Country Risk Report 2014: Angola

MAY 21 2014

Angola-Country Risk Report

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CHAPTER I - BACKGROUND

“Men is not the product of circumstances, they are the product of their own choices.”

Following that, the world has been shaped quite sophisticatedly different from one to

another. Countries have been flocked based on their various characteristics and backgrounds.

Some share same history and heritage while some share same values and beliefs. All in all, they

recognize that they are a global community with distinct fate. Retrospectively, perceiving from

the glasses of Jared Diamond’s popular discourse; Gun, Germs & Steel, setting the view that the

human societies environmental situation have significantly affect civilization, and thus Eurasian

could easily dominate the world not because of ingenuity, but of opportunity and necessity. That

is, Eurasian civilization is not created out of superior intelligence, but more to the result of

development chains, each made possible through certain prerequisites.

Therefore, countries which particularly resides in Sub-Saharan are understandably reeks

with backwardness and deemed indifferent with technologies and development. To prove this

argument, we can see that one of Africa’s major oil producer, in this case, Republic of Angola is

nonetheless one of the world’s poorest country.1 Technology is a luxury for Angolans as they

keep their conventional ways of living. At this junction, almost three decades have passed since

the civil war in Angola, revolution and development are actually being proliferated in the said

land though not with equal distribution. Merely, the capital Luanda has seen a construction boom

since the end of the civil war however, areas like Menongue which are barren barely receive any

infrastructure injection from the long-ruling government. This situation, where hundreds and

even thousands of citizens are hardly living well, cannot be taken at ease.

In this globalized capitalist-dominated world, business has taken over the human activity

circle. All businesses are originated with people searching for greater profits and commodities.

When they couldn’t get enough, they explored the world, make agreement and the term ‘invest’

was born. However, on the bright side of capitalist realm, backwardness is suddenly nowhere to

be seen. Countries who could not nurture its infrastructure and compete with others are deemed

as failures and thus, trigger the whole investment fiasco. Realistically saying, Africa is one of the

most projected investment destinations. Business leaders are striving for the great resources and

vast prefecture the Africans have, preferably in this case is the Republic of Angola.

In Angola, a country worthy of gazillion of oil reserves, investment growth has become

unprecedentedly well through years. However, with various internal and external factors, welfare

system is not developed just as well. Moreover, due to the fluctuation of its political upheaval,

country’s situation can be vaguely understood. On the contrary, it is forecasted that Angola’s

1 Synthesized from "Angola Demographics Profile 2013". Index Mundi. Retrieved 22 March 2013.


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growth in 2014 will put a steady bottom line for the legacy of its people. With that being said,

this paper aims to cover, report and analyze the situation in Angola, pre and post-war with its

administration throughout is period, for investment-installment stability. In order to encompass

all points in this report paper, we have to take several dimensions and index into account.

In the first chapter, the report will deeply provide clear geo-strategic condition and

demography of the said, while mix-matching the environment for a good business. Moving on,

we will walk upon each significant fracture of Angolans history, while scrutinizing the current

implication. Following that, economic, political-security and social condition will be laid out to

present an adjacent review of Angola’s status and development, not to mention its compliance

to international norms and bureaucracy process concerning business and investment. From those

data, we will form a hypothetical assumptions for business to operate in Angola and

recommendation for its improvement.

CHAPTER II – METHOD OF ASSESMENT

In most academic discipline, we will come to countless researches and directive discourse,

when data is everywhere. More specifically in social science, collection of data is the fundamental

belief to examine the root of human’s behavior and its development. Therefore, it is fairly popular

that qualitative research method is the most suitable type of research to analyze a state’s

decision making and its governance. Systematically speaking, qualitative method will always be

accompanied by various data to adequately complete its task. However, different with

quantitative method, qualitative will only present an informed assertions to wrap up the whole

case, particularly the case being addressed at.

