos Santos (above) heads a recovering
the economy. It led to 1.5m deaths and left can country doomed to be defined by poverty economy. Infrastructure development includes
roads and a Luanda construction boom.
over 4m citizens internally displaced. and corruption are tempting depending on
Agricultural production, oil extraction what figures are invoked.
and gold mining virtually ground to a halt. In the end, the most informed opinions
Infrastructure was destroyed. A generation of will draw on observations and assertions
Angolans have missed out on education and from both camps.
50 African Business | June 2012
most lucrative natural resource: oil. The gov- former Portuguese colony, Brazil, is also one
ernment has invested heavily in oil explora- to watch. In the last six years, the country has
tion and infrastructure to boost production extended $3bn of credit lines to Angola, and
and capacity. Its enthusiasm is now paying the activities of Brazilian construction firm,
dividends: Oil accounts for 90% of export Odebrecht, in the country are intensifying.
revenues and 80% of government revenues. Yet, the drawbacks of the country’s reli-
Moreover, Angola is anticipated to rev up its ance on revenue from oil exports became
oil output in coming years, through further clear during the global crisis of 2008–2009,
expansion of operations in both onshore and when slowing demand from oil-consuming
offshore facilities. countries caused the average US price of oil
Using its new oil-based windfall, Angola to dip to $56.15 a barrel (inflation adjusted).
has been able to make dramatic strides in GDP growth duly collapsed in Angola, plum-
terms of rebuilding its infrastructure. The meting to 2.4% in 2009 and 2.3% in 2010.
results of the construction boom are overt Thus, any projections when it comes to
in the country’s dusty capital, Luanda, where Angola’s GDP growth prospects for the years
skyscrapers and cranes graze the skies, and to come are inevitably volatile, being ulti-
concrete mixers are becoming as common mately tied to oil prices. Any assessment of
as street-food stalls. the sustainability of the Angolan economy
Much of the country’s construction efforts must therefore also rest on tight scrutiny of
have involved the revamping of thousands of its progress in diversifying its economy away
kilometres of its main, secondary and tertiary from oil-based wealth.
roads and railway tracks. Moreover, infra-
structure development efforts are becom- Diversification:
ing more ambitious by the day, from plans staggering rather than striding
to build Africa’s biggest airport to bringing Experts warn that Angola’s economy is dan-
4G networks to Angola in advance of many gerously undiversified and overreliant on oil
European countries. for capital. It is, however, true that, to a very
It therefore comes as little surprise that limited degree, other non-oil aspects of the
foreign interest in Angola is deepening. Chi- Angolan economy are also anticipated to
na, in particular, has captured headlines by grow over the next few years.
pumping billions into the country in the Unsurprisingly perhaps, the one non-oil
form of loans and credit lines in an attempt aspect of the economy that is perhaps set
to gain favoured access to Angola’s oil fields, to flourish the most in coming years also
an arrangement which has been dubbed ‘in- comes within the extractive category – the
frastructure for oil’ by observers. mining sector.
Such financial assistance has mainly fo- Angola now has one of the biggest and
cused on public investment projects in in- most varied portfolios for mining on the con-
frastructure, agriculture and telecommu- tinent and is the world’s third major supplier
It comes as little surprise that
nications. of diamonds. Moreover, diamond extraction
foreign interest in Angola is
Meanwhile, bilateral trade between China is set to increase significantly in coming years
deepening. China has pumped
and Angola reached $120bn in 2010, making – last year, the industry recorded its best ever
billions into the country
Angola China’s largest African trade partner. production figures. And with 60% of Angola’s
And Chinese firms, as well as ramping up diamond-rich territory still awaiting explora-
Bouncing back from the brink their operations in Angola’s oil sector, are tion, the potential is massive.
Given the formidable traumas that the coun- keen to explore new areas of the country’s Yet, in many ways, the country has a far
try’s economy has been exposed to in the economy, such as the diamond mining sector. way to go. Take the country’s ailing agri-
recent past, its current growth level is all the European counties have also been eager to cultural sector. Before the war, Angola was
more impressive. step up their relations with Angola recently. self-sufficient in virtually all food crops and
Economists have projected around 10% For example, the UK’s annual investment in exported various products including sisal,
GDP growth for this year. The country’s GDP Angola has reached $3bn, making it the coun- banana, tobacco and maize. It was also the
growth figures from slightly further back are try’s second-largest investor. And, although fourth-largest coffee producer in the world.
also staggering – between 2005 and 2007, trade with Germany is relatively modest, Now a large proportion of food is import-
GDP growth averaged around 21%, peaking German construction companies are showing ed and only 10% of the 35m hectares of the
at nearly 23% in 2007. a strong appetite for building their stake in country’s cultivable land is being used for
Such growth has been overwhelmingly Angola’s infrastructural development. agriculture.
due to the hike in Angola’s exports of its The interest of rising power in fellow The civil war has been a big contributing
African Business | June 2012 51
FOCUS ANGOLA
In AN
we see
The Capanda Dam on the Cuanza river generates
hydroelectric power with a capacity of 520MW.
