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.
Angola Country Risk
Strong growth in Angola's crude oil production will pave the way for more robust real GDP growth in 2016. The resulting increase in government revenues will contribute to several infrastructure projects that will also support GDP over the year. However, increasing import costs as the effects of currency devaluations feed through into prices will pose a strong headwind.
Angola's current account deficit will record a mild improvement in 2016, as increasing oil production boosts export revenues in a climate of falling commodity prices. Even so, the deficit will remain high, financed by a mixture of external debt, and central bank reserves.
The Angolan government's crackdown on public displays of opposition is indicative of the fears surrounding the issue of President Eduardo Jose Dos Santos'...
Angola Operational Risk Coverage (9)
Angola Operational Risk
Angola Operational Risk
Angola's operating environment is threatened by high levels of crime, endemic corruption, a lack of adequate regulations and poor military capacity to ensure security and combat crime. Underdeveloped financial legislation exposes businesses to fraud and money laundering activities, while violent assaulted and armed robberies threaten employees in their day-to-day activities. However, with the exception of lingering border disputes with the Democratic Republic of the Congo and Congo Republic, Angola enjoys good relations with its neighbours and is increasingly involved in regional cooperation on trade and security. As a result, Angola receives an overall score of 29.3 out of 100 for Crime and Security Risks, sitting in 28 th position out of 48 countries in Sub-Saharan Africa.
|Only Competitive In Terms Of Conflict Risk|
|Angola & Sub-Saharan Africa Regional Average - Crime And Security Risk Scores...|
Angola Crime & Security
Angola Crime & Security
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...
Angola Labour Market
Angola Labour Market
BMI View: Angola's labour force is weak as a result of years of civil war that damaged the country's infrastructure. 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. Nonetheless, increased government spending on education and healthcare is likely to strengthen the labour force in the long term. Angola therefore receives a score of 37.9 out of 100 for its Labour Market Risk, ranking 25th out of 48 Sub-Saharan African (SSA...
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...
Angola Trade & Investment
Angola Trade & Investment
BMI View: Angola's wealth of natural resources has potential to attract greater foreign investment; however the high levels of bureaucracy and legal risk have reduced the scope of opportunities available for foreign investment. Although investors can benefit from the fiscal and tax incentives in various sectors and special economic zones, businesses in Angola continue to be burdened with difficult and expensive bureaucratic processes and significant trade barriers in the form of costly and lengthy import and export procedures. Furthermore, firms will face difficulty in accessing credit and international financial markets due to the country's banking structure and poor financial compliance in key sectors...
Angola Industry Coverage (10)
BMI View: We believe the rising incomes and population of South West Africa will see the region enjoy long-term growth in production in the corn sector. While there will be bumps along the way, we are ultimately predicting the region to see output growth outpace consumption growth over our forecast period to 2019. Meanwhile, in the sugar sector we see production in the key markets of Angola and Zambia beginning to slow over the forecast period as cheap imports from Brazil and China compete with local production.
Key BMI Forecasts
Angolan corn production from 2014/15 to 2018/19: 6% to 1.97mn tonnes. Although less than the bumper 2014 crop, we expect above-...
|High Fuel Costs Dragging Sales Growth|
|Source: BMI, Renault|
|* Passenger vehicle sales will contract by 15% in 2016.|
|* The removal on fuel subsidies will lead to higher fuel costs and reduced fuel consumption, which will feed into reduced demand for vehicles.|
Food & Drink
Angola Food & Drink
BMI View: Angola's food and drink industry will contract over 2016 in USD terms, while local currency growth rates have been distorted by high inflation to show positive growth. This contraction can be attributed to high import costs in 2015, which will filter into consumer prices in the first half of 2016, thus reducing purchasing power. Over the long term, the industry will remain attractive, showing strong growth on the back of economic expansion and a youthful population.
|Food & Drink Spending|
BMI View : Angola's construction industry will average annual growth of 5.1% in real terms over our 10-year-forecast period, driven primarily by investment in the country's residential and non-residential sector, as well as into power generation and freight infrastructure. Untapped oil reserves also hold potential to boost growth over the second half of our forecast. While we highlight the long-term cost of servicing the debt to be a downside risk for Angola's infrastructure sector, the issuance of the country's first Eurobond will partially help to address the financing deficit, with further support coming from China.
Latest Updates And Structural Trends
We continue to forecast 2.5% real growth over 2016, 4% over the next five years and 5.1% over our full 10-year forecast period....
BMI View: Angola's insurance market is at an early stage of development and the life sector accounts for only around 1% of the total insurance industry. The non-life sector is more robust and accounts for around 99% of the insurance market, a very large imbalance. Nevertheless, we hold the view that the life sector is poised for very negligible growth over the course of our forecast period. The main growth and primary gains driving the insurance industry will come from the non-life segment as all major and minor non-life lines are poised for meteoric growth due to economic expansion, rising incomes and higher spending powers.
BMI View: Angola's mining sector growth will continue to be driven by the country's diamond sector. We expect diamond mining growth will be supported with continued investment, both domestic and international, over our forecast period. Although the Angolan government keen to diversify the economy away from oil, mining expansion will be constrained by both inadequate infrastructure and high levels of bureaucracy.
We expect Angola's mining sector to expand at a steady pace through to 2019, reaching USD7.7bn in terms of overall output in 2019. Nevertheless, mining will remain far from a core industry...
Oil & Gas
Angola Oil & Gas
BMI View : Angola is among the most resilient of Africa's oil producers against sustained lower oil prices. This is due to a strong projects pipeline - with several major developments post-FID - and highly prospective deepwater acreages. However, we see downside to output post-2020, due to rapid decline rates at major maturing fields and prospective delays to projects which are pre-FID. Gas production will remain limited throughout our 10-year forecast period due to low levels of domestic consumption and unfavourable pricing dynamics and demand constraints in key export markets.
Pharmaceuticals & Healthcare
Angola Pharmaceuticals & Healthcare
BMI View: Angola is emerging from a long civil war, which has resulted in years of neglect of its healthcare sector. Whilst the government is taking positive measures to address a lack of hospitals and medical professionals via infrastructure projects, foreign investment in the healthcare sector and a fast growing population remain key growth factors for both pharmaceutical and healthcare markets. However, we believe uncertainty surrounding President Eduardo Jose Dos Santos' succession and the rise in civil unrest will dampen multinational drugmakers' interest in the market.
Headline Expenditure Forecasts
Pharmaceuticals: AOA34.25bn (USD282mn) in 2015 to AOA36.70bn (USD252mn) in 2016; +7.1% in local currency...
BMI View: Angola will not increase its electricity generation through means other than hydropower, due to a lack of oil or gas-fired projects which are economically viable. Furthermore, our bearish forecasts reflect our view that subsequent power projects beyond 2016 will also struggle to progress due to a decrease in government spending following the collapse in oil prices.
BMI View : BMI 's 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 estimates based on the latest market data and updated five-year forecasts to 2020 for the mobile, fixed-line and broadband sectors. From the five states, Mauritius and Mozambique stand out as dynamic and higher performing markets in terms of penetration and 3G/4G developments along with growth rates.
Latest Updates & Industry Developments
Important downward revisions were made to Angola's...