Angola

In-depth country-focused analysis on Angola’s economic, political and operational risk environment, complemented by detailed sector insight

Angola

Our comprehensive assessment of Angola’s operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Angola, as well as the latest industry developments that could impact Angolan industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Angola before your competitors.

Country Risk

Angola Country Risk

Angola Operational Risk Coverage (9)

Angola Operational Risk

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BMI View: Angola's poor overall security environment poses a number of risks to investors, including violent crime from informal and organised gangs; a prevalence of legal and illegal firearms; an unresolved border dispute with the Democratic Republic of the Congo (DRC); and low levels of professionalism and competence in the national police. Expatriates and their property are the preferred targets of attacks by formal and informal criminals, and foreigners enjoy little protection from the police, whose low accountability and reliability necessitate investment in private security systems. Difficulties could also arise from potential border closures or skirmishes, which may complicate trade flows or day-to-day activities. Security advantages include high national military and intelligence spending and one of the largest armies on the continent, which largely deter attacks and ensure stability for business...

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Angola Crime & Security

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BMI View:  Angola's poor overall security environment poses a number of risks to investors, including violent crime from informal and organised gangs; a prevalence of legal and illegal firearms; an unresolved border dispute with the Democratic Republic of the Congo (DRC); and low levels of professionalism and competence in the national police. These conditions pose a number of security threats to foreign companies. Expatriates and their property are the preferred target of attacks by formal and informal criminals, and foreigners enjoy little protection from the police, whose low accountability and reliability necessitate investment in private security systems. Difficulties could also arise from potential border closures...

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Angola Labour Market

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BMI View: Firms in Angola face a number of challenges that substantially increase labour market risk. Poverty and limited access to healthcare perpetuates low life expectancy rates, while inadequate and overcrowded teaching facilities and resources limit the educational attainment and skills of the Angolan workforce. Despite a severe shortage in qualified local labourers, firms face high costs and difficult bureaucratic procedures to import high-skilled expatriates, which affect business productivity. As a result, Angola receives a score of 36.5 out of 100 for its Labour Market Risk, ranking joint 26th with the Congo Republic.

Angola's labour market has significant potential to promote business operations and encourage the diversification of the Angolan economy. With regards to the availability of labour, Angola is...

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Angola Logistics

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Angola has only recently emerged from a civil war that raged from 1975 to 2002. The war decimated the economy and left Angola's infrastructure in tatters. In the post-war era, the Angolan government faces the onerous task of rebuilding what was lost. In doing so, it could boost the country's already booming oil sector, while also diversifying its economy into other important industries.

Its agricultural potential, in particular, is very important. At the time of its independence in 1975, Angola was largely self-sufficient in agriculture production, was the largest staple food exporter in Sub-Saharan Africa (SSA), and the third largest coffee exporter in the world. By 2000, its agriculture and mining sectors were in shatters, with landmines rendering much of the country unsafe, transport systems broken, and just 3% of its land arable. Angola now ranks seventh in the Global Food Security Index due to the fact that the country imports around 90...

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Angola Trade & Investment

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Investors in Angola face a considerable number of operational challenges in the realm of trade and investment. Although the country is open to trade due to its dependence on extractive exports, significant trade barriers remain in the form of costly and lengthy import and export procedures. Angola's financial system has enjoyed explosive growth over the last decade, particularly in terms of banking sector development, facilitating transactions for companies, along with increased transparency and available credit flows. However, major borrower information gaps exist within banks, leading to limited credit availability for smaller and newer firms and growing competition from larger firms.

Government intervention benefits investors by providing fiscal and tax incentives to encourage foreign direct investment (FDI), but businesses continue to be burdened with difficult and expensive bureaucratic processes. Corruption poses a major risk to...

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Angola Industry Coverage (10)

Agribusiness

Angola Agribusiness

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BMI View: We expect food security in South West Africa to improve over the short term, as we expect higher corn production from Zambia in 2014/15. Over the medium term, we see downside risks to sugar production in the region owing a global glut of the sweetener. Even with reduced production incentives, we expect Zambia to easily remain the region's largest corn producer and exporter, while other countries in the region will struggle to maintain production surpluses. We believe that the potential in the Angolan sugar sector due to recent investments coming on...

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Autos

Angola Autos

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Passenger car sales in Angola increased 37.8% in 2014, to 39,938 units, due to strong private consumption in the country. We expect this positive growth story to continue, and forecast a 10% increase in passenger car sales in 2015. We expect inflation to moderate somewhat over the year, and access to credit for many Angolans to improve, which should continue to boost car sales. Further, we expect the exchange rate to remain relatively steady, which should help to stabilise the cost of imported vehicles into the country and further boost sales.

