Republic of Angola the Africa Country Series

2016 The Africa Country Series Republic of Angola

The Africa Country Series Republic of Angola

2016 Acknowledgements

Team Leader: Samir S. Amir Lead Researcher: Fatima Attarwala

Disclaimer: The findings, interpretations and conclusions expressed do not necessarily reflect the views of the Board of Directors and Members of The Pakistan Business Council or the companies they represent.

Any conclusions of analysis based on ITC, IDB, CTS, UNCTSD and WEO data are the responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN.

Although every effort has been made to cross-check and verify the authenticity of the data, The Pakistan Business Council, or the author(s), do not guarantee the data included in this work. All data and statistics used may be subject to change.

For any queries or feedback regarding this report, please contact [email protected] or fatima@ pbc.org.pk

Cover Picture: Broad streams of water falling down (Kalandula Falls, Lucala River, Malanje Province, Angola) by L. Willms licensed under Creative Commons 2.0 ii Republic of Angola The Pakistan Business Council: An Overview

The Pakistan Business Council (PBC) is a business policy advocacy forum, representing private-sector businesses that have substantial investments in Pakistan’s economy. It was formed in 2005 by 14 (now 48) of Pakistan’s largest enterprises, including multinationals, to allow businesses to meaningfully interact with government and other stakeholders.

The Pakistan Business Council is a pan-industry advocacy group. It is not a trade body nor does it advocate for any specific business sector. Rather, its key advocacy thrust is on easing barriers to allow Pakistani businesses to compete in regional and global arenas.

The PBC works closely with the relevant government departments, ministries, regulators and institutions, as well as other stakeholders including professional bodies, to develop consensus on major issues which impact the conduct of business in and from Pakistan. It also serves on various taskforces and committees of the Government of Pakistan as well as those of the State Bank, SECP and other regulators with the objective to provide policy assistance on new initiatives and reforms.

The PBC conducts research and holds conferences and seminars to facilitate the flow of relevant information to all stakeholders in order to help create an informed view on the major issues faced by Pakistan.

The PBC’s Founding Objectives:

• To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan.

• To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and fieldwork for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan.

• To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan.

• To promote and facilitate the integration of businesses in Pakistan into the world economy and to encourage the development and growth of Pakistani multinationals.

• To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan.

The PBC is a Section 42 not-for-profit Company Limited by Guarantee. Its working is overseen by a Board of Directors elected every three years by the Membership with the Board being headed by a Non-Executive Chairman. The day-to-day operations of the PBC are run by a professional secretariat headed by a full-time, paid CEO. More information on the PBC, its members, and its workings, can be found on its website: www.pbc.org.pk

Republic of Angola iii The PBC’s Member Companies The PBC’s Member Companies Executive Summary

The Africa Country Series is part of an effort by The Pakistan Business Council (PBC) to highlight trade and investment opportunities in countries in Africa which have traditionally not been major trading partners with Pakistan. With growth slowing in Pakistan’s traditional markets in the developed countries, and exports stagnating in the US$24 – 25.0 billion range, it is imperative that Pakistani firms look for new markets.

This brief Study on the Republic of Angola is the fourth in the Africa Country Series; short studies have already been published on Ethiopia, Nigeria & South Africa. The PBC’s Research Unit is currently preparing Country Profiles of Mozambique & Ghana which are expected to be available before end of March.

The table below shows a comparison of Pakistan and Angola’s economies. Angola’s GDP and population are much smaller than Pakistan’s, however its per capita income is more than 4 times Pakistan’s! Oil dominates Angola’s economy and the trade surplus is almost entirely due to oil.

Pakistan Angola Data Sources 2013 2014 2013 2014 GDP at Market Prices $144 B $152 B $138.4 B N/A World Bank (current US $) Authors’ calculations based on GDP Growth 4.4% 5.4% 10.0% N/A World Bank data GDP per Capita $1,282 $1,334 $5,901 N/A World Bank

Population 181 M 185 M 23 M 24 M World Bank Authors’ calculations based on Trade Deficit/Surplus ($18.6 B) ($22.8 B) $48.0 B $37.2 B Trade Maps Data FDI, net inflow $1.31 B $1.78 B ($7.12B) $1.92 B World Bank

Other than oil Angola’s main exports are diamonds and other mineral resources. Angola’s main trading partner is China. India is among its top 10 trading partners. However, Angola’s bilateral trade with Pakistan was just $40 million in 2014 whereas Pakistan’s potential exports to Angola are $2.9 billion. High potential export products to Angola include rice, sugar, wheat, medicaments, medical instruments and appliances, items of apparel, structures & parts of structures and cement.

Although still amongst the fastest growing economies in Africa, Angola’s GDP growth has recently slowed due to falling oil prices as well as its own weak performance in the oil sector. While business opportunities exist in the fuel, diamond and agricultural sectors among others, investment also poses high risks due to high on-the-ground costs with bureaucratic and legal complexities in the business environment.

China is one of the main sources of FDI for Angola. The sectors for investment include oil, mining, especially diamonds, and agriculture. Though the business environment in Angola faces an underdeveloped financial system and poor infrastructure, the financial sector has seen significant growth. Infrastructure has made a net contribution of 1% to Angola’s improved per capita growth performance in recent years. Reportedly billions are being pumped in the Angolan economy through Angola’s sovereign wealth fund (mostly funded through Angola’s vi Republic of Angola trade surplus due to its oil exports) and the African Development Bank and the World Bank to help Angola develop its infrastructure.

Republic of Angola vii

Table of Contents EXECUTIVE SUMMARY ...... vi GEOGRAPHIC & SOCIAL INDICATORS...... 01 Location...... 03 Population ...... 05 Literacy Rates ...... 06 Political Structure ...... 06 Connectivity...... 07 ANGOLA’S HISTORY ...... 09 ANGOLA’S ECONOMY ...... 13 GDP ...... 15 Country Debt ...... 18 Exchange Rate ...... 19 Angola’s Trade Surplus as a percentage of GDP ...... 19 Country Risk – Comparison of LIBOR and LUIBOR ...... 20 Economic Outlook ...... 20 ANGOLA’S TRADE OVERVIEW ...... 23 Major Imports...... 25 Major Exports...... 27 Major Trading Partners ...... 29 Special Import Restrictions ...... 31 EASE OF DOING BUSINESS, FOREIGN DIRECT INVESTMENT & MAJOR INSTITUTIONS OF ANGOLA ...... 33 Ease of Doing Business...... 35 Foreign Direct Investment ...... 35 Major Institutions of Angola ...... 37 Major Foreign Companies in Angola ...... 38 REGIONAL TRADE TRENDS ...... 41 Trade Alliances ...... 44 PAKISTAN ANGOLA TRADE OVERVIEW ...... 47 Pakistan Angola Trade Potential ...... 53 INDIA ANGOLA TRADE PATTERNS ...... 55 CHINA ANGOLA TRADE PATTERNS...... 59 MAJOR INDUSTRIES OF ANGOLA ...... 63 Financial Sector ...... 66 Funding for Infrastructure Projects...... 66 CONCLUSION ...... 69 Bibliography ...... 72

Republic of Angola ix

SECTION I Geographic and Social Indicators

Republic of Angola 01

Geographic and Social Indicators: Geographic and Social Indicators: Location: Location: The Republic of Angola is located on the Atlantic Coast of southern Africa between Latitude 4’22The and Republic 18’2 South,of Angola Longitude is located on 11’41 the Atlantic and 24’05 Coast East. of southern Africa between Latitude 4’22 and 18’2 South, Longitude 11’41 and 24’05 East.

Source: Embassy of India in Angola

Total Area: Source: Wiki Commons via U.S. Central Intelligence Agency

3

Republic of Angola 03 Total Area Total surface area is a country’s total area, including areas under inland bodies of water and some coastal waterways. Land area is a country’s total area, excluding area under inland water bodies, national claims to continental shelf, and exclusive economic zones.

Land: 1.2 million km2 Agricultural land1: 592,000 km2 Arable land2: 46,800 km2 Source: World Bank

Coastline: 1,650 km Source: Embassy of India in Angola

Border Countries: Republic of Congo to the north Democratic Republic of Congo to the north and north east Republic of Zambia to the east and Namibia to the south Source: Embassy of India in Angola Capital city: Luanda

Luanda is the largest city in Angola with a population of 5.2 million. Other major cities include Huambo, N’dalatando, Benguela and Lobito. Source: UN Database

Provinces (18): Bengo, Benguela, Bie, Cabinda, Cunene, Huambo, Huila, Cuando Curbango, Kwanza Norte, Kwanza Sul, Luanda, Lunda Norte, Lunda Sul, Malanje, Moxico, Namibe, Uige and Zaire. Source: Embassy of Angola in India

1As per the World Bank’s definition, agricultural land refers to the share of land area that is arable, under permanent crops and under permanent pastures. Permanent pasture is land used for five or more years for forage, including natural and cultivated crops. 2Arable land includes land under temporary crops, temporary meadows for mowing or for pasture, land under market or kitchen gardens and land that is temporarily fallow. 04 Republic of Angola

Source: Angola Embassy in India

Population:Population: Population: 24 Million Population: 24 Million PopulationPopulation growth growth rate: rate: 3.3% 3.3% Urban Population: 43% of total population – 10.4 million people Urban Population: 43% of total population – 10.4 million people Rural Population: 57% - 13.7 million people Rural Population: 57% - 13.7 million people

PopulationPopulation by byAge: Age:

0-14 years:0-14 48% years: (11.6 48% million) (11.6 million) 15-64 years: 50% (12.1 million) 65 and above:15-64 2%years: (484.5 50% (12.1thousand) million) 65 and above: 2% (484.5 thousand) Population by Gender: Population by Gender: Females: 50.4% (12.2 million) Males: 49.6% Females: (12.01 50.4% million) (12.2 million) 5

Republic of Angola 05 Life Expectancy: Total population: 52 years; Male: 50 years; Female: 53 years

Literacy Rates: Percentage of the population age 15 and above who can, with understanding, read and write a short, simple statement on their everyday life. Generally, ‘literacy’ also encompasses ‘numeracy’, the ability to make simple arithmetic calculations.

Total population: 71%; Male: 82%; Female: 60%

Source: World Bank

Religions: Angola is a secular state enjoying separation between state and religion. Catholics comprise the majority of its population. The country has three main ethnic groups - Ovimbundu 37%, Kimbundu 25% and Bakongo 13%. Source: Embassy of India in Angola

Languages: Portuguese is both the official and predominant language. There are other local languages of which Umbundo, Quimbundo and Quicongo are considered national languages. Source: Embassy of India in Angola

Political Structure: Angola is governed by a President who is assisted by a Vice President and a team of Ministers and Vice Ministers, all appointed by the President. Political power rests mainly with the Presidency. The Council of Ministers, composed of all government ministers and vice ministers, meets regularly to debate and approve policy matters. The central government in Luanda administers the country through 18 provinces through Governors appointed by the President.

Angola’s latest constitution was implemented in February, 2010. Under it, the presidential elections were abolished with the leader of the party with most parliamentary seats automatically becoming president. The head of state is President Jose Eduardo dos Santos; he has been head of state since 1979. The next legislative elections are scheduled for 2017.

The ruling party, with 175 seats out of 220 seats in the parliament, is People’s Movement for Liberation of Angola (MPLA). The main opposition party is National Union for the Total Independence of Angola (UNITA). UNITA has 32 seats in the parliament. The remaining 13 seats are divided between the Social Renovation Party and other political parties.

Legal system: Strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. The index ranges from 0 to 12, with higher scores indicating that these laws are better designed to expand access to credit.

Angola’s Ranking of the Strength of Legal Rights Index (0=weak to 12=strong): 1 Source: World Bank, Doing Business project

Angola’s legal and judicial system lacks capacity and is inefficient. Legal fees are high and most businesses avoid taking commercial disputes to court. The World Bank’s Ease of Doing 06 Republic of Angola Business in 2016 survey ranks Angola at 185 out of 189 on contract enforcement and estimates that commercial contract enforcement, measured by time elapsed between filing a complaint and receiving restitution, takes an average of 1,011 days, at an average cost of 44.4% of the claim. Source: US Department of State Connectivity Roads The road network covers about 75,000 km, of which 7,955 km are tarred.

Source: Angola’s Embassy in India

Rail Transport Angola possesses a rail network of 2,750 km on three routes of which two are on interprovincial routes and one is on intercontinental route.

Routes Company Distance Lobito-Zambia R.D. of Congo Railway of Benguela (CFB) 1,305 KM Namibe-Menongue Interprovincal Railway of Namibe (CFN) 907 KM Luanda-Malange Railway of Luanda 538 KM

Source: Angola’s embassy in the United Kingdom of Great Britain and Northern Ireland

Airport Transport: Passengers carried in 2014: 1,335,850 Registered carrier departures worldwide3: 13,818 Source: World Bank

Luanda International Airport is the current international airport serving Angola’s capital city Luanda and the rest of Angola, via a network of 12 provincial airports, and is soon to be replaced by the new Angola International Airport scheduled to be completed in 2017.

Source: Angola International Airport Ports: Major seaports: Cabinda, Lobito, Luanda, Namibe

Source: Angola Embassy in India Internet Connectivity Internet Users (per 100 people): 21.3 Source: World Bank Mobile Connectivity Total Mobile Phone Users: 14.1 million Subscriptions per 100 inhabitants: 63 Country Code: +244 Source: World Bank

3Registered carrier departures worldwide are domestic takeoffs and takeoffs abroad of air carriers registered in the country Republic of Angola 07

SECTION II Angola’’’s History

Republic of Angola 09 10 Republic of Angola Angola’s History:

Angola was once a Portuguese colony. The Portuguese began arriving in the region from the late 15th century when the region, which is now Angola, comprised of small kingdoms such as the Kingdom of Congo and the Kingdom of Ndongo ruled by the “ngola” which meant king or ruler in the local language. Modern Angola derives its name from the word “ngola”. Though the Portuguese were challenged by the local monarchs, they gradually took control of the coastal strip throughout the 16th century by a series of treaties and wars. By 1671, the Portuguese had achieved military conquest of the Kingdom of Congo and the Kingdom of Ndongo though full Portuguese administrative control of the interior did not occur until the beginning of the 20th century.