In ANG
ating a skilled labour pool: because of the
civil war, a whole generation of Angolans
have missed out on education and training.
we see op
The overall proportion of skilled workers
is low – 74% of those aged 20-24 years old
are unskilled, according to the OECD. That
figure is 68% for those aged 25 to 29. Eighty-
eight per cent of women in Angola are also
unskilled.
The implications that this has in terms
of boosting non-oil aspects of the economy
In ANGOLA
and encouraging foreign firms to invest in
both industry and agriculture is, of course,
massive.
we see opportu
There have been some attempts to tackle
this issue – a major three-year government
plan to boost technical education levels was
announced in 2005, which included the con-
struction of 35 technical institutes with Chi-
nese support in the form of capital.
factor to the poor state of agriculture in An- Yet, according to the OECD, the curricu-
gola. A particularly destructive repercussion The government has shown lum needs updating and there are no known
of that war is the fact that large tracts of land willingness to make the plans to train new teachers. There are also
remain abandoned because the prevalence agricultural sector a priority and nowhere near enough vocational training
commit much-needed investment
Best Inve
of land mines, hidden in these plots during centres in Angola to meet demand.
the conflict. Worryingly, alleged corruption is also
The government has nonetheless shown There have been some attempts to reinvig- reportedly depriving Angola of the capital
an encouraging willingness to make the agri- orate Angola’s manufacturing arm, however. investment that the non-oil sectors of its
cultural sector a priority and commit much- In the 1990s the state undertook a privatisa- economy need to develop.
needed investment: in 2009 it announced its tion drive and began its battle to encourage The Angolan government has shown some
intention to commit no less than $12bn to foreign investment. And there is a smattering glimmers of willingness to reform. Yet the
agriculture and increase cereal output five- of evidence of such foreign interest today. country’s ranking in Transparency Interna-
fold to 15m tons by 2013. Although some mooted manufacturing tional’s Corruption Perceptions Index for 2011
It is, nonetheless, clear that transform- ventures, such as Volkswagen’s plans to build was poor, with the country coming in 168th,
ing the sector will be no easy task: Angolan a car plant in Angola, have not come into a worse result than in 2008.
banks are reportedly reluctant to lend to fruition, others have resulted in success. Angola is awash with advantages; from
farmers, and disease, poor practices when
it comes to management and harvesting of
For example, the South African packing
company Nampak, which opened its first Best Investm
its natural resources stockpile to its enviable
demographics, the country has several pil-
crops, scarcity of vital inputs and lack of plant in the country in 2011, plans to build lars of strength which it will be able to lean
training support for farmers continues to two further manufacturing facilities. on when propelling itself towards further
prevent sufficient growth within the sector. International organisations have also economic growth.
The country’s manufacturing industry is shown a keenness to boost SME manufac- Experts assess that impressive growth
also struggling to take off. The area contrib- turing. should materialise in coming years, as long
utes only slightly to the economy, making up For example, the International Finance as the prices of its major export, oil, remains
5.79% of value-added GDP in 2010, according
to World Bank figures.
Corporation (a member of the World Bank
Group) has recently provided loans to com-
high.
Best Investment Ba
Yet, the country’s economy is danger-
Moreover, this figure represented a de- panies within the sector: one to a cement ously undiversified and faces some daunting
crease from 2009, when industry contributed plant worth $27m and one to a soap manu- macro-economic challenges. With both po-
6.07% of GDP. Although manufacturing facturing firm. litical and economic power still heavily con-
flourished before the war, the onset of con- centrated in the hands of very few in Angola,
flict compromised the skills of the work pool Creating a skilled labour pool perhaps it is fair to assert that whether these
and disrupted production; the sector is still Perhaps the most daunting task that the will be tackled depends, more than anything,
recovering from these setbacks. country faces over the next decade is in cre- on the mettle and appetite for change of
52 African Business | June 2012
FOCUS ANGOLA
Oil rules all
Angola's Minister of Petroleum Jose Maria
Botelho de Vasconcelos (below): the importance
of oil to Anglola cannot be overstated.
