African Capital Markets News

Sub-Saharan African sovereigns outside SA to raise $7bn in fixed income

African countries (apart from South Africa) are set to place $7 billion of debt this year, buoyed by low interest rates and a huge global appetite. According to this article in Bloomberg Businessweek by Roben Farzad, this year’s debt issues will be more than the previous 5 years combined and African capital markets are feeling the boom.
No wonder international investors who are “grabbing for yield and growth” (according to Farzad) are looking to Africa which the International Monetary Fund forecasts will grow at 5.6% this year against 1.2% in developed countries. But Africa’s terrible infrastructure, including electricity, bridges, roads and wastewater treatment, is costing African sat least 2 percentage points of growth. Some of the new bond proceeds are likely to go on infrastructure, which needs investments of up to $93 billion a year.
The article cites research from JP Morgan Chase that average yields on African debt fell 88 basis points in the past 12 months, to 4.35%. “Nigeria, Gabon, Ghana, Ivory Coast, Namibia, the Congo, Senegal, and the Seychelles have all seen their borrowing costs fall this year.”
“It’s a hugely exciting story,” Jim O’Neill, the chairman of Goldman Sachs Asset Management who plans to retire this year, said in an April 23 interview with Bloomberg Television in London, writes Bloomberg reporter Chris Kay: “The only thing one has to be a little bit careful of are many of those markets are still very undeveloped and suddenly there’s a lot of people around the world regarding Africa to be sort of fashionable and trendy.”
Farzad wonders how easy it will be to “service so much easy-money debt when the credit cycle turns, or if commodities and political stability decline. At least for now, though, you get the impression that sub-Saharan Africa has turned a corner in global capital markets.” And journalist Chris Kay quotes Charles Robertson, global chief economist at Renaissance Capital: “For governments, great, don’t look a gift horse in the mouth. I still don’t believe investors are getting risk-adjusted returns in the dollar-bond space.”
According to Kay, debt-forgiveness programmes have helped 45 African nations cut debt to about 42% of gross domestic product this year from an average 120% in 2000, according to data compiled by Bloomberg and IMF estimates. South Africa’s Finance Minister Pravin Gordhan says debt will peak at 40% of GDP in 2016, compared with more than 100% for the U.S. and an average 93% in the eurozone.
Another reason why Africa offers lower risk is that taxpayers have no expectations of massive social and other spending in nearly all countries. Meanwhile global appetites are shown by the $20 trillion reportedly invested in debt at less than 1% yield.

Some potential issues
Nigeria planning to offer $1bn in Eurobonds and a $500m Diaspora bond, according to Minister of State for Finance Yerima Ngama. It was recently included in JP Morgan and Barclays local bond indices. Yields on the existing $500m Eurobond, due 2021, were down to 4.05% by 3 May, from a peak of 7.30% in October 2011.
Kenya really boosted investor confidence in Africa with its peaceful outcome after elections on 4 March and the Finance Minister Robinson Githae said on 11 March they could be in line to issue up to $1bn by September.
Ghana fuelled by an oil boom, has seen its debt yields on the 10-year bonds down 3.43 percentage points to 4.82% since their issue in October 2007, said Bloomberg.
Zambia successfully raised $750m last year at 5.625% and is thinking to return for another $1bn. Yields were up 20 basis points to 5.66% by 3 May.
Tanzania has asked Citigroup to help it get a credit rating before issuing a maiden Eurobond of at least $500m. Finance Minister William Mgimwa said a total of $2.5bn was bid for a private offering of $600m of Government debt in March. According to this story on Reuters that bond’s pricing and structure at the time had shocked markets and appeared to benefit investors: “The cheaply priced US$600m seven-year private placement was described as a “disaster” by one banker. And certainly the immediate secondary market performance looked terrible. The bonds jumped 2.75 points on their first day of trading.. That works out at a cost to the government of US$4m a year in coupon payments, assuming that the bonds could have priced at the tighter level.”
Angola did a private sale of $1bn in debt in 2012 and will go for $2 billion this year, according to Andrey Kostin Chairman of VTB Bank OJSC, who helped arrange the first issuance, last October.
Mozambique and Uganda may also issue foreign currency bonds of $500m each, according to Moody’s last October.
Gabon’s $1bn of dollar bonds are down 4.78 percentage points to 3.13% since they were issued in December 2007.