Portugal’s primary interest in Angola was slavery. In early 16th century, slaves were sent to work on sugar plantations in São Tomé, Principé and Brazil. By the 19th century, Angola was also a major source of slaves for the Americas which is modern day North America and South America.

The slave trade in Angola was officially abolished in 1836, but agriculture in Portuguese- influenced territories such as Brazil relied on Angolan ‘workers’ until well into the 1900s. By the end of the 19th century, a forced labor system had replaced formal slavery. It was the forced labor system that provided the basis of the initial plantation economy and, by the mid- 20th century, a major mining sector.

Portugal used its colony to export materials such as rubber and ivory, as well as taxing the local population. After the fall of the Portuguese monarchy in 1910, some reforms were introduced and Angola became a province of Portugal. However, the existing Portuguese regime encouraged white immigration which intensified racial antagonisms.

After World War II, political movements in Angola began to demand more rights and independence. Portugal refused and as a result a civil war ensued.The three main independence movements which emerged in Angola were:

• MPLA: The Popular Movement for the Liberation of Angola (Movimento Popular da Libertação de Angola, MPLA) led by Agostinho Neto, with a base among Kimbundu and the mixed-race intelligentsia of Luanda and links to communist parties in Portugal and the East Bloc.

• FNLA: The National Front for the Liberation of Angola (Frente Nacional para a Libertação de Angola, FNLA), led by Holden Roberto with an ethnic base in the Bakongo region of the north and links to the United States and the Mobutu regime in Kinshasa.

• UNITA: The National Union for the Total Independence of Angola (União Nacional para a Indepêndencia Total de Angola, UNITA), led by Jonas Malheiro Savimbi with an ethnic and regional base in the Ovimbundu heartland in the center of the country and links to the People’s Republic of China and apartheid South Africa.

From the early 1960s, elements of these movements fought against the Portuguese. A 1974 coup d’etat in Portugal established a military government that resulted in power being handed over in Angola to a coalition of the three movements. The ideological differences between the three movements eventually led to armed conflict, with FNLA and UNITA forces, encouraged by their respective international supporters, attempting to wrest control of Luanda from the

Republic of Angola 11 MPLA.

The intervention of troops from South Africa on behalf of UNITA and Zaire on behalf of the FNLA in September and October 1975 and the MPLA’s importation of Cuban troops in November effectively internationalized the conflict.

Retaining control of Luanda, the coastal strip, and the oil fields in Cabinda, the MPLA declared independence on November 11, 1975, the day the Portuguese abandoned the capital thus 1975 is known as the year in which Angola finally won independence. UNITA and the FNLA formed a rival coalition government based in the interior city of Huambo. Agostinho Neto became the first president of the MPLA government that was recognized by the United Nations in 1976. Upon Neto’s death from cancer in 1979, the then-Planning Minister José Eduardo dos Santos became President.

In 1979, the fighting between the MPLA and UNITA intensified. The independence movement had been made up of three rival groups but once Angola achieved independence, the groups became rivals. The Marxist MPLA were backed by the Soviet Union and Cuba. UNITA was supported by the USA and the white government of South Africa. In 1988, a ceasefire was agreed and maintained by a United Nations peacekeeping force. But after an MPLA election- win in 1992, won by José Eduardo dos Santos, the opposition party again took up arms. A peace treaty was signed in 1994 but this agreement eventually collapsed into renewed conflict. In 1997, the UN imposed sanctions on UNITA and the Angolan military launched a massive operation against UNITA which destroyed much of its resources and recaptured the cities held by them.

27 years of civil war finally ended in 2002, when Jonas Savimbi the leader of UNITA was killed. The Angolan government and UNITA signed the Luena Memorandum of Understanding (MOU), which formalized the de facto cease-fire that prevailed following Savimbi’s death.By the time peace was declared in 2002, around 1.5 million people had been killed and more than 4 million forced to flee their homes.

In 2003, UNITA and MPLA held their first post-war party congresses in which UNITA transferred power from interim leader General Paulo Lukumba “Gato” to former UNITA representative in Paris Isaias Henriqué Samakuva, while the MPLA Congress reaffirmed President dos Santos’ leadership of party structures. José Eduardo dos Santos is now one of the longest-serving heads of state.

12 Republic of Angola SECTION III Angola’’s Economy

Republic of Angola 13 14 Republic of Angola Angola’s Economy GDP4 The GDP given below is the sum of gross value added by all resident producers in the economy plus taxes and minus subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. GDP growth rates are calculated on the basis of year to year changes converted to percentage. GDP per capita is calculated by dividing GDP by population.

Geographically, Sub Saharan African region is the area of the continent of Africa that lies south of the Sahara Desert. It comprises of 48 countries. In 2014, the World Bank estimated its GDP at market prices to be at $1.729 trillion with a population of 973.4 million people.

Angola is the third largest economy in Sub Saharan Africa in terms of GDP with the second highest GDP growth rate and amongst the highest GDP per capita.

GDP at Market GDP per capita Sub Saharan African Countries GDP Growth % Prices (USD Billion) (USD) Nigeria 569 6.3 3,203 South Africa 350 1.5 6,482 Angola (2013) 138 10.0 5,900 Sudan 74 3.1 1,875 Kenya 61 5.3 1,358 Ethiopia 56 10.3 574 Tanzania 48 7.0 955 Ghana 39 4.0 1,442 Côte d'Ivoire 34 8.5 1,546 Congo (Democratic Republic) 33 9.0 442

Angola’s GDP

2005 2006 2007 2008 2009 2010 2011 2012 2013 GDP at Market Prices 36.97 52.38 65.27 88.54 73.16 83.37 110.89 125.49 138.36 (USD Billion) GDP growth rate 57% 42% 25% 36% -17% 14% 33% 13% 10% Source: World Bank

Over the last decade, Angola’s GDP has grown at high rates, however it must be borne in mind that Angola’s GDP has grown from a small base hence the exceptionally high rates. Furthermore, the GDP data available for Angola is in nominal terms which is why Angola’s double digit inflation has resulted in high GDP growth rates.

4As per World Bank sources, the Angolan authorities have revised their GDP numbers from 2002-2013, and no data is yet available for 2014. The only set of data available for Angolan GDP is from the expenditure side in current US dollars. Republic of Angola 15 data available for Angola is in nominal terms which is why Angola’s double digit inflation has resulted in high GDP growth rates.

GDP at Market Prices $160 $138.36 $140 $125.49 Billions $120 $110.89

$100 $88.54 $83.37 $73.16 $80 $65.27 $60 $52.38 $36.97 $40 $23.55 $20

$0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: World Bank GDPGDP Growth Growth Rate: Rate: Angola’sAngola’s GDP growthGDP growth rate has beenrate erratichas been over erraticthe last decade,over the influenced last decade, partly byinfluenced high rates of partly by high inflation.rates ofThough inflation. Angola’s Though GDP growth Angola’s rate has GDPdecl inedgrowth in recent rate years, has itdeclined is partly duein recent to Angola’s years, it is partly inflationdue to being Angola’s reined ininflation and partly beingdue to reinedthe dec linein andin the partly economy due due to tothe the decline decline in in oilthe price economys, due to Angola’sthe decline primary in export. oil prices, Real GDP Angola’s in 2013 wasprimary 6.8% as export. per the RealAfrican GDP Economic growth Outlook. rate in 2013 was 6.8% as per the African Economic Outlook. GDP growth rate 70%

57% 60%

50% 42% 36% 40% 33%

30% 25%

20% 14% 13% 10% 10%

0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 -10%

-20% -17% -30% 12

Source: Authors’ calculations based on World Bank data

Inflation:

Although still relatively high at 7.3% in 2014, Angola’s inflation has been declining steadily since 2010.

Inflation 25.0% 23.0% 16 Republic of Angola 20.0% 14.5% 13.3% 13.7% 13.5% 15.0% 12.2% 12.5% 10.3% 8.8% 10.0% 7.3%

5.0%

0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: World Bank

GDP by Sector:

The bulk of Angola’s GDP stems from its oil sector followed by agriculture. In recent years Angola’s government has made an effort to invest in sectors other than oil which has led to a relative decline in

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GDP growth rate 70%

57% 60%

50% 42% 36% 40% 33%

30% 25%

20% 14% 13% 10% 10%

0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 -10%

-20% -17% -30%

Source: Authors’ calculations based on World Bank data

Inflation:Inflation:

AlthoughAlthough stillstill relatively relatively high high at 7.3% at 7.3%in 2014, in Ang 2014,ola’s Angola’s inflation has inflation been declining has beensteadily declining since 2010. steadily since 2010. Inflation 25.0% 23.0%

20.0% 14.5% 13.3% 13.7% 13.5% 15.0% 12.2% 12.5% 10.3% 8.8% 10.0% 7.3%

5.0%

0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: World Bank GDPGDP byby Sector: Sector: TheThe bulk bulk ofof Angola’sAngola’s GDP GDP stems stems from itsfrom oil sector its oil followed sector byfollowed agriculture. by In agriculture. recent years Angola’sIn recent years Angola’sgovernmentoil’s importance. government has made The declinean has effort made in to global invest an oileffort in prices sectors to has invest other further thanin putsectors oil pressure which other has on led thanthe to Angolan aoil relative which government decline has led in to to a relativedevelop decline other sectors.in oil’s importance. The decline in global oil prices has further put pressure on the Angolan government to develop other sectors. 13 Agriculture, hunting, forestry, fishing 2008 2012

Mining (Oil) 3.7% 4.3% 6.1% 6.8% Mining (Others) 8.1% 10.2%

Manufacturing 14.2% 16.0% Construction 5.2% Wholesale and retail trade, hotels and 5.0% 7.8% 46.0% 57.9% restaurants 1.1% Transport, storage and communication 6.6%

Public administration, education, health and 1.0% social work, community, social and personal services

Source: African Economic Outlook

GDP per capita

GDP per capita is gross domestic product divided by population. Angola’s nominal GDP per capita has been increasing steadily since 2009; it was $5,901 in 2013, an increase of 6.67% over 2012. GDP per capita $7,000 $5,901 $6,000 $5,532 $5,054 $5,000 $4,462 $3,929 Republic$4,000 of Angola $3,402 $3,565 17 $2,825 $3,000 $2,064 $2,000

$1,000

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: World Bank

14

oil’s importance. The decline in global oil prices has further put pressure on the Angolan government to develop other sectors.

2008 Agriculture, hunting, forestry, fishing 2012

Mining (Oil) 3.7% 4.3% 6.1% 6.8% Mining (Others) 8.1% 10.2%

Manufacturing 14.2% 16.0% Construction 5.2% Wholesale and retail trade, hotels and 5.0% 7.8% 46.0% 57.9% restaurants 1.1% Transport, storage and communication 6.6%

Public administration, education, health and 1.0% social work, community, social and personal services

GDP per capita Source: African Economic Outlook GDPGDP per per capita capita is gross domestic product divided by population. Angola’s nominal GDP per GDPcapita per hascapita been is gross increasing domestic steadily product divided since 2009;by population. it was $5,901 Angola’s in nominal 2013, an GDP increase per capita of has 6.67% over been2012. increasing steadily since 2009; it was $5,901 in 2013, an increase of 6.67% over 2012. GDP per capita $7,000 $5,901 $6,000 $5,532 $5,054 $5,000 $4,462 $3,929 $4,000 $3,402 $3,565 $2,825 $3,000 $2,064 $2,000

$1,000

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: World Bank

5 CountryCountry Debt Debt 5 Angola’s gross government debt was 36.6% of its GDP in 2014, of which 11.6% was its total domestic Angola’s gross government debt was 36.6% of its GDP in 2014, of which 11.6% was its total debt and 25% was its total external debt as percentage of GDP. 14 domestic debt and 25% was its total external debt as percentage of GDP. Gross Government Debt

Total External Debt Total Domestic Debt 60%

50%

40% 29.70% 18.10% 11.60% 30% 12.50% 12% 9.90% 20%

Percentage of GDP 25% 10% 20.20% 21.70% 20.20% 19.70% 22.10%

0% 2009 2010 2011 2012 2013 2014

Source: IMF

Exchange Rate:

The Angolan Kwanza (AOA) is the currency currently used in Angola. The Kwanza was introduced 1999, replacing the "Kwanza Reajustado" (AOK). The Kwanza has bill denominations of 10, 50, 100, 200, 500, 1000 and 2000 and is subdivided into coin denominations of 100 centimos. Angola’s Kwanza has been depreciating against the American dollar due to economic difficulties that 5Country debt statistics have been taken from an IMF report published in September 2014. Though this is the latest set of data available, it does not accountAngola for is the facing recent revisionamid depressed of the GDP figures oil prices by the andAngola an ca authorities.sh strapped The 2014 government. data is stated as projected by the IMF report. 18 Republic of Angola

5 Country debt statistics have been taken from an IMF report published in September 2014. Though this is the latest set of data available, it does not account for the recent revision of the GDP figures by the Angolan authorities. The 2014 data is stated as projected by the IMF report.

15

Exchange Rate: The Angolan Kwanza (AOA) is the currency currently used in Angola. The Kwanza was introduced in 1999, replacing the “Kwanza Reajustado” (AOK). The Kwanza has bill denominations of 10, 50, 100, 200, 500, 1000 and 2000 and is subdivided into coin denominations of 100 centimos.

