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Apr 07, 2011

Great opportunities for SA business in Angola, says chamber CEO

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Angola is keen for partnerships between the public and private sector to help it spend a $43-billion budget this year, providing South Africa with significant business opportunity, an executive from the South Africa–Angola Chamber of Commerce said on Thursday.

Speaking at the Railways and Harbours conference in Johannesburg, the chamber CEO, previously also South Africa’s Ambassador to Angola, Roger Ballard-Tremeer, said Angola was set for strong economic growth of about 7,5% this year.

“The country can also expect a strong windfall to come its way, as the budget was worked out on an average oil price of $68/bl, but as oil prices have now risen to a massive $120/bl,” he added.

Since 2002, when the 27-year civil war ended, the country has worked to repair and improve ravaged infrastructure and weakened political and social institutions.

However, Ballard-Tremeer said that Angola was still struggling with serious capacity impediments in terms of the skills needed to rebuild infrastructure and the functioning of institutions.

“While the country has the money to spend on a number of big projects, including the ongoing rehabilitation of its railway lines, institutional capacity is still limited, with as much as 80% of the country’s budget being return unspent by some units in government in recent years.

“The country is in need of services across the board, including the oil and gas sector, property development and most other industry, and this is where the real opportunity for South African business lies,” said Ballard-Tremeer.

However, South African businesses do face some tough competition from especially China, and others such as Brazil and Portugal.

Angola had been exporting a third of its oil to fuel-hungry China since the early nineties, and in the first quarter of 2008, it became the main exporter of oil to China.

In return, the Chinese had provided Angola with a $15-billion credit line since 2002, while importing most of its own labour to carry out projects.

However, Ballard-Tremeer said that while Angola’s infrastructure rebuild would not have been able to advance to where it is today without the Chinese assistance, the engineering and construction was sometimes of a low standard.

It is precisely in this space where a number of South African companies had already achieved success, such as Pretoria-based engineering, management and technical services company Aurecon, which is contracted as work supervision agents to oversee and manage projects between the Chinese labour force and the Angolan government.


South Africa’s financial institutions are also eyeing business opportunities in the country, with Standard Bank recently opening its first branch, and others such as Nedbank, Absa, and First National Bank ready to follow.

Ballard-Tremeer said that South African banking institutions could also be looking at merger and acquisition opportunities with the 21 local banks in the country.

On the mining side, the country is in the process of drafting a new mining legislation, expected to reach Parliament during the course of the year.

“Mining activity in Angola had not been actively developing as it should, mostly as a result of the current Mining Act of 1992, which left investors somewhat hesitant to enter into the  mining sector.

“But, we have seen geological exploration of the country’s diverse minerals already picking up in anticipation of the new act,” said Ballard-Tremeer.
 

Edited by: Mariaan Webb
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