In this report paper, the qualitative research will mostly cover visual data collections,

historical research, ethical and grounded researches derived and synthesized from experts’

journals, interviews and surveys. Furthermore, to analyze those provided data, the paper will

then construct the data with interpretive technique which allows the observers to examine the

data and come up with their own impression and point-of-view in a structured manner.2

But beyond that, it is arguably understandable to say that the validity and/or the

credibility of the data cannot be taken with depth. However, consider a report of insight, where

data could presumably be manipulated, there is no such thing as flawless credibility. Bear in mind,

however, that overall, the report will reveal both opportunities and risks in investing in Angola,

per se.

2Summarized from Denzin, Norman K. & Lincoln, Yvonna S. (Eds.). (2005). The Sage Handbook of Qualitative Research (3rd ed.). Thousand Oaks, CA: Sage.


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CHAPTER III – ANALYSIS & DISCUSSION

III-A. GEOGRAPHY & DEMOGRAPHY

As history tells, most successful civilization happened along the coastline where

transportation and trade routes intersect and where water disembogues. 3 Luanda, Angola’s

capital city lies on the South Atlantic coast, just northwest of the country. Moreover, being the

twenty-third largest country on the earth with approximately 1,246,700 km2 total land area,

Angola has a great potential to develop and to nurture its soil. Unfortunately, however, it has no

inland water reservoirs such as lakes, dams or rivers to quench inner-Angola civilization needs for

clean water. Therefore, eastern part of Angola where it is barren is barely feasible for living.

But beyond that, ideally yet strategically speaking, having three vast countries like Zambia

to the East, Namibia to the South and Democratic Republic of the Congo (DR Congo) to the North

bordering the Republic, Angola has sufficient opportunities to establish an exclusive relations

with those countries. Moreover, the exclave of Cabinda, the tiny breadwinner of Angola, located

just six-hundred km through the DR Congo is bordered by Republic of the Congo to the North,

which widen the chance for Angola’s cooperation. Paradoxically, things usually doesn’t go as

planned.

Putting aside security matters at this point, Angola has two seasons; dry and hot rainy;

with four natural dimensions, ranging from the barren coastal lowland, green hills and inland

mountains, eastern sandy high-plateau dessert and northern rainforest. Like most African

countries in tropical area, rain is rare and thus, affect its city’s agriculture sector with only 3.29%

of arable land.4 Despite the seemingly bad precipitation and natural condition, its strategic

resources focus on petroleum, diamonds, iron ore,

phosphates, copper, feldspar, gold, bauxite and

uranium. These minerals have become of

commercial importance for Angola’s current global

struggle.

Demographically, as of July 2013, Angola’s

population growth rate stands at 2.78% with

18,565,269 people at residence. This growth rate will

significantly affects country’s decision in organizing

the needs of its people of infrastructure, resources

and jobs. On the other hand, as the growth rate

suggests, the birth rate in Angola is impressively

3 History Of Cities And City Planning By Cliff Ellis http://www.art.net/~hopkins/Don/simcity/manual/history.html 4 CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/fields/2010.html

Angola’s Human Development Index (HDI) Ratio


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decreasing from year to year, not to mention the same thing happens to its mortality rate.

However, based on the data provided, almost half of the population are children of age 0-14,

which are unproductive and are prominent subject to illness.5 As a nation’s age structure is an

essential factor of nation’s economic, it is arguably correct to put Angola into a risky situation.

Because at the end of the day, Angola is currently suffering with a crippling shortage of skilled

labors, even the low-cost ones. Furthermore, the low number of productive age is barely the cause

of the migration rate, but it is the epidemics like malaria, cholera, and rabies which are common

with no sufficient medication that decrease life expectancy into that of 48,1 of its land. Moreover,

tuberculosis and HIV/AIDS are inevitable and have been rampantly spreading without warnings

with about 500,000 people living with it, as of now.6

Closer to the security matters, with currently imbalance political & economy situation

for its own citizens, Angola has gathered 23,400 refugees and 20,300 asylum seekers which

undoubtedly burdens the situation of the country as a whole.7 With those being shown, both

geographically and demographically, Angola has an inadequate drivers to foster business and

investment to the extent where it produces great benefits for the investors. Its land has great

potentials though, the lack of human’s development there is the Achilles’ heels for its own

merits.