The acceleration of exploration
activities is also anticipated to add
to Angola’s already impressive oil
reserves
The continuing surge in oil production is
partly due to new offshore projects coming
into fruition. They include Pazflor, at deep-
water offshore block 17, 150km off the coast
of Angola, which is operated by Total in
partnership with Statoil, Esso and BP.
The country has plans to increase Pazflor’s
June exports by one cargo from May to seven.
This would be the project’s largest output
since it was initiated in October 2011.
Another project which is expected to ramp
up oil output is Plutao, Saturno, Venus and
Marte (PSVM), which is anticipated to have
output peaking at 150,000 b/d by 2013–2014.
The acceleration of exploration activities
is also anticipated to add to Angola’s already
impressive oil reserves, currently estimated
to be between 10 and 13.5bn barrels.
Gas production, which is tied to oil pro-
duction, can also be expected to increase in
Angola. Estimates put gas reserves above 11
trillion cubic feet.
The expected boost in output levels is
partly due to projects with notable gas pro-
duction tied to them getting under way. It is
also partially due to the fact that significant
A
ngola is the second biggest producer efforts have been made to reduce gas flaring
of crude oil in Africa. A combination in the country.
of intensified oil exploitation in the Exportation outlook is promising: Angola
country and damage to the oil in- LNG is expected to start regularly exporting
frastructure in the Niger delta due to attacks to Asia and Europe, rather than the US, due
from anti-government insurgents, enabled to higher prices in the former regions, from
90%
Angola to temporarily surpass Nigeria in the June following shipping tests.
oil production stakes in 2008, but Nigeria And Angola’s LNG plant in Soyo, which
regained its top position and is expected to is now in its advanced stages, also hit the
produce 2.6m barrels per day in 2012. headlines in May; its annual production is
However, to assert that oil is the Angolan anticipated to reach 5.2m metric tonnes.
economy would be no overstatement – expor- Western oil firms dominate stakes in An-
tation of oil is by far the most important ele- gola’s oil field. They include the two American
ment in the Angolan economy. It constitutes firms, Chevron Texaco and ExxonMobil, the
90% of the country’s exports and 80% of its French company Total, British oil giant BP
government revenue. Exportation of oil is by far the most and Italian firm Agip Eni.
Moreover, the country’s oil production important element in the Angolan economy. Chinese firms are also jockeying for oil
and capacity is set to increase. Oil output It constitutes 90% of the country’s exports equity rights in exchange for no-strings loans
was anticipated by the government to reach and 80% of its government revenue and credit lines. However, experts predict
1.84m barrels per day in 2012. that China is not likely to make any dra-
54 African Business | June 2012
FOCUS ANGOLA
its government. n
The government decided that
tourism projects needed to
prioritise a positive impact
on the livelihood of rural
inhabitants
LNG carrier: Angola LNG is expected to
start exporting to Asia and Europe.
matic progress in their struggle for more payments and arrears to the government have
expansive oil rights as its oil companies are Although some diversification is systematically characterised management of
said to lag behind when it comes to deploy- taking place, the economy remains its national oil revenues.
ing technology and know-how to navigate dominated by oil and vulnerable to Sonangol has, nonetheless, shown some
Angola’s sprawling and treacherous undersea fluctuations in global oil prices willingness to reform.
depositories. Firstly, it is now ring-fencing its conces-
Moreover, it has been reported that the The firm, which dominates the country’s oil sionaire activities and has audited its quasi-
Angolan government has sought to impose landscape, became the national oil company fiscal endeavours, according to the Develop-
limits on Chinese operations in the coun- in 1976. Sonangol has huge economic clout ment Bank of Southern Africa.
try through its subsidiary active within the – it is estimated that the firm has more than Wider reforms across the sector have also
country, Sonangol Sinopec. 5m barrels of both onshore and offshore oil been noted. For example, international audi-
In contrast, downstream production is reserves. tors are now permitted to carry out annual
likely to remain modest in Angola in the im- Moreover, Sonangol’s acquisition of pe- audits of the country’s oil industry and the
mediate future. There is currently only one troleum reserves looks set to only increase oil-bidding procedure is now more trans-
refinery in Luanda. There are, however, plans as new discoveries currently override con- parent.
