Analyst Picks

Angola: Wrestling with the past | Analyst Picks | RiskMap 2020


Angola risk forcast

Wrestling with the past

Since his inauguration in September 2017, the scale of President João Lourenço’s ambitions has been remarkable. The kwanza (currency) has been fully liberalised. Corruption investigations have targeted figures previously thought to be untouchable, such as the children of former president José Eduardo dos Santos (1979-2017). Structural changes are challenging vested interests and introducing some transparency in previously opaque sectors such as oil and gas. His future plans are even grander, foreseeing a completely restructured economy in which previously all-powerful state-owned companies would be brought to heel by newly formed regulators. A total of 195 state-owned entities are due to be wholly or partially privatised by 2022.

There are significant challenges and the pace of change has slowed. Privatisation plans have been long discussed but remain unimplemented amid a lack of administrative capacity and opposition from influential figures who view SOEs as a vehicle for patronage and maintaining political influence. The aborted attempt to issue a new telecommunications operator licence in April highlighted the continued pervasiveness of high-level corruption. Economic problems remain severe; 2019 looks set to be the fourth consecutive year of recession.

For all that international investors have welcomed Lourenço’s reforms, these challenges mean risks remain. Whatever the long-term necessity of fiscal and monetary reforms, the short-term economic pain caused is fuelling anger that is manifesting in rising unrest. There is growing disquiet over the perceived witch-hunt of dos Santos and his family. If Lourenço does not deliver economic recovery soon, opinion – both among voters and within the ruling Popular Movement for the Liberation of Angola (MPLA) – will turn against him, derailing the reform agenda and potentially raising risks of political instability.

Control Risks remains positive about Angola’s longer-term outlook. Lourenço’s reforms are sensible and investors are showing increasing interest. There are no obvious challengers to Lourenço’s authority and the economic and political drivers behind his reform agenda are likely strong enough to ensure they continue. But this optimistic outlook cannot be guaranteed, and developments in 2020 will be critical in determining whether it is accurate.



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