III-B. HISTORICAL OVERVIEW

Wandering into the early stages of Angola’s civilization back in the 1300s, after the Bantu

dominated the area, they swiftly consolidated a kingdom called Kongo in the north, where one

of the oldest ethnic groups has established themselves quite astonishingly.

In the 15th century, specifically 1483, Portuguese arrived and explored the area until they

found Luanda and established several forts and settlements around the said place. Not long after,

Portuguese took over the coastal territory and made Angola a major trading arena for slaves.

With countless resistance groups’ efforts, slave trade was then abolished in 1836 and Angola’

status concretely changes from colony to overseas province through treaties and agreements

after the Berlin Conference in the middle 1950s.

However, to gain independence was not an easy task for any colonized state. There are

three rebel parties who gained recognition namely; People’s Movement for the Liberation of

Angola (MPLA) with Agostinho Neto as its leader, the National Front for the Liberation of Angola

(FNLA) chaired by Roberto Holden and the National Union for the Total Independence of Angola

5 Retrieved and synthesized from http://allafrica.com/stories/201103160092.html 15 March 2011 6 Synthesized from USAID http://dhsprogram.com/Where-We Work/CountryMain.cfm?ctry_id=76&c=Angola&Country=Angola&cn=&r=1 7 Paraphrased and compiled from http://www.unhcr.org/cgi-bin/texis/vtx/page?page=4a03e30d6


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(UNITA) under Jonas Savimbi leadership. 8 With those

parties being so influential, guerilla and colonial war begins

in 1960s. After these sequence of events, Angola finally

seized its taste on independent with 1974 Lisbon coup

d’état revolution.

Sadly, the war did not stop at that point. Following the independence in 1975, civil war

broke out. The three rebel parties fought each other in order to achieve the highest position in

the country. Political blocks were then formed, which piqued the interests of major superpowers

to involve in the said turmoil. Proxy wars then began to happen with United States, DR Congo

and South Africa supporting FNL and UNITA, while the Soviet Union and Cuba supported the

MPLA.9 Through decades of devastating wars, Jose Eduardo dos Santos as the reigning President

from MPLA and UNITA agreed to have cease-fire, but was immediately failed. The guerilla

activities continued for years until it reached an impasse in the beginning of the 21st Century

when Savimbi, UNITA leader, was killed by the government troops, it surrendered shortly after.

However, the legacy of the wars remained, famine and poverty has covered almost half of

Angolan populations while skilled workers in various sectors like the public administration,

agriculture, industries and trade fled the country leaving its once prosperous and growing

economy to a state of bankruptcy.10

Despite United Nations’ (UN) active role

in deploying peacekeeping troops and giving

humanitarian aids in the area which were

sufficient in holding the state from its nightmare,

haunted by poverty on their sleep, illegal

activities, health problems and crimes were

starting to spread uncontrollably in the country.

In June 2005, Wen Jiabao, Chinese premier took a visit to the promising land, he pledged

to give a total of $5 billion credit to Angolan’s authorities for revitalizing the welfare of the nation.

From that point, a beacon of light guided Angola to a better stance in economy. Since much of

Angola’s petroleum reservoir lies depth in the exclave of Cabinda, a peace deal with its separatist

group was first in order to seize a better market and economy stability.

Apparently, the President is a hypocrite. In February 2007 he announced that the first

parliamentary elections for 16 years will be held in 2008 and presidential polls will follow the year

8 Derived from http://www.bbc.com/news/world-africa-13037271 Angola’s Facts 22 December 2013 9 Synthesized from "The Economist: Flight from Angola". 16 August 1975. 10 Derived from http://www.bbc.com/news/world-africa-13037271 Angola’s key events 22 December 2013

The leaders of the main rebel parties (from L-R) Roberto Holden (FNLA), Agostinho Neto (MPLA) and Jonas Savimbi (UNITA)

The war that has taken almost 4 decades in Angola


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after. However, in December 2009 he re-announced that the presidential elections will have to

wait for another three years, leaving his decision contradicting with his previous pledge.

