Angola: an exigent country with enormous potential

Angola's boom period from 2005 to 2008 might be over but within two years the country's Gross Domestic Product (GDP) is expected to outpace the GDPs of its two main economic rivals. Doing business in Africa's third largest economy however, is not for the faint-hearted.

"Angola is one of the most promising countries in Africa. It is the region's second largest oil producer, exceeding Nigeria's oil output from time to time," said Edward George, senior economist at the Economist Intelligence Unit, during the Angola Business and Investment Summit, which took place in Cape Town on Thursday

"For the next few years we expect a GDP growth of 7.4%. That is more than what is anticipated in South Africa and Nigeria," George added.

"The country furthermore has a large growing young population, harbours diamonds and gold, and has an abundance of fertile land and water resources. The potential is enormous."

Companies who are not keen to take risks however should avoid Angola, which in 2007 saw a GDP growth exceeding 20% and was one of the quickest countries to recover from the global economic crisis.

"Angola is an incredibly challenging country," George pointed out. "The visa and work permit system is complicated and time consuming. Obtaining a visa is difficult among other things because you have to apply for your permit upon arrival. You can't do it outside the country, at an embassy. You therefore stand the chance of being rejected at the gate."

Finding accommodation is challenging too, George pointed out. "It's hard to get a hotel booking and if you manage to get one, don't be surprised if the room upon arrival has been given to someone else. Renting is an option, but is very expensive. A simple flat in Luanda will cost you around R60,000 ($8,500) per month. Long term leases often require you to pay the rent upfront for one or two years."

The legal and banking systems are slow and inefficient, George added, pointing out that success to a large extent depends on one's connections.

Additionally, there is the impact of the civil war, which lasted 27 years and ended almost nine years ago. "The infrastructure has suffered tremendously and Angola is the number one country with regards to the number of companies with their own electricity generators. Power supply is too erratic."

Nevertheless, Angola has a lot of potential, George underlined. "Take untapped sectors like telecommunication, the exploitation of minerals such as gold, and agriculture for instance. South African companies who are considering taking the plunge: political ties haven't been this good in decades, so there is an opportunity."