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

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

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Core Views

  • We forecast that real GDP growth in Angola will average 5.4% annually between 2015 and 2019. The non-oil sector will be the main driver of growth over our 2015-2019 forecast period. High levels of government spending on infrastructure and oil exploration and development underpin strong growth in the construction, energy and transport sectors.

  • Plateauing oil revenues, a narrow tax base and heavy public spending will see Angola's fiscal balance remain firmly in the red over the next few years. We predict that the country will sustain a sizeable fiscal shortfall - in the range of 6.0-8.5% of GDP - over our 2014-2018 forecast period.

  • The current account balance will steadily deteriorate over the next five years to stand at 1.0% of GDP by 2019, from an estimated 7.4% of GDP in 2014. We predict that the country will sustain a sizeable...

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Angola Operational Risk Coverage (9)

Angola Operational Risk

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BMI View:   Angola's poor overall security environment pose s a number of risks to investors, including violent crime fr om 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 rel iability necessitate investment in private security systems. Difficulties could also arise from potential...

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Angola Crime & Security

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BMI View:   Angola's poor overall security environment pose s a number of risks to investors, including violent crime fr om 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 rel iability necessitate investment in private security systems. Difficulties could also arise from potential...

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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 of 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 hurts business productivity. As a result, Angola receives a score of 36.5 out of 100 for its Labour Market Risk and is ranked joint 25th 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 ranked 15th regionally, as the country's youth population has experienced...

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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, disadvantaging firms engaged in trade. 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 information gaps exist within banks about borrowers, leading to a gap in 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...

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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 corn production in the region owing to new reforms introduced in Zambia that aim to reduce farm subsidies. 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 see potential in the Angolan sugar sector due to rece nt investments coming on - stream   and...

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Autos

Angola Autos

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BMI forecasts car sales in Angola to increase 21% in 2014, predicated on our bullish outlook for private consumption in the country.

We expect inflation to moderate somewhat over the year, and access to credit for many Angolans to improve, which should serve to boost car sales over the year. We expect the exchange rate to remain relatively steady over the course of the year, 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 Toyota Motor...

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Food & Drink

Angola Food & Drink

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BMI View: Angola remains one of the most attractive, yet risky, food and drink markets in Sub-Saharan Africa . S trong economic expansion, combined with a young and rapidly growing population and plenty of untapped market opportunities, means the country holds a lot of potential for foreign investors. That said, we highlight Angola's challenging regulatory and operating environment, as illustrated by recently introduced import duties for numerous food and drink products.

Key Forecasts

  • Total food consumption (local currency) growth year-on-year (y-o-y) in 2014: +17.5%; compound annual growth rate (CAGR) to 2018: +16.6%.

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

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Infrastructure

Angola Infrastructure

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BMI View:   Following a downgrade to our construction sector outlook last quarter, we are maintaining our view for growth to be robust, but below average. Threats to government investment in infrastructure due to capacity constraints and growing fiscal pressure are the primary drivers behind our weaker outlook. However, growth will remain strong as a result of the USD55bn FY2014 budget and the 2013-2017 National Development Plan.

Government investment is the primary driving force behind our positive growth outlook for Angola. However, threats to the country's fiscal position, with a budget deficit expected from 2014, as well as growing concerns over budget execution have put a dampener on the large investment plans. As such we expect growth will trend lower over the next five years than the previous - averaging 8.8% between 2015 and 2019, compared to 14.2% between 2009 and 2013.

...

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Insurance

Angola Insurance

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BMI View: The lack of news from Angola's insurance sector confirms our view that it is, and will remain, very underdeveloped by most metrics. Premium growth is being driven by the growth in GDP which, in turn, depends on the fortunes of the energy sector. The employees of the large companies which dominate the energy sector are covered by formally constituted pension funds. Overall, though, the life segment hardly exists at all.

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 developments in the form of product/distribution innovation, regulatory change or substantially increased interest on the part of foreign insurance groups.

...

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Mining

Angola Mining

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Angola's mining industry is set to reach USD7.5bn in 2018, growing at an average rate of 5.3% a year. The rate of growth will remain stable thereafter, with diamonds providing the main thrust for production growth over the medium term. New areas of mining, including iron ore, copper and phosphates, are also receiving increasing international interest from investors and are expected to provide further momentum for Angola's mining sector over the long term. That said, we do not expect the mining sector to receive much attention from the government as the country's burgeoning oil sector attracts the lion's share of investment. Therefore, problems relating to mining such as poor infrastructure and stringent bureaucracy are unlikely to be resolved in the near term.

Government Aims Too Optimistic

Angola's government wants to boost diamond production by more than 20% in 2015. The potential increase is...

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Oil & Gas

Angola Oil & Gas

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BMI View : The outlook for Angola's oil and gas sector is positive. Although technical challenges led to production issues in 2013, we expect the start of major upstream projects such as Total's CLOV to boost push output higher by end-2014. Over the next decade, planned projects and the tie-back of additional discoveries to existing infrastructure will support strong growth in output over the course of our forecast period.

Headline Forecasts (Angola 2012-2018)
  2012e 2013e 2014f ...

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Pharmaceuticals & Healthcare

Angola Pharmaceuticals & Healthcare

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BMI View: The Angolan government ' s initiatives to make healthcare more affordable, coupled with the municipalisation of health services, will lead to greater access to medical services and increase pharmaceutical spending in Angola. A new medicine depot is a step in the right direction towards improving the traditionally difficult operating environment of the country's pharmaceutical and healthcare markets. However, poor patent protection, a lack of hospitals and clinics, and the threat of counterfeit medicines will deter foreign drugmakers looking to operate in the Angolan pharmaceutical and healthcare sector.

Headline Expenditure Forecasts

  • Pharmaceuticals: AOA29.12bn (USD302mn) in 2013 to AOA33.33bn (USD339mn) in 2014; +14.5% in local currency and +12.4% in US...

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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 for exploiting new forms of energy.

The outlook for Angola's energy sector is good. The government is investing heavily in rehabilitating the country's antiquated power sector, constructing various new hydroelectric dams and oil-fired power stations, and rebuilding dilapidated distribution networks. The centrepiece of this will be the Cacombo and Laúca dams, the...

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Telecommunications

Angola Telecommunications

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BMI View :  BMI's Q 4 14 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 analysis of the latest market data relating to the end of June 2014   a nd an update of   our five-year forecasts to 2018 for the mobile, fixed-...

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