Angola usually makes economic headlines on the back of its substantial oil industry, but the south-west African country is in the midst of an ongoing diversification programme that is having mixed results (albeit erring on the positive side).

For one, the Angolan economy is forecast to grow by 3% in 2023 following the acceleration of the country’s non-oil sector. In fact, over the next five years, non-oil growth in the country will average 4.6%, while oil sector growth is expected to average 1%. 

This positive direction is linked to presidential reforms (which have helped bring new foreign investors into the country), as well as the country’s largest-ever privatisation campaign (known as Propiv) that, since launching in 2019, has raised more than $1bn (Kz832.95bn). Propiv’s recent extension means that it will run for another three years. 

Another bright spot in Angola’s diversification effort is the 4,717-hectare Luanda-Bengo Special Economic Zone (ZEE), which is currently home to 7,712 workers. Founded more than a decade ago and located in the capital Luanda, it is the country’s biggest dedicated area for industrial projects, although it also boasts a commercial hub, housing projects, and other services and non-industrial investments. ZEE is in the process of a major, and hitherto successful, transformation. 

Manuel Francisco Pedro, the new chairman of ZEE, took the time to speak to Investment Monitor about his vision for the site. Pedro previously served as a consultant for the World Bank and has had an extensive career at the Ministry of Finance of Angola, among other institutions. Today, he is working to further transition the ZEE from a commonplace industrial zone to a fully fledged free trade zone. The project has already attracted some $3bn in foreign investment since 2018.

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By GlobalData

Why is the ZEE being transformed?

We decided to transform the ZEE into a free-trade zone to maximise benefits for national and foreign investors at the ZEE. As a free trade zone, the ZEE will be endowed with a specific and subsidised tax regime. This will help the ZEE further cement its status as the central platform for business regionally and internationally. A change in status will also improve the ZEE's relations in the future common market, the African Continental Free Trade Area, which encompasses more than one billion potential consumers. Free trade zone status will also significantly increase the ZEE's international credibility and the confidence of potential investors. 

How does this work fit into Angola's national economic diversification?

The government has a long-term strategy to diversify away from the oil economy. This started with presidential reforms in 2018, such as the Private Investment Law, which was created to attract more investment to the country. The Angolan economy has proven to be very resilient. GDP growth in 2022 was around 3%. This was the second consecutive year of economic growth. Our hard recession from 2016 to 2021 was due to two major factors. Firstly, the sharp drop in the oil price on the international markets in the second half of the previous decade penalised the oil extraction industry, which remains the engine of the Angolan economy. Secondly, a crisis motivated by the after effects of the Covid-19 pandemic that had a worldwide impact.

We aim to increase domestic production, reduce imports, increase exports and generate more jobs for Angolan citizens. We want a more sustainable, inclusive, private sector-led economic model that is less dependent on oil revenues. As Angola’s largest industrial park, the ZEE’s core mission is to attract investment, help diversify the country's economy, promote national production and create jobs. 

What types of foreign direct investment (FDI) has the ZEE already attracted and what types of companies are you targeting?

The ZEE has attracted FDI from countries such as China, Eritrea, India, Lebanon, Portugal and Turkey. Investors from these countries have set up industrial units in the ZEE and they manufacture products in diverse industrial sectors. In terms of target sectors, we are looking at companies primarily involved in agriculture and food processing, light and heavy manufacturing industries, digital technology and the pharmaceutical industry. The countries we are currently targeting are Algeria, Côte d'Ivoire, the Democratic Republic of Congo, Egypt, Ethiopia, India, Nigeria, Portugal, Republic of Congo, South Africa, Uganda, the UK, the United Arab Emirates and the US.

It is worth noting here that the top countries for FDI into Angola, between 2018 and March 2023, were the UAE (with $351.7m through 234 projects), the UK (with $283m through 234 projects), China (with $225m through 24 projects) and Germany (with $93.6m through four projects). 

How does the ZEE compare with other free trade zones in neighbouring countries?

The ZEE can facilitate the entire investment process, from production to the commercialisation of goods. Our goal is to be the best free trade zone in Africa. To this end, we have attractive business incentives and investment laws that support foreign investments. We also have a very competitive offering, such as the lowest operational costs in southern Africa, with a reliable electricity supply, potable water and world-class infrastructure. We are strategically located close to roads, railways, seaports and the new Angolan airport, which will open later this year. Plus, our 'Guiché de Apoio ao Investidor’ or ‘Investor Support Office’, simplifies doing business as it has all the necessary business administration procedures in one building, so you can easily sort out your taxes, banking or municipal accounts. 

What are the key features/sectors that make Angola an interesting prospect for FDI?

In Angola, the projects with the most FDI are related to mining, financial activity, telecommunications, construction, education and health, tourism, fishing, agriculture, trade and industry. In 2022, the largest contribution to the Angolan economy was agribusiness. The Angolan Government anticipates economic growth of 3.5% between 2023 and 2027, driven by economic diversification, especially agribusiness. The government plans to use some $3bn to position Angola among the main African agricultural producers.

This will not be hard, as the Angolan territory has around 58 million hectares of highly fertile, arable land, which allows for at least two annual harvests. There is ample space for installing agro-industrial units, especially for fruit, vegetables and livestock. 

In terms of energy production, the government has an ambitious infrastructure construction plan for the country. Our goal is 9.9GW of installed generation capacity and a 60% electrification rate by 2025. We are also betting on renewable energies, mini-hydro, natural gas for combined cycles and green hydrogen. 

With regards to the manufacturing industry, there is a strong focus on food processing. Other sectors in manufacturing include packaging, tractor assembly, automobile assembly and assembling telecommunication devices.

Meanwhile, our mining sector is renowned. Angola currently has 36 of the world’s most critical minerals, namely chromium, cobalt, copper, diamonds, gold, graphite, lead, lithium, neodymium, nickel and praseodymium (used in car batteries), with projects to be developed in the next five years.

Lastly, we also need companies to help us extend the existing mobile and fibre networks throughout the inhabited territory.

Could you elaborate on the state of the privatisation process?

Propriv covers all relevant sectors of Angola’s economy: finance, telecommunications, mining, agriculture and energy. Since 2019, the government has collected $1.1bn through the privatisation of 96 assets. Propriv has been extended for another five years.

By divesting companies and assets, a total of 2,747 jobs have already been secured, of which 1,462 are new and 1,285 previously existed. The government plans to privatise 73 assets in the 2023–26 period.

In 2023, the executive plans to privatise the country's largest telecommunications company, Unitel, and one of the main providers of connection services, such as TV Cabo. This is a great example of the government's intent to open this sector, diversify investments and continue a path of technological and digital modernisation of the Angolan economy.

In 2024, we want to finalise the privatisation of some renowned companies such as Sonangol, Endiama, Bodiva and TAAG through the stock exchange.