ANGOLA

Unlocking Emerging OpportunitiesPresentation to UK-Angola Investment Forum

May 24, 2012

Elio Codato

World Bank

Overall Macro Economic Situation

In 2011, Angola’s overall economic situation improved from the immediately preceding years: Robust real growth of 4%

Declining inflation to 11% and exchange rate stabilized

Overall fiscal surplus increased to 10% of GDP with domestic arrears settled

International reserves reaching US$27 billion, equivalent to 6 months of imports

Trend is expected to accelerate in 2012 with growth forecast to reach 8%, helped by increased oil output

EMERGING SECTORS OF OPPORTUNITY

Non-oil sectors are playing an increasing role in the country’s economic success story and are contributing a higher share of GDP from 45% in 2008 to 55% in 2011

Housing and Transport Infrastructure:

Ambitious Housing Projects: Luanda and surrounding areas

Rehabilitation/development of Transport Infrastructure (roads, railways, bridges, airports) to regenerate existing networks and develop transport corridors within the country and with neighbors

Bringing construction and maintenance levels to SADC and international standards

EMERGING SECTORS OF OPPORTUNITY

Agriculture/Agribusiness:Second largest sector (after oil and gas) and

source of income for 60% of the population

Estimated 3 million hectares of arable land exist

Crops include cassava, beans, sweet potatoes, bananas, cotton, rice along with other fruits and vegetables

Historically, the country was a major world exporter of coffee and the potential remains for reinvigorating the agriculture sector

Potential for forestry and livestock production

EMERGING SECTORS OF OPPORTUNITY

Telecommunications: planned sector liberalization and expansion of coverage

Power: Construction of hydro-electric power plants, diesel-fired plants, and use of LNG in order to multiply the current capacity from 1000 MW to 5500 MW in the coming 5 years

Water: Second most endowed country in Africa in terms of water resources but significant investments needed to improve access to water in both urban and rural areas

Mining: Full potential to be fully explored but proven reserves of diamond, gold, iron, phosphate, copper and others

EMERGING SECTORS OF OPPORTUNITY

Tourism/Hospitality: Significant potential for development (coastline, system

of parks and natural reservations, unexplored landscapes)

Demand for rehabilitation/development of hotel and conference facilities in Luanda and surrounding regions

Financial and Other Services: Banking system includes 23 banks (majority privately

owned); sector is profitable but there is need for new products, services, and innovation to promote greater access to bank products

Insurance and pensions: new actors entering the market

Ongoing need for consulting, legal, and financial advisory services

Investment Climate Challenges

To unlock the competitiveness of these emerging sectors, lessen dependence on oil, and diversify the economy, Angola needs to dramatically transform its investment climate: 2011-2012 Ranking in Global Competitiveness Index : 139 out of

142

2012 Ranking in Trade Logistics Performance Index : 138 out of 155

2012 Ranking in Doing Business Index: 172 out of 183

Key Challenges include: Infrastructure bottlenecks

Low labor productivity

Limited access to finance, especially for small and medium enterprises

Weak governance environment

Doing Business Results

Despite progress in certain areas, Angola’s overall performance on Doing Business remains low compared with its peers in the region

2008 2012 Change 2012 2012 DifferenceAngola Rank Regional Average*

Overall Ease of Doing Business 172 137 -35

Starting a business 167 123 -44Procedures (number) 12 8 4Starting a business - Time (days) 119 68 51Registering property 129 119 -10Procedures (number) 7 7 0Time (days) 334 184 150Trading across borders 163 134 -29Time to export (days) 64 48 16Time to import (days) 58 45 13Enforcing contracts 181 117 -64Time (days) 1011 1011 0Cost (percent of claim) 44 44 0Dealing with Construction Permits 115 112 -3Procedures 13 11 2Time (days) 321 321 0

*Sub-Saharan Africa Average

Angola Selected Doing Business Indicators

Business Perception of Main Constraints

According to the 2010 Enterprise Survey administered to 479 firms in Angola of all sizes and sectors (including informal) the top three investment climate constraints were: (i) Corruption; (ii) Access to Land; (iii) Access to Finance

Percent of Firms Identifying the problem as the main obstacle

Government Reform Programs

Government recognizes importance of improving the investment climate in order to attain its diversification and job creation goals

Recent reforms include: Guichet Unico (Single Window) which has reduced time and cost for business

start-ups

Administrative reforms and IT upgrade which have reduced import / export time at the Port of Luanda (main port for the country)

Establishment of the Central de Riscos de Crédito (Credit Risk Bureau) to facilitate access to finance by providing updated borrower data to finance institutions

Government has launched an ambitious Public Investment Program to upgrade infrastructure and energy access

An Enterprise Development Program has been announced which aims to promote access to finance to SMEs, develop industrial poles, improve skills, and create linkages between large investments and smaller businesses

Angola Portfolio 5 Active Projects (US$461.5 million), 2 Trust Funds (US$5

million)

New World Bank Group Country Partnership Strategy

New Country Partnership Strategy under preparation covering 2013-2016

Strategy will have two main pillars and a foundation as follows: Pillar One: Deepening Diversification for Inclusive Growth

Pillar Two: Enhancing the Quality of Decentralized Service Delivery

Foundation: Building Human Capacity and Institutions and Deepening Social Protection

Strategy will bring together all institutions in the World Bank Group, including: International Finance Corporation (IFC): to catalyze investments and support

business environment reforms

Multilateral Investment Guarantee Agency (MIGA): to facilitate foreign investments

World Bank Institute (WBI): to provide training and capacity development

Strategy will focus on knowledge transfer and developing partnerships with donors, civil society, and the private sector

Summary Conclusions

Angola presents a unique and exciting set of business prospects across a range of industries

The country continues on a solid growth trajectory with clear Government commitment for maintaining macro-economic stability

To unlock the many potential opportunities, significant reforms have to be undertaken at the policy and institutional levels which should be coupled with progress in physical infrastructure and human capital

The World Bank is ready to do its part to help Angola attain its stated social and economic development goals

The World Bank believes the private sector has an essential role in promoting lasting, broad-based, and sustainable growth through responsible business investments

Thank you!

http://www.worldbank.org