Moreover, throughout the three years-span before the election, he established a social media

campaign stating that people who opposed the government will be summoned and defected

which immediately garnered 20,000 people support for him out of intimidation. The opposing

party of UNITA alleged the lack of transparency from the elections but was soon ignored.

Currently, several clashes with the separatist movement from the exclave of Cabinda is

still happening though irregularly. Moreover, the state oil firm, Sonangol has signed a deal with

Iraq to produce oils there. As oil is indeed its economic backbone, Angola launched a $5 billion

sovereign wealth fund to channel the country’s oil wealth into investment projects.11

III-C. CULTURAL ASPECT & SOCIOLOGY

As the former Portuguese colony, Angolan more or less has adopted prevalent Portuguese

custom, cultures and even languages and beliefs. However, Angolans’ culture is somehow

derived from the diffusion of both Portuguese and its native, the Bantu tribes and several other

ethnic groups. Frankly, Angola has no explicit and clear national identity as the country itself is

divided along many lines, ranging from; language, race, religions, and more than 100 distinct

ethnics which interacts closely in conflicts.

Thus, based on the similarities it has, its

official language is Portuguese though many

speak native African languages. The majority of

the people are upholding Roman Catholic

Christianity as their belief. For another, in

commercial activities women usually get the

task of gathering fire woods and selling crops or

foods while men dominate in trading arms,

diamonds, spare parts, transport and building

sectors. Those activities are highly situated in the middle-economy society since its currency, the

new kwanza, is a subject prone to inflation.

But beyond that, as a matter of fact, MPLA and UNITA are both restricting the freedom of

the people to move around and imposing an immobility policies to just move in a certain areas

at a specific time, which clearly hindered the proliferation of cultural values such as; harvesting,

festivals celebration and traveling ceremony in Angola. Though having various influential ethnics

who are highly recognized by most people, namely; Ovimbudu, Mbunda, Bakongo, Lunda-

11 Supporter of Angola’s 2013-2015 outlook http://www.tradingeconomics.com/angola/forecast

Angolan women are seen selling fish at Luanda Port.


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Chokwe, and Ambundu, each with their own characteristics, the mixed European and African

descent called Mestico are more wealthy and respected in politics despite their minor

population. 12 Therefore, UNITA is bashing MPLA because it continues to popularize the

importance of Mesticos in their parties while FNLA is more conservative and UNITA is populist-

opportunist.

Through deeper analysis, it is found that in spite of socializing gender equality on its

citizen by the MPLA, gender-based discrimination and social discrepancies can still be seen clearly

in Angola. Often women are paid less than men even when they are working on the same level

of jobs, their literacy rate also shows a saddening gap as men are far more educated than women.

However, in 2011, Leila Lopes, a full-fledged Angolan woman has become the first lady from

Angola who won the Miss Universe Pageant, setting a groundbreaking foundation for the

women’s empowerment in Angola.

In business environment, Angolans highly adore and uphold the etiquette of relationship.

Their business people are somewhat formal and restrained. Moreover, they tend to do business

only with the people they can trust which means communication and relationship-building are

indeed necessary. They are also quite fond of pleasing people even if the reality does not support

their statements, their gestures, however are honest as they envisage positive and negative

things so eloquently through their own animation. The most lamentable condition is that women

must not make direct eye-contact with men, even to show sincerity, though this is changing.

