Angola Renews Reforms, to Privatize More Than 70 State-Owned
Angola plans to privatize 74 state companies over the next few years, predominantly those in the industrial sector, according to the prospectus sent to investors as part of the country’s Eurobond issuance.
Africa’s second-largest crude producer has been battered by a fall in the price of oil over the past four years and President João Lourenço, who took office in September, has pledged to reduce state interference in the economy, which remains centrally controlled after years of civil war and Soviet influenced state building following independence from Portugal in 1975.
“Generally, the government intends to sell its entire interest in these companies, the majority of which operate in the industrial sector,” the prospectus, a copy of which was seen by Reuters, said.
The prospectus does not list the companies or say how much the privatizations could raise, but a government source told Reuters that Angola’s ports, national carrier TAAG, BCI bank, and insurer Ensa were all being considered for full or partial privatization.
“The government’s long-term policy is that companies which, in the government’s view, are not required to remain under public ownership as a matter of policy should eventually be privatized,” the prospectus added.
Lourenço aims to revive growth by opening the economy to foreign investors and diversifying away from oil, which currently accounts for 95 percent of exports.
Angola is in the process of raising $3 billion through two Eurobond issues, launching $1.75 billion in 10-year notes at 8.25 percent and a $1.25 billion 30-year tranche at 9.375 percent.
In the prospectus, Angola also said it saw its total debt excluding that held by state oil firm Sonangol reaching $77.3 billion, or 70.8 percent of GDP, by the end of 2018.
These planned reforms are significant in many respects. In Angola, certain state-owned enterprises (SOEs) exercise delegated governmental powers, especially in the mining sector where the government is the sole concessionaire. Foreign investors may sometimes find demands made by SOEs excessive, and under such conditions, SOEs have easier access to credit and government contracts. Whereas there is no law mandating preferential treatment to SOEs, in practice they have access to inside information and credit. Currently, SOEs are not subject to budgetary constraints and quite often exceed their capital limits.
SOEs, often benefiting from a government mandate, operate mostly in the extractive sectors, transportation, commerce, banking, and construction. Finally, all SOEs in Angola are required to have boards of directors; however, most board members are affiliated with the government, even though they are not explicitly required to consult with government officials before making decisions.