Angola: More than an oil and gas story

Angola was the world’s fastest-growing economy for the first 10 years of the new millennium, and it continues to be among the fastest-growing economies on the continent. This growth has been fueled by significant FDI capital inflows, thanks to Angola’s substantial oil and mineral reserves.

However, there is more to Angola than oil and gas. It’s the third-biggest economy in sub-Saharan Africa (after South Africa and Nigeria), with a growing middle class and an increasingly diversifying economy. As a result, the country is attracting investors into sectors including: real estate, construction, telecommunications, financial services, agri-business, and retail and consumer products. Between 2003 and 2011, over US$10 billion was spent on FDI into Angola in sectors other than oil and gas.

What is Angola’s story, if it is more than just Oil and Gas?

Investment in Angola, as highlighted, has been significant over the last decade. However, the statistics reveal only a fraction of what has flowed into the country as a result of the significant reserves it holds beneath its surface. FDI in the coal, oil and gas sectors amount to over US$40 billion. Numerous industries have developed around this booming sector, driving diversification of the economy and establishing the platform for a sustainable future beyond reliance on natural resources alone.

Organizations wanting to invest in areas beyond natural resources are showing interest in Angola. The following examples of international and regional organizations that have achieved success in Angola illustrate the emerging opportunities the economy has to offer:

  • Shoprite. A large South Africa retailer that entered Angola in 2003, with its first store opening in Luanda. Initially, the organization entered on a pilot basis, but after a few years their Angolan operations were their biggest sales contributor outside of South Africa.
  • Pumangol. A company belonging to the Trafigura Group made significant investments into Angola, in order to expand the respective network of retail fuel stations all over the country.
  • Portuguese construction companies have been engaged with several major projects in the country, such as the new parliament building developed by Teixeira Duarte, and the Nova Marginal development in Luanda by Mota-Engil.
  • Brazilian construction companies have been engaged in building some important areas in the new south region of Luanda, such as the Belas Shopping Centre and the Belas Business Park.
  • Standard Bank. A significant South African financial services provider has begun opening several banking agencies in various provinces in the country.

While these opportunities are exciting, as with any business entry into a new country, there are risks to be considered and challenges to be faced. Many of these considerations are not unique to one particular market. However, in the case of Angola, there are a number of themes that are often raised as issues or risks that make foreign investors wary. Some of these risks, and how they have been mitigated by successful investors, are outlined below.

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