III-D. LEADERSHIP DIMENSION

Although Angola is a Presidential republic, the political activity is majorly controlled by

the MPLA, the centralized system deems the government institutions to be useless while

presidential power is extensive. Moreover, under the leadership of Dos Santos, the land has

adopted a multi-party mechanism, though it does not significantly change anything since he has

been ruling for almost 4 decades now. His opposition party claimed that there is a lack of

transparency in the previous elections, however all complaints come back to Santos as no

response was given. Astonishingly, he is the second-longest serving president all over Africa just

after Equatorial Guinea’s leader.

However, in Angolans’ point of view, Santos is credited

as the most prominent leader for managing the

country because most of them believe that he was the

one who bring Angola to the end of the civil war in

2002 and for turning the economy from socialist

12 Derived and synthesized from http://www.everyculture.com/A-Bo/Angola.html and http://www.kwintessential.co.uk/resources/global-etiquette/angola.html

President Jose Eduardo Dos Santos


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economy into an unprecedented growing economy-solely due to their voluminous oil reserves.

On the other hand, some people, mostly his opposition address him as an authoritarianism. He

had ruled for too long and he disregards inequality and fairness in his office. That assumption

was then proven when he absentmindedly alter the constitution in 2010 when his party won the

parliamentary election in 2008 that the president is the candidate coming from the largest party

in parliament. Presidency’s power is strengthened and it obviously destroys democracy in Angola.

To give a better perspective on Angola, the

land has a 2.2 out of 10 for its Corruption Perception

Index (CPI), which is 40% worse than the average

corruption by all countries.13 The data shows that

the government is indeed corrupted by not only the

president but also its government’s officials.

Furthermore, the country’s also has a bad

transparency index and democracy level. For

instance, the government of Angola has enacted the State Secrets Law in 2002 that upholds the

government’s right to classify information with high discretion. Most journalists and NGOs said

the government has systematically utilized the law to prevent disclosure and to intimidate those

who dare to publish specific information.14 Therefore, Economic Intelligence Unit (EIU) envisages

that Angola’s democracy-with 1 as fully democratic-stays at rank 133, which is devastating for its

future. At this junction, the president has practiced various intimidation campaign to suppress

demonstrations as far as getting criticized by the U.S. and NGOs. He won the 2012 election

comfortably and is guaranteed with another term in the office.

Joining army at the age of 19, Dos Santos has an expertise in oil engineering and radar

technology. He held a ministerial post before becoming a president. He is quite open for

investment especially in petroleum field, with a sole aim of improving financial gains without

putting sufficient concern on distribution and unemployment. However from 2014 onwards,

there is a slight chance that Angola will grow with his in power. Because, the civil war has stopped

and the military expenditures will be reduced, per se. The remaining problem in this dimension

is his accountability in managing the country.

13 Derived from http://country-corruption.findthedata.org/l/157/Angola 14 Synthesized from http://www.revenuewatch.org/countries/africa/angola/transparency-snapshot

Angola’s Corruption Perception Index Score & Rank


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CHAPTER IV – COUNTRY’S RISK ASSESSMENT

Since the civil war in Angola has been extinguished, Angola’s GDP has significantly

multiplied tenfold. Economic development has been sharp and swift, albeit it will reach its hilt, it

is still considerably high. However, the complex capacity of Angola is halting its way, moreover

with insufficient management and regulation, it will be inadequate to adequately distribute

income and reach a better future. Here are some comparisons that could be summarized from

the status quo in Angola;

IV-A. POLITICAL-SECURITY ASPECT

As MPLA is currently reigning and is expected to win again, the probable future successor of Dos

Santos will be the former CEO of the state oil company Sonangol, Manuel Vicente, who is

currently the vice-president.15 Paradoxically, he has no political background and his winning has

erupted several dissatisfaction within the party. Therefore, Vicente’s candidacy will be far from

certain as rivalries will become imminent in the next election. It is crystal clear that society’s trust

towards MPLA is dampening, with its inability to present basic needs for Angolans in general. This

is an advantage for UNITA, though MPLA is predicted to invigorate its grip on power again, but

will be suppressed by the people and the opposition to a heavier extent than previously. Hence,

it is just a forecast, but security matters may come rising again in the future, whether through

aggressive means or through social measures.