Angola’s Kwanza has been depreciating against the American dollar due to economic difficulties that Angola is facing amid depressed oil prices and a cash strapped government. Angola Kwanza per US$ AOA 120 AOA 97.9 Angola Kwanza per US$AOA 93.5 AOA 94.9 AOA 96.1 AOA 100 AOA 91.7 AOA 120 AOA 80.2 AOA 79.1 AOA 77.3 AOA 74.8 AOA 80 AOA 97.9 AOA 93.5 AOA 94.9 AOA 96.1 AOA 100 AOA 91.7 AOA 80.2 AOA 79.1 AOA 60 AOA 77.3 AOA 74.8 AOA 80 AOA 40 AOA 60 AOA 20 AOA 40 AOA 0 AOA 20 2006 2007 2008 2009 2010 2011 2012 2013 2014

AOA 0 2006 2007 2008 2009 2010 2011Source: United 2012 Nations 2013Treasury 2014

Angola’s Trade Surplus as a percentage of GDP Source: United Nations Treasury AngolaAngola’s enjoys a Trade significant Surplus trade surplus as due a topercentage its oil exports. Angola’sof GDP trade surplus in 2014 was $37.2 Angola’s Trade Surplus as a percentage of GDP billion.Angola However enjoys Angola a significant has not reported trade datasurplus over thedue last to decadeits oil andexports. hence mirrorAngola’s data trade was used surplus to in 2014 calculateAngolawas $37.2 enjoys trade billion. a surplus. significant However,The trade decline surplus inAngola trade due surpl to has ituss oil notin exports. 2013 reported was Angola’s mainly data tradedue over to surplus falling the inoil last 2014 prices. decade was $37.2 and hence billion.mirror However data was Angola used has notto reportedcalculate data trade over surplus.the last decade The anddecline hence inmirror trade data surplus was used in to 2013 was calculatemainly tradedue tosurplus. falling The oil decline prices.Trade in trade Surplus surpl usas in a 2013 percentage was mainly of due GDP to falling oil prices.

60% 53% Trade Surplus as a percentage of GDP 50% 44% 45% 43% 60% 41% 43% 39% 53% 40% 35% 50% 44% 45% 43% 41% 43% 30% 26% 39% 40% 35% 30% 20% 30% 26% 10% 30% 20% 0% 10% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0% 2004Source: 2005 Authors 2006 calculations 2007 based 2008 on World 2009 Bank da 2010ta and Trade 2011 Maps 2012 (mirror data) 2013

Country Risk – ComparisonSource: Authorsof LIBOR calculations and LUIBOR based on World Bank data and Trade Maps (mirror data)

The Luanda Interbank Offered Rate (LUIBOR) was established in the third quarter of 2011 as a reference Country Risk – Comparison of LIBOR and LUIBOR rate for the Angolan financial market. The graph shows the average rate of 3 month (USD) London

InterbankThe Luanda Offered Interbank Rate Offered (LIBOR) Rate and (LUIBOR)3 month LUIBORwas esta fromblished 2011 in tothe 2014. third LIBORquarter is ofa widely 2011 as used a reference benchmarkrate for the forAngolan short financialterm interest market. rates. The LUIBOR graph shis owsthe averagethe average of interest rate of rate 3 month charged (USD) by Londoncommercial banksInterbank while Offered lending Rate to one (LIBOR) another. and 3 month LUIBOR from 2011 to 2014. LIBOR is a widely used Republic of Angola 19 benchmark for short term interest rates. LUIBOR is the average of interest rate charged by commercial banks while lending to one another. 16

16

Country Risk – Comparison of LIBOR and LUIBOR The Luanda Interbank Offered Rate (LUIBOR) was established in the third quarter of 2011 as a reference rate for the Angolan financial market. The graph shows the average rate of 3 month (USD) London Interbank Offered Rate (LIBOR) and 3 month LUIBOR from 2011 to 2014. LIBOR is a widely used benchmark for short term interest rates. LUIBOR is the average of interest rate charged by commercial banks while lending to one another.

LUIBOR 3 Month LIBOR 3 Month

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% 2011 2012 2013 2014

Ice Benchmark Administration & National Bank of Angola Economic outlook: Economic outlook: Once the fastest growing economies of Africa, the Angolan economy has slowed down. African OnceEconomic the fastestOutlook, growingin its Angola economies overview 2015, of esti Africa,mates thethat Angola’s Angolan economy economy will suffer has from slowed down. Africansignificantly Economic lower oil Outlook, prices, with in real its GDP Angola growt hoverview expected to 2015, decelerate estimates to 3.8% thatin 2015 Angola’s and 4.2% economyin will2016, suffer down from from significantlythe 4.5% registered lower in 2014 oil 6.prices, with real GDP growth expected to decelerate to 3.8% in 2015 and 4.2% in 2016, down from the 4.5% registered in 20146. This is primarily due to the weak performance of the oil sector that has contracted since 2011. In 2014, Thisoil productionis primarily declined due byto 2.6%the weak due to performanceunscheduled maintenance of the oil andsector repair that work has in contractedsome oil fields. since 2011. InLower 2014, oil oil prices production are expected declined to lead toby sizeable 2.6% cdueuts in to public unscheduled spending and maintenance a consequent deceleratioand repairn work of GDP growth. Angola joined the Organization of Petroleum Exporting Countries (OPEC) in 2007 and in some oil fields. Lower oil prices are expected to lead to sizeable cuts in public spending since 2008, Angola been among the top oil producers in Africa. and a consequent deceleration of GDP growth. Angola joined the Organization of Petroleum ExportingAs per World Countries Bank, growth (OPEC) also slowed in 2007 in the and non-oi sincel sectors 2008, of the Angola economy has due been to delays among in the the top oil producersexecution ofin key Africa. electricity and industrial investments, the non-oil sectors nevertheless grew by 7.3% as a result of the recovery of the agriculture sector following the 2012 drought as well as expansion of the Asservice per World sector. Non-oilBank, revenuesgrowth increasedalso slowed slightly in bythe 1% non-oil between sectors 2013 and of 2014. the economy due to delays in the execution of key electricity and industrial investments, the non-oil sectors nevertheless grewPublic by expenditure 7.3% as a as result a percentage of the ofrecovery GDP fell byof 3 the.2% inagriculture 2014 reflected sector in the following form of decreased the 2012 drought spending on goods, services, and subsidies. Capital expenditure also fell by 0.6% of GDP in 2014 due to as well as expansion of the service sector. Non-oil revenues increased slightly by 1% between liquidity pressures arising from a decline in oil prices according to the World Bank’s economic overview 2013of Angola. and 2014.

PublicDeclining expenditure global food prices, as a increase percentage in agricultu of GDPre production, fell by 3.2%and efforts in 2014 of the reflected Angolan Central in b ankthe form of decreasedto stabilize spending the nominal on exchange goods, rate services led to infla andtion subsidies. being at the Capital historically expenditure low level of 7.3%also in fell 2014, by 0.6% of GDP in 2014 due to liquidity pressures arising from a decline in oil prices according to the World Bank’s economic overview of Angola.

Declining6 As per World global Bank sources,food prices, the Angolan increase authorities in agriculturehave recently revised production, their GDP numbersand efforts from 2002- of the2013, Angolan and no data is yet available for 2014. However, the analysis given above is based on the studies made available by 6AsAfrican per World Economic Bank sources, Outlook the Angolan and the authorities World Bank. have recently revised their GDP numbers from 2002-2013, and no data is yet available for 2014. However, the analysis given above is based on the studies made available by African Economic Outlook and the World Bank. 17 20 Republic of Angola

Central bank to stabilize the nominal exchange rate led to inflation being at the historically low level of 7.3% in 2014, down from 8.8% in 2013. The average rate of inflation from 1995 to 2006 was 547% with inflation as high as 4145% in 1995 as per the World Bank.

Investment opportunities exist in the dominant hydrocarbons sector since the country could potentially generate up to 50,000 MW of electricity as the west coast of Angola contains presalt formations which are estimated to hold large quantities of hydrocarbon resources.

Substantial natural resources, such as in the minerals sectors, particularly diamonds, ensure that strong prospects continue for economic growth, foreign direct investment (FDI) and export earnings.

Since Angola is considered one of the most fertile countries in Africa, there is tremendous agricultural potential as well. As per the Food and Agriculture Organization (FAO) of the United Nations in 2011, of the total land area of about 124 million hectares (ha), it was estimated that 35 million ha was potentially arable. Of the potentially arable land, 30 million ha had been untouched and the remaining 5 to 8 million ha had been previously cleared and cultivated. Of this, only 2.5 million ha was estimated to be currently in use. However landmines remain a problem.

One of Angola’s biggest development impediments is its dependence on the oil sector, rendering it vulnerable to fluctuating commodity prices and external demand. However using the funding available from the country’s sovereign wealth fund, the Fundo Soberano de Angola (FSDEA), Angola is investing to reduce its dependency on its oil revenues and to develop the non-oil economy.

Angola has made substantial progress in economic and political terms since the end of the civil war in 2002. However, the country continues to face massive developmental challenges which include reducing the dependency on oil and diversifying the economy, rebuilding its infrastructure, improving institutional capacity, governance, public financial management systems, human development indicators and the living conditions of the population. Each of these areas however offer opportunities for companies who are willing to take the risk.

Republic of Angola 21

SECTION IV Angola’’s Trade Overview

Republic of Angola 23 24 Republic of Angola Angola’s Trade Overview Angola’s Trade Overview Angola’s bilateral trade in 2014 was $90.3 billion, a 200% increase over a 10 year period over 2005Angola’s when bilateral it was trade$29.9 in billion. 2014 was Angola $90.3 billion, enjoys a 200% a significant increase over trade a 10 surplusyear period due over to 2005high wh exportsen it was $29.9 billion. Angola enjoys a significant trade surplus due to high exports of petroleum products. of petroleum products.

Imports Exports Trade Surplus

$80 $74.2 $71.4 $67.7 $70 $65.7 $63.8 Billions $60 $52.9 $53.6 $47.7 $48.0 $50 $47.3 $41.7 $39.8 $40 $37.2 $37.2 $32.0 $29.0 $26.5 $30 $23.4 $22.1 $21.5 $20.5 $22.3 $20.6 $17.5 $18.0 $20 $14.3 $15.7 $10.5 $12.7 $7.8 $10

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Major Imports: Major Imports: The table below lists Angola’s top 25 imports at HS 6 digit level which accounted for 28% of Angola’sThe table total below imports lists Angola’s in 2014. top 25The imports top imports at HS 6 digit in 2014level whichwere accountedfloating foror 28%submersible of Angola’s drilling or totalproduction imports in platforms. 2014. The top Total imports Angolan in 2014 importswere floating in 2014 or submersible were $26.5 drilling billion. or production Angola has not reportedplatforms. its Total international Angolan imports trade in data2014 werefor the $26.5 last billion. decade Angola hence has not Angola’s reported itsimport international figures are basedtrade on data mirror for the data, last decadei.e. Angolan hence Angola’s imports impor are basedt figures on are exports based on to mirror Angola data, by i.e. trading Angolan partners. imports are based on exports to Angola by trading partners.

Table 1: Angola’sTable 1: Angola’s Top Top 25 25 Imports Imports as HS as 6 digitHS leve 6 ldigit level Imports Imports Imports Imports Imports Imports Imports Imports Imports Imports 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M HS (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror Code Product label Data) Data) Data) Data) Data) Data) Data) Data) Data) Data) HS Floating or submersibleProduct drilling label '890520 orCode production platforms 707.7 171.2 145.7 975.6 503.4 474.8 111.2 151.7 1,030.8 1,113.5 Other petroleum oils and

'271019 preparations 31.1 Imports 2005 100.8 Imports 2006 142.4Imports 2007 348.1Imports 2008 620.8Imports 2009 597.6Imports 2010 Imports 2011 431.4 Imports 2012 684.0 Imports 2013 735.9Imports 2014 937.1 Floating docks and vessels '890590 which perform special functions 770.5 725.9USD M (mirror Data) USD M (mirror Data) 12.1 USD M (mirror Data) 59.7 USD M (mirror Data) 196.5USD M (mirror Data) 133.6USD M (mirror Data) 174.0USD M (mirror Data) USD M (mirror Data) 45.0 USD M (mirror Data) 59.1 USD M (mirror Data) 592.5

Parts of boringFloating or sinking or submersible '890520machinery, whetherdrilling or or not production self- 707.7 171.2 145.7 975.6 503.4 474.8 111.2 151.7 1,030.8 1,113.5 '843143 propelled platforms 441.9 479.4 539.5 594.9 444.7 422.7 273.3 304.9 321.5 408.8 Fowls (gallus domesticus), cuts Other petroleum oils and '020714 '271019& offal, frozen 52.2 31.162.5100.8 89.4142.4 135.5348.1 107.1620.8 597.6176.6 431.4239.6 684.0296.9735.9 296.5937.1 330.5 Palm oil andpreparations its fractions refined but notFloating chemically docks and '151190 '890590modified vessels which perform26.6 770.537.6725.9 57.712.1 86.159.7 196.570.0 133.6110.7 174.0192.0 45.0160.259.1 255.1592.5 283.0 Structures&partsspecial of functions structures,i/s (ex prefab bldgs '730890 of headg no.9406)Parts of boring or 71.8 97.5 159.3 278.0 298.2 195.8 135.0 196.7 173.3 251.3 sinking machinery, '843143 441.9 479.4 539.5 594.9 444.7 422.7 273.3 304.9 321.5 408.8 whether or not self- 19 propelled

Fowls (gallus '020714 domesticus), cuts & offal, 52.2 62.5 89.4 135.5 107.1 176.6 239.6 296.9 296.5 330.5 frozen

Republic of Angola 25 Table 1: Angola’s Top 25 Imports as HS 6 digit level

HS Product label Code Imports 2006 Imports 2007 Imports 2008 Imports 2009 Imports 2010 Imports 2011 Imports 2012 Imports 2013 Imports 2014 Imports 2005 USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data)