SADC stock exchanges work together towards links, shared skills and better visibility

The 10 stock exchanges of the Southern African Development Community (SADC) are working together to increase the effectiveness of their markets. The Committee of SADC Stock Exchanges (CoSSE) has agreed to concentrate on 6 priority areas in support of regional moves to more efficient capital markets.
The stock exchanges will explore ways to use technology to link their trading and order systems and work together to ensure clearing and settlement systems align with global standards adopted in April. They are working closely with SADC institutions to support development of regional systems, including payment and will boost visibility of trading data and enhance their joint website (www.cossesadc.org), launched in April by the JSE and I-Net Bridge. The bourses will also pool resources to accelerate training and skills development for capital markets staff.
CoSSE members are Botswana Stock Exchange, Malawi Stock Exchange, Stock Exchange of Mauritius, Bolsa de Valores de Moçambique, Namibian Stock Exchange, South Africa’s JSE Ltd, Swaziland Stock Exchange, Dar es Salaam Stock Exchange of Tanzania, Zambia’s Lusaka Stock Exchange, and the Zimbabwe Stock Exchange. They met on 25 June in Gaborone, Botswana in a meeting convened by CoSSE with support from SADC Secretariat.
“Stock exchanges have their roles cut out in each of our economies to augment our governments’ efforts to grow national economies for the greater good and as part of the SADC region’s struggle for growth to escape poverty,” says Mrs Beatrice Nkanza, Chairperson of CoSSE and CEO of the Lusaka Stock Exchange. “They are the channel for long-term risk capital, which is urgently needed for the region’s businesses, infrastructure providers and even governments. They also encourage saving and investment. CoSSE members are working closely together to support SADC initiatives and to make individual markets even more effective”.
CoSSE was set up in 1997 as a collective body of the stock exchanges in the Southern African Development Community (SADC). It promotes co-operation and collaboration between member stock exchanges and is resourced by a Secretariat, supported by the JSE. SADC defines CoSSE’s role in the Finance and Investment Protocol and other policy documents and CoSSE has links to ministerial and senior treasury bodies and also works closely with the Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) and the Committee of Central Bank Governors (CCBG).
CoSSE had set up three working committees to implement six business plans, prioritized from the initiatives identified in its Strategic Plan 2011-2016. These are:
1. Legal and Secretariat working committee – chaired by Geoff Rothschild of the JSE. This is responsible for formalizing and resourcing the Secretariat, and for continuing and improving liaison with CISNA and other SADC organs.
2. Market Development working committee – chaired by Vipin Mahabirsingh of the Stock Exchange of Mauritius. CoSSE has been developing models for inter-connectivity between automated trading systems at some or all member exchanges. The working committee will help member exchanges ensure their clearing and settlement systems comply with new global standards and support regional initiatives.
3. Capacity-Building and Visibility working committee – chaired by Anabela Chambuca Pinho of the Bolsa de Valores de Moçambique. This will liaise with member exchanges, regulators, stockbrokers, investors and others to develop and coordinate training courses. It will also enhance the new CoSSE website, help members to upgrade their own websites and to ensure their trading data and company news are disseminated internationally.
Progress will be guided by an Executive Committee, consisting of CoSSE Chairperson Mrs Nkanza, CoSSE Vice-Chairperson Gabriel Kitua (CEO of the Dar es Salaam Stock Exchange in Tanzania) and the three working committee chairpersons. The strategic plan was developed with assistance from FinMark Trust.

