FROM SECURITIES AFRICA/CITIGROUP 5TH ANNUAL AFRICAN INVESTMENT CONFERENCE, LONDON
All the frameworks are in place for an Angolan stock exchange, and a first listing and official launch could be expected in the current year, 2010, says former Finance Minister José Pedro de Morais, Jr, who is closely involved In the board of the future bourse. He was a speaker on 15 March at the 5th Annual African Investment Conference in London, organized by stockbrokers Securities Africa and Citigroup Emerging Markets.
“We are waiting for the Government to take the necessary steps” says Sr de Morais. “All the legal and regulatory framework is already in place, it was approved in recent years. We have shared the experience of some neighbouring countries, which have well developed stock exchanges. We have the basis and foundations to start with this market.”
Sr de Morais was finance minister from 2002-8, and helped drive the stock exchange initiative. He says that the preliminary studies suggest that the authorities have the intention to allow large state-owned companies to allocate a small part of their capital to be listed on the stock exchange to help the beginning of its operations, but the main trading products are likely to be treasury bonds, which the Government uses to finance national reconstruction. Mechanisms are being created so that foreign investors can move in and out.
According to Sr de Morais, Angola’s strength lies in the way it is managing its political, economic and social transitions, creating an extended period of rapid expansion and massive infrastructure investment, which in turn is allowing the country to lay the foundation for more competitive economy, despite the global economic crisis. Angola’s medium-term outlook remains favourable and very promising.
In recent years, Angola was the second fastest growing economy in world (2005-7), oil accounted for large majority but the non-oil sector has also shown strong growth. After a slowdown in 2009, the longer term growth trend is expected to resume from this year. Net international reserves have been growing for last 5 or 6 years, and this is reflected in the official exchange rate.
He says major challenges include:
• Economic diversification and competitiveness – agriculture and other sectors
• Job creation – reduction of unemployment, people have high expectations. The economy is still recovering from a destructive and long war, at the same time it is moving from central planning to a more market-oriented system and making the transition from single party to multi party system. So far it has been hard to establish the right institutions to create a more competitive environment.
• Improving income distribution, for which the only route is increasing employment, but prospects are good.
• Improving social indicators.
• Gradual fiscal decentralization.
• Improving regulation and supervision of the credit system, institutional capacity to deal with large, more diversified and sophisticated economy.
• Inflation trend.
• Price of real estate is increasing extremely fast.
Real estate – where the sources of growth can come in next couple of years. There is a huge deficit in terms of real estate products, be it residential, commercial, services and parking, etc. The emphasis is on superior quality products, the capacity to pay is there because of the oil industry with its skilled expatriates who need housing. The Government has many incentives to private investors in this area and has promised to build 1 mln houses during their mandate.
Infrastructure – the Government has been very active and visible, with more than 5,000 km paved roads been rehabilitated, also airports, ports, recently in Luanda organized the African Cup of Nations and did a lot of infrastructure improvement, this area will continue to be one of the largest for government capital spending.
Telecommunications – Angola is late but rushing to make progress after the 2001 telecommunciations law which established the basis for liberalization, competition in both mobile and fixedline, including privatization of the national telecom operator. Another innovation of national fibre background network, involving 6 meshed rings with more than 6,000km and microwave onward connection to rural areas. Internet usage is up from 1,500 in 1997 to 500,000, mobile from 2,000 to 7.3 million with a penetration rate of 43%.
Agriculture – 70% of food comes from imports in a country that used to be a major producer. Now Government plans to rehabilitate rural support infrastrucute for agricultural such s irrigation systems, tertiary roads, rural electricity, and has invested in large agricultural projects such as maize, soya beans, rice, sugar cane. Farm productivity and production costs remain main obstacles to increase agricultural production, but not many expert companies are yet involved, Angola is using less than 10% of its total agricultural land.
Speaking later in the day, Eduardo Vieira, President of Angolan stockbroker Novacao Corretora de Valores, who is working with a number of investment and financing projects, also believes the scope for Angolan private equity is also very strong.