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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Advantages for foreign businesses in Angola include the rapid development of the national banking sector, a low probability of conflict with its neighbours and significant market potential, offering companies a growing number of investment opportunities within a stable operating environment. However, businesses face considerable risk from high rates of crime and corruption, generally poor transport quality, a scarcity of educated and skilled labourers, a difficult and expensive set of trade procedures, and poor intellectual property rights protection. Due to these considerations, Angola receives a score of 31.7 out of 100 in BMI's Operational Risk Index.

The country is characterised by high and often violent crime that exists throughout Angolan territory, executed by both informal and formal criminals and gangs. Foreign companies are particularly prone to risk from crime due to the targeting of expatriates by criminals...

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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 a nd limited access to health care 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 receive s a score of 27.6 out of 100 for its L abour M arket R isk and is ranked 32nd...

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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. Although this will help to improve the country's current account balance, it may lead to deteriorating food security across the region as farmers respond to lower prices. 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 recent...

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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 food and drink markets in Sub-Saharan Africa . With strong economic expansion , combined with a young and rapidly growing population and plenty of untapped market opportunities ,   the country hold s 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.   ...

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Infrastructure

Angola Infrastructure

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BMI View: We have downgraded our five- year growth outlook for Angola's construction sector by about four percentage points to reflect the impact of capacity constraints on government spending. High growth expectations from major investment plans under the control of the government, including the USD55bn FY2014 budget and the 2013-2017 National Development Plan, have as such been eroded partially by concerns over budgetary execution. However, we maintain a broadly positive outlook for the industry, with growth to peak over the five year horizon (2014-2018), averaging 9.3% y-o-y.

Angola's construction industry is expected to be boosted by a combination of government investment, as part of a drive to develop infrastructure to support economic diversification and a strong expansion in oil production and...

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Insurance

Angola Insurance

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BMI View: Looking ahead to 2015 and beyond, Angola's insurance sector should record sustained, double digit growth. In large part, this will be driven by wider economic expansion and the increase in demand for insurance solutions related to the country's dominant energy sector. However, the sector will be hindered by the fact that the majority of Angolans will not be able to afford anything beyond basic, compulsory motor lines. As a result, low penetration levels will suppress growth in the life segment, with demand limited to a very small, wealthy portion of the population.

We are of the view that despite solid growth, challenges will continue to hinder Angola's insurance sector. The relatively recent opening up of the market to foreign investors should bring benefits including greater product innovation and new channels of distribution, as well as access to global capital markets. However,...

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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: Both government and foreign investment will see the Angolan healthcare sector continue to grow in the coming years mainly due the country ' s rich oil reserves attracting external revenues. Angola ' s high burden of communicable disease, such as measles and malaria, will mean that the demand for vaccines remain high. However, the country ' s pharmaceutical and healthcare market is greatly affected by its difficult operating environment, with corruption and poor infrastructure posing considerable challenges to foreign drugmakers operating in the country.

Headline Expenditure Forecasts

  • Pharmaceuticals: AOA19.66bn (USD204mn) in 2013 to AOA21.95bn (USD223mn) in 2014; +11....

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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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