Angola: Privatisations are advancing, although slowly

 In Development, Economy, Industry, Infrastructure, News

The Privatisation Program (Propriv 2019-2022) launched in 2019, has been one of the main “flags” of Angolan President João Lourenço’s government along the road of Angolan economy liberalisation. It is an ambitious programme which deserves special attention from the international business community.


According to this plan, the sale of 195 assets held or participated by the Angolan State is foreseen in a number of areas, such as in banking, industry, insurance, telecommunications, oil, mineral resources, beverages or agriculture.
So far, according to government sources, around €87 million (€64 Bn Kwanzas) have been raised to the end of September 2020, corresponding to the privatisation of 23 assets.
There are signs and statements of some optimism, albeit cautious on the part of some members of the government regarding the privatisation process, however, one cannot help feeling some concern about the course of events to date, since we are still far behind established goals.
Last February, we listed seven reasons that seem to be attractive for such a vast privatisation program. In summary these are:
• IFC quality assurance (International Finance Corporation / World Bank).
• Institutional strengthening and property protection in progress.
• Liberalising economic reform.
• Desirable companies.
• Small and medium-sized companies with attractive niches.
• Business problems are not structural.
• High rate of return on investment.

We also warned of some unresolved issues, being of three types: bureaucratic-administrative, the assessment of the real situation of companies and the lack of clarity of purpose, in relation to large companies and banks. In addition, we drew attention to the fact that it would be essential to give the privatisation processes a quick and efficient dynamic. To achieve this purpose, we suggest the best solution would be to “appoint a “Privatisations Czar”.
This could be someone who has the President’s confidence and who, under his command alone, directs the privatisations with the legal powers to instruct any minister or body and to override by deciding to concentrate the expertise and powers for the privatisations”.
What we have witnessed to date on the part of the government is an ineffective effort in the coordination between the several bodies and entities involved in the privatisation processes, seeking to comply with the Propriv calendar. An example of this was the creation of the National Interministerial Commission for Monitoring the Privatisation Program, which brings together several public sector entities, with the aim of coordinating the implementation of the program. Or, the contracting by the IGAPE (State Assets and Participations Management Institute) of the Standard Bank de Angola, to support in the privatisation process of BCI (Banco de Comércio e Indústria). Recently also, the Minister of Finance Vera Daves, called for greater involvement of provincial governments, implying that in the future more companies and local assets could be included in the programme.
All of this seems beneficial, since apparently there is an effort by the Government to bring the set of privatisation processes to a successful conclusion. The problem is that, as already mentioned, this process is very complex, each type of company needs to be analysed in a different way, not only due to its economic and financial background, but also taking into account its size and relevance to Angolan society.
The different procedures that have already been triggered, need to be dealt with with accuracy and caution, because above all, one should not forget that this Propriv, aims to “promote the stabilisation of public finances, through fiscal consolidation, the money markets, foreign exchange and the recovery of robust levels of economic growth”. In addition, “It will allow the Executive to reduce the State’s presence in the business sector, promote competition and private initiative, improve the availability of products and services to the population, improve the distribution of income at the level of the national economy, as well as promote the capital market in the country”. These statements were recently uttered in an interview by Osvaldo João, Secretary of State for Finance and Treasury and Coordinator of the Propriv Program Technical Group. They are very demonstrative of the commitment to the liberalisation of the Angolan economy. Nevertheless, we realised more than a year after the launch of this whole process, that the “Privatisations Czar” was not created, that the government has spoken with “different voices”, the lack of coordination and unclear information transmitted outside is still a steep reality, in addition to the fact that we are a long way from the sale of the 195 assets. One of the main factors for success in the privatisations would be the existence of transparency and confidence to give private individuals who enter the companies’ shareholdings a greater security, and also so that the companies are not sold merely by the minimum levels defined by the State.
Clearly, all the problems associated with covid-19 were detrimental to the development of the various stages of privatisation, however, this does not justify everything, namely, issues related to everything related to bureaucracies, disorganisation and lack of clarity regarding some cases.
We believe that there has been some progress, mainly in the attempt to explain some pressing issues that are emerging. In fact, this has been a prerogative in other matters in these early years of the Government led by João Lourenço. However, there has been no single leadership in this program, which reports only directly to the President. Thus, the information can become diffuse, confusing and this, naturally, turns away potential investors and devalues ​​the active potential of a company.
For large companies, often called blue-chips, clarification is needed with dates, percentages and specific conditions for privatisations, since there are privatisations that will go through two stages, the last of which will include the dispersion of capital in the stock exchange. In the case of Sonangol, already called Angola’s “golden egg” umpteen times, we defend the privatisation of 33% of the oil company Sonangol and a new strategy for the company, considering that the current recovery plan is insufficient to make it profitable.
According to Osvaldo Silva, the calendar itself predicts that all companies in the program will have their privatisation processes started by 2022. The year 2021 will be crucial for the privatisation of assets and holdings of national reference. Thus it is expected that the calendar will be fulfilled, but should be done in a way that will not compromise the future of the Angolan people.
The Propriv Program Technical Group Coordinator foresees in practice that: “The future clearly represents the liberalisation of the economy and the improvement of the living conditions of families, through their participation in economic activity, whether as workers or shareholders in the various companies to be privatised”.

SOURCES: – table 3: Reasons for attracting privatizations in Angola  idem  idem