So far, the government has not been rushing the process, which started in 2019. It has been making sure that companies that do not meet the requirements to sell stakes on the local bourse find other ways to offload stakes. “Their balance sheets need to be clean and transparent,” finance minister Vera Daves tells The Africa Report. “All the legal processes regarding the assets of those companies need to be resolved before starting the due diligence. This will ensure that the final value the government gets from this sale is as good as possible.”

But, as analysts point out, the programme contains a conundrum for good-governance enthusiasts: who outside the Movimento Popular de Libertação de Angola (MPLA) politico-military elite has the kinds of money to buy and then invest in troubled state-run companies?

To highlight Angola’s direction of travel, The Africa Report takes a look at whether the privatisations are attracting serious local and international investors, and also traces Angola’s connections to global markets.

August’s general elections have put the privatisation programme in the spotlight. President Lourenço and the ruling party are trying to keep the opposition União Nacional para a Independência Total de Angola, under its newish leader Adalberto Costa Júnior, out of power. At stake is the future of the economy: Angola’s gross domestic product was $66bn in 2020, down from its record of $145.7bn in 2014.

Lourenço has campaigned on a promise to fight corruption and to weaken the preponderant role of the state in many sectors of the economy, including oil and gas, banks, telecoms, insurance, transport, manufacturing and retail. His clearest anti-corruption victories have been against the elite of the previous MPLA regime, including family members of the ex-president José Edouardo dos Santos. Dos Santos’s son José Filomeno (‘Zenu’) was sentenced to five years in prison in 2020 on fraud and other charges related to his term as head of Angola’s sovereign wealth fund.

The government has also gone after Isabel dos Santos, who claimed that she became the country’s richest woman without the help of her presidential father. Critics say that the fight against corruption is a witch hunt and that the ruling party has not fundamentally changed the way it operates.

Small fish are the first to fry

So how is rolling back the state going? The opposition has something to say on the matter. UNITA parliamentarian Joaquim Nafoia told reporters: “President João Lourenço had promised to fight monopoly but is doing exactly the opposite – [he is] promoting monopoly in Angola.”

The most important deal so far has been the December 2021 sale of the Banco de Comércio e Indústria for $29.3m, through an auction on the stock exchange. The government said this would serve as a bellwether for investor interest in big state-owned enterprises. The winner was the Carrinho group, an Angolan agribusiness run by Nelson Carrinho.

Civil society campaigners point out that the group had already benefited from state guarantees for two of its loans, attesting to its connections to power. Carrinho also manages the Reserva Estratégica Alimentar – the country’s food reserves –and was chosen by Luanda to run the financial and administrative operations of a textile plant in the western city of Benguela. With the Carrinho family in the news, workers at the firm went on strike in May.

Economist Tomás Kambuete told media that the privatisations are not about improving governance: “There is a fight between a group of people who had economic power within the same political family, the MPLA. They are not fighting this evil that is corruption; they are just fighting each other, taking from one another. In the midst of all this, the country is the loser.”

ENSA sale delayed

One of the next big firms with a stake for sale is the insurance company Empresa Nacional de Seguros de Angola (ENSA), which has a 37% market share. A 51% stake shareholding was due to be sold by February of this year, but the sale was been delayed. ENSA is “most likely to attract regional peers” as buyers, Alisa Strobel, senior economist for sub-­Saharan Africa at IHS Markit, told The Africa Report. She adds that “generally poor records on transparency, efficiency and profitability are challenging for bidders for Angolan state-owned enterprises.”

Omatapalo, an Angolan conglomerate created by Luís Nunes – a member of the political bureau and central committee of the MPLA, and governor of Benguela, has been beating out competitors for government contracts and also winning several more where there has been no competition. In December, Omatapalo won the rights to manage Hotel Infotour Benguela in the privatisation process, with an option to purchase it in the future.

Something for everyone

The Lourenço government wants to attract big international buyers for stakes in the most valuable corporations, including Sonangol and Endiama, to show that serious investors have confidence in the country. While international firms have not yet shown a big interest in the firms on offer, they are already a major force in the Angolan economy.

Angola’s diplomatically non-aligned status is mirrored in its international economic engagement: major Western oil companies predominate in the oil business, while there is close cooperation with a Russian diamond miner, tens of billions of dollars in loans for infrastructure from China, and the strong presence of investors from fellow Lusophone countries Portugal and Brazil (see map).

Some of the world’s biggest oil companies, including US-based Chevron, France’s TotalEnergies and Britain’s BP, have been in Angola for decades. The end of the civil war in 2002 brought with it renewed interest in the wider economy from other countries, most notably China, India, Brazil, and Portugal, the erstwhile colonial power. While China is Angola’s largest trading partner, by far – it is the destination of roughly 61% of Angola’s exports, mostly in the form of crude oil – Portuguese companies have a much more visible presence in local commerce.

Portuguese investment can be seen in construction, with Teixeira Duarte, Mota Engil and Casais responsible for major works throughout the country; banking, where the Portuguese state has a majority stake in Banco Caixa Angola; and in the large, small and medium-­sized companies that form the backbone of Angola’a service industry, in fields such as accountancy and retail. Before IHG Hotels opened Intercontinental Luanda Miramar last year, for example, all the major hotels in Luanda were owned by Portuguese companies.

Other European countries have been making substantial gains in Angola. The UK, Germany, and Italy have all increased their investment in several key sectors, but the government seems most interested in courting Spain, Turkey and France.

The Agence Française de Développement has invested hundreds of millions of dollars in efforts to diversify the Angolan economy and promote socioeconomic development. The Angolan government finally did away with Sonangol’s monopoly on the fuel distribution business when it entered a joint venture with TotalEnergies to operate service stations nationwide under the Total brand.

In recent months, President Lourenço has made trips to Spain and Turkey, where he actively sought investment, announced a slew of agreements in a variety of sectors, and named these countries as strategic partners. Shortly after, Angola’s national flag carrier TAAG announced a non-stop service to Madrid starting in June 2022, and Turkish Airlines quickly began a twice-weekly service to Luanda. Turkey’s stated goal is to reach a $500m bilateral trade volume with Angola within the coming years, while also getting involved in Angola’s defence industry — an area previously dominated by Russia.

Waiting for reforms

Angola is yet to fully integrate into the regional economy, much less a global one. Many business leaders are waiting for serious reforms and green shoots outside of the oil sector, as well as signs of higher consumer spending, before committing to invest. South African supermarket chain Shoprite announced in 2021 that it had dialled back its ambitions for Angola, and this year the British bank Standard Chartered said it planned to stop operating in the country.

Few observers think that UNITA has a chance of deposing the ruling party in August, so the sale of stakes in state-owned companies will continue to run its course after the elections. But the privatisation programme will show whether Lourenço has the capacity to gain the confidence of international investors, whether Angola can breed strong local champions able to compete on their own terms, or whether the grip of crony capitalism is simply too strong.