For more information contact
• Beatrice Nkanza, CEO Lusaka Stock Exchange, tel +260 (1) 228391 or email nkanzab [at] luse.co.zm
• Gabriel Kitua, CEO Dar es Salaam Stock Exchange, tel +255 22 2135779 or email gabriel.kitua [at] dse.co.tz.
• Pearl Moatshe of CoSSE Secretariat, tel +27 11 5207118 or email pearlm [at] jse.co.za

Vital impact PE fund raises $250 m and invests in Angolan housing

A private equity fund that invests in housing, agriculture, education and health says it has raised more than $250 million for its first fund, Vital Capital Fund I. Eytan Stibbe, founding managing partner at Vital Capital Investments LP (www.vital-capital.com) and chief investment officer was reported as telling Bloomberg yesterday (3 May) the fund aimed to invest in Angola, Ghana and Mozambique.
The fund includes retired U.S. Army General Wesley Clark among its advisory board members, is a proponent of “impact investing,” a strategy that places capital in ventures with social or environmental goals.
Stibbe says Vital Capital has already invested in Kora Housing, a developer of affordable housing in Angola. It aims to raise another $250 million.

Nigeria and Zambia joining African rush into bonds

The African bond market continues to expand, with many countries raising money on world capital markets. They are taking advantage of low global interest rates and many investors turning to African debt, partly fuelled by better economic management in Africa. Yields are near zero in Europe, the U.S. and Japan, and investors are looking to new frontiers.
Africa has massive capital needs to fuel its anticipated long growth run. The temptations to rack up debt again remain. The World Bank estimates that Africa needs to spend $93 billion a year on power, transport and water projects over the next decade to lift growth in the world’s poorest continent.
Bloomberg news agency reports that Nigeria appointed Barclays Capital in October as an adviser for its planned $500 million Eurobond. Zambia plans to raise $1 billion on the back of a planned sovereign credit rating this year.
Other African nations are dusting off plans to sell Eurobonds – bonds issued in an international currency, not the local one – to international investors. Many plans had been shelved in the global financial crisis in late 2008.
Bloomberg quotes Tanzania’s Deputy Finance Minister Omar Yusuf Mzee as saying that Tanzania is returning to work on its bond plan after postponing a sale of $500 million of the securities in 2008.
Angola has been talking for some time about raising $1 billion – $2 bln through international bonds this year. It received a B+ credit rating from Standard & Poor’s and Fitch Ratings in May.
Kenya plans to wait on its planned $500 million sovereign bond as the global recovery is “still uncertain,” according to Geoffrey Mwau, economic secretary in the Finance Ministry reportedly in August.
Sudan is next year to seek investors from the Persian Gulf region for $300 million of Islamic bonds because U.S. economic sanctions have denied the country access to other international markets, central bank Governor Sabir Hassan told the agency in an interview in Khartoum on 6 Sept.
Economic growth for Africa is expected to be more than 5% a year, says Bloomberg, fuelled partly by investment from China and India and partly by its own growing consumer spending. Infrastructure to be upgraded includes obsolete road and rail networks and power generation, where may countries face more power shortages – Bloomberg says that a continent of 1 billion people that has electricity capacity equivalent to Spain.
Bloomberg cites Samir Gadio, an emerging- markets strategist in London at Standard Bank Group Ltd: “The timing is perfect. Global yields are extremely low and that’s pushed a lot of countries to tap international markets. We’ll see good demand for these bonds. There’s just so much excess liquidity across the globe.”
South Africa’s $2 billion bond maturing in March 2020, yielded 3.69% recently (on 11 October), 138 basis points lower than when the securities were sold in June, according to data compiled by Bloomberg. The yield on Ghana’s 8.5% dollar-denominated bonds, due October 2017, has fallen 239 basis points to 5.78% during 2010.
According to the report, David Damiba, managing director in London for Renaissance Asset Managers,says: “It’s a fantastic idea to diversify their sources of funding. It’s important that these countries would want a benchmark bond” so that other assets can be priced appropriately by investors.
Another proponent is Stuart Culverhouse, chief economist of London-based Exotix Ltd., which advises clients on investments in illiquid markets. “Africa is relatively new to investors. After the last 20 to 30 years of really bad news, the past 5 to 6 years have been generally positive. There’s a cash pile just waiting to be invested. African Eurobonds will definitely be well-received.”
Some economic fundamentals have improved in Ghana, Zambia, Nigeria, Tanzania and Uganda. Most of their foreign debt, totaling about $33 billion, was canceled by lenders such as the International Monetary Fund and the U.S. starting in 2000.
Nigeria’s sovereign debt was 15% of gross domestic product in 2009, according to data from the IMF. That compares with 115% in Greece, 77% in Portugal and 116% in Italy. The report cites the IMF’s April 2010 Regional Economic Outlook for Sub-Saharan Africa. as saying in 2009 government debt was 26% of GDP in Zambia, 37% in Tanzania and 60% in Ghana.
Eurobond sellers will have to rein in fiscal deficits and limit any shortfall in their current accounts, to show that they can repay the money.
“It puts the countries on their toes,” said Kofi Wampah, first deputy governor of the central bank of Ghana, which is considering selling its second security in international markets, speaking to Bloomberg in an interview from his office in Accra on 7 Oct: “You have to ensure that your fundamentals are always right.”

