Opinion
Angola’s lessons from Brazil
BAI, says Fonseca, looks both at a company’s assets and the quality of its management: “Companies here usually have very low equity. And if it is too low, this is also a constraint for them to access financing. Banks don’t just look for guarantees, they also look at the repayment capacity.”
Outside the oil industry, private companies remain dependent on state spending: “If the government doesn’t keep a regular payment flow to its suppliers,” says Fonseca, “those companies will face difficulties including defaulting on loans. It is important that government keeps regular payments to its suppliers, especially small and medium-sized companies that have less access to finance.”
For banks and other financial institutions, supervision and regulation are becoming more pressing as the volume of business grows in line with the wider economy. “There is a real gap in knowledge,” says Fonseca, “even more with the new foreign exchange regime because oil companies that operate in Angola are used to an international environment.” Like other business people in Luanda, Fonseca laments that “when we do have good people, oil companies hire them.”
Despite the difficulties, the banking and service sector is growing, broadening the base of the economy. The barons of the ruling Movimento Popular de Libertação de Angola (MPLA) see this ambivalently. The burgeoning middle classes may have resources and time to articulate the grievances of the poor, and its activists have the daring to expose malfeasance.
For now, the political system looks robust with the main opposition União Nacional para a Independência Total de Angola apparently coopted into the system. President José Eduardo dos Santos, in power since 1979, sporadically announces without enthusiasm that he plans to step down, but there are no signs this is imminent.
The overwhelming power of the presidency at Futungo de Belas and its extensive network of family and political ties mean that change at the top could have seismic effects. The MPLA, a disciplined party in a growing economy, may have the chance to plan and manage the succession.
Much depends on the timing and context. A sharp deterioration in economic conditions caused by a global slump in oil prices could cause difficulties. Some oil experts predict the doubling of oil production if new presalt finds are deemed commercially viable.