Palm oil and its '151190 fractions refined but not 26.6 37.6 57.7 86.1 70.0 110.7 192.0 160.2 255.1 283.0 chemically modified Structures&parts of '730890 structures,i/s (ex prefab 71.8 97.5 159.3 278.0 298.2 195.8 135.0 196.7 173.3 251.3 bldgs of headg no.9406) Machines & mechanical '847989 appliances nes having 44.9 69.4 106.8 72.8 78.5 55.1 51.4 86.8 172.2 249.4 individual functions Rice, semi-milled or '100630 wholly milled, whether 83.5 64.2 89.5 232.9 105.7 153.0 146.4 192.2 213.9 229.4 or not polished or glazed Taps, cocks, valves and '848180 25.2 47.9 100.9 77.3 103.4 256.3 150.0 144.8 238.8 225.5 similar appliances, nes Road tractors for semi- '870120 30.9 68.7 104.3 241.5 181.4 57.6 57.2 119.6 124.6 221.7 trailers (truck tractors) Casings,tubing, drill '730429 91.4 160.5 124.7 166.6 81.7 75.1 116.3 167.9 166.9 216.1 pipe, for oil drilling use '110100 Wheat or meslin flour 76.4 90.6 118.2 168.8 130.3 137.2 212.8 209.7 250.2 211.1 '220300 Beer made from malt 70.4 108.6 117.8 154.3 130.4 148.5 185.3 203.2 175.4 205.4 Motorcycles with '871120 reciprocatg piston engine 23.6 24.7 39.5 70.0 84.3 76.1 131.3 198.9 168.2 204.1 displacg > 50 cc to 250 cc Refined cane or beet sugar, solid, without '170199 55.8 109.7 83.3 100.4 84.0 129.9 147.6 141.2 212.6 203.5 flavouring or colouring matter Automobiles w reciprocatg piston '870322 18.3 44.9 75.5 100.0 100.1 68.7 70.4 116.4 115.3 193.0 engine displacg > 1000 cc to 1500 cc Telephones for cellular networks mobile '851712 - - 47.8 54.4 70.6 33.0 79.9 72.5 87.7 192.5 telephones or for other wirele '732690 Articles, iron or steel, nes 27.8 44.8 55.0 74.7 93.9 104.1 101.5 122.3 134.0 191.4 Automobiles w reciprocatg piston '870323 82.3 115.4 155.0 206.1 185.4 138.9 106.2 142.0 136.7 181.0 engine displacg > 1500 cc to 3000 cc '940320 Furniture, metal, nes 11.7 19.8 28.5 41.2 34.6 39.4 46.2 91.8 74.9 178.5 Bovine cuts boneless, '020230 65.2 106.0 115.7 143.8 80.6 91.0 127.4 144.3 162.9 178.5 frozen Medicaments nes, in '300490 39.0 56.0 70.8 78.7 80.6 78.2 114.4 129.3 157.1 166.7 dosage ‘940360 Furniture, wooden, nes 18.7 32.7 66.3 99.1 95.8 81.3 91.5 88.1 93.9 162.0 Diesel powered trucks ‘870423 with a GVW exceeding 33.0 40.7 180.3 379.5 206.4 70.5 63.5 143.6 128.8 158.8 twenty tonnes

26 Republic of Angola Major Exports Angola’s total exports in 2014 were $63.8 billion of which $61.2 billion (96%) comprised of crude petroleum oils and oils obtained from bituminous minerals. The remaining 24 products in Angola’s top 25 exports consisted of 4% of Angola’s total exports in 2014.

Table 2: Angola’s Top 25 Exports at HS 6 digit level

HS Product label Code Exports 2005 Exports 2006 Exports 2007 Exports 2008 Exports 2009 Exports 2010 Exports 2011 Exports 2012 Exports 2013 Exports 2014 USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data)

Petroleum oils and oils obtained from '270900 20,938 30,669 38,343 65,404 37,654 50,918 62,916 70,046 67,134 61,197 bituminous minerals, crude Diamonds non-industrial '710231 unworked or simply 671.5 555.4 629.1 867.6 442.1 218.9 497.4 835.2 629.9 809.6 sawn, cleaved or bruted Other petroleum oils and '271019 199.2 258.7 305.2 354.8 290.4 308.2 560.6 471.3 636.7 544.6 preparations '271112 Propane, liquefied 37.1 136.9 174.3 168.8 157.9 233.3 250.6 317.3 228.6 296.2 '271111 Natural gas, liquefied 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 267.9 295.4 Light petroleum oils and '271012 0.0 0.0 0.0 0.0 0.0 0.0 0.0 104.3 223.5 172.6 preparations '271113 Butanes, liquefied 12.6 67.1 61.3 47.6 64.2 87.8 67.0 96.7 78.3 68.5 Ferrous waste and scrap, '720449 3.6 6.2 2.9 13.1 5.2 18.3 60.0 69.1 65.4 53.4 iron or steel, nes Light petroleum oils and '271011 48.0 91.7 102.9 123.2 64.5 80.0 193.7 31.4 37.5 37.1 preparations Granite, crude or '251611 20.4 18.6 20.7 30.2 29.3 28.4 30.7 40.3 36.9 27.3 roughly trimmed Waste and scrap, copper '740400 1.9 3.2 4.7 2.6 2.2 6.0 9.4 21.4 30.1 20.4 or copper alloy Other frozen shrimps '030617 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.1 15.5 14.4 and prawns Gas turbines nes of a '841182 power exceeding 5000 0.1 0.2 0.0 0.7 0.0 11.0 3.5 4.9 1.3 12.8 KW Waste and scrap, '760200 2.7 3.8 5.6 2.5 0.6 3.5 6.8 9.5 12.6 10.4 aluminum Drill pipe, seamless, of a '730423 kind used in drilling for 0.0 0.0 0.0 0.4 0.0 0.0 0.2 0.0 0.0 7.7 oil or gas, of ir Salmonidae nes,fresh or '030219 chilled,excl heading No 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 03.04,livers and roes Aluminum unwrought, '760120 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.1 1.1 6.2 alloyed Cargo vessels nes&oth '890190 vessels for the transport 0.0 0.0 159.4 246.3 268.9 257.8 750.3 909.5 549.6 5.4 of both persons&goods

Republic of Angola 27 Table 2: Angola’s Top 25 Exports at HS 6 digit level

HS Product label Code Exports 2005 Exports 2006 Exports 2007 Exports 2008 Exports 2009 Exports 2010 Exports 2011 Exports 2012 Exports 2013 Exports 2014 USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data) USD M (mirror Data)

Boring or sinking '843041 machinery nes, self- 0.5 0.0 0.0 2.8 1.4 0.3 0.4 0.0 0.0 5.1 propelled '440399 Logs, non-coniferous nes 1.0 0.1 0.9 0.8 0.9 0.8 0.2 0.8 0.7 4.7 Builder's joinery and '441890 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 4.2 carpentry of wood nes Parts of boring or sinking machinery, '843143 1.2 2.3 4.5 5.8 7.4 12.5 16.9 4.9 4.2 3.8 whether or not self- propelled Hydraulic power '841221 engines & motors linear 0.0 0.0 0.0 0.1 0.0 0.4 0.0 0.0 0.0 3.6 acting (cylinders) Flour,meal&pellet of '230120 fish,crust,mol/oth aqua 3.4 3.4 3.2 0.9 0.0 6.1 5.4 2.4 2.3 3.2 invert unfit human cons '854810 Waste&scrap of prim cell 0.0 0.0 0.0 0.1 0.0 1.1 1.3 2.3 6.1 2.9

28 Republic of Angola Major Trading Trading Partners: Partners:

In 2014, 2014, China China was was Angola’s Angola’s top bilateral top bilateral trade par tradetner. Indiapartner. was one India of the was top one 10 ofdestinations the top 10 for destinations forAngola’s Angola’s exports exports as well as as among well the as topamong 10 import theing top partners 10 importing of Angola. partnersChina and India’sof Angola. share of China and India’sAngola’s shareinternational of Angola’s trade has international grown since 2005. trade has grown since 2005. Major Importing Partners: Major Importing Partners: The top 10 importing partners of Angola are listed below. In 2014, these country accounted for 43% of TheAngola’s top total 10 importing imports. partners of Angola are listed below. In 2014, these countries accounted for 43% of Angola’s total imports. Top 10 Import Partners of Angola

$40

Billions $35

$30

$25

$20

$15

$10

$5

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China Portugal United States of America Korea, Republic of Brazil South Africa France United Kingdom Singapore India Others

Table 3: Top 10 Import Partners of Angola 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M (mirror (mirror (mirrorTable 3: (mirrorTop 10 Import(mirror Partners(mirror of (mirrorAngola (mirror (mirror (mirror Exporters data) data) data) data) data) data) data) data) data) data)

Total 7,764 10,497 12,667 20,456 17,533 15,701 17,965 20,629 23,395 26,539 Exporters 2005 USD M 2006 USD M 2007 USD M 2008 USD M 2009 USD M 2010 USD M 2011 USD M 2012 USD M 2013 USD M 2014 USD M (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) 23(mirror data) (mirror data) Total 7,764 10,497 12,667 20,456 17,533 15,701 17,965 20,629 23,395 26,539 China 373 894 1,235 2,942 2,386 2,004 2,784 4,039 3,964 5,975 Portugal 996 1,519 2,303 3,326 3,124 2,521 3,243 3,843 4,132 4,218 United States of America 928 1,550 1,280 2,117 1,423 1,293 1,503 1,491 1,443 2,039 Korea, Republic of 1,517 1,037 174 1,266 325 158 218 415 1,242 1,800

Republic of Angola 29 Table 3: Top 10 Import Partners of Angola

Exporters 2005 USD M 2006 USD M 2007 USD M 2008 USD M 2009 USD M 2010 USD M 2011 USD M 2012 USD M 2013 USD M 2014 USD M (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data)

Brazil 521 837 1,218 1,975 1,333 944 1,074 1,145 1,271 1,262 South Africa 545 687 772 898 682 714 890 1,002 1,004 1,051 France 371 634 742 745 753 841 813 699 612 1,022 United Kingdom 289 393 548 535 522 827 603 636 857 1,000 Singapore 64 94 101 171 330 320 251 394 264 786 India 103 196 234 330 586 597 536 535 560 610

30 Republic of Angola Table 3: Top 10 Import Partners of Angola 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror (mirror Exporters data) data) data) data) data) data) data) data) data) data) China 373 894 1,235 2,942 2,386 2,004 2,784 4,039 3,964 5,975 Portugal 996 1,519 2,303 3,326 3,124 2,521 3,243 3,843 4,132 4,218 United States of America 928 1,550 1,280 2,117 1,423 1,293 1,503 1,491 1,443 2,039 Korea, Republic of 1,517 1,037 174 1,266 325 158 218 415 1,242 1,800 Brazil 521 837 1,218 1,975 1,333 944 1,074 1,145 1,271 1,262 South Africa 545 687 772 898 682 714 890 1,002 1,004 1,051 France 371 634 742 745 753 841 813 699 612 1,022 United Kingdom 289 393 548 535 522 827 603 636 857 1,000 Singapore 64 94 101 171 330 320 251 394 264 786 India 103 196 234 330 586 597 536 535 560 610

Major Exporting Exporting Partners: Partners: 76% of Angola’s total exports in 2014 were to the top trading partners listed below: 76% of Angola’s total exports in 2014 were to the top trading partners listed below: Angola's Top 10 Export Markets $80

$70 Billions

$60

$50

$40

$30

$20

$10

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China United States of America India Spain Taipei, Chinese Portugal France South Africa Italy Netherlands Others

Table 4: Top 10 Export Partners of Angola

Importers 24

2005 USD M 2006 USD M 2007 USD M 2008 USD M 2009 USD M 2010 USD M 2011 USD M 2012 USD M 2013 USD M 2014 USD M (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data) (mirror data)

Total 22,086 31,983 41,695 67,747 39,830 52,933 65,700 74,215 71,390 63,755 China 6,582 10,933 12,889 22,383 14,676 22,815 24,922 33,562 31,973 31,106 United States of America 8,847 12,175 12,926 19,498 9,703 11,940 13,597 9,824 8,743 5,720 India 3 183 920 1,289 3,394 4,838 6,005 8,020 6,798 5,642 Spain 675 473 659 1,802 769 622 595 1,424 2,884 3,604 Taipei, Chinese 983 1,867 2,121 2,013 1,059 2,860 5,665 5,005 3,855 2,956 Portugal 31 66 507 601 211 746 1,638 2,290 3,495 2,132 France 1,749 1,553 2,371 4,010 3,271 2,126 1,826 1,200 1,226 2,079 South Africa 297 366 1,646 2,686 1,371 1,998 1,585 2,802 1,961 2,019 Italy 84 52 196 454 37 349 2,068 878 721 1,233 Netherlands 77 61 755 1,857 649 622 931 738 1,418 1,219

Special Import Restrictions The import of certain goods into Angola requires an import license issued by the Ministry of Trade. The import license is renewable annually and covers all shipments of the authorized goods or category of goods imported by the licensed importer. The importation of certain goods also requires specific authorization from various government ministries. Goods that require ministerial authorization include the following:

Republic of Angola 31 Ministry of Health

• Pharmaceutical substances • Saccharine and derived products

Ministry of Telecommunications

• Radios • Transmitters • Receivers and other devices

Ministry of Interior

• Weapons • Ammunition • Fireworks • Explosives

Ministry of Agriculture

• Plants • Roots • Bulbs • Microbial cultures • Buds • Fruits • Seeds and crates and other packages containing these products

Ministry of Post and Telecommunications

• Fiscal or postal stamps

Ministries of Agriculture, Industry, and Health

• Poisonous and toxic substances and drugs

32 Republic of Angola SECTION V Ease of Doing Business, Foriegn Direct Investment & Major Institutions of Angola

Republic of Angola 33 34 Republic of Angola Ease of Doing Business:

Angola’s Ease of Doing Business rose from 183 in 2015 to 181 in 2016, out of 189 economies. Starting a Business ranking improved the most from 2015 to 2016 by 33 points. Trading Across Borders and Getting Electricity rankings improved as well while the rest of the indicators declined.

TOPICS DB 2016 Rank DB 2015 Rank Change in Rank

Starting a Business 141 174 33

Dealing with Construction Permits 108 105 -3

Getting Electricity 166 167 1

Registering Property 169 166 -3

Getting Credit 181 180 -1

Protecting Minority Investors 66 64 -2

Paying Taxes 141 144 3

Trading Across Borders 181 180 -1

Enforcing Contracts 185 185 No change

Resolving Insolvency 189 189 No change

Foreign Direct Investment (FDI): The graph below shows FDI, net inflows (Balance of Payments, current US$). FDI refers to direct investment equity inflows which equals the sum of equity capital, reinvested earnings, and other capital. The negative FDI net flows figures of Angola show that Angola made more investments abroad than it received. Although FDI inflows into Angola are significant (UNCTAD reported that Angola attracted FDI inflows worth $10.5 billion in 2013) Angola also invests heavily abroad.

