Angola post-Dos Santos: An interview with Edward Semple
GRI sat down with Edward Semple, Founder of SET Advisory and a leading expert on Angola.
Background
Angola gained its independence from Portugal in 1975. Since 1979 the country’s President has been José Eduardo dos Santos, Africa’s second longest-serving leader. In February 2017, President dos Santos publically announced that he would not be standing as the presidential candidate for the ruling centre-left political party Movimento Popular de Libertação de Angola (“MPLA”, the People’s Movement for the Liberation of Angola) in the country’s parliamentary elections, which were held on 23 August 2017. The MPLA won over 64 percent of the votes, giving them the mandate in parliament to choose the next president – their choice was the Angolan Minister of Defence João Manuel Gonçalves Lourenço, officially the new President of the oil rich Lusophone African country.
GRI: What are the risks and opportunities facing businesses in a post-dos Santos Angola? Will the power brokers change across the board?
Semple: There is significant uncertainty as to what will happen politically and economically in Angola now that dos Santos is no longer President; he has been a constant in Angolan politics and business (albeit covertly) for nearly 40 years. Predicting the trajectory and nature of Lourenço’s presidency will be difficult as he has maintained a relatively low profile up until the announcement that he would be dos Santos’ replacement as head of the MPLA. In the short term, there is unlikely to be any massive overhauls to the country’s business environment, given that dos Santos and his associates have in the past decades established themselves firmly as significant players in industries such as oil & gas, banking, agriculture, mining and retail.
The Angolan Supreme Court in the summer of 2017 passed into law legislation stating that former Presidents and their close family will enjoy immunity from prosecution after their term in power. Considering this, it does not appear that the country’s political and business power brokers will disappear from the scene in the short term.
In terms of opportunities, the Angolan government knows that total dependency on the oil & gas sector has not fared well for the country and will look for international partners to assist the country in diversifying the economy. Aside from the uncertainty, long-standing risks associated with doing business in Angola, such as issues with transferring money abroad, poor infrastructure and lack of skilled workers, will continue to be real problems facing investors in the country.
Lourenço’s presidency will not bring about transformative political changes, though the general consensus is that the new president will have to focus his efforts on improving Angola’s credibility worldwide after years of dos Santos and his associates blatantly abusing their powers for their own benefit.
GRI: How is the Angolan economy faring at the moment? Do you expect the economy to diversify away from oil?
Semple: The Angolan economy has been suffering in recent years with the 2014 collapse in the price of oil given that the country depends heavily on this sector. Much of the country’s economy did and still does rely on the oil sector.
International companies that had been operating on a large scale in Angola have significantly scaled back their operations in the country due to the difficulty in repatriating funds. Only recently Dubai-based airline Emirates terminated a 10-year deal signed in 2014 with the Angolan state-owned airline TAAG and is scaling back direct weekly flights between Luanda to Dubai from 5 to 3.
The Angolan government has in the past made calls for the diversification of the country’s economy, with potential growth industries including agriculture and tourism. However, many of the large-scale agricultural projects and tourism real estate development plans have come to a halt over difficulties in making international payments due to the foreign currency shortage. It is unlikely that the Angolan economy will diversify much in the short term given high costs of operating in the country, extensive bureaucracy, inadequate infrastructure and the lack of skilled workers. The government is likely to focus on increasing investment in the oil sector in the short term in order to continue to attract foreign investment and generate revenue.
GRI: What are three tips you can provide investors who are looking to enter the Angolan market?
Semple:
1.Understand the difficulty of taking money out – Over the last few years, Angola has been plagued by currency issues that have been aggravated by the collapse in the price of crude oil. The Angolan central bank’s official exchange rate against the dollar is at present around Kz 167, however, on the black-market, the going rate is Kz 370. Due to a shortage of foreign currency, individuals and companies in Angola have struggled to move capital from within the country to abroad, with it taking sometimes over a year for a transaction to take place. If one is thinking of investing in the country, it must be kept in mind that it may not be so easy take profits out afterwards.
2. Patience – Registering, buying and/or starting a company in Angola can be very time-consuming. The country’s bureaucracy is infamous. It is not always easy to find information regarding what documentation is needed and it used to be the case that every company had to have an Angolan shareholder. Although this is no longer an official requirement, companies can now be wholly-owned by non-Angolans, most investors in Angola choose to have local partners who understand the local market.
3. Know whom you are doing business with – Business and politics are blurred in Angola, with many of the country’s most prominent businesses being directly or indirectly owned by figures within the MPLA or by their relatives and acquaintances. It is important to know exactly who you are doing business with, as these high-ranking political or military figures use family members or friends as fronts for their business interests. One must be careful to avoid the risk of breaching international anti-corruption laws such at the UK’s Anti-bribery act and the USA’s Foreign Corrupt Practices Act (FCPA). Penalties for breaching such laws can include high fines or the imprisonment of executives.
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Edward Semple is the Founder and Managing Director of SET Advisory, a leading boutique business intelligence firm based in London. Prior to founding SET Advisory, Edward worked in the corporate investigations division of a large risk consultancy as an in-house Lusophone Africa specialist. Edward specializes in covering the Lusophone world, especially Angola, Mozambique, Brazil and Portugal. Edward has given lectures at the London School of Economics (LSE), has been hosted by the Reuters Global Markets Forum and has provided commentary for leading media outlets, including Forbes.
He has lived and worked in several countries including Brazil, Spain, Portugal and Ireland. He holds a Masters of Science in Criminology from the London School of Economics. He speaks Portuguese, Spanish and English fluently.
