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A united push for economic diversification

Article - April 7, 2014
Africa's second largest oil producer, Angola is encouraging the private sector to add variety to its economic base
From hydrocarbons to gemstones and sought-after minerals, Angola’s soils are steeped in natural wealth. The country has Nigeria’s title of the continent’s top oil producer in its sight; its diamond riches make it home to the fourth largest diamond mine in the world at Catoca; and Angola has barely scratched the surface of its mineral mining potential beyond iron ore. 
Oil production and its associated activities overwhelmingly dominate the economy, accounting for about 85% of the country’s GDP. High international oil prices have fuelled the nation’s economic growth for years. World Bank figures show that in 2002, Angola’s GDP was $11.4 billion; by the end of 2012 it had shot up to $114.2 billion. However, when the global economic slowdown in 2008 forced the price of oil to hit the skids, Angola’s overreliance on one industry and its susceptibility to external economic shocks were demonstrated. 
In 2013 GDP growth was around 6.5% and as oil continues to trade at over $100 a barrel, growth of between 7-8% is confidently expected in 2014. 
“The price of oil is a big threat so we need to diversify the economy to mitigate this,” says Antonio Andre Lopes, Vice-Governor of the Banco Nacional de Angola. 
The National Private Investment Agency (ANIP) is the one-stop government entity for all foreign investment issues and is a key contact for foreign investors. Established in 2003, ANIP is on hand to guide investors into Angola, explore targeted sectors – especially beyond petroleum – and help them tap the country’s potential.  
Agriculture, for example, is one area that is ripe for development. Before its independence in 1975, Angola was regarded as an agricultural powerhouse, known for its coffee and rubber production. However, the country spent more than $3.6 billion on imported food and drinks in the first nine months of last year alone. So, Angola wants to encourage local production, boost productivity in the sector, and reduce its dependence on food imports, as high food costs are one of the contributory factors to Luanda’s position as one of the most expensive cities in the world to live. 

“International collaborations permit the much needed transfer of technology, expertise and dialogue,
in addition to technical assistance”

Agriculture Minister, Afonso Pedro Canga
Foreign companies are being urged to take a closer look at the sector and examine the possibilities for partnerships with local firms. 
“International collaborations permit the much needed transfer of technology, expertise and dialogue, in addition to technical assistance in the agro sector,” says Minister of Agriculture and Rural Development, Afonso Pedro Canga. 
One of the leading agriculture companies in the country, Giasop is also backing the call for foreign involvement, particularly in the areas of technology and training. Essen-based Ferrostaal supplies Giasop’s factories with its dairy equipment, and management at the Angolan firm is keen to build links with other German companies to add to the technology already in place – as well as train Angolans on to how to operate and maintain the machinery. 
Established in 1994, Giasop is experienced in various aspects of the sector, and mainly focuses on fertiliser manufacture, juice production, dairy products and cattle breeding. It has plans to expand its maize, wheat and tomato activities in the future. 
Managing Director Tambwe Mukaz affirms that Giasop is “bringing technology and innovation to the sector, so that the country can produce more food and at lower costs.” He also highlights that Angola is blessed with fertile land, abundant water and a large workforce, and “the market for local food products is growing rapidly.”  
Increased industrial production as a result of greater economic diversification will put additional strain on Angola’s transportation network, which is still recovering from the 27-year civil war, as more products and materials will need to be taken to market, both at home and abroad. The country’s infrastructure is therefore also undergoing a transformation. 
“Transport and logistics are regarded, if not the backbone, the veins through which the connection of the entire country will be possible, as well as the mobility of people, goods and mail,” says Celso Rodrigues de Lemos, President of the Board of Directors at Caminho de Ferro Luanda (CFL). 
CFL operates the 424km railway line connecting Luanda with Malanje, as well as the 55km link between Dondo and Zenza do Itombe. 
“We want to do everything to start cargo transportation from Luanda to Malange and from Luanda to Ndalatando,” says Mr de Lemos. 

Improvements in Angola’s transportation and logistics networks are taking shape and gaining recognition
“The big challenge will be transporting fuel, gas, cement, bricks, as well as other goods, our people may need. Logistic hubs are being built right now in Malange to support local production. By railway, transportation will cost much cheaper for people and companies. We are planning to take advantage of our spaces (train stations) transforming them into shopping malls with shops, pharmacies, cafés, etc.” 
The government’s transport plan is for new railways, roads and airports to be built to enhance the country’s connectivity and to build logistics hubs to facilitate the flow of local production. “Today, Angola has modern railways, new airports,” adds Mr de Lemos, “and we have just purchased new locomotives, carriages and wagons.”
The advances being made in the sector are mirrored in the take-off of the state-owned flag carrier TAAG Angola Airlines. The company’s achievements in recent years reflect the country’s rapid transformation. TAAG has invested heavily in modernising its fleet with new aircraft, improving its maintenance schedules and upgrading its customer services.

It also has partnerships with Boeing, TAP, South African Airways and Ethiopian Airlines as part of its staff training programs. Punctuality has increased too: in 2009, around 90% of its flights suffered delays of 30 minutes or more. Two years later, TAAG’s efficiency drive had reduced that figure to 10%.
Having an ambassadorial role in carrying the image of Angola overseas, it was particularly proud to receive a third star from the international airline rating agency Skytrax last year, putting it on par with leading airlines such as Spain’s Iberia and Aer Lingus of Ireland. 
The renewal of TAAG’s affiliation with IATA, its positive results from its IATA Operational Safety Audit (IOSA) inspection, and the government’s ongoing investment in transport infrastructure have resulted in the African Airlines Association (AFRAA) handing its Aviation 2013 award to Angola and recognition of a sector, and country, in change.