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Abu Dhabi, UAESaturday 22 September 2018

Change at the top raises hopes Angola is on the right path

The Opec member, whose oil exports are second only to Nigeria, has struggled to turn its large resource base into general wealth

Office blocks under construction stand behind the Angolan central bank building in the capital Luanda. Regime change will hopefully help the country realise its enormous potential. Mike Hutchings/Reuters
Office blocks under construction stand behind the Angolan central bank building in the capital Luanda. Regime change will hopefully help the country realise its enormous potential. Mike Hutchings/Reuters

The net is closing on a powerful family that has run Angola, Africa's second largest oil exporter, for the past three decades, raising hope that the country may finally escape its tortured past.

The Opec member, whose oil exports are second only to Nigeria, has struggled to turn its large resource base into general wealth. The newly appointed administration of Joao Lourenco that took office in a peaceful handover in September last year appears to want to change this.

In late March prosecutors filed charges against José Filomeno dos Santos alleging fraud relating to a $500 million transaction out of an account belonging to the central bank. Mr Dos Santos, or Zenu as he is publically known, is the son of Jose dos Santos, the man who ran the country for nearly four decades.

At the same time Mr dos Santos' sibling Isabel, Africa's richest woman according to Forbes, is also under investigation. The allegations relate to Ms dos Santos tenure as head of Sonangol, the Angolan state oil firm.

"The key driver is anti-corruption," says Alex Vines, the head of the Africa Programme at Chatham House in London. "I do not think that Joao Lourenco wanted to move as quickly as he has had to against the dos Santos family. In the case of Jose dos Santos, there was little choice. The UK regulatory authorities and HSBC bank had flagged the $500m transfer as suspect and officially requested Angolan government guidance on what to do."

So seriously was the matter viewed in London that a delegation from the UK visited the Angolan capital Luanda earlier this year to discuss the case. Mr Lourenco would have felt obliged to hear them out.

The country has struggled to survive the fall in the price of oil since 2014, which accounts for around 45 per cent of GDP and 95 per cent of its exports, Opec data shows. Currently Angola needs a floor price of $85 a barrel to balance its budget against a prevailing price of under $65.

According to AFP, the past year has been especially tough on Angola's finances with dollar reserves having dropped from $20 billion at the start of 2017 to $14bn by November. Consequently, the Lourenco administration may feel it has to show potential financial backers that it is serious about making Angola more business friendly and that it is willing to tackle corruption.

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Mr Lourenco is also moving on the country's woeful lack of economic diversity, beginning with a basic and easy to implement measure: doing away with cumbersome visa requirements for nationals of 61 countries last month, who will now be issued with one on arrival.

"Setting foot in the country was extremely difficult, which kept potential business ventures out of the country," says Lucia Kula, an Angolan and scholar at the School of Oriental and African Studies: University of London. "By opening up the border, the first step is taken to get people interested."

Before the revolution that toppled the colonial Portuguese government in 1975, the country's beaches were a tourism draw. Decades of war and economic stagnation, however, have ensured all but the hardiest adventure travellers get to experience its attractions.

According to travel guide Lonely Planet, "Angola has the potential to be one of Africa's dazzling highlights", with attractions such as "the continent’s second-largest waterfall, scattered remnants of Portuguese colonial history, a handful of emerging national parks, beaches galore and a diverse and unbelievably stoic cross-section of people".

Easing visa requirements now make a viable hospitality industry possible, Ms Kula notes.

"Angola needs to try to mirror its southern neighbours like Namibia and South Africa in attracting more tourism, as revenue from tourism usually stays within the country."

The country also has vast agriculture potential. During the colonial period it was a major exporter of coffee and sugar among other items. Today, though, it imports most of its processed food, while the poor depend on subsistence farming to survive.

The UN agency Food and Agricultural Organisation estimates the country could be one of the world's largest agribusiness producers with up to 50 million hectares of arable land.

However, an obstacle to both tourism and farming is a wartime menace – landmines. The country has at least 10 million of them, laid down during the civil war, according to various NGO estimates. Luckily the issue is being addressed and a global effort is underway to remove as many as possible.

According to Halo Trust, a de-mining organisation, the efforts are paying off and most of the provincial cities have been cleared. Work now is focusing on rural areas, especially in the south where Angolan forces battled the apartheid military machine during the height of the war.

For now, though, the work of rebuilding an economy yet to recover from war begins anew. The dos Santos clan together with a clique of generals ran Angola as a personal fiefdom. Their removal will be a welcome sign to international investors and donors that the country is setting off on a different path.

The crash of the oil price may also turn out to be an advantage of sorts.

"The post-conflict years were mostly influenced by high oil prices," says Mr Vines.

"Its only as they weakened significantly that the Angolan government has really felt it needs to seriously seek to diversify the economy and end its addiction to easy oil money."

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