Angolan state oil company Sonangol has spearheaded Angolan investments abroad in recent years, notably in the energy sector in Portugal (Galp Energia), Brazil (oil exploration), Sao Tome and Principe and Cape Verde (fuel distribution and logistics).

Some of the latest investments include banking, Sonangol being the main shareholder of the largest Portuguese private bank, Millennium bcp. More recently, Angolan private groups have begun to take an interest in the construction and banking sectors abroad.

The bulk of FDI inflows that Angola has received in recent years are concentrated inoil exploration, natural gas exploration and road and rail infrastructure. China is a major source of inward FDI for Angola.

Republic of Angola 35 FDI inflows $4 $2.21 $1.68 $1.92 Billions $2

$0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -$0.89 -$2 -$1.30 -$0.04

-$4 -$3.23 -$3.02

-$6

-$6.90 -$8 -$7.12

Source: World Bank & UNCTAD

FDI guidelines: FDI guidelines: Angola is the second highest FDI inflows receiver in Africa. Its vast reserves of oil, gas and diamonds Angolahave made is the the second country highest an appealing FDI destination inflows receiverfor FDI. While in AngolaAfrica. offersIts vast high reserves returns to ofinvestors oil, gas and diamondsand exporters, have it made poses thesignificant country risks an as appealing well. destination for FDI. While Angola offers high returns to investors and exporters, it poses significant risks as well. Business opportunities exist in the oil and diamond industries. Intensive infrastructure rebuilding Businessfollowing opportunities the end of the civil exist war in 2002 the has oil crea andted diamond new business industries. opportunities. Intensive Development infrastructure in rebuildingagriculture following and mining the pose end potential of the investment civil war op inportunities 2002 has ascreated well. However, new business the business opportunities. environment remains one of the most difficult in the world with pervasive corruption, an Development in agriculture and mining pose potential investment opportunities as well. underdeveloped financial system, poor infrastructure and extremely high on the ground costs, as per However, the business environment remains one of the most difficult in the world with the US Department of State’s 2013 investment climate statement on Angola. Surface transportation pervasive corruption, an underdeveloped financial system, poor infrastructure and extremely inside the country is slow and expensive, while bureaucracy and port inefficiencies complicate imports high on the ground costs, as per the US Department of State’s 2013 investment climate and raise costs. statement on Angola. Surface transportation inside the country is slow and expensive, while bureaucracyThe minimum and size port of private inefficiencies investment complicaterequired to qualify imports for incentivesand raise is costs. $1 million. Investors must enter into an investment contract with the Angolan state, represented by the National Agency for ThePrivate minimum Investment size (ANIP), of private which establishes investment the co requirednditions for to the qualify investments for incentives as well as the is incenti $1 million.ves Investorsgranted. mustProjects enter with intoinvestment an investment value greater contract than $5 withmillion the require Angolan the approval state, ofrepresented the Angolan by the NationalCouncil of Agency Ministers. for Private Investment (ANIP), which establishes the conditions for the investments as well as the incentives granted. Projects with investment value greater than $5 millionThe incentives require andthe benefits,approval which of the include Angolan repatria Counciltion of funds of Minister for foreigns. investments, tax deductions, and exemption from certain taxes and duties, need to be negotiated with ANIP and other ministries of Thethe incentives Angolan government and benefits, on a case-by-case which include basis. Angrepatriationola restricts offoreign funds ownership for foreign to 10% investments, in banking, tax deductions,50% in insurance, and exemption and 80% in transportation. from certain taxes and duties, need to be negotiated with ANIP and other ministries of the Angolan government on a case-by-case basis. Angola restricts foreignIn determining ownership whether to 10% to grant in banking, incentives, 50% conside in insuranceration is given and to 80%the economic in transportation. and social impact of the investment according to the economic development strategy set by the Angolan executive. The In determining whether to grant incentives, consideration is given to the economic and social 28 impact of the investment according to the economic development strategy set by the Angolan executive. The most generous benefits are offered to companies investing outside of the petroleum industry and in geographic areas which are least-developed.

Under the local content umbrella the Angolan government expects foreign and national

36 Republic of Angola companies to prioritize local labor, as such a company investing in Angola has to exhaust all possible recruitment methods for a certain period of time before recruiting externally. For each company, there is in place a 70/30 split requirement for the employment of local staff. However, the Angolan government recognizes that there is a shortage of skilled technical and professional personnel, a reason why several companies are forced to recruit expatriate staff.

Angola’s private investment law expressly prohibits private investment in the areas of defense, internal public order, and state security. Banking activities related to the operations of the Central Bank and the Treasury are forbidden as is the administration of ports and airports and in other areas where the law gives the state exclusive responsibility. However, Angolan companies do subcontract parts of or all of a project to foreign companies. Investment in the petroleum, diamond, and financial sectors is governed by sector-specific legislation.

In November 2011, the government passed a new foreign exchange law requiring oil companies operating in Angola to make all payments through local (Angola-domiciled) banks as opposed to normal procedures wherein proceeds would be sent to and kept in overseas banks. This law aims to strengthen demand for the kwanza and build up the capacity of Angola’s underdeveloped financial sector. The new law is being implemented in phases. In the first phase, which came into force in early 2012, oil companies are required to pay their taxes owed to the Angolan treasury through a local bank. In the final phase, oil companies operating in Angola will require to use local banks to make all payments, including payments to suppliers and contractors located outside of Angola.

While no formal discrimination against foreign investment exists, Angolan or other companies familiar with the bureaucratic and legal complexities of the business environment hold an advantage over newcomers. The Promotion of Angolan Private Entrepreneurs Law gives Angolan-owned companies preferential treatment in tendering for government contracts for goods, services and public works. Furthermore, only firms with a majority Angolan stake can benefit from the loan guarantees, generous terms, and subsidized interest rates of the $1.6 billion fund to support micro, small and medium-sized businesses. Major Institutions: National Bank of Angola: The National Bank of Angola is Angola’s central bank. Its purpose includes the preservation of the value of the national currency and participating in defining the monetary, financial and exchange rate policies.

Website: http://www.bna.ao

Ministry of Commerce: Angola’s Ministry of Commerce is responsible for implementing, monitoring and controlling trade policy. It aims to regulate and discipline trade activity while promoting development and modernization of commercial infrastructures.

Website: http://www.minco.gov.ao

Republic of Angola 37 Ministry of Finance: The Ministry of Finance is responsible for managing Angola’s public resources efficiently and effectively.

Website: http://www.minfin.gv.ao

Ministry of Foreign Affairs Angola’s Ministry of Foreign Affairs is responsible for implementing and coordinating the foreign policy in all its aspects.

Website: http://www.mirex.gov.ao

Ministry of Industry The Ministry of Industry governs, manages, evaluates and control’s Angola’s policy on manufacturing and the provision of industrial services,

Website: http://www.mind.gov.ao

Angola Chamber of Commerce & Industry The Angola Chamber of Commerce & Industry is endowed with administrative, judicial, and financial autonomy to promote economic and commercial enterprises domestically andin collaboration with foreign countries.

Website: http://www.ccia.ebonet.net

Angola Industrial Association Angola Industrial Association is an employers’ association for private and multi-sectoral activity for 60 business sectors including manufacturing, agriculture and livestock, construction, fishing, transport, telecommunications, information technology, building materials, chemicals and various services.

Website: http://www.aiangola.com

Major Foreign Companies in Angola: Some of the major foreign companies operating in Angola are given below:

Corporation Home Country Sector Alvalade Empreendimentos Turisticos E Hoteleiros Portugal Public administration Sarl Auto-Sueco Angola Sarl Portugal Wholesale trade Banco de Fomento e Exterior Portugal Finance Banco Espirito Santo de Angola Portugal Finance Banco Totta de Angola Spain Finance Blackwood Hodge Angola Lda Portugal Wholesale trade Bp Angola (Block 18) B V United Kingdom Petroleum Cabinda Gulf Oil Company Limited United States Petroleum

38 Republic of Angola Corporation Home Country Sector Cameron Angola Lda United States Machinery and equipment Comatel Construcao Manutencao de Sistemas de Portugal Telecommunications Telecomunicacoes Conduril Engenharia Angola Lda Portugal Research and development Electrical and electronic Efacec Angola Lda Portugal equipment Esso Exploration Angola Ltd United States Petroleum Eusebios Angola Construcao Civil Lda Portugal Construction Ferpinta Angola Comercio e Industria Portugal Metal and metal products Habitar Sociedade Construcoes Lda Spain Research and development HSBC Equator Bank Plc United Kingdom Finance Kuehne & Nagel (Angola) Transitarios Limitada Switzerland Supporting transport activities Food products, beverages and Kwaba Sociedade Industrial e Comercial United States tobacco Orey Angola Comercio E Servicos Lda Spain Supporting transport activities Pao De Acucar – Companhia Angolana Portugal Wholesale trade Distribuicao Lda Petromar Limitda Italy Research and development Prefabricados de Luanda lda Portugal Non-metallic mineral products Quintas & Quintas Angola Condutores Electricos Portugal Metal and metal products Angola R and B Falcon Drilling Luanda Branch United States Petroleum Serafim L Andrade Sarl Portugal Hotels and restaurants Sonamet Industrial SARL Luxembourg Construction Sonils Sonangol Integrated Logistics Services United Kingdom Research and development Lda T D A Comercio E Industria L D A Portugal Wholesale trade Tecnosecil Investimentos e Participacoes Portugal Non-metallic mineral products Texaco Panama Inc United States Petroleum Chemicals and chemical Tintas Cin de Angola Portugal products

Republic of Angola 39 40 Republic of Angola SECTION VI Regional Trade Trends

Republic of Angola 41 42 Republic of Angola Regional Trade Trends

Sub-Saharan Africa, of which Angola is a part, is one of the least diversified regions in the World with its participation in global production and trade largely confined to energy products and other commodities. Exports from the region are significant in the energy, mining and metal ores sectors. While Sub-Saharan Africa is largely disconnected from international trade flows, China has become an increasingly important trading partner in the region.

In 2014, Angola’s imports from Africa were 7.7% of its total imports from the World, whereas its exports to Africa were 3.4% of its exports to the World. Total bilateral trade with Africa was 4.7% of Angola’s total bilateral trade with the World. Angola has not reported its international trade figures hence mirror data7 has been used.

Table 5: Angola’s Regional Trade Trends - Imports

Angola’s Imports from Angola’s Imports Africa from the World USD M USD M (mirror data) (mirror data) Inter-regional imports as a % of world imports

HS Code Description 2012 2013 2014 2012 2013 2014 %

All products 2,182 2,620 2,050 7.7% 20,629 23,395 26,539 Floating or submersible '890520 drilling or production 152 528 179 152 1,031 1,114 0% platforms Other petroleum oils and '271019 39 15 11 684 736 935 2% preparations Floating docks and '890590 vessels which perform 37 54 32 45 59 593 8% special functions Parts of boring or sinking '843143 machinery, whether or 35 21 2 305 321 404 1% not self-propelled Fowls (gallus '020714 domesticus), cuts & offal, 0 0 0 297 296 331 0.1% frozen Palm oil and its '151190 fractions refined but not 4 4 0 160 255 283 0.004% chemically modified Machines & mechanical '847989 appliances nes having 5 4 2 87 172 249 1% individual functions Structures&parts of '730890 structures,i/s (ex prefab 12 12 10 197 173 248 4% bldgs of headg no.9406) Taps, cocks, valves and '848180 1 2 2 145 239 225 20% similar appliances, nes Rice, semi-milled or ‘100630 wholly milled, whether 0 0 0 192 214 222 0.1% or not polished or glazed

7Mirror Data – Exports to Angola by all trading partners are used as proxy for Angola’s total imports and imports from Angola by all trading partners are used as proxy for Angola’s exports

Republic of Angola 43 Table 6: Angola’s Regional Trade Trends - Exports

Angola’s Exports to the Angola’s Exports to Africa World USD M USD M (mirror Data) (mirror Data) world exports Inter-regional exports as a % of

HS Code Description 2012 2013 2014 2012 2013 2014 % All products 4,806 3,953 2,164 74,215 71,390 63,756 3.4% Petroleum oils and oils obtained from '270900 2,764 1,937 2,001 70,046 67,134 61,197 3% bituminous minerals, crude Diamonds non-industrial '710231 unworked or simply 31 21 8 835 630 810 1% sawn, cleaved or bruted Other petroleum oils and '271019 26 50 43 471 637 545 8% preparations '271112 Propane, liquefied 0 0 0 317 229 296 0% '271111 Natural gas, liquefied 0 0 0 8 268 295 0% Light petroleum oils and '271012 0 0.001 0 104 223 173 0% preparations '271113 Butanes, liquefied 14 3 5 97 78 69 7% Ferrous waste and scrap, '720449 2 5 69 65 53 0% iron or steel, nes Light petroleum oils and '271011 31 38 37 31 38 37 100% preparations Granite, crude or '251611 0 0 0 40 37 27 0% roughly trimmed

Southern African Development Community (SADC)8 and Common Market for Eastern and Southern Africa (COMESA) are the two main regional trade agreements in Sub-Saharan Africa. Another important regional trade agreement is the Eastern African Community (EAC). SADC, EAC and COMESA are negotiating the implementation of a COMESA-EAC-SADC free trade area also known as the Africa Free Trade Zone or the Tripartite Free Trade Area (TFTA). Trade Alliances: Common Market for Eastern and Southern Africa (COMESA): In 1994, COMESA replaced the former Preferential Trade Agreement that existed since 1981 between most African countries. Covering a geographical area of 12 million sq km, it comprises of 19 members: Burundi, Comoros, Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe. These countries together have a Free Trade Area and are working towards becoming a Customs Union.

8SADC countries consist of Angola, Botswana, Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe

44 Republic of Angola Economic Community of West African States (ECOWAS): The Economic Community of West African States (ECOWAS) was established in 1975. ECOWAS is a 15 member regional group with the purpose of promoting economic integration. Its member states are: Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Nigeria, Niger, Sierra Leone, Senegal and Togo. It has a Free Trade Area under ECOWAS Trade Liberalization Scheme.