Rencap has expansion plans

Renaissance Capital (www.rencap.com), the Russian emerging-markets bank with operations in Africa, plans to expand next year into Egypt and at least 3 other African countries, according to a 5 October interview published on Bloomberg. Rencap says on its website that its core businesses areas are Mergers & Acquisitions, equity and debt capital markets, securities sales and trading, research, and derivatives. It says it is building “market-leading practices across emerging markets globally in metals & mining, oil & gas and agriculture.”.
Clifford Sacks, CEO of the South African unit and head of Pan-African Equities, told Bloomberg from Johannesburg the bank may buy or start a brokerage in Egypt that would also cover Morocco and Tunisia. Hasnen Varawalla, global head of corporate finance, added that it also plans to move into Angola, Uganda and Rwanda. Rencap is bsed in Moscow, and currently operates in African nations including Ghana, Kenya, Nigeria, South Africa Zambia and Zimbabwe. Bloomberg quotes Varawalla: “Each of these countries will see a huge development in their capital markets. We are looking to expand into another 5 or 6 countries in Africa.”
The bank is half-owned by billionaire Mikhail Prokhorov. It started its African business in 2007. According to Bloomberg last year it participated in 24 transactions across 13 African countries, including the $955 million sale of Central African Mining & Exploration Co. to Eurasian Natural Resources Corp. Africa accounts for a quarter of RenCap’s investment-banking business. Varawalla told Bloomberg that Non-Russian activities will generate more than 50% of revenue within 2 to 3 years.
In July, it paid ZAR207 million (then US$27.3 million) to acquire BJM Securities, the brokerage business of South Africa’s Barnard Jacobs Mellet (BJM) Group. A press release by Rencap describes BJM: “Founded in 1985, BJM Securities is the leading independent full service broker-dealer in South Africa. The firm is known for its outstanding research franchise, having been ranked No.1 in South African research surveys.
The Firm entered South Africa in February 2010 and appointed Clifford Sacks. The press release quotes him: “The combination of a leading independent brokerage in South Africa with award-winning research franchise and Renaissance Capital’s unparalleled expertise in capital markets and M&A, complemented by our unique access to global emerging markets creates a powerful platform across research, sales and trading in Africa’s largest economy.”

