Creating Markets in Angola : Country Private Sector Diagnostic
Total Page:16
File Type:pdf, Size:1020Kb
CREATING MARKETS IN ANGOLA MARKETS IN CREATING COUNTRY PRIVATE SECTOR DIAGNOSTIC SECTOR PRIVATE COUNTRY COUNTRY PRIVATE SECTOR DIAGNOSTIC CREATING MARKETS IN ANGOLA Opportunities for Development Through the Private Sector COUNTRY PRIVATE SECTOR DIAGNOSTIC CREATING MARKETS IN ANGOLA Opportunities for Development Through the Private Sector About IFC IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org © International Finance Corporation 2019. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 www.ifc.org The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. The findings, interpretations, views, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Executive Directors of the International Finance Corporation or of the International Bank for Reconstruction and Development (the World Bank) or the governments they represent. This publication uses U.S. spelling. All mentions of dollars refer to U.S. dollars, unless otherwise indicated. Photos: Cover, Andre Silva Pinto / Shuttestock; page 3, Fabio Seda / Adobe Stock; page 14, siempreverde22 / Adobe Stock; page 47, Carine Clert / World Bank Group; page 57, Manok / Adobe Stock; page 75, rosn123 / Adobe Stock. CONTENTS Acknowledgments vii Executive Summary viii Abbreviations xxiv PART I OVERVIEW 01 COUNTRY CONTEXT: WHY A PRIVATE SECTOR DIAGNOSTIC NOW? 2 02 AN UNDERDEVELOPED PRIVATE SECTOR 6 The Economic Boom Did Not Deliver Job Creation and Economic Transformation 6 A Small Private Sector Dominated by Few Politically Connected Firms 9 03 CREATING MARKET OPPORTUNITIES: REBUILDING THE ECONOMY WITH THE PRIVATE SECTOR 15 Sector Scan Results and Constraints 16 Opening Markets by Rethinking the Role of the State 22 Sectors for Priority Interventions and Investments 27 04 THE WAY FORWARD: HOW TO CREATE MARKETS IN ANGOLA? 46 Context 46 iv CONTENTS Seven Good Reform Process Management Principles 48 Main Recommendations from the CPSD 52 PART II DEEP DIVES FOR MARKET OPPORTUNITIES 05 AGRIBUSINESS 56 Buoyed by Strong Demand, the Agriculture Sector is Growing 56 Drivers of Competitiveness for Agribusiness 61 Constraints to Take Off 62 Opportunities for Scaling up the Angolan Agribusiness Sector 64 Actions Needed to Realize Investment Opportunities 69 Annex 5A 71 06 TRANSPORT 74 Overview and Prospects for the Transport Sector 74 Maritime Transport 76 Air Transport 79 APPENDIXES A ANALYTICAL APPROACH OF THE COUNTRY PRIVATE SECTOR DIAGNOSTIC 88 B WORLD BANK GROUP STRATEGY AND PORTFOLIO IN ANGOLA 89 C ENABLING SECTORS DETAILED SCORING 92 D SECTOR SCAN DETAILED RESULTS: TRADED SECTORS 102 E DETAILED SECTOR SCAN RESULTS: NONTRADED SECTORS 118 Notes 124 References 129 BOXES 2.1 Structural transformation in Angola 10 2.2 The Angolan government’s productive assets 13 3.1 Luanda Medical Center 36 3.2 The challenge of importing medicines in Angola 37 3.3 Instituto Superior Politécnico do Cazenga 39 5.1 Angolanita 60 5.2 Horticulture and fruit market leaders 60 5.3 Literature and lessons learned in Africa from large-scale land investments 69 FIGURES 2.1 Structural transformation in Angola 7 2.2 Angola’s exports, 2016 (%) 7 2.3 Angola’s main suppliers are from Europe, 2016 (%) 8 2.4 Employment by sector, 2016 (%) 9 2.5 SOEs assets in IGAPE’s portfolio 11 3.1 Summary of scoring results 18 3.2 A new compact for market creation 23 4.1 Complementary actions for market creation 47 4.2 Institutional framework for economic policy reform in Angola 49 4.3 Reform implementation steps: Where does Angola stand? 50 5.1 Increase in production of selected agriculture products, 2012–16 (%) 56 5.2 Maize, beans, and soybeans yields 58 5.3 Angola reduced undernourishment 58 ANGOLA COUNTRY PRIVATE SECTOR DIAGNOSTIC v 5.4 Import needs for key food staples 59 5.5 Imports of agriculture and food products ($ millions) 59 5.6 Exports of agriculture and food products ($ millions) 59 5.7 Consumption of Fertilizer 64 5.8 Actions necessary to realize opportunities in agribusiness 70 6.1 Liner shipping connectivity index 77 6.2 Sea freight rates from Le Havre to various African ports, 2018 79 6.3 Angola’s airport system traffic 80 D.1 fish and fish products Exports (tons) 106 MAPS 6.1 Location of Angola’s main ports 76 6.2 Angola’s existing rail networks—a