Angola is emerging as a land of opportunities. Having more than 20 million population, the African nation is pursuing social and economic development by making use of its abundant natural resources such as crude oil, diamond and iron ore while increasing its political and diplomatic presence in the continent as the chair country of the Southern African Development Community (SADC).
It is known to be home to more than 13.1 billion barrels of crude oil reserves and its total petroleum output is approximately two million barrels on an average day, topping the list with Nigeria among Sub-Saharan countries. The contribution of crude oil to its GDP amounts to 45%. As of the end of 2011, Angola recorded a GDP of US$117.2 billion and ranked third in the Sub-Saharan region, following South Africa and Nigeria.
The skyline of the capital city, Luanda, which is filled with lofty skyscrapers and construction cranes, symbolizes the nation’s rapid growth. Mail and Guardian once reported, “Here, one hamburger costs as much as US$50 and you have to pay US$100 to enter a nightclub.”
After the end of the 27-year-long civil war back in 2002, the Angolan government knuckled down to petroleum development and achieved an astonishing annual average economic growth rate of 17.5% between 2005 and 2008. Though the percentage fell to 1% or so in 2009 and 2010 for the global financial crisis, it rebounded up to 3.4% in 2011, showing strong signs of further recovery. The country’s economic growth rate for 2012 is estimated at over 10%.
The fast growth is expected to get a boost from the reelection of the incumbent President, Jose Eduardo dos Santos, who came to power in 1979, came out victorious in the civil war in 2002 and is to govern the country for five more years until August 2017. He has invested the huge foreign exchange gains earned with crude oil production in national economic development and infrastructure to realize such a high average growth rate.
Angola is showing stable financial conditions, too. The Standard Bank in South Africa recently predicted that its fiscal surplus-to-GDP ratio would reach 9% this year. In 2011, its foreign exchange reserves increased 44% from a year earlier to US$25.02 billion.
Nowadays, the Angolan government is striving to further utilize its other mineral resources like diamond and iron ore so that it can be less dependent upon petroleum. As the government has granted the prospecting and mining rights to not only state-run company Endiama but also foreign enterprises, development of the resources and investment attraction are expected to speed up down the road. Global developers like Brazil’s Vale have made investments worth a total of US$6 billion combined in iron ore development projects in Angola to date.
A large number of countries around the world are paying close attention to the southern African nation for its rich natural resources and high growth potentials. Angola and the United States concluded a trade and investment framework agreement (TIFA), which is seen as a build-up to a free trade agreement, three years ago. The purpose of the agreement is to guarantee free inter-company investment and overseas remittance of profits with Germany, Spain, Portugal, Italy, Britain, Russian, South Africa, etc. In the meantime, China has also tightened its relations with Angola by providing loans of up to US$15 billion and participating in its infrastructure construction and petroleum development projects. Japan, on its part, is going through negotiations with it for an investment treaty, too. At present, more than 450 non-Angolan companies are doing business there and over 70,000 employees are working for them.
In November 2011, Portuguese Prime Minister Pedro Passos Coelho visited Angola and asked for more investment. It was a truly noteworthy event in that Angola used to be a colony of Portugal in the past for no less than 470 years. Angolan enterprises and sovereign wealth funds have made concentrated investments in Portuguese banks and energy companies since 2008.
SONANGOL, or Sociedade Nacional de Combustiveis de Angola, is the state-run oil company that is the second largest in the entire African continent. In 2008, during the financial crisis, SONANGOL acquired 9.99% of shares of Banco Comercial Português (BCP) at a cost of US$469 million. In late 2011, it increased its share to 12.44% and became the largest shareholder. Also, it purchased 45% of Amorim Energia, which owned 33.4% of Galp, to take over the Portuguese petroleum company. Sovereign wealth fund Santoro Finance bought 45% of the shares of Amorim as well to exceed the portion possessed by the government. According to the Le Monde Diplomatique, Angolans are estimated to own at least 4%, or US$2 billion, of the aggregate market value of the banks and energy companies listed on the Portuguese stock exchange although exact figures are not available yet. In addition, Angola has launched a US$5 billion sovereign wealth fund as of late.
Angola is aiming to turn itself into a financial hub of Africa as well. Luanda is considered as the third most competitive financial city in the Sub-Saharan region, second only to Johannesburg and Lagos. More than 50% of the banks and their branches in Angola are located in the capital city and the number of branches went up 22% from 680 to 830 between 2009 and 2010. During the same period, that of ATMs soared from 995 to 1,250. According to accounting firm KPMG’s report published in November last year, the combined total assets of Angolan banks posted a 21% and 24% year-on-year growth in 2010, respectively.
The Ministry of Environment of Korea signed an MOU with its Angolan counterpart in May this year for better protection of environment and natural resources. Two months later, Minister of Foreign Affairs and Trade Kim Sung-hwan met with Angolan Foreign Minister George Rebello Chicoti, who visited Korea to join the opening ceremony of the Expo 2012 Yeosu Korea, and discussed how to further beef up the bilateral relations in such fields as politics, diplomacy, economy, international commerce and energy.
“Minister Chicoti’s visit celebrates the 20th anniversary of the establishment of diplomatic relations between Angola and Korea and marks the first one since his inauguration in November 2010,” said the MOFAT, adding, “The visit was a valuable opportunity to bolster our ties and make our cooperation even more practical.” Korea and Angola had established diplomatic ties on January 6, 1992.