Preparations continue for Angola Securities Exchange (BVDA)

Angola will have a securities exchange covering equities and other securities – including derivatives – in 2011, according to a report on the Angolan Press Agency. The report cites remarks by Finance Minister, Carlos Alberto Lopes who was speaking on 28 July in Luanda at a seminar on Insurance and Pension Funds.
The market will be called the Bolsa de Valores e Derivativos de Angola (BVDA).
Sr António Cruz Lima, Chairman of the Capital Market Installing Commission, said arrangements to set up the BVDA are far advanced. Next step being prepared is a shareholders’ general assembly to name the top structures of the exchange. The strategic plan for implementing the bourse is to be announced in September 2010, as will the launch date.
Sr. Cruz Lima said that legislation and other preparations, including human resource development and building technical and technological capacity are now far advanced. He added, according to the report: “There is little left for the BVDA to start, including legislation on investment funds and adjustments of the Capital Market Commission Decree to the new constitutional reality of the country. But I believe now it can be implemented.”
The market has been frequently flagged since 2006 and its launch has been delayed a few times. The story was covered in March, when we interviewed the former Finance Minister, José Pedro de Morais, Jr.
In April and May Imara Securities Angola’s chief executive, Anthony Lopes Pinto, started investment research and is distributing detailed reports to Imara clients and potential investors in the USA, UK and Western Europe.

Investors back $ billions of African bonds

Interest in African sovereign debt has been climbing again in recent months. Angola has stil not issued a $1 billion – $2 billion benchmark bond due in May. However, Kenya, Nigeria and Mauritius and many other countries have flourishing debt markets and international interest is good in high-yielding hard-currency bonds such as those issued by the Republic of Congo and Cote d’Ivoire.
In April top bond broker Exotix (www.exotix.co.uk) gave a “buy” recommendation on the REPCON 2.5% bond, redeemable in 2029. Then it was trading at 57.0 and offered a yield of 10.8% and was the highest-performing African sovereign bond.
Trading in $2.4 billion of Cote d’Ivoire debt in US dollars trading under New York law (2.5%, redeemable in 2032) began in mid-April, after the country exchanged it for Brady bonds it had defaulted on nearly a decade ago. Exotix only rates it a “hold” at 64.2 in mid-April, when it yielded 9.6%. The bond was expected to make up 0.75% of the $400bn Emerging Market Bond Index (EMBI), according to a recent article in The Banker, and many were expected to buy it for this reason. Exotix commentary on the bond included detailed assessment of politics and economic developments including current account surpluses and International Monetary Fund assessments.
Governments in some countries are seeking to create longer-term yield curves for domestic investors, in order to provide a framework for longer-term finance and investment. For instance Barclays Kenya is offering 20-year mortgages, compared to a few years ago when the limit was 5 years. Bonds are also being moved into electronic trading and being handled by central depositories.
According to a report on 19 May on Bloomberg, Angola was awarded credit ratings of B+ by Standard &Poors and Fitch, 4 levels below investment grade, and Moody’s assigned an equivalent ranking of B1, putting Angola on par with Nigeria, Lebanon, Belarus and Ghana. The country plans to issue $1billion – $2 billion in bonds this year.
Other high-yield bonds, including in local currencies, can be found in Tanzania, Zambia, Ghana and Kenya. Economic commentators are encouraged, as debt can be a more cost effective way to fuel long-term economic growth than equity.
Better economic management and good investor interest in government debt has paved the way for more corporate bonds, including for power and telecommunications infrastructure. This site has already reported how Kengen and Nampower have issued bonds to fund urgently needed power expansion. Telecommunications giant Safaricom has also been successful.
The successes are tribute to the increasing quality of economic and fiscal management by African governments.

