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
Angola will face another challenging year in 2016 as low oil prices, a weak investment climate, and rising inflation all contribute to low real GDP growth. The outlook improves slightly for 2017 as accelerating oil production supports exports, but the structural weaknesses in the economy will remain largely unaddressed.
A depreciating currency, the removal of subsidies, and an increasing money supply will see inflation continue to rise through H116 in Angola, prompting the monetary policy committee of the Banco Nacional de Angola to make furthers hikes in the policy rate.
Angola's budget will record another heavy deficit in 2016 as even lower oil prices offset the impact on government revenues of several devaluations made to the local currency. Furthermore, the government's clear intention to increase expenditures...
Angola Operational Risk Coverage (9)
Angola Operational Risk
Angola Operational Risk
BMI View: Angola's civil war from 1975 to 2002 severely damaged the country's infrastructure and the Angolan government faces the onerous task of rebuilding what was lost. The country's already-booming oil sector has the potential to bring investment to boost its utilities and transport network, which at present poses significant risks to businesses. The global fall in oil prices is severely affecting Angola's oil-dependent economy, but low fuel costs are also a benefit for businesses operating on the ground. As a result, Angola obtains a score of 32.9 out of 100 for its Logistics risk, ranking the country 26th out of 48 states in the Sub-Saharan Africa region...
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 presents a challenging market for employers seeking to recruit from the country's labour pool. The country's large population, high worker productivity, low levels of education, as well as low unionisation rate, should provide an attractive environment for labour-intensive industries which require a large number of unskilled workers. This possibility is hindered by Angola's high minimum wage, extremely young population due to high birth rates and low life expectancy, as well as the very low health levels of the population which often result in disease outbreaks. Employers will face many challenges in recruiting for higher-skilled positions...
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...
Angola Industry Coverage (11)
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-...
BMI View: We believe rising incomes and growing populations in Angola, Botswana and Namibia will see these countries enjoy long-term production growth in the corn sector. While there will be bumps along the way, we are ultimately predicting these countries to see output growth outpace consumption growth over our forecast period to 2020. Meanwhile, in the sugar sector we see Angolan production accelerating over the forecast...
BMI View: We expect vehicle sales in 2016 to fall by 19.0% as inflationary pressures driven by a weakening currency and high domestic fuel prices weigh on the purchasing power of the Angolan consumer and keep vehicle import prices elevated, leading to a challenging year for the autos industry.
|Inflationary Pressures Weighing Down Vehicle Sales|
|Angola - Vehicle Sales|
|f = BMI forecast. Source: BMI, Renault|
Food & Drink
Angola Food & Drink
BMI View: Angola's food and drink industry will contract over 2016 due to a weak economy, weak investment climate and rising inflation. Consumers will remain price sensitive over 2016, which will drive growth in economically priced segments. Over the long term, Angola's food and drink industry will remain attractive, showing robust growth on the back of economic expansion and favourable demographics.
|Food and Drink Spending|
|f = BMI forecast....|
BMI View : Construction industry growth will be sluggish over the short term as the weak commodities outlook weighs on the budget balance and hampers the government's ability to boost construction activity. We expect significant movement after 2020, in line with improved oil prices, which will provide the government with additional revenue to funnel into infrastructure projects as well as spur the development of oil infrastructure. Pervasive corruption and an inflexible labour policy will remain a drag on investor sentiment.
Latest Updates And Structural Trends
This quarter we are maintaining our forecast for 2.5% real growth in 2016 as the weak commodities outlook weighs on government revenues and diverts attention away from key...
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's oil production is forecast to remain strong and unaffected by low oil prices, with output rising up until 2018. Post-2018 oil production will fall off due to a steep decline in rates on mature fields and no new projects forecast to counteract the declines. However, with plenty of pre-FID projects in the pipeline and a strong oil major presence, oil production risks lie to the upside. Gas production will remain limited throughout our forecast with weak domestic demand, but will benefit from the ALNG coming back online after two years of closure....
Pharmaceuticals & Healthcare
Angola Pharmaceuticals & Healthcare
BMI View: Like other oil-dependent countries, Angola has suffered from the large fall in the price of oil. The healthcare sector has been impacted by large budget cuts as a result of the lower government revenues. With waste collection services also affected by severe cuts, the country is expected to see a sharp rise in communicable diseases such as the re-emergence of yellow fever disease following a major outbreak which began in December 2015. We believe that the deterioration of Angola's healthcare sector will work to impede the pharmaceutical market in the near-term at least until oil prices recover.
Headline Expenditure Forecasts
Pharmaceuticals: AOA34.25bn (USD282mn...
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...