“The selection is based on our local research, own forecasting methodology and quantitative risk calculations,” reads the ‘Africa Investment Risk Report 2019’, which was sent to investors.
The selection, explained as, “presents some of our risk predictions for this year and signals potential business opportunities and new investments” in a set of estimates that takes into account “the main reasons for the risks security and economic policies as well as other longer-term trends that can determine a country’s risk trajectory.”
According to the Africa Investment Risk Report 2019, Angola, which appears again on the list, this time in second place after Ethiopia, when last year had been in first place, is presented as a country whose “economy will recover in 2019 with the prospect of increasing levels of oil production and financial support from the International Monetary Fund (IMF). “
The $ 3.7 billion program approved by the International Monetary Fund will “add legitimacy to the reformist path of President João Lourenço,” which will “increase compliance with macroeconomic conditions and policy approaches, optimism of market in the face of an already promising economy, should improve further. ”
There are, analysts say, “immediate opportunities for the oil and gas sector in Angola in this year’s bidding rounds, which are concrete steps to reverse the downward trend in production.”
Despite the positive opinion, consultants also points to some medium-term risks, namely the “massive debts” of the national oil company and the banking sector, which remains “politically exposed.”
Banks, analysts say, “urgently need a round of consolidation to improve asset quality and foreign currency risks,” noting that “with public debt at around 70 percent of GDP, domestic credit is now crucial to state funding. ”
Another of the risks pointed out by this consultancy has to do with the policy against corruption and favorable to economic liberalization: “Although the highly popular policy of fighting corruption and promoting a platform of economic liberalization is directed towards diluting the domain of the old political and economic elite, infrastructure projects will be at risk of cancellation or revision, “conclude the analysts.
Lourenço has been a member of the MPLA since Angola’s independence, supporting the party’s highly illiberal rule of Angola as Minister of Defence since 2014. During this time, he has argued against the economic development of the restive Cabinda enclave.
Implications for investors
2018 was attended by senior representatives of De Beers, Rio Tinto, MMG, and Ivanhoe mines. The following economic sectors are also likely to become more open to foreign investment and fair(er) competition under the Lourenço administration, including:
Retail: Retail and food importation will be a huge area of opportunity if Lourenço breaks up the importation monopolies the same way he has with the cement industry. As one interviewee commented, “the people of Luanda spend so much money on basic imported groceries!”.