BUSINESS IN ANGOLA

As an international marketing consultant let me show you more about Angola, a country that has interesting business opportunities

Angola Exported in 2007 (estimated), $44.32 billion. Consisting of crude oil, diamonds, refined petroleum products, gas, coffee, sisal, fish and fish products, timber, cotton. Angola major markets are U.S. (38.1%), China (34.2%), Taiwan (5.8%), France (4.9%), Chile (4.1%).

Angola Imported in 2007 (estimated) $12.29 billion: consisting in machinery and electrical equipment, vehicles and spare parts, medicines, food, textiles, military goods. Angolan major sources are U.S. (15.3%), Portugal (15%), South Korea (10.1%), China (8.8%), Brazil (8.2%), South Africa (6.7%), France (6.2%).

Angola is the third-largest trading partner of the United States in sub-Saharan Africa, largely because of its petroleum exports. U.S. exports to Angola primarily consist of industrial goods and services--such as oilfield equipment, mining equipment, chemicals, aircraft, and food. On December 30, 2003, President Bush approved the designation of Angola as eligible for tariff preferences under the African Growth and Opportunity Act (AGOA).

Angola has a fast-growing economy largely due to a major oil boom, but it also ranks in the bottom 10% of most socioeconomic indicators. The country's real GDP growth rate was estimated at 21.1% for 2007. Angola is recovering from 27 years of nearly continuous warfare, and it remains beset by corruption and economic mismanagement. Despite abundant natural resources, and rising per capita GDP, it was ranked 161 out of 177 countries on the 2006 UN Development Program's (UNDP) Human Development Index. Subsistence agriculture sustains one-third of the population.

The rapidly expanding petroleum industry has reached its Organization of Petroleum Exporting Countries (OPEC) cap, producing approximately 2 million barrels per day (bpd). Angola's crude oil production is one of the highest in Africa, behind only Nigeria. Crude oil accounts for 51.7% of GNP, 95% of exports, and 80% of government revenues. Angola also produces 40,000 bpd of locally refined oil. Oil production remains largely offshore and has few linkages with other sectors of the economy, though a local content initiative promulgated by the Angolan Government is pressuring oil companies to source from local businesses.

Block 15, located offshore of Soyo, currently provides 30% of Angola's crude oil production. ExxonMobil, through its subsidiary Esso, is the operator with a 40% share.

TotalFinaElf brought the first Kwanza Basin deepwater blocks on-line with production from its Block 17 concession that began in February 2002. Inauguration of the Dalia oilfield in December 2006 combined with the Girassol field already in operation brought Block 17's total production to approximately 500,000 bpd as of July 2007. Total expects to begin drilling in new oilfield

Pazflor in 2009, bringing production to a peak 700,000 bpd by 2011. Exploration is ongoing in ultra-deep water concessions and in deepwater and shallow concessions in the Namibe Basin. BP made the first significant ultra-deepwater find in its Block 31 concession in 2002 and had reached nine significant discoveries by the end of 2005. BP expected to ship its first crude from the Plutonio oilfield in Block 18 in September 2007 and expects Plutonio to average 200,000 bpd in full production. Marathon also drilled a successful well in its Block 32 ultra-deep water concession.

Diamonds make up most of Angola's remaining exports, with yearly production at 6 million carats. Diamond sales reached approximately $1.1 billion in 2006. Despite increased corporate ownership of diamond fields, much production is currently in the hands of small-scale prospectors, often operating illegally. Only eight large-scale mines are operating out of a total of 145 concessions.

The government has established an export certification scheme consistent with the "Kimberley Process" to identify legitimate production and sales. Other mineral resources, including gold, remain largely undeveloped, though granite and marble quarrying have begun.

In the last decade of the colonial period, Angola was a major African agricultural exporter. Because of severe wartime conditions, including extensive laying of landmines throughout the countryside, agricultural activities came to a near standstill, and the country now imports over half of its food. Small-scale agricultural production has increased several-fold over the last 5 years due to demining efforts, infrastructure improvements, and the ability of returnees and internally displaced persons (IDPs) to safely return to agricultural areas, yet production of most crops remains below 1974 levels. Some efforts at commercial agricultural recovery have gone forward, notably in fisheries and tropical fruits, but most of the country's vast potential remains untapped. Recently passed land reform laws will attempt to reconcile overlapping traditional land use rights, colonial-era land claims, and recent land grants to facilitate significant commercial agricultural development.

An economic reform effort launched in 1998 was only marginally successful in addressing persistent fiscal mismanagement and corruption. In April 2000, Angola started an International Monetary Fund (IMF) staff-monitored program (SMP). The program lapsed in June 2001 over IMF concerns about lack of progress by Angola. Under the program, the Government of Angola did succeed in unifying exchange rates and moving fuel, electricity, and water prices closer to market rates. In March 2007, the government announced it was not interested in a formally-structured IMF program, but would continue to participate in Article IV consultations and other technical assistance on an ad hoc basis.

In December 2002, President dos Santos named a new economic team to oversee homegrown reform efforts. The new team succeeded in decreasing overall government spending, rationalizing the Kwanza exchange rate, closing regulatory loopholes allowing off-budget expenditures, and capturing all revenues in the state budget. New procedures were implemented to track the flow of funds between the Treasury, Banco Nacional de Angola (the central bank), and the state-owned Banco de Poupanca e Credito, which operates the budget.

The Angolan Government adopted a new investment code. Concerns remain about quasi-fiscal operations by the state oil company Sonangol, continued oil-backed commercial borrowing by the Angolan Government, and inadequate transparency and oversight in the management of public accounts. The Angolan commercial code, financial sector law, and telecommunications law all require substantial revision.