As with many emerging markets, the used-car segment is far more substantial than the new car market. We expect this to remain the case for some time in Angola, as new cars remain unaffordable for most people.

In spite of the small size of the market, a large number of foreign brands are already doing business, with competition rife in the passenger car segment. Japan's...

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Food & Drink

Angola Food & Drink

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BMI View: We maintain our view that Angola is one of the most attractive, yet risky food and drink markets in the region. Continued economic expansion combined with a young and rapidly growing population and plenty of untapped market niches offer a lot of opportunities for foreign investors. That said, we highlight downside risks to our forecast arising from an increasingly subdued outlook for the country's oil-dependent economy as well as a challenging regulatory and operating environment.

Key Forecasts

  • Total food consumption (local currency) growth year-on-year (y-o-y) in 2015: +16.4%; compound annual growth rate (CAGR) 2014-2019: +15.8%.

  • Per capita food consumption (local currency) growth (y-o-y) in...

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Infrastructure

Angola Infrastructure

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BMI View: We have significantly altered our forecast for Angola's construction sector this quarter in light of lower oil prices. The country has cut a significant amount from the budget and has suspended all road construction. The main impact of these changes will be felt in 2016 after a number of current projects end later in 2015. Longer term fundamentals are more robust and the 2013-2017 National Development Plan offers some upside.

As crude prices have collapsed Angola has been forced to reach out to the World Bank to borrow at least USD1bn in loans. Against this backdrop, continued investment from China, Brazil...

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Insurance

Angola Insurance

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BMI View: . Angola's insurance sector is one of the least developed of any that is monitored by BMI. It will likely remain so at the end of the forecast period. In part because of low household incomes and in part because of the lack of trust in financial institutions, life insurance hardly exists at all. We see no catalyst for a rise in non-life penetration from what is, by virtually all standards, a low level. This is in spite of the likelihood of fairly rapid volume growth in motor vehicle insurance and company purchases of group health insurance products.

For many of the emerging markets whose insurance sectors are reviewed by BMI, premiums appear set to grow slowly through the forecast period in an environment where strengths and opportunities are very clear. Over any six month period, it is usually possible to identify positive...

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Mining

Angola Mining

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BMI View: We forecast Angola's mining sector to grow to USD7.7bn in value in 2019, expanding at an average rate of 6.1% a year over the 2015-2019 period. The mainstay of the industry will continue to be diamond mining with continued investment, both domestic and international, in this segment helping to support steady growth in output over our forecast period. While the Angolan government is increasingly turning its attention towards mining as it looks to diversify the economy away from oil, expansion will continue to be constrained by a lack of supportive infrastructure as well as high levels of bureaucracy.

Angola's mining landscape is relatively limited with total output of USD6.1bn forecast for 2015, comprising about 4.6% of GDP. That said, the country is established as one of the most prominent diamond...

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Oil & Gas

Angola Oil & Gas

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BMI View : The outlook for Angola's oil sector remains broadly positive, with highly prospective offshore acreage and a number of major projects under development. However, sustained lower oil prices pose downside risk to production growth post-2020, as rapid natural decline rates and a slowdown in investment combine to undercut output levels. Gas production will remain limited throughout our 10-year forecast period due to low domestic consumption, unfavourable pricing dynamics and demand constraints in key export markets.

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Headline Forecasts (Angola 2013-2019)
2013 2014e

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Pharmaceuticals & Healthcare

Angola Pharmaceuticals & Healthcare

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BMI View: Angola's pharmaceutical market is held back by weak regulatory framework and lack of intellectual property legislation which create a challenging environment for innovative drugmakers. The fall in the price of oil will have a heavy impact the economy as a whole. Despite the dominance of oil revenue for Angola's state funding, the country will go ahead with its plans to decentralise the health system. The government will increase its share of the total healthcare market over the long term; however, state spending will remain modest in the short term given lower oil prices.

Headline Expenditure Forecasts

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Power

Angola Power

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BMI View: The government is investing heavily in rehabilitating the country's antiquated power sector, with a focus on distribution systems and generating capacity, especially hydropower and oil. Demand for electricity will grow rapidly due to rapid economic and population growth. However, risks remain, such as corruption and a lack of transparency in tendering, while the lack of a robust regulatory framework will limit the opportunity to exploit new forms of energy.

The outlook for Angola's energy sector is good. The state is rehabilitating the country's antiquated power sector, building hydroelectric dams and oil-fired power stations, and rebuilding dilapidated distribution networks. The centrepiece will be the Cacombo and Lauca dams, the latter of which...

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Telecommunications

Angola Telecommunications

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BMI View : BMI's Q215 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius and Namibia. It also contains our estimate of the market data relating to the end of 2014 and an update of our five-year forecasts to 2019 for the mobile, fixed-line and internet sectors.

Key...

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