Angola cuts back on May $4 bln bond

Angola has cut back its plans to raise as much as $4 billion in a sale of bonds without credit ratings, according to a report on Bloomberg. It cites Finance Minister Carlos Lopes speaking to reporters in Luanda and says it aims instead to issue $1 billion to $2 billion in May, after finalizing the amount by the end of April.
The country competes with Nigeria as Africa’s biggest oil producer. The bonds are aimed to help pay for government expenditure after oil’s decline from record prices of July 2008 andt is reduced Government incomes, of which 80% comes from crude exports. According to a previous report, JP Morgan Chase and Co. is handling the placement.
David Aserkoff, a strategist at Exotix Holdings Ltd, was quoted as saying: “It’s good that the Finance Ministry is talking about a more sensible issue size, given current market conditions and the fact that Angola has no rating from any of the major agencies… Given the increase in oil prices, it’s likely that Angola’s funding needs aren’t as high as they originally anticipated.”

Angola’s first private equity fund raises $28 mln

Angola’s first private equity fund has raised US$28 million in capital in its first closing, in an important step forward for the country’s capital markets. The Fundo de Investimento Privado Angola (FIPA) aims to link local capital markets with international sources of finance and to small and medium-sized privately owned businesses.
The fund was initiated by Norfund, in association with local partner Banco Africano de Investimentos (BAI). According to a press release from the European Investment Bank, Kjell Roland, CEO of Norfund, emphasizes how having a local partner is key to success: “We believe this is the time for private and institutional investors to start looking beyond traditional markets… There are many good entrepreneurs in Angola. They are in need of strong financial partners that, in addition to financial capital, can provide long term partnership and support. We find similar demand across the continent and hope the story of FIPA can spark the interest of other investors in the African markets.”
The investors in FIPA are:
• The European Investment Bank (www.eib.org), the long-term lending institution of the European Union, whose shareholders are the 27 European Union member states. EIB has been active across Africa for over 40 years and its loans in Africa concentrate on fostering private sector-led initiatives, including SME and microfinance investments that promote sustainable economic growth and help to reduce poverty. The Bank also supports public sector projects that are critical for private sector development and the creation of a competitive business environment.
• Danish International Investment Funds (www.ifu.dk), founded by law in 1967. The objective of IFU is to promote economic activity in developing countries in collaboration with Danish trade and industry. IFU works to achieve it’s objective by investing in companies in such countries in collaboration with Danish strategic partners.
Banco Privado Atlântico (www.bpa.ao), aims to be a model financial company in Angola.
• Banco Africano de Investimentos (www.bancobai.ao), founded in 1996, claims to be the largest Angolan bank, with over 70 branches in Angola, BAI is also present in Portugal (BAI Europa), Cabo Verde, Sao Tomé e Príncipe and Brazil.
• Norfund (www.norfund.no). The Norwegian Investment Fund for Developing Countries was created by Parliament in 1997 and is a hybrid state-owned company established by law with limited liability, owned on behalf of the state by the Ministry of Foreign Affairs. The vision is to combat poverty through investments in profitable and sustainable businesses in developing countries and it works in accordance with the fundamental principles for Norwegian development cooperation.
Tiago Laranjeiro, Managing Director of Angola Capital Partners LLC, says he is optimistic about the prospects of investing in SMEs in Angola, one of the world’s fastest-growing economies. “We see plenty of potential within our pipeline companies and the economy in general. Sectors outside the dominant petroleum sector are in special need for growth and expansion capital” says Laranjeiro. “Our second closing, to be completed by year-end 2010, will aim to raise FIPA’s capital up to $100 million, so that we can fully capture the good investment opportunities we have at hand.”
Kim Gredsted, Head of the Johannesburg regional office for Denmark’s IFU says it is important to have a team on the ground in Angola since private equity financing has been mostly missing: “By filling in this gap, FIPA can be seen as a step in the right direction of making the financial system of Angola more complete… Our investment in FIPA has enhanced IFU’s presence in one of the more challenging but also very promising markets in Africa. We can now pursue investment opportunities with Danish strategic partners and in many cases bring FIPA as a local financial partner and thereby have a permanent team on the ground that will help manage the investment and mitigate the various risks that are associated with private equity investments in Angola.”

Angolan Stock Exchange “in next 12 months”

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.
Investment opportunities
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.