to build a new refinery, known as SonaRef, sumption massively. Yet questions remain over whether the
in Lobito. Sonangol is accused of having a weak oil-boom will supply Angola with reliable
Commissioning at the end of the $8bn corporate governance structure and keeping growth.
project is scheduled to take place by 2016. Itirregular accounts. “Although there is some diversification
is estimated that SonaRef’s refining capacity It has also been criticised for alleged poor taking place, the economy remains domi-
will add up to 200,000 b/day with the over- oversight of its oil revenues. Sonangol also nated by oil and, as such, vulnerable to fluc-
whelming majority of its production being attracted criticism in 2001; although oil rev- tuations in global oil prices,” says Lisa Lewin,
harnessed for domestic consumption. enues are meant to be paid into a specific ac- head of sub-Saharan Africa Analysis at BMI.
count administered by Angola’s state bank in “Even if oil prices remain stable, we ex-
Watching Sonangol Angola, in 2001 Sonangol announced that it pect GDP growth to be largely determined
By far the single biggest player in Angola’s would no longer comply with this protocol. by trends in the oil sector, since output in
oil and gas industry is the state-owned oil According to a report by the Development that industry comprises a significant share
firm Sonangol. Bank of South Africa, since then tax under- (around 50%) of the total economy.” n
56 African Business | June 2012
FOCUS ANGOLA
Finance
exciting growth
The banking sector has huge potential for future
growth and is diversifying away from domination
by state banks.
monthly ATM transactions in Angola has
reached 10m kwanza ($105,000).
The sector is also diversifying, moving
away from its previous structure dominated
by state banks. Although most assets are still
concentrated within the country’s five larg-
est banks, their share of total wealth in the
financial sector is decreasing.
In addition, new institutions are entering
Angola’s banking industry. In 2010, alone,
three new banks, BPD, BCH and BNB opened
for business. This bought the total number
of authorised banks in the country up to 23.
According to banking analysts, with bank-
ing penetration still low in relative and abso-
lute terms at only 11%, the potential for the
industry’s further growth is huge. “Histori-
cally, the main reasons for this low banking
penetration derived essentially from the ab-
sence or low level of infrastructures in some
regional areas (particularly outside the major
cities and far from the coastline), revealing
A
nalysts perceive a warm glow over average income asymmetries within the
The financial sector has made
the potential of Angola’s finance sec- population, from the financial illiteracy of a
positive strides largely due to post-
tor. By and large, the sector is well significant part of the population and from
war reforms such as the Financial
capitalised and liquid, with an excel- the existence of an informal payments sys-
Institutions Modernisation Project
lent profit outlook and strong asset quality. tem and economy,” Ribeirinho commented.
Angola’s banking sector has experienced
encouraging growth in recent years. “The the sector’s assets increased by 21% and the Restoring confidence
sustained economic growth of Angola, the number of branches surged by more than The country’s insurance sector has also been
gradual increase of the average life expect- 22%. The number of those employed within maturing well since the government submit-
ancy and greater literacy levels have been the sector also jumped by over 18%. ted it to a liberalisation programme in 2000
shaping the country’s demography, contrib- Profitability has also increased, with bank- and it has experienced substantial growth.
uting to changes in client behaviour, not only ing and net incomes rising by nearly a quarter. The number of insurance firms operating
in more consistent saving habits, but also Moreover, the number of monthly transac- in Angola has risen to 21, with 11 reportedly
into an increasing demand for new products, tions amongst banks in Angola has increased pending licensing, according to KPMG.
transactions and channels,” Vitor Ribeirinho, by millions in recent years. The financial sector has made such posi-
Head of Audit of KPMG Portugal and Angola, Figures announced by the Empresa Inter- tive strides largely due to a stringent diet of
commented. According to KPMG, in 2010, bancária de Serviços reveal that the value of post-war reforms. Between 1992 and 2002,
58 African Business | June 2012
FOCUS ANGOLA
Growth of the non-oil aspects of
Angola’s economy is crucial to
ensuring the creation of a more
solid and sustainable economy
to oversee its implementation. The move is
reported to have caused a lot of foreign as-
set management firms to quietly move into
the capital in preparation for the launch, al-
though, as of 2012, the stock market has not
yet materialised. "There are some key factors
that may influence the launch (and timing)
of capital markets in Angola, including the
creation and adoption of a legal framework,
both at the legislative and regulatory level,
that supports the implementation of this
activity; and the continuous reinforcement
of the supervisory role, ensuring the trans-
parency and credibility of the capital market,”
Ribeirinho commented.