But beyond that, over the relatively short period after the war, the country has become a major

international player in the oil realm, for another, regionally, it is acknowledged as an influential

actor in terms of both politics and economic. To elaborate the argument, from a foreign policy

aspect, Angola has diversified its virtue towards various dimension. For instance, as one of oil

15 Viera, Arnaldo. March 4 2014. http://www.africareview.com/News/Is-Manuel-Vicente-the-Chosen-One/-/979180/2230518/-/128b1ir/-/index.html

Strengths Weaknesses

Rich in natural resources, African’s second-largest oil producer

Weak institutions, government, corrupted officials, and difficult business environment

Historically high growth and good prediction going forward

Limited growth in business and inequality will linger in society

Initiatives for diversifying economy and reducing vulnerability

MPLA is deemed incapable in solving social issues and providing basic social function


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market destinations, People’s Republic of

China has been labeled as an important

trading partner. Their cooperation is

understandably remarkable, with China

providing funds without linking it to demands

for reforms. Capital investment is pouring in

due to Sonangol’s joint venture with

international oil companies for oil extraction.

Debts are significantly paid-off to the donors

and Angola’s compliance with IMF policy has

leveled up the country’s overall stance. All in

all, it could be scrutinized that Angola has a

low short-term political-security risk. However, in the long run, as government is dynamic, a

counter-measure should be taken into account to consolidate middle and long term political-

security risks.

IV-B. ECONOMIC STANDINGS

Almost 95 percent of Angola’s export surplus is based on oil commodity, just over half of

its Gross-Domestic Product (GDP) and 75 percent of government’s revenues. Given the vast

‘resource curse’ and energy insecurity encompassing Africa, Angola acts as an essential

stakeholder. There is also ‘Angola 2025’ a national development plan with the objectives of

eradicating structural hindrances and improving economic diversification by revitalizing non-oil

economic potent. For another, though idealistic yet not completed, a pipeline project to Zambia

and DR Congo is currently on elaboration, the outlook however, can be affected by oil price

fluctuations and global economic downturn. But then again, oil prices are likely to remain high

and favorable and thus, will continue to be the driving force in Angola’s economy, while keep

proliferating non-oil sectors by public investment.

Unfortunately, the growth spurts are only concentrated to the capital, Luanda, it had a

limited implication on its majority of the population. Since the oil industry is capitally intensive

and employs roughly only two percent of the country’s workforce, the majority then undoubtedly

lives in poverty with a high rate on unemployment at over 25 percent. Figuratively, about the half

of the population is under 15 years old and those children will be available to work in upcoming

year, though it is unlikely that they will have sufficient skills to be a qualified workforce. This is

why manufacturers recognize Angola’s vulnerability in the future.

Angola on other side, has taken up IMF project to strengthen its institution and improve

its transparency, but it is progressing from a grass-root level which may take a while before it is

Angola’s oil exports by destination 2011from EIA


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on the same ground with its current financial strength. A reform is indeed needed and that is the

role of Angola’s passion in becoming the global oil producer.

According to its GDP projection, Angola will achieve stable growth throughout 2014-2015

which is a good sign for investors, however, its high growth and investment rates require major

import yet so little production takes place in the country. In coming years, this will consequently

go to a reduction in the current account, even if it continues becoming the rigid oil exporter.

Moreover, albeit it has paid-off its external debt to its donors, it should be noted that as GDP

growth has been high, a constant ratio means that the remaining debt will also be expanded

nominally.

From its currency policy, Angola has tried its best in decreasing dollarization as it was

highly before, although the Kwanza is the only accepted currency, US Dollars were previously

deposited quite massively in its banks. With a reinvigorated policy, all companies will then be

forced to use the local banking system for all commercial transactions and pay their taxes in

Kwanza. 16 This stops the previous offshore and USD transactions yet also developing the

domestic banking system, which are majorly privately owned, principally by Portuguese. They

believe they need to defend the Kwanza when sharp oil price falls in the future. Of the bank

ownership, retrospectively, it evolves into a complex cross-ownership as it is usually linked to

successful groups of companies or politically influential people.

