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2003 Trade & Investment A Trip Report This report describes the trade mission to Angola conducted by the US-Angola Chamber of Commerce, October 20-24, 2003. To view images of the 2003 Trade & Investment Mission to Angola, please click here to access the Mission's Photo Gallery. OVERVIEW Angola has enjoyed a remarkable degree of internal stability since the signing of the peace agreements between the Government of Angola and UNITA in April 2002. Several incidents occurred recently, however, in the interior of the country, which led the United States government to issue a cautionary travel advisory for American citizens. Some Angolans interpreted the advisory as a warning to discourage American business activities. The US Embassy refuted this interpretation and pointed out that the US-Angola Chamber of Commerce was organizing a trade and investment mission to Angola, which had the full support of the American government. As far as the trade mission was concerned, no security problems were experienced in Luanda or during the travel to the provinces. While the evolving security situation will need to be carefully monitored, there is no indication that Angola will return to war or experience serious social unrest in the near term. The overwhelming sentiment among all Angolans is to maintain the peace and to restart their lives. Over the longer term, the government’s capacity to deliver essential services to the interior of the country, reintegrate former combatants into civil society, and cope with the large populations of the internally displaced and refugees will determine in large measure whether Angola will continue to enjoy the relative stability it has experienced during the last eighteen months. The political situation is undergoing change, especially in Luanda. UNITA is in the process of reconstituting itself as a political party and elected in June 2003 a new President, Isaías Samakuva, in what was considered to be an open and transparent election. The independent press is growing and often criticizes various aspects of government performance. The political parties are beginning to organize in the provinces, though there are reports of harassment of opposition parties, especially of UNITA, by MPLA militants. While there is a general consensus that national elections will be held in 2005, no date has been announced. This has prompted concern among some political and civil society groups that the elections could be delayed beyond 2005. At this point, it is unclear whether President dos Santos will run again for the presidency. Perhaps the greatest immediate challenge facing Angola is its macro-economic situation, which is considered fragile. Angola has one of the highest inflation rates in the world, though it has been lowered recently to 65% from the previous level of over 100%, according to Angolan officials. If the inflation rate is to decline further, it will require rigorous discipline over budgetary expenditures. The government is now attempting to include in the official budget all government revenues, which represents a major step forward, if implemented properly, and will help to correct the past practice of large off-budget expenditures. The second major economic issue relates to the transparency and accountability of government revenues. The government has taken several steps to improve its performance in this area in the last several months. In addition to the incorporation of all revenues into the budget mentioned above, the executive summary of the oil diagnostic, the report of the Article IV IMF consultations (May 2003), and the IMF’s Executive Board Report (July 2003) have been made publicly available. The larger issue at this stage is whether sufficient progress has been made for Angola and the IMF to reach agreement on a Staff Monitoring Program, which could pave the way for bilateral debt rescheduling at the Paris Club and improve the environment for holding a donors’ conference. The latter holds special importance if Angola is to tap into major funding from the World Bank and other international and bilateral donors for reconstruction purposes. ORGANIZATION OF THE TRADE MISSION Four underwriters – BP, ChevronTexaco, DevonEnergy, and Grupo Valentim Amões, sponsored the trade mission organized by the US-Angola Chamber of Commerce. In addition, support was received for specific events from the following sponsors – BP, ChevronTexaco, DevonEnergy, ExxonMobil, HSBC Equator, Grupo Valentim Amões, MITC Investimentos, PriceWaterhouseCoopers, S&N Pump, and Tecnocarro. Ten organizations participated in the mission from a number of sectors, including housing, education, law, consulting, telecommunications, downstream operations, banking, and civil engineering. As the above representation indicates, the purpose of the trade mission was to recruit participants principally from the non-oil sectors. The Chairman of the Board of Directors, Dr. Filippo Nardin of Citizens Energy, and Ambassador Paul Hare, Executive Director, led the mission. Although the trade mission did not formally begin until October 20, an unscheduled visit was made on October 19 to the Bom Jesus water bottling plant and the nearby greenhouses that produce vegetables and fruits for the Angolan market. The trip was organized by MITC and provided a good insight of what could be done by a foreign company with relatively small investments. The American Ambassador, Chris Dell, formally opened the trade mission on the first day with an excellent overview of the political and economic situation in Angola, which was followed by meetings with the Angolan economic team, Sonangol, and the Prime Minister. The day closed with a reception at the Hotel Presidente for members of the Chamber resident in Angola and government officials. The second day was dedicated to private meetings with government officials and the private sector, as well as a working lunch with Carlos Fernandes of the National Private Investment Agency. The trade mission split into two groups on the third day for the visits to Cabinda and Huambo provinces. The last day featured a roundtable discussion and lunch with representatives of the Angolan private sector, a