Southern African Development Community (SADC): Formed in 1992, the Southern African Development Community (SADC) is a Regional Economic Community comprising of 15 members: Angola, Botswana, Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

SADC Economic Partnership Agreement (EPA) group concluded negotiations with EU in 2014. Though Angola is not part of the SADC EPA group, it has the option to join the agreement in the future. The EPA is a Free Trade Agreement negotiated between West Africa and European Union.

“Everything But Arms” (EBA): Under “Everything But Arms” (EBA), the EU offers duty-free, quota-free treatment for Least Developed Countries (LDCs) for all their exports except arms and armaments. There are currently 49 beneficiaries of this scheme, of which Angola is one of them.

African Growth and Opportunity Act (AGOA): The African Growth and Opportunity Act was granted by the US to 39 Sub-Saharan Africa countries in 2000. This allows preferential access to the US market through lower tariffs or no tariffs on a specified list of products that encompass approximated 7,000 products at the tariff line.

The eligibility criteria for GSP and AGOA substantially overlap, and countries must be GSP eligible in order to receive AGOA’s trade benefit; however GSP eligibility does not imply AGOA eligibility. Since 2004, Angola has been designated AGOA eligible but is not under the GSP scheme.

Republic of Angola 45 46 Republic of Angola SECTION VII Pakistan Angola Trade Overview

Republic of Angola 47 48 Republic of Angola Pakistan Angola Trade Overview: Pakistan Angola Trade Overview: Currently trade between Angola and Pakistan is insignificant. Pakistan’s exports to Angola Currentlyare 0.15% trade of Angola’sbetween Angola total andimports Pakistan and is 0.16%insignificant. of Pakistan’s Pakistan’s total exports exports. to Angola However, are 0.15% Pakistan’s of Angola’sexports total to Angola imports andhave 0.16% almost of Pakistan’s quadrupled total exports. over theHowever, last 10 Pakistan’s years toexports $40 millionto Angola in ha 2014.ve At almost$0.42 quadrupledmillion in over 2014, the Pakistan’s last 10 years imports to $40 mil fromlion in Angola 2014. At were$0.42 millionless than in 2014, 1.0% Pakistan’s of Angola’s total importsexports from and Angola Pakistan’s on the othertotal handimports. are less than 1.0% of Angola’s total exports and Pakistan’s total imports. Pakistan Angola Trade Overview

Pak's Exports to Angola Pak's Imports from Angola Trade Balance

$45 $40 $39 $40 $34 $34 Millions $35 $30 $25 $25 $23

$20 $16 $15 $15 $14 $13 $15 $12 $10 $10 $10 $10 $10 $5 $5 $6 $6 $5 $1.5 $0.6 $0.0 $0.1 $0.4 $0.0 $1.0 $1.3 $0.6 $0.4 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pakistan’sPakistan’s Exports Exports to Angola: to Angola:

TheThe bulk bulk of Pakistan’sof Pakistan’s exports exports in 2014 in to 2014 Angola to co Angolansisted ofconsisted fruit and vegetableof fruit and juices, vegetable sugar and juices, sugar sugar confectionary,and sugar confectionary, and cereals such and as rice cereals and pasta. such The as rice tables and below pasta. shows The Pakistan’s tables below top 10 showsexports Pakistan’sto Angolatop 10 between exports 2005 to Angola and 2014 between at HS 2 Level 2005 and and top 2014 20 exports at HS at2 LevelHS 6 digit and level. top 20 exports at HS 6 digit level. Table 7: Pakistan's Exports to Angola at HS 2 digit level 2005Table 7:2006 Pakistan’s 2007 Exports2008 to Angola2009 at 2010 HS 2 digit2011 level2012 2013 2014 HS Code Description USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS TOTAL All products Description10.2 5.3 USD6.1 USD 14.7USD USD10.2 USD13.3 USD16.3 USD 24.8USD USD34.3 USD39.8 Code Vegetable, M M M M M M M M M M fruit, nut, etc TOTALfoodAll products 10.2 5.3 6.1 14.7 10.2 13.3 16.3 24.8 34.3 39.8 '20 preparationsVegetable, fruit,0.0 nut, etc 0.1 0.3 1.5 1.0 2.9 7.7 9.2 16.8 17.4 '20 0.0 0.1 0.3 1.5 1.0 2.9 7.7 9.2 16.8 17.4 Sugars andfood preparations sugarSugars and sugar '17 0.7 0.7 0.5 1.1 0.4 0.3 0.2 2.1 4.0 6.2 '17 confectioneryconfectionery 0.7 0.7 0.5 1.1 0.4 0.3 0.2 2.1 4.0 6.2 Beverages, Beverages, spirits and '22 0.0 0.0 0.0 0.8 2.9 0.0 0.0 0.6 0.4 5.0 spirits andvinegar '22 vinegar 0.0 0.0 0.0 0.8 2.9 0.0 0.0 0.6 0.4 5.0 '10 Cereals 2.9 1.3 0.2 1.1 2.2 8.7 5.4 8.4 7.0 3.7 Other made textile '63 articles, sets, worn 3.3 2.0 4.2 7.1 2.6 0.4 1.4 2.1 2.3 2.6 clothing etc Wadding, felt, '56 nonwovens, yarns, twine, 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.036 1.5 cordage, etc

Cereal, flour, starch, '19 milk preparations and 0.0 0.0 0.4 0.1 0.1 0.1 0.3 0.5 0.6 0.9 products

Republic of Angola 49 Table 7: Pakistan’s Exports to Angola at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code M M M M M M M M M M Edible fruit, nuts, peel of '08 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.7 citrus fruit, melons Paper and paperboard, '48 articles of pulp, paper 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.8 0.5 and board '30 Pharmaceutical products 0.0 0.2 0.1 0.0 0.0 0.1 0.3 0.1 0.1 0.3

Pakistan’s top 20 exports to Angola between 2005 and 2014 at HS 6 digit level are given below:

Table 8: Pakistan’s Exports to Angola at HS 6 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code M M M M M M M M M M TOTAL All products 10.2 5.3 6.1 14.7 10.2 13.3 16.3 24.8 34.3 39.8 Juice of fruit or vegetables, unfermented, '200989 whether or not 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 5.8 6.6 containing added sugar or other Orange juice&nes,unfermented '200919 0.0 0.0 0.0 1.1 0.5 1.4 1.4 1.8 4.5 6.6 not spirited,whether or not sugared or sweet Chewing gum containing '170410 0.6 0.3 0.2 0.7 0.4 0.01 0.0 1.9 3.5 5.8 sugar, except medicinal Rice, semi-milled or '100630 wholly milled, whether 2.9 1.3 0.1 1.1 2.2 2.2 5.3 7.4 5.9 3.6 or not polished or glazed Undenaturd ethyl alcohol '220710 of an alcohol strgth by 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 3.6 vol of 80% vol/higher Apple juice, unfermented, Brix value '200979 0.0 0.0 0.0 0.0 0.0 0.1 0.0 3.2 4.2 2.1 > 20 at 20°C, whether or not cont Knotted netting of twine/cordage/rope,and '560819 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 others made up nets of m-m tex mat Worn clothing and other '630900 0.0 0.0 0.01 0.05 0.1 0.2 0.4 0.5 1.0 1.3 worn articles Ethyl alcohol and other '220720 spirits, denatured, of any 0.0 0.0 0.0 0.8 2.9 0.0 0.0 0.0 0.1 1.1 strength Mixtures of juices unfermented ¬ '200990 0.0 0.0 0.03 0.1 0.1 0.02 0.2 0.2 1.3 1.1 spirited whether or not sugared o sweet Potatoes prepared or '200520 preserved,o/t by vinegar 0.0 0.0 0.0 0.0 0.01 0.02 0.2 0.8 0.9 1.0 or acetic acid,not frozen Guavas, mangoes and '080450 mangosteens, fresh or 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 dried

50 Republic of Angola Table 8: Pakistan’s Exports to Angola at HS 6 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code M M M M M M M M M M Tents, of other textile '630629 0.0 0.0 0.7 2.0 0.7 0.0 0.2 1.1 0.9 0.6 materials Paper and paperboard, surface-coloured, '481159 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.8 0.4 surface-decorated or printed, Uncooked pasta, not '190219 stuffed or otherwise 0.0 0.0 0.0 0.0 0.0 0.0 0.03 0.2 0.1 0.3 prepared, nes Dressings&similar articles,impreg or coated '300590 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.02 0.0 0.3 or packaged for md use,nes Sugar confectionery nes (includg white '170490 0.1 0.3 0.3 0.4 0.04 0.3 0.2 0.3 0.4 0.3 chocolate),not containing cocoa Waters incl mineral & aeratd,containing sugar '220210 0.0 0.0 0.0 0.0 0.01 0.0 0.04 0.3 0.3 0.3 o sweetening matter o flavoured '190532 Waffles and wafers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 Communion wafers,empty cachets '190590 0.0 0.02 0.1 0.1 0.0 0.03 0.2 0.1 0.3 0.2 f pharm use&sim prod&bakers' wares nes

Pakistan’s Imports from Angola: Pakistan’s imports from Angola in 2014 mainly consisted of iron and steel and articles of iron and steel. The tables below show Pakistan’s imports from Angola between 2005 and 2014 at HS 2 digit Level and HS 6 digit level.

Table 9: Pakistan’s Imports from Angola at HS 2 digit level9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 TOTAL All products 570 32 98 364 48 1545 962 1311 584 422 '72 Iron and steel 6 0 0 334 18 40 302 1289 584 420 '73 Articles of iron or steel 0 1 0 0 0 0 0 0 0 1 Printed books, '49 0 0 0 17 18 0 0 0 0 1 newspapers, pictures etc

Pakistan’s imports from Angola composed entirely of products made from iron or steel. Only 6 products at HS 6 digit level were imported from Angola by Pakistan.

9Due to the small volume of Pakistan’s imports from Angola the data has been given in thousands of dollars rather than millions of dollars used in most trade data tables. Republic of Angola 51 Table 10: Pakistan’s Imports from Angola HS 6 Digit Level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 TOTAL All products 570 32 98 364 48 1545 962 1311 584 422 Ferrous waste and scrap, '720449 6 0 0 334 0 0 0 0 0 196 iron or steel, nes Waste and scrap, of '720430 0 0 0 0 0 0 302 1288 584 136 tinned iron or steel Ferrous waste & scrap,iron or steel,from '720441 0 0 0 0 0 40 0 0 0 76 the mechanical working of metal,nes Wire of iron or non-alloy '721790 0 0 0 0 0 0 0 0 0 11 steel, nes Stranded wire,ropes&cables of iron '731210 0 0 0 0 0 0 0 0 0 1 or steel,not electrically insulated Books, brochures, leaflets '490199 and similar printed 0 0 0 17 18 0 0 0 0 1 matter, nes

Diplomatic Presence in Pakistan: Angola does not have any diplomatic representation in Pakistan and vice a versa.

52 Republic of Angola Pakistan Angola Trade Potential: Potential trade method indicates the fullest possible extent of trade that can take place between two countries, given their current export and import patterns. It is calculated by subtracting Pakistan’s exports (imports) to Angola from the minimum of Pakistan exports (imports) and Angola’s imports (exports) at HS 6 digit level. Given the infeasibility of trade in petroleum oil between Pakistan and Angola, potential trade figures are calculated by excluding such products. Total potential trade between Pakistan and Angola based on 2014’s trade patterns was $3.12 billion, however it should be kept in mind that the method only calculates the potential, it does not account for distances and differences in consumer preferences in markets.

Export Potential: Pakistan can potentially export $2.9 billion worth of goods to Angola, excluding petroleum products. High potential export products to Angola include rice, sugar, wheat, medicaments, medical instruments and appliances, items of apparel, structures & parts of structures and cement. The top 20 potential exports to Angola at HS 6 level are shown in the table below:

Table 11: Pakistan’s Potential Exports to Angola (excluding petroleum products oil) at HS 6 digit level Angola’s Pak’s Pak’s Imports Exports Exports to Export HS from Description to Angola the World Potential Code World 2014 2014 USD M 2014 USD M USD M USD M Rice, semi-milled or wholly milled, whether or not '100630 3.57 222 1,895 219 polished or glazed Refined cane or beet sugar, solid, without '170199 0.03 203 289 203 flavouring or colouring matter '110100 Wheat or meslin flour 0 211 195 195 '300490 Medicaments nes, in dosage 0 166 87 87 Instruments and appliances used in medical or '901890 0.14 70 320 70 veterinary sciences, nes Mens/boys trousers and shorts, of cotton, not '620342 0.06 62 665 62 knitted Structures&parts of structures,i/s (ex prefab bldgs '730890 0 248 50 50 of headg no.9406) '252329 Portland cement nes 0 50 502 50 Articles of bedding/furnishing, nes, stuffed or '940490 0 40 85 40 internally fitted Sugar confectionery nes (including white '170490 0.33 36 49 36 chocolate),not containing cocoa '610910 T-shirts, singlets and other vests, of cotton, knitted 0.02 29 195 28 Milk not concentrated & unsweetened exceeding '040120 0 28 37 28 1% not exceeding 6% fat Undenaturd ethyl alcohol of an alcohol strgth by '220710 3.56 28 246 24 vol of 80% vol/higher Guts, bladders and stomachs of animals except '050400 0 24 34 24 fish whole or in pieces Footwear, outer soles of rubber/plastics uppers of '640399 0 24 78 24 leather, nes Plain weave cotton fabric,>/=85%, >100 g/m2 to '520852 0 24 40 24 200 g/m2, printed '841182 Gas turbines nes of a power exceeding 5000 KW 0 54 23 23

Republic of Angola 53 Table 11: Pakistan’s Potential Exports to Angola (excluding petroleum products oil) at HS 6 digit level Angola’s Pak’s Pak’s Imports Exports Exports to Export HS from Description to Angola the World Potential Code World 2014 2014 USD M 2014 USD M USD M USD M '190531 Sweet biscuits 0 54 21 21 '870190 Wheeled tractors nes 0.01 20 26 26 '610342 Mens/boys trousers and shorts, of cotton, knitted 0 20 70 70

Import Potential: Pakistan can potentially import $177 million worth of goods from Angola, excluding petroleum products. Waste and scrap of iron, steel, aluminum, or copper, gas turbines, logs, and boring and sinking machinery are among the top potential imports.