Banks assets are often invested abroad to ensure better feedbacks, which resulted in a

global fluctuation effects. Angola, with insufficient and beginner regulations, supervision,

frameworks and accounting cannot match up the international parameter. The gap is

substantially evident.

16 Synthesized from Lovisa Bolander EKN’s Country Analyst Angola: Creating Confidence in your Exports 18 December 2012

Angola’s Annual GDP Growth based on IMF


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During 2014, it is assumed that the banking system will be faced with challenges that

adhere in management policies realm. It is beneficial since it will strengthen the liquidity and

widen the banking system, but on the contrary, will also expose its own loopholes and its

capacity incompatibility.

Overall, the financial stability of Angola is on its way to adolescence, flaws are distinct

but it is manageable, however, several prominent risks should be taken into account by its

officials; these are concerning the still-high degree of dollarization, banks’ property holding and

a lack of supervision and management regulations.17

Henceforth, in establishing a promising investment, the business environment should be

carefully look upon. From the previous passage and exposition, it is clear that Angola’s business

climate is difficult. Some companies cannot produce as much as expected good-to-be financial

statements, it is barely hard fulfilling the international parameter. These are caused by corruption

plague, government’s inefficiency, and transparency problems. The country’s poor position in

international’s ranking of the business environment is not giving so much insights throughout

2011-2013. This matter, will certainly increase the costs for companies setting up anew in the

said land. Infrastructure is a common obstacles for most countries, ergo, many companies that

are established in Angola are believed to identify and understand the sleeping potential that

exists on the area.

17 Synthesized and paraphrased from ONDD Angola’s Asessment 23 April 2013, Pascalline Della Failie


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CHAPTER V – CONCLUSION & RECOMMENDATION

V-A. CONCLUSION

Through four decades of indescribable derailment, Angola’s political upheaval has fell into

a pit and reach a quite stable impasse, yet the future is a blurred line, vaguely, the presidential

succession and the increased empowerment of civil society and opposition party will burden the

country as more challenges will emerge from the said actors. On the status quo, weak

institutional element, structural and infrastructural system, and business environment has

hindered the development of all sectors in Angola. Nonetheless, with its great potential of oil

revenues from Cabinda’s vast resources, Angola’s solid account with eager financial principles

and a strong regional position has gained a surplus, though declining, on its financial account.

The sole threat clamoring upon Angola’s forecast is the uncertain global arena, given that the

current condition is preserved, despite the process of management regulations, Angola will still

be vulnerable, as a whole.

Therefore, as the analyst and the country’s observer, it is wise to put Angola in country

risk category 7, for both short and long term guarantees. Because, having sophisticated resources

doesn’t mean they can utilize it well for its own merits. In the future, it is assumed that through

experience, the risk could be dampened into that of 5 or 6 out of 10

V-B. RECOMMENDATION

For all investors, buyers and stakeholders in Angola, some limitations apply. Public

investors, aiming to the state energy, and transport companies should seek government

permission from the Ministry of Finance. For private stakeholders, it needs a special treatment

and transparency and that of sufficient financial restraints to avoid unwanted events that are

assumed to happen more generally in Angola than in countries with stable business climate.

Investors could also consult with business consultant firms and suggest to the government that

establishing a state fund to accumulate shares of revenue could reduce the economic

vulnerability. Moreover, it is also recommended to invest not only on the capital, Luanda but also

Cabinda and other cities like Ambris and Namibe which are famous for its diamond mines.

Investing in the banking system could also turn out to be another long-term guaranteed

investment as Angola is currently revitalizing its banking and finance to a betterment. Other

investment objects like the idealistic pipelines project, bauxite, gold and phosphates can also be

considered in the long run when infrastructures are regaining its composure in Angola.

Country Risk Report 2014: Angola

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