visit to the Catholic University of Angola, and a reception hosted by Ambassador Dell. BUSINESS ENVIRONMENT There was an incredible amount of activity in Luanda during the trade mission. Hotels were jammed, airplanes were full, and car rentals were sold out. In the space of two weeks, the President of Uruguay, a British trade mission, the Prime Minister of Portugal, a German economic delegation, and the President of Brazil paid visits to Angola. The Portuguese and Brazilian delegations included a large contingent of businessmen. In addition to this impressive array, many European, Asian and South African groups could be seen at the various hotels. The city itself is bustling, virtually bursting at the seams. Traffic is becoming more of a problem. While some work was being done on the road network, most are in need of major repair. The basic problem is that Luanda was never designed to accommodate a population of 4 million and is vastly overcrowded because of persons internally displaced by the war. Cell phones are the lifeline and principal means of communication. Without a cell phone, the visitor will not be able to conduct a great deal of business, though it is now possible to rent cell phones during one’s stay in the country. Renting a car and driver is also advisable since the existing taxi service is not reliable. For non-Portuguese speakers, use of interpreters is critical to conduct business meetings. First impressions count. Two of the participants were unable to join the trade mission because of delays in securing visas in London and South Africa, an obvious impediment to attracting business to Angola. However, the Angolan Embassy in Washington, DC, issues visas expeditiously, especially if they are channeled through the US-Angola Chamber of Commerce. Getting to Angola can be a problem, though more air routes are opening up and the Houston Express offers an excellent direct air service for members of the US-African Energy Association. The arrival at Luanda airport can be a bewildering experience, especially in the baggage claim area when more than one flight arrives at the same time. It is important to be met at the airport. Even though a “Macon” taxi office is located at the airport, at times it may be closed. Macon taxis may, however, be waiting outside the terminal building. Confirmed hotel reservations are strongly advised. There are several good hotels in Luanda and more hotels are on the drawing boards. The government has taken certain steps in an effort to improve the business environment and attract investment. A new law governing foreign and domestic investment has just been enacted and is intended to provide more expeditious processing of investment proposals and to create favorable terms for investments outside of the oil and diamond sectors. The new law and an analysis are posted on the Chamber’s website. While the investment code represents a sea change, certain lingering ambiguities remain. These relate primarily to the repatriation of profits and legal guarantees. Angola does not have a good record for the time it takes to register a new company. Estimates vary from six to eight months, or even more. The government has recognized this problem and has recently inaugurated a new one-stop window facility in the downtown area of Luanda. The facility is still not operational but is in the process of being staffed. If administered well, this should greatly facilitate business transactions. CONCLUSIONS 1. Angola is undergoing rapid change now that peace has been achieved. The real issue is the pace at which it will grow over the coming years. One certainty is that oil production will double in the next five years. The greatest uncertainty is the degree to which Angola will be able to control inflation and to promote transparency and accountability over the government’s revenues, which has important implications for macro economic stability and obtaining international assistance for reconstruction needs. 2. In contrast to the bustling and overcrowded life of Luanda, life in the provincial cities is still relatively quiet, though the amount of activity varies from one province to another. Nevertheless, the future growth of the economy will depend principally on the degree to which agriculture and business operations can be revived in such areas as Uige, Malange, Huambo, Benguela, and Lubango. There are many economic opportunities that can be exploited outside of Luanda, especially once the transportation infrastructure is rehabilitated. 3. It is ironic that the prevalence of HIV/AIDS in Angola was restricted because of the war. With the coming of peace and the opening up of lines of communication within Angola and across its borders, the incidence rates are climbing. If not curbed, this will have dire consequences for the already abject living standards of most Angolans and will have a dampening impact on the growth of the private sector and development in general. 4. The Angolan market is being aggressively targeted by a number of countries at the present time. One indicator of the changing climate is the number of banks that are being established in Luanda, as well as the opening of branch offices in the provinces. While many factors must be considered in making a business decision in Angola, there is a general consensus that having good U.S. and local lawyers and reliable Angolan partners top the list. The prospective investor must also be prepared to persevere over the longer term. But the rewards can be great. 5. The trade mission met its objectives and can be considered a success. It received a warm welcome from the government and the Angolan private sector. Favorable publicity was given to the visit in the local media, which highlighted the meeting with the Prime Minister. Despite a few problems, the schedule was followed. Most importantly, the response of the participants was positive. One participant signed three MOUs with the Ministry of Public Works following the trade mission, and others intend to return to pursue their interests.
If you would like to review the
recruitment packet and schedule of the 2003 Trade & Investment Mission to
Angola, please click here.
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