Table 12: Pakistan’s Potential Imports from Angola (excluding petroleum products) at HS 6 digit level Pak’s Pak’s Angola’s Imports Imports Import HS Exports to Description from from the Potential Code World Angola World USD M USD M USD M USD M '720449 Ferrous waste and scrap, iron or steel, nes 0.2 53 560 53 '760200 Waste and scrap, aluminum 0.0 10 55 10 '841182 Gas turbines nes of a power exceeding 5000 KW 0.0 10 28 10 Drill pipe, seamless, of a kind used in drilling for '730423 0.0 8 68 8 oil or gas, of ir '740400 Waste and scrap, copper or copper alloy 0.0 20 7 7 '760120 Aluminum unwrought, alloyed 0.0 6 19 6 '440399 Logs, non-coniferous nes 0.0 5 7 5 Parts of boring or sinking machinery, whether or '843143 0.0 4 61 4 not self-propelled '441890 Builder's joinery and carpentry of wood nes 0.0 4 4 4 Carboys, bottles, flasks, jars, pots, phials and '701090 0.0 4 9 4 other containers, of '843041 Boring or sinking machinery nes, self-propelled 0.0 5 3 3 '440349 Logs, tropical hardwoods nes 0.0 2 5 2 '732690 Articles, iron or steel, nes 0.0 2 33 2 Surveyg,hydrographic,oceanographic,meteorolog '901580 0.0 2 43 2 ic/geophysical inst nes Cargo vessels nes&oth vessels for the transport of '890190 0.0 5 2 2 both persons&goods Cont-action elevators/conveyors for goods/mat '842839 0.0 2 5 2 nes '730210 Rails, iron or steel 0.0 2 3 2 '848180 Taps, cocks, valves and similar appliances, nes 0.0 2 69 2 '720410 Waste and scrap, cast iron 0.0 2 1 1 Machines & mechanical appliances nes having '847989 0.0 1 54 1 individual functions

54 Republic of Angola SECTION VIII India Angola Trade Patterns

Republic of Angola 55 56 Republic of Angola Table 12: Pakistan’s Potential Imports from Angola (excluding petroleum products) at HS 6 digit level Pak's Imports Angola's Exports Pak's Imports from Import from Angola to World the World Potential HS Code Description USD M USD M USD M USD M

'720410 Waste and scrap, cast iron 0.0 2 1 1

Machines & mechanical appliances nes having '847989 individual functions 0.0 1 54 1

India Angola Trade Patterns India Angola Trade Patterns India was one of the top ten trading partners of Angola in 2014. India’s proportion of bilateral trade with IndiaAngola was was one 7% of of the Angola’s top ten total trading bilateral partners trade wit hof the Angola World. inSince 2014. 2007, India’s India’s proportion trade balance of with bilateral tradeAngola with has Angola been in wasthe negative. 7% of Angola’s total bilateral trade with the World. Since 2007, India’s trade balance with Angola has been in the negative.

India's Exports to Angola India's Imports from Angola Trade Balance

$10 $8.0 $8 $6.8

Billions $6.0 $5.6 $6 $4.8 $4 $3.4 $0.003 $0.2 $0.9 $1.3 $2 $0.6 $0.6 $0.5 $0.5 $0.6 $0.6 $0.1 $0.1 $0.2$0.01 $0.2 $0.3 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -$2 -$0.7 -$1.0 -$4 -$2.8 -$4.2 -$6 -$5.5 -$5.0 -$6.2 -$8 -$7.5 -$10

Angola’sAngola’s top top exportsexports to to India India consist consist of oil, of pearl oil, pearlss & precious & precious stones, iron stones, and steel,iron aluminumand steel, and aluminum andcopper copper articles. articles. Angola’s Angola’s top exports top exportsto India as to H SIndia Level as2 are HS given Level below: 2 are given below:

Table 13: India’s ImportsTable from13: India’s Angola Imports from at Angola HS 2at digitHS 2 digit level level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Code Product label USD M USD M 2005 USD2006 M USD2007 M 2008USD M 2009USD M2010 USD2011 M 2012USD M 2013USD M2014 USD M HS Mineral fuels, oils,Description USD USD USD USD USD USD USD USD USD USD Code distillation M M M M M M M M M M '27 products, etc 0 180 916 1,280 3,390 4,821 5,945 7,951 6,730 5,463 Mineral fuels, oils, '27Pearls, precious 0 180 916 1,280 3,390 4,821 5,945 7,951 6,730 5,463 stones, metals,distillation products, etc '71 coins,Pearls, etc precious0 stones, 0 0 0 0 0 0 0 0 106 '71 0 0 0 0 0 0 0 0 0 106 metals, coins, etc '72 Iron and steel 2 2 2 5 3 12 50 53 43 49 '72AluminumIron and and steel 2 2 2 5 3 12 50 53 43 49 '76 articles thereofAluminum and0.17 articles 0.67 1.1 0.39 0.28 2.3 5.0 8.2 12.9 12 '76 0.17 0.67 1.1 0.39 0.28 2.3 5.0 8.2 12.9 12 thereof Copper and articles '74 0.15 0.20 0.67 0.57 1.10 2.1 2.3 2.9 5.3 3.3 thereof 43 Electrical, electronic '85 0 0 0 0 0.06 0.38 0.70 2.3 6.1 2.9 equipment Salt, sulphur, earth, '25 stone, plaster, lime and 0 0 0 0 0.21 0.68 0.82 0.62 0.55 1.98 cement '73 Articles of iron or steel 0 0.05 0 0.04 0 0.03 0.30 0.26 0.02 1.75 '78 Lead and articles thereof 0.001 0.04 0.07 0.07 0.02 0.30 0 1.01 0.22 0.71 Optical, photo, technical, '90 0 0 0 0 0 0.005 0 0 0 0.40 medical, etc apparatus

India’s top exports to Angola in 2014 were vehicles, followed by meat and pharmaceutical products. Cereals, beverages, plastic and cotton were also among India’s top exports to

Republic of Angola 57 Angola. The table below lists the top Indian exports to Angola in 2014 at HS 2 Level:

Table 14: India’s Exports to Angola at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code M M M M M M M M M M TOTAL All products 103 196 234 330 586 597 536 535 560 610 Vehicles other than '87 4 12 17 55 75 53 96 156 125 183 railway, tramway Meat and edible meat '02 47 59 77 76 51 51 58 85 105 109 offal '30 Pharmaceutical products 16 21 20 25 31 28 47 53 65 65 '10 Cereals 0.2 0.0 0.4 0.4 0.1 0.2 3 11 22 36 Beverages, spirits and '22 4 4 7 8 16 30 47 40 45 35 vinegar Plastics and articles '39 2 2 5 4 5 6 14 21 23 30 thereof Cereal, flour, starch, '19 milk preparations and 2 2 3 7 10 6 17 15 26 23 products '52 Cotton 5 4 3 6 9 8 11 21 24 23 Machinery, nuclear '84 4 3 4 9 15 10 6 29 16 14 reactors, boilers, etc Electrical, electronic '85 2 0.1 0.5 1 20 9 21 32 21 9 equipment

Angola and India Ties: India and Angola have traditionally enjoyed friendly relations dating back to pre-independence era of Angola but India’s trade with and investments in Angola increased significantly after Angola’s civil war ended. Angola is the second most important source of oil for India in Africa.

The first major government-to-government initiative between the two countries started in 2005 when India extended $40 million in credit to Angola for the rehabilitation of CFM (Railway Company of Mocamedes) Railway.

Angola is the 4th largest producer of diamonds in the world while 90% of world´s rough diamonds are processed, cut and polished in India. Apart from cooperation in the oil, gas and diamond sector, India has expressed an interest in participating in national reconstruction and infrastructure programs in Angola.

India has extended different credit lines to Angola which have been utilized for the Railway Rehabilitation Project and supply of agricultural equipment and Indian tractors. Loan of $30 million for the construction of an industrial park and a loan of $15 million for setting up of a cotton ginning and spinning plant were also approved in 2010. In 2012, EXIM bank of India extended a fresh line of credit to Angola for the supply of Indian tractors, implements and related spares.

58 Republic of Angola SECTION IX China Angola Trade Patterns

Republic of Angola 59 60 Republic of Angola Angola China Trade Patterns Angola China Trade Patterns ChinaChina is Angola’s is Angola’s most significant most significant trading partner trading accounting partner for 41.4% accounting of Angola’s total for internationa 41.4% ofl Angola’s total trade.international China’s trade trade. with China’sAngola has trade increased with stea Angoladily and has significantly increased over steadily the last 10and years. significantly The bulk over of this trade consists of China’s imports of Angola’s petroleum oil. the last 10 years. The bulk of this trade consists of China’s imports of Angola’s petroleum oil.

China's Exports to Angola China's Imports from Angola Trade Balance

$40 $34 $32 $31 $30

Billions $25 $22 $23 $20 $13 $15 $11 $10 $7 $6.0 $2.9 $2.4 $2.8 $4.0 $4.0 $0.4 $0.9 $1.2 $2.0 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -$10 -$6.2 -$10.0 -$11.7 -$12.3 -$20 -$19.4 -$20.8 -$22.1 -$30 -$25.1 -$29.5 -$28.0 -$40

China’s imports from Angola consist almost entirely of mineral fuels. Pearls & precious stones, salt, sulphur, earth, stone, plaster, lime & cement, wood and wooden articles form a relatively small proportion of China’s imports from Angola. The table listing China’s imports China’s imports from Angola consist almost entirely of mineral fuels. Pearls & precious stones, salt, from Angola in 2014 at HS 2 digit level are given below: sulphur, earth, stone, plaster, lime & cement, wood and wooden articles form a relatively small proportion of China’s imports from Angola. The table listing China’s imports from Angola in 2014 at HS 2 digit level are given below:Table 15: China’s Imports from Angola at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD TableUSD 15: China’sUSD Imports USD from AngolaUSD at HSUSD 2 digit levelUSD USD USD USD Code HS 2005 2006 2007M M2008 M 2009 M 2010M M2011 M 2012 M 2013M M2014 Code Product label USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M TOTAL All products 6,582 10,933 12,889 22,383 14,676 22,815 24,922 33,562 31,973 31,106 TOTAL All products Mineral6,582 fuels, 10,933 oils, 12,889 22,383 14,676 22,815 24,922 33,562 31,973 31,106 '27 6,576 10,931 12,880 22,359 14,618 22,796 24,810 33,431 31,907 31,060 Mineral fuels, distillation products, etc oils, distillation '27 products, etc Pearls,6,576 precious 10,931 stones, 12,880 22,359 14,618 22,796 24,810 33,431 31,907 31,060 '71 6 2 9 23 52 9 99 100 50 30 Pearls, precious metals, coins, etc stones, metals, Salt, sulphur, earth, '71 coins, etc 6 2 9 23 52 9 99 100 50 30 '25 stone, plaster, lime and 0 0.13 0.11 0.42 6.3 9 11 23 13 8 Salt, sulphur, cement earth, stone, plaster, lime and Wood and articles of '44 0.09 0 0.34 0 0.002 0.81 0.64 6 1 7 '25 cement wood,0 wood charcoal 0.13 0.11 0.42 6.3 9 11 23 13 8 Wood and articles Plastics and articles '39 0 0 0.01 0 0 0 0.002 0.001 0.001 0.053 of wood, wood thereof '44 charcoal 0.09 0 0.34 0 0.002 0.81 0.64 6 1 7

China’s exports to Angola consisted of vehicles, furniture lighting, signs, prefabricated 46 buildings, electrical and electronic equipment, machinery, and iron & steel among other

products.

Republic of Angola 61 The table below lists the top 10 Chinese exports to Angola at HS 2 digit level:

Table 16: China’s Exports to Angola at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Description USD USD USD USD USD USD USD USD USD USD Code M M M M M M M M M M TOTAL All products 373 894 1,235 2,942 2,386 2,004 2,784 4,039 3,964 5,975 Vehicles other than '87 70 172 240 573 321 215 242 465 475 751 railway, tramway Furniture, lighting, signs, '94 8 19 32 90 77 68 101 259 217 734 prefabricated buildings Electrical, electronic '85 58 177 200 415 338 334 467 539 535 728 equipment Machinery, nuclear '84 44 140 169 485 329 222 274 500 416 605 reactors, boilers, etc '72 Iron and steel 12 63 47 253 153 114 180 263 273 339 Plastics and articles '39 9 19 33 73 60 52 95 193 165 247 thereof '73 Articles of iron or steel 18 67 105 327 298 144 296 267 241 245 '69 Ceramic products 3 6 11 27 36 53 77 108 100 221 Footwear, gaiters and the '64 18 24 33 47 63 98 93 97 148 217 like, parts thereof Articles of apparel, '61 accessories, knit or 3 4 14 25 21 47 25 82 119 195 crochet

Angola China Ties: China and Angola’s economic and political ties developed during the 1980s with the signing of their first trade agreement in 1984 and the establishment of a Joint Economic and Trade Commission in 1988. In terms of volume, Angola is China’s second largest trading partner in Africa after South Africa. Since Angola is China’s largest source of oil in Africa, oil is at the crux of the relationship between the two countries.

China provides low-interest loans to Angola in return for favorable rights to develop oil and mining projects. The credit line extended by China to Angola has enabled Angola to build up its infrastructure. Angola’s oil industry has developed through direct Chinese investment in Angola’s oil sector. Chinese credit lines for infrastructure are closely linked to China’s interest in the Angolan oil sector since they are guaranteed by oil supply contracts.

The Chinese Exim Bank has been a key instrument in facilitating the expanding economic cooperation between China and Angola. Between 2004 and 2010, China’s Exim Bank extended a total of $10.5 billion in oil-backed credit lines to the Angolan Government. These loans were targeted specifically towards facilitating public investment in Angola. According to the terms of the loans, Chinese companies were largely contracted to undertake required projects and were paid directly by the China Exim Bank, which writes down the contract amount against oil sales made to the Chinese government. Generally the loans charge an interest rate of 1.5 percent over LIBOR and are repayable over 17 years, including a grace period of five years.

