Transcript World Bank

ANGOLA
Unlocking Emerging Opportunities
Presentation to UK-Angola Investment Forum
May 24, 2012
Elio Codato
World Bank
Overall Macro Economic Situation
 In 2011, Angola’s overall economic situation improved
from the immediately preceding years:
 Robust real growth of 4%
 Declining inflation to 11% and exchange rate stabilized
 Overall fiscal surplus increased to 10% of GDP with domestic arrears
settled
 International reserves reaching US$27 billion, equivalent to 6 months
of imports
 Trend is expected to accelerate in 2012 with growth
forecast to reach 8%, helped by increased oil output
EMERGING SECTORS OF OPPORTUNITY

Non-oil sectors are playing an increasing role in the country’s
economic success story and are contributing a higher share of GDP
from 45% in 2008 to 55% in 2011

Housing and Transport Infrastructure:
 Ambitious Housing Projects: Luanda and surrounding areas
 Rehabilitation/development of Transport Infrastructure
(roads, railways, bridges, airports) to regenerate existing
networks and develop transport corridors within the
country and with neighbors
 Bringing construction and maintenance levels to SADC and
international standards
EMERGING SECTORS OF OPPORTUNITY
 Agriculture/Agribusiness:
 Second largest sector (after oil and gas) and
source of income for 60% of the population
 Estimated 3 million hectares of arable land exist
 Crops include cassava, beans, sweet potatoes,
bananas, cotton, rice along with other fruits and
vegetables
 Historically, the country was a major world
exporter of coffee and the potential remains for
reinvigorating the agriculture sector
 Potential for forestry and livestock production
EMERGING SECTORS OF OPPORTUNITY
 Telecommunications: planned sector liberalization and
expansion of coverage
 Power: Construction of hydro-electric power plants,
diesel-fired plants, and use of LNG in order to multiply
the current capacity from 1000 MW to 5500 MW in the
coming 5 years
 Water: Second most endowed country in Africa in terms
of water resources but significant investments needed to
improve access to water in both urban and rural areas
 Mining: Full potential to be fully explored but proven
reserves of diamond, gold, iron, phosphate, copper and
others
EMERGING SECTORS OF OPPORTUNITY
 Tourism/Hospitality:
 Significant potential for development (coastline, system of
parks and natural reservations, unexplored landscapes)
 Demand for rehabilitation/development of hotel and
conference facilities in Luanda and surrounding regions
 Financial and Other Services:
 Banking system includes 23 banks (majority privately
owned); sector is profitable but there is need for new
products, services, and innovation to promote greater
access to bank products
 Insurance and pensions: new actors entering the market
 Ongoing need for consulting, legal, and financial advisory
services
Investment Climate Challenges

To unlock the competitiveness of these emerging sectors,
lessen dependence on oil, and diversify the economy, Angola
needs to dramatically transform its investment climate:
 2011-2012 Ranking in Global Competitiveness Index : 139 out of 142
 2012 Ranking in Trade Logistics Performance Index : 138 out of 155
 2012 Ranking in Doing Business Index: 172 out of 183

Key Challenges include:
 Infrastructure bottlenecks
 Low labor productivity
 Limited access to finance, especially for small and medium enterprises
 Weak governance environment
Doing Business Results

Despite progress in certain areas, Angola’s overall performance on
Doing Business remains low compared with its peers in the region
Angola Selected Doing Business Indicators
2008 2012 Change
Overall Ease of Doing Business
Starting a business
Procedures (number)
Starting a business - Time (days)
Registering property
Procedures (number)
Time (days)
Trading across borders
Time to export (days)
Time to import (days)
Enforcing contracts
Time (days)
Cost (percent of claim)
Dealing with Construction Permits
Procedures
Time (days)
*Sub-Saharan Africa Average
12
119
8
68
7
7
334 184
64
58
48
45
1011 1011
44
44
13
11
321 321
2012
2012
Difference
Angola Rank Regional Average*
172
137
-35
167
123
-44
129
119
-10
163
134
-29
181
117
-64
115
112
-3
4
51
0
150
16
13
0
0
2
0
Business Perception of Main Constraints

According to the 2010 Enterprise Survey administered to 479 firms in Angola
of all sizes and sectors (including informal) the top three investment climate
constraints were: (i) Corruption; (ii) Access to Land; (iii) Access to Finance
Percent of Firms Identifying the problem as the main obstacle
Courts
Crime & disorder
Labor regulations
Transportation
Political instability
Workforce
Informal sector
Electricity
Customs and trade regulations
Licensing & permits
Access to finance
Access to land
Corruption
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Government Reform Programs

Government recognizes importance of improving the investment
climate in order to attain its diversification and job creation goals

Recent reforms include:
 Guichet Unico (Single Window) which has reduced time and cost for business start-ups
 Administrative reforms and IT upgrade which have reduced import / export time at
the Port of Luanda (main port for the country)
 Establishment of the Central de Riscos de Crédito (Credit Risk Bureau) to facilitate access
to finance by providing updated borrower data to finance institutions

Government has launched an ambitious Public Investment Program to
upgrade infrastructure and energy access

An Enterprise Development Program has been announced which aims
to promote access to finance to SMEs, develop industrial poles, improve
skills, and create linkages between large investments and smaller
businesses
Angola Portfolio
5 Active Projects (US$461.5 million), 2 Trust Funds (US$5 million)
IDA Financing Compared to
Total Investiments
(current US$ million)
14000
12000
10000
8000
6000
4000
2000
IDA Commitment
2010
2009
2008
2007
2006
2005
2004
2003
0
2002

New World Bank Group Country
Partnership Strategy

New Country Partnership Strategy under preparation covering
2013-2016

Strategy will have two main pillars and a foundation as follows:
 Pillar One: Deepening Diversification for Inclusive Growth
 Pillar Two: Enhancing the Quality of Decentralized Service Delivery
 Foundation: Building Human Capacity and Institutions and Deepening Social Protection

Strategy will bring together all institutions in the World Bank Group,
including:
 International Finance Corporation (IFC): to catalyze investments and support business
environment reforms
 Multilateral Investment Guarantee Agency (MIGA): to facilitate foreign investments
 World Bank Institute (WBI): to provide training and capacity development

Strategy will focus on knowledge transfer and developing
partnerships with donors, civil society, and the private sector
Summary Conclusions

Angola presents a unique and exciting set of business prospects across
a range of industries

The country continues on a solid growth trajectory with clear
Government commitment for maintaining macro-economic stability

To unlock the many potential opportunities, significant reforms have
to be undertaken at the policy and institutional levels which should be
coupled with progress in physical infrastructure and human capital

The World Bank is ready to do its part to help Angola attain its stated
social and economic development goals

The World Bank believes the private sector has an essential role in
promoting lasting, broad-based, and sustainable growth through
responsible business investments
Thank you!
http://www.worldbank.org