Nonetheless, according to industry ex-
perts, the banking sector is still not fulfilling
its potential as an instrument for capitalising
Angola’s growing economy by turning cus-
tomer deposits into credit or loans. Angolan
banks are reported to be still relatively risk
averse after years of high inflation and po-
litical instability and reluctant to hand out
loans, especially in sectors of the economy
outside of oil and infrastructure.
Some allege that since defaults on loans
are still high in some sectors, for example
in agriculture, banks have adopted an ultra-
cautious approach.
Others attest that many Angolans lack
training in basic business practices, such as
accounting or drawing up business plans,
Exciting economy: Africa’s largest bank, making Angolan banks even less willing to
Standard Bank is leading the way. lend to small businesses.
As growth of the non-oil aspects of An-
gola’s economy, such as agriculture and in-
dustry, is crucial to ensuring the creation of
Kz10m
a more solid and sustainable economy, with
the sector was subjected to the rigorous Fi- a more equal distribution of wealth, the re-
nancial Institutions Modernisation Project, luctance of Angolan banks to lend in these
which involved liberalising the sector as well areas is a serious handicap. Nevertheless, as
as bringing into force a new framework for the pace of the economy picks up and more
regulation and supervision. Angola’s central money trickles down, the banking and insur-
bank has also focused much effort on restor- ance potential is vast. It is precisely the sort
ing confidence in the kwanza, after triple- of environment that many African bankers,
digit inflation during the civil war destroyed The value of monthly ATM transactions from East and West Africa, have managed to
confidence in its local currency. in Angola has reached 10m kwanza turn around at very healthy profits to them-
Furthermore, the government caused selves and their shareholders. One expects
a flurry of excitement in December 2005 that several continental banks will join the
when it announced its intentions to launch queue to obtain licences in Africa’s most
a stock market. It duly created a commission exciting economy. n
60 African Business | June 2012
FOCUS ANGOLA
Interview Pedro Pinto Coelho MD, Standard Bank Angola
Raising the Standard
Standard Bank Angola, a subsidiary of Standard Bank, Africa’s largest
lender, started operations in 2009, opening its first branch in 2010. The
bank has six branches, five in the capital, Luanda, and one in Lubango
in the south. The bank comprises a corporate investment bank for larger
clients and a retail section. It is planning to roll out more branches and
become one of the top five banks in Angola. Stephen Williams talked to
the bank's MD, Pedro Pinto Coelho (below), about this vision.
African Business: What sorts of clients are though there is now an Angolan legal code
you targeting? which has made some changes.
Pedro Pinto Coelho: We have a strategy that But essentially, the biggest influence is
we call the virtuous circle. We start with Portugal and, to a certain extent, Brazil. Due
the top of the economic pyramid, that is the to the fact that a number of Portuguese banks
large corporates, since we are the only true that have been here for many years, Angolan
international bank in Angola. We operate in banks have tended to operate in the same
all of Angola’s neighbouring countries and, way as them.
in fact, in 17 countries throughout Africa,
while other banks here are domestic Angolan How competitive is the Angolan banking
Banks or subsidiaries of Portuguese banks. system, and what are the strengths you
So we have that advantage. are bringing to the market?
The first objective is to provide our serv- I would say that we bring a new type of cul-
ices to these large corporates, leveraging ture and a new way of doing business, so I
our truly pan-African and, indeed, global think that we can differentiate ourselves from
networks. the rest of the banks.
We then focus on the smaller and me- We are particularly focused on the qual-
dium-size companies that are typically the ity of the service. The ébanking sector in
suppliers to the large corporates, and then Angola is quite young with just five banks,
we offer retail banking services – especially namely Banco Poupança e Crédito SARL;
to the employees of the companies we work Banco Angolano de Investimentos; Banco
with and high-net-worth individuals. Fomento Angola; Banco BIC SA; and Banco
Espírito Santo Angola SA as the country’s
You have very ambitious expansion plans biggest lenders, according to the central bank,
in terms of rolling out your branch net- controlling 80% of the market. That is why
work. So will the nature of your client base of this year. And in three to five years’ time, I say it is so important for us to break into
change as you expand? hopefully, we will have established around that top five.