62 Republic of Angola SECTION X Major Industries of Angola

Republic of Angola 63

Major Industries of Angola

Before independence in 1975, Angola possessed a diversified economy with strong agricultural and manufacturing bases. The civil war caused major upheavals and the economy as a result became entirely dependent on oil, diamonds and other minerals. Angola’s involvement in the global oil value chain has been limited with only underwater umbilicals, risers and flowlines made locally. Other key activities performed at local level include systems, equipment, pipes and valves installation, construction and services and drilling services, however most activities in the oil field value chain are global. Currently, Angola produces 1.8 million barrels of crude oil a day and refines about 39 000 barrels per day against total domestic demand for 85 000 barrels each day

Oil As Africa’s second largest producer, in 2013 Angola’s oil production was 1.8 million barrels per day. It is expected to rise to 2 million barrels per day in 2016 with a new field having being discovered and developed. However, Angola’s oil industry is influenced by its top markets of China and the USA. If economic growth in China and United States slows down, it could have a significant adverse effect on Angola’s oil industry. The country exports 90% of its oil production. Angola’s estimated reserves of oil are over 13 billion barrels.

Angola is taking steps to reduce its dependence on its oil sector. The state is also urging oil companies to strengthen links to the rest of the economy, which currently employs just 1% of Angolan workers.

Diamonds Angola has extensive diamond reserves in its center and north-east regions. Diamonds are Angola’s second most important source of foreign revenue after oil. A mining law was enacted in November 2012 which cut taxes on revenues to 25% from 35%, leading to significant investment from companies including diamond producer De Beers and Sumitomo Corp, which is also developing an ammonia and urea plant. Diamonds account for 1% of Angola’s GDP which is Africa’s number two producer in quantity, after Botswana. It is also the world’s fourth largest producer of rough diamonds.

Agriculture In 2014, agriculture accounted for 9% of Angola’s GDP and 70% of its total employment. Angola has an abundance of high quality soil and good water supply which makes farming a viable industry for Angola. Most people in Angola however practice subsistence farming as their main source of livelihood.

In 2013, farm output grew 8.6% mostly through strong growth in cereal production. Angola was once the world’s fourth biggest coffee producer, but agriculture is held back by limited competition and processing facilities and a lack of co-operation among small farmers. Land mines left over from the war remain a serious threat to farmers and many areas are left unfarmed because of mines.

Republic of Angola 65 Other Sectors: Manufacturing’s annual growth which rose from 6.5% in 2012 to 8% in 2013 was driven by wood, cement and electric materials production. Angola also has sugar, beef and fish processing factories. Although tourism to Angola is growing, there is however a severe shortage of hotels and other types of accommodation, which leads to high prices for visits and stays in Luanda, the capital city.

Financial Sector Angola has seen significant growth in its financial sector with the banking sector assets growing from $3 billion in 2003 to an estimated $60 billion in 2013. However Angola’s financial sector is highly concentrated with the growth stemming almost exclusively from the banking sector. While there are over 20 commercial banks operating in Angola, the top five banks account for 78% of total assets.

Banking coverage expanded from 22% in 2010 to 51% of the country’s area in 2012 though it is still concentrated in Luanda. The percentage of adults with access to formal banking services increased from 13.5% in 2011 to 22% in 2012 as the bank network expanded and publicity campaigns had an effect.

The leading banks enjoy close connections to the country’s elite. International banks seeking to enter the Angolan market struggle to compete with the well-connected domestic banks. Foreign banks are expected to establish joint ventures with domestic partners which further strengthens the control that the country’s dominant banks possess over the economy. Currently, the majority of foreign banks operating in the country are Portuguese subsidiaries.

The expansion of Angola’s banking sector, following the end of the civil war in 2002, is inherently linked to mounting income from oil. $450 billion of oil revenues entered the Angolan economy between 2002 and 2013. As a result of the latest decline in oil prices and the subsequent slowdown in the Angolan economy, the financial sector is currently facing liquidity and foreign exchange constraints.

The IMF’s 2012 Financial Stability Assessment Program highlighted significant weaknesses, notably constraints in banking supervision, the existence of structural and operational risks, inadequate bank corporate governance, high dollarization, and liquidity shifts linked to large oil sector transactions. Non-performing loans rose sharply from 2.5% in 2012 to 6.7% in 2013.

Despite the vulnerabilities faced by the Angolan financial system, particularly due to risky domestic environment with capacity constrains in banking supervision, high dollarization and inadequate bank corporate governance, the financial sector has broadly continued to expand.

The insurance sector and capital markets remain underdeveloped. While the insurance sector was liberalized in 1999, there are only about seven companies operating in the country. Their revenues derive mostly from the oil and gas sector.

66 Republic of Angola Funding for Infrastructure Projects

Infrastructure has made a net contribution of around 1% to Angola’s improved per capita growth performance in recent years, despite unreliable power supplies and poor roads. The World Bank’s research paper Angola’s Infrastructure: A Continental Perspective estimates that poor power and road infrastructure is responsible for a 0.2% reduction in growth. Raising Angola’s infrastructure endowment to that of the region’s middle-income countries (MICs) could boost Angola’s annual growth by about 2.9%. Angola recently expanded its generation capacity and launched a multibillion-dollar road rehabilitation program aimed at easing congestion at the Port of Luanda and improving the urban water system.

Angola presently spends around $4.3 billion per year on infrastructure, with $1.3 billion lost to inefficiencies. Angola’s spending on infrastructure is heavily skewed towards improving the transport sector. Angola’s infrastructure investment is predominantly funded by domestic fiscal resources. From among overseas investment, China plays the most significant source of external finance.

Sovereign Wealth Fund: The Fundo Soberano de Angola is a sovereign wealth fund (SWF) that was officially established in 2012 with an initial endowment of $5 billion. Its purpose is to generate long term and sustainable returns to promote Angola’s social and economic development. Its portfolio is intended to be diversified across a number of industries and asset classes including stocks, bonds, foreign currencies, real estate and infrastructure funds.

The SWF plans to allocate half of its initial $5 billion to investments in sectors including hospitality, infrastructure, agriculture and mining in the first two years. Therefore, there are plans under way to focus on three to five star hotels in sub-Saharan African capitals and other commercial centers. In addition to the hotel fund, an infrastructure fund is also being set up for projects concerning ports, airports and power plants.

In the long term, 7.5% of SWF’s endowments will be dedicated to the social development projects in areas of education, income generation, healthcare, energy and off-the-grid access to clean water.

Strategic Financial Oil Reserve Account for Infrastructure: The Strategic Financial Oil Reserve Account for Infrastructure is a fiscal stabilization fund that accrues the financial equivalent of 100,000 barrels of oil per day. The government budgets it revenues on a set figure for the oil price, but if the price of oil drops below the set price this fund can be used to offset the shortfall in the budget. However, if the price does not fall below the set price, the surplus goes into the sovereign wealth fund. This has been the case for most years.

World Bank and African Development Bank: In 2014, the World Bank offered $1 billion to Angola to rebuild infrastructure and develop its agriculture through its International Bank for Reconstruction and Development. The African Development Bank also approved a $1 billion loan for Angola to develop its electricity network.

Republic of Angola 67

SECTION XI Conclusion

Republic of Angola 69 70 Republic of Angola Conclusion:

Pakistan has not diversified from its traditional export markets whereas Pakistan’s neighbors, China and India have vibrant relationships with African countries. A case in point is Angola: Angola and Pakistan’s bilateral trade in 2014 was less than one percent of both the countries’ international trade, whereas India and China were among the top trading partners of Angola in 2014.

Bilateral Trade: Bilateral trade between Angola and Pakistan was $40 million while potential bilateral trade between two countries, excluding petroleum products, was estimated at $3.12 billion. Even accounting for differences in consumer tastes and the distance between the two countries, the potential trade figures are an indication of opportunities that lie therein. Top potential Pakistani exports to Angola consist of rice, sugar, wheat, medicaments, medical instruments and appliances, items of apparel, structures & parts of structures and cement with an export potential of $2.9 billion.

Pakistan can potentially import $177 million worth of goods from Angola (excluding petroleum products) which consist primarily of waste and scrap of iron, steel, aluminum, or copper, gas turbines, logs and boring and sinking machinery.

Investment: Angola is not only amongst the highest recipient of FDI on the African continent, it also has amongst the highest GDP growth rates. Investment opportunities exist in the energy generation sector, in the natural resources sector, particularly oil and diamonds, and in the agricultural sector.

However, there are high on-the ground costs involved in doing business in Angola. Though there is no formal discrimination against foreign investment, companies that are familiar with the red tape involved in setting up a business have an advantage over newcomers.

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Major Institutions World Investment Directory. Volume X Africa. 2008. United Nations Conference on Trade and Development. http://unctad.org/en/Docs/iteiit20075_en.pdf Major Foreign Multinational Corporations in Angola. AfriBiz. http://www.afribiz.info/ content/2010/major-foreign-transnational-corporations-in-angola/

Special Restrictions to Trade Angola. Office of the United States Trade Representative. https://ustr.gov/sites/default/files/ Angola_0.pdf Trade Alliances Overview of COMESA. COMESA. http://about.comesa.int/index.php?option=com_content&view =article&id=75&Itemid=106 Southern African Development Community. European Commission. http://ec.europa.eu/trade/ policy/countries-and-regions/regions/sadc/ General Country Eligibility Provisions. International Trade Administrations. http://trade.gov/ agoa/eligibility/ Angola. Office of the United States Trade Representative. https://ustr.gov/countries-regions/ africa/southern-africa/angola Southern African Development Community (SADC). European Commission. http://ec.europa. eu/trade/policy/countries-and-regions/regions/sadc/ Everything But Arms – Who Benefits? European Commission. http://trade.ec.europa.eu/doclib/ docs/2014/october/tradoc_152839.pdf The EPA between the EU and West Africa: Who benefits? Spotlight Report 2015 Policy Paper. Concord Europe. http://www.concordeurope.org/images/Spotlight_2015-TRADE-EPA- April_2015-EN.pdf EU Relations with Angola. http://eeas.europa.eu/angola/index_en.htm

Major Industries Angola Economy and Industry. Our Africa. http://www.our-africa.org/angola/economy- industry Angola| Extractive Industries. Natural Resource Governance Institute. http://www. resourcegovernance.org/countries/africa/angola/extractive-industries Angola Industry. Nations Encyclopedia. http://www.nationsencyclopedia.com/Africa/Angola- INDUSTRY.html Angola 2014. African Economic Outlook. http://www.africaneconomicoutlook.org/fileadmin/ uploads/aeo/2014/PDF/CN_Long_EN/Angola_ENG.pdf Other Links: TDAP participates in FILDA 2015. July 25, 2015. The News. http://www.thenews.com.pk/ print/52764-tdap-participates-in-filda-2015 Financial Sector: 74 Republic of Angola Angola: Financial Sector Profile. Making Finance Work for Africa. http://www.mfw4a.org/ angola/financial-sector-profile.html Angola’s Financial Sector: A Roundtable Report. June 2015. Chr. Michelsen Institute.http:// www.cmi.no/publications/file/5637-angolas-financial-sector-a-rountable-report.pdf Angola 2014. African Economic Outlook. http://www.africaneconomicoutlook.org/fileadmin/ uploads/aeo/2014/PDF/CN_Long_EN/Angola_ENG.pdf

Angolan Economy 2014 Article IV Consultation – Staff Report; Press Release; and Statement by the Executive Director for Angola. International Monetary Fund. September 2014. https://www.imf.org/ external/pubs/ft/scr/2014/cr14274.pdf

India Angola Ties Economic & Commercial. Embassy of India, Luanda – Angola. http://www.indembangola.org/ angolaeconomic_commercial.html India Angola Relations. January 2012. Ministry of External Affairs. Government of India. http://www.mea.gov.in/Portal/ForeignRelation/Angola-January-2012.pdf India & Angola: Multi-Faceted Energy Partnership. India Writes. http://www.indiawrites.org/ africa-insights/india-angola-multi-faceted-energy-partnership/

China Angola Ties Alves, A C. The Oil Factor in Sino– Angolan Relations at the Start of the 21st Century. China in Africa Project. Occasional Paper No 55. February 2010. South African Institute of International Affairs. http://www.voltairenet.org/IMG/pdf/Sino-Angolan_Relations.pdf Alessi, C, Xu, B. China in Africa. April 27, 2015. Council on Foreign Relations. http://www.cfr. org/china/china-africa/p9557 China and Angola Strategic partnership or marriage of convenience? Angola Brief. January 2011, Volume 1 No. 1. Chr. Michelsen Institute. http://www.cmi.no/publications/file/3938-china- and-angola-strategic-partnership-or-marriage.pdf China’s Involvement in Angola: Mutually beneficial commercial pragmatism? Centre for Chinese Studies. March 2009 – Issue 38. http://www.ccs.org.za/?p=1708 Zhao, S. The China-Angola Partnership: A Case Study of China’s Oil Relations in Africa. China Briefing. May 25, 2011. http://www.china-briefing.com/news/2011/05/25/the-china-angola- partnership-a-case-study-of-chinas-oil-relationships-with-african-nations.html

Government Funding for Infrastructure Wright, Chris. Inside Angola’s Sovereign Wealth Fund. September 5, 2014. Forbes. http:// www.forbes.com/sites/chriswright/2014/09/05/inside-angolas-sovereign-wealth-fund/ Hu, Bei. Angola Sovereign Wealth Fund Starts Hotel, Infrastructure Pools. April 23, 2014. Bloomberg. http://www.bloomberg.com/news/articles/2014-04-23/angola-sovereign-wealth-fund- starts-hotel-infrastructure-pools

World Bank offers Angola $1 billion to fund infrastructure, agriculture. May 26, 2014. Reuters Africa. http://af.reuters.com/article/angolaNews/idAFL6N0OC4NF20140526 Pushak, Nataliya, Foster, Vivien. Angola’s Infrastructure: A Continental Perspective. September 2011. World Bank. http://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-5813 Fundo Soberano de Angola. http://www.fundosoberano.ao/language/en/

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