regional perspective 82 TABLES ES.1 Summary of CPSD main recommendations xxi 3.1 Overview of constraints for Angola 19 4.1 Main recommendations from the CPSD 53 5.1 Private sector entry points to develop agribusiness value chains with smallholders 66 5A.1 State-owned agro-industrial ventures and infrastructure 71 6.2 Financial results of state-owned ports, 2016 ($) 78 6.3 Published economy-class airfare from Lisbon, Portugal to Luanda, Angola 81 6.4 Financial performance of railways, 2016 ($) 83 B.1 World Bank lending portfolio in Angola 90 B.2 World Bank Advisory Services and analytics portfolio in Angola 91 C.1 Desirability scores: Transport 92 C.2 Feasibility scores: Transport 93 C.3 Desirability scores: Electricity 93 C.4 Feasibility scores: Electricity 94 C.5 Desirability scores: ICT 95 C.6 Feasibility scores: ICT 95 C.7 Desirability scores: Health 96 C.8 Feasibility scores: Health 97 C.9 Desirability scores: Education 98 C.10 Feasibility scores: Education 98 C.11 Desirability scores: Financial sector 99 C.12 Feasibility scores: Financial sector 99 C.13 Desirability scores: Water 100 C.14 Feasibility scores: Water 101 D.1 Desirability scores: Agriculture and agribusiness 104 D.2 Feasibility scores: Agriculture and agribusiness 104 D.3 Desirability scores: Fisheries 106 D.4 Feasibility scores: Fisheries 107 D.5 Desirability scores: Oil and Gas 109 D.6 Oil and Gas 109 D.7 Desirability scores: Mining 111 D.8 Feasibility scores: Mining 111 D.9 Desirability scores: Manufacturing 113 D.10 Feasibility scores: Manufacturing 114 D.11 Desirability scores: Tourism 116 D.12 Feasibility scores: Tourism 117 vi CONTENTS D.13 Desirability scores: Construction and real estate 119 D.14 Feasibility scores: Construction and real estate 120 D.15 Desirability scores: Wholesale and retail trade 122 D.16 Feasibility scores: Wholesale and retail trade 123 ACKNOWLEDGMENTS The Angola Country Private Sector Diagnostic was Benjamim Mutti and Jesus Alberto Lino provided prepared by a team led by Zenaida Hernandez Uriz, in-country support to the team. Jean-Christophe Maur, and Stephan Dreyhaupt, and The team benefited from suggestions and com- included Francois Caulier, Katia Daude, Luciana ments from many, including: Sandra Leila Antunes Harrington, Lindsey Lim, Delfim Mawate, and Boumah, Andre Aquino, Diego Arias, Soumya Banerjee, Antonio Muhungo. Rafael Barroso, Ariana Batori, Andreas Blom, Mazen The team gratefully acknowledges the guidance of Bouri, Marcel Bruhwiler, Carmen Carpio, Dan Croft, Mona Haddad, Elisabeth Huybens, Kevin Njiraini, German Cufre Rostan Schwab Issa Diaw, Emily Elaine Sebastian Molineus, Jumoke Jagun-Dokunmu, Olivier Gardner, Chijioke Gbolahan Egejuru, Norbert Fiess, Lambert, Lisa Kaestner, Rashmi Shankar, Vincent Doyle Gallegos, Chabir Hassam, Roberto F. Iunes, Palmade, Frank Armand D. Douamba, Caroline A. Camilo Lombana, Ramatou Magagi, Lais Miachon Goldie, and Daria Taglioni. The team is grateful for the Silva, Bernard Micallef, Maria Paulina Mogollon, comments provided by the peer reviewers: Hans Beck, Ricardo Jorge Monteiro Mota, Paul Mukasa, Xavier Gabriel Goddard, Sunita Kikeri, Graciela Miralles Muron, Riadh Naouar, Ken Osei, Mariana Petrei, Murciego, Daniel Benitez, and the contributions Zaid Safar, Markus Scheuermaier, Leila Celia Serrao, for the deep dives from Vasco Nunes (agribusiness), Javier Soriano Tabares, and Melanie Trost. The team Pierre Pozzo di Borgo (transport), and Kjetil Hansen would like to express gratitude for the insights shared (rethinking the role of the state). Administrative support by Angolan public and private sector representatives was provided by Magalie Pradel and Lydia Waribo. met during the preparation of this report. EXECUTIVE SUMMARY This Country Private Sector Diagnostic (CPSD) identifies opportunities to stimulate sustainable economic growth and development by harnessing the power of the private sector in Angola. Applying a sectoral lens, it leverages the private sector’s knowledge and experience to accelerate transformational investment. It also puts forward operational recommendations highlighting strategic entry points for diversification and growth, while addressing key constraints to private sector engagement. The CPSD discusses implementation principles inspired by international good practices.