Courtesy of The Africa Report, an interesting look at the recent appointment of an economic reformer in Angola that should bode well for continued economic growth:

José de Lima Massano, renowned for his competence, was appointed Angola’s Minister of State for Economic Coordination. His main task will be to put an end to fuel subsidies, a delicate reform in the oil-rich nation.

In Angola, presidential appointments that are unanimously approved are rare enough to merit a mention. This includes Massano, who was installed by President João Lourenço on 8 June.

Previously governor of Angola’s central bank (Banco nacional de Angola, BNA), another key post in Angola where access to foreign currency is sensitive. Now, the renowned banker is taking on more political responsibilities in a difficult context.

Despite sluggish growth and high inflation – 3.5% and 11.7% respectively in 2023, according to the IMF – Angola, the continent’s second-largest producer of oil after Nigeria, needs to speed up the diversification of its economy.

It was on this promise that José Eduardo dos Santos’ successor, Lourenço, came to power in 2017, which is deemed key to the country’s future growth.

Respected abroad

Everyone agrees that Lourenço chose competence by appointing Massano to head up the ministry. “Intelligence”, “ability to synthesise”, “clarity” are the qualities attributed to Massano by those who work with him.

“Along with [Finance Minister] Vera Daves and [Transport Minister] Ricardo Viegas D’Abreu, he is part of the “dream team. All three are respected and appreciated by the international financial community,” says a longtime player in the country’s economy.

He has done a very good job in managing and supervising the banking sector.

Massano trained in finance in the UK and has worked for two of Angola’s economic giants: Sonangol, the national oil company, and BAI (Banco Angolano de Investimentos), the country’s leading bank. He is an experienced financier with a good network of contacts in the private sector.

But it is above all the achievements of this 50-year-old native of Luanda at the head of the BNA that are being hailed.

“He has done a very good job in managing and supervising the banking sector. He has closed some establishments, consolidated others, in particular by asking them to increase their equity capital, and strengthened anti-money laundering measures to combat corruption,” says Daniel Ribant, a former banker who has worked in Angola.

A driving force behind the modernisation of the BNA and the strengthening of its independence from political power, Massano was above all the architect of a bold monetary reform that the IMF had long been calling for: the liberalisation of the exchange rate of the kwanza, the national currency.

Effective since the end of 2019, the transition from a fixed regime (where an official rate and an informal rate coexisted) to a floating regime resulted in a sharp devaluation of the kwanza against the dollar until the end of 2020 (to almost 700 kwanzas for $1, compared with around 200 kwanzas in 2018), before a revaluation and stabilisation today (around 600 kwanzas for $1).

This success illustrates the ability of this leader (replaced at the head of the BNA by one of the deputy governors, Manuel António Tiago Dias) to carry out difficult reforms.

Results below expectations

President Lourenço, who came to power promising to be “the man of the Angolan economic miracle”, needs just such competence. After a first term marked by two setbacks (the Covid-19 pandemic, then the consequences of the war in Ukraine), Lourenço, re-elected in August 2022 for five years with just 51% of the vote, must prove that he can boost the national economy and improve living conditions for the population.

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But despite efforts to boost the private sector, fight corruption and improve the business environment, the results have failed to live up to expectations, fuelling growing social discontent. Worse still, despite the support of donors, including the IMF, and the appetite of foreign investors, the executive is struggling to implement these reforms.

His appointment is very good news, but it comes too late

In taking the helm of the ministry, Massano has inherited a highly sensitive issue, which has set off a firestorm over the last few days in several provincial towns, including Huambo and Lubango: the end of fuel subsidies. Ending this public support, which helps to keep petrol prices down but weighs on the budget (to the tune of 2.7% of GDP according to the IMF), is a long-standing issue in Angola. A first attempt failed in 2017.

Supported by the IMF and announced by the executive, this measure finally came into force in early June (the price of petrol rose from 160 to 300 kwanzas, or from 23 to 44 cents per litre), with the government planning to issue cards to transport professionals so that they can continue to benefit from subsidies. The problem is that difficulties in distributing the cards have led to violence and even deaths in clashes between taxis and the police.

Despite appeals for calm from the ministries of transport and finance, the situation remains tense, and this episode led to the ousting of Manuel Nunes Júnior, the previous super-minister of Economy, who was replaced by Massano. The weight on the latter’s shoulders is apparent.

Power struggles

“His appointment is excellent news, but it comes very late,” says the economic player. Well-versed in the workings of Angola’s political and economic system, he was governor of the BNA between 2010 and 2015, during the Dos Santos era, and then from the start of the Lourenço presidency in 2017.

Having demonstrated his composure, the new minister will have to defuse this crisis while driving the diversification of the economy forward.

Agriculture, fishing and industry are all sectors where the needs are enormous and progress is too slow. While he is fully aware of the obstacles to be overcome (difficulties in accessing credit, the country’s lack of attractiveness to investors, inadequate infrastructure and lack of training), the former governor will have to find a way to deal with a bureaucratic administration, a presidential party, the MPLA, which is struggling to modernise, and constant power struggles.

“You can’t manage the country’s economy the same way you manage the financial system. It’s much more complex and more […] political,” says Daniel Ribant.

“That said, Massano’s new post should enable him, for example, to amend the country’s strategic food reserve, the current design of which is deemed too costly for the state, in particular, because of the management monopoly granted to one operator [the Carrinho group].

“With Massano, there is hope that the necessary reforms will see the light of day. It remains to be seen whether he will be allowed to do his job,” says another player in the oil sector, who deplores the existence of forces opposed to change within the presidential entourage.

Lack of options

Aside from his chances of success, Massano’s arrival in this position says a lot about the state of Angolan governance. Reappointed as BNA governor for six years at the end of 2022, and thus set to head the central bank until 2028, Massano seems to have been called in to rescue the super ministry.

While this promotion confirms his personal success, it also illustrates how few options the Angolan president has when it comes to reforming the country and achieving results.

Moreover, the enthusiasm that has accompanied the former central bank governor’s rise should not obscure what it signifies: the consecration of one of the regime’s old hands, who began his career at Sonangol when the company was run by Manuel Vicente, a former dos Santos strongman, and was able to navigate under the presidencies of dos Santos and then Lourenço without ever being touched by the latter’s anti-corruption campaign.

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Despite promising to correct the mistakes of the past, including corruption and inefficiency, President Lourenço has maintained this super minister post that dos Santos created in 2012 primarily for political reasons: he wanted to propel the man who would become his vice-president, Vicente, to the forefront.

However, there is no guarantee that this super ministry, directly linked to the presidency, will work in synergy with the government’s other key portfolios, namely the ministries of finance and economy. Even for an insider like Massano, managing such a configuration will not be so easy.