We are only expecting to cover the remain- 60-70 branches that will allow us to build a Banking has grown quite fast in Angola
ing parts of the banking market at a much client base across the country. over the last decade, but many of the banks
later stage, if and when we are able to service have just not had the time to adjust their op-
the corporate segment, which is our priority. How different is the banking culture in erations to cope with the number of clients
At this stage, we are not planning to be Angola to other countries in Africa? that they have been attracting.
a full-fledged universal bank because that The banking culture in Angola is influenced We hope that, by entering at the later stage
would require many more branches than we by the fact that this is a country working in the market, we can be more competitive,
currently own, although we anticipate open- under a different legal system, which is in- particularly in terms of the strength of our
ing between 20 and 25 branches by the end fluenced by the Portuguese legal system – al- balance sheet.
62 African Business | June 2012Five Standard Bank branches now serve the
capital Luanda, but many more are to open
throughout the country.
Also in the short to medium term there are a
number of retailers that are being established
here. Now you have the major brands starting
to want to be based in Angola.
In the medium to long term, but not at
such a quick pace, there are clearly some in-
dustries that are trying to become established
here. For example, there is one enterprise that
has already opened producing cans for the
beverage industries. I think that there will be
more important investment, particularly in
construction materials production that will
reduce the imports from abroad.
AB: Are there any other trends within the
retail space? I’m thinking here of the big
supermarket groups that are opening up
in Angola.
The first objective is to provide our services to large corporates, Yes, there are Portuguese, Angolan retail-
leveraging our truly pan-African and, indeed, global networks ers and South African retailers that have all
have ambitious plans to grow, and grow fast,
in Angola. Clearly, food and beverage retail-
Are there any other advantages that Stand- This places a lot of pressure on the existing ing is growing very quickly. I sense that the
ard Bank Angola enjoys? financial system to ensure the right proce- agricultural sector has been a bit slow. But
First of all, we are the largest African bank dures are followed, that the banks are fully I think with the number of instruments the
and have the full support of the Standard prepared and they have the right skills sets, government is providing in terms of subsidies
Bank Group. Secondly, we are an interna- the right people and the right systems in place and trying to attract investment in that area,
tional bank; and thirdly, because we always to guarantee a smooth process of payment. it will also eventually allow Angola to capture
provide the best quality service possible – and We believe that we are quite well posi- some of that investment in agriculture. But I
that is something that, in my experience, the tioned for this. We have been attracting a lot think it is taking a bit longer due to the nature
customer always appreciates. of these companies already. I would expect of the sector and the cycle is much longer.
Finally, I think that the way we are very a big share of that particular market and,
careful in how we deal with the client is piv- on the other hand, we also have people that AB: Would you say that the economy is
otal. We segment the client according to its come from the industries and that speak the diversifying quickly enough to deal with
profile; whether it is an oil and gas company, same language. Angola’s demographics and the income
the government, a retail company, a private We have an oil and gas desk specifically disparity in the country?
client or whoever is in front of us, we try to that relates with these companies and they I would say that it is clearly an objective from
tailor our service specifically to that client. are so focused on the oil industry that we the government to increase the number of
can guarantee that we understand their chal- jobs and diversify away from the oil and gas
AB: As a proportion, how much of your lenges and we can support them. I would business.
business is oil and gas related? say, right now, that our oil and gas business Certainly, there are limitations bearing in
Well, our business is still quite young. Basi- is about 20% of our portfolio, but I would mind the level of qualification the Angolans
cally, the fact is that since we are a new bank expect this figure to increase within the next have, and those that they need to have. I think
in this country, the companies that have been couple of years. the diversification is probably not proceeding
present in Angola have naturally had to work as quickly as government may want or that
with banks that were already operating in AB: Beyond the oil and gas and extrac- Angolans believe is necessary, but realistically
Angola – that is, Angolan banks and some tive sectors, which of Angola’s economic I think that a lot has been achieved in such a
Portuguese banks. I believe there is the pos- sectors, in your opinion, offer the best short period for a country.
sibility that that this will change and we will potential? In 10 years, they have done such a lot, they
attract more oil and gas clients, especially as I think it depends on the time frame. If we have had to train people in order to guarantee
the government wants the oil companies to consider the short to medium term, I would they achieve adequate and relevant economic
start paying their taxes and services through say that the construction sector, particu- diversity, and that will take some time given
the local financial system. larly infrastructure, will be quite important. the wide skills gap. n
African Business | June 2012 63You can also read
