Business & Industry

Nov 1, 2016

REDUCE OIL DEPENDENCY

The heavy and sudden fall in oil prices occurred in late 2014 and aggravated in 2015 and 2016 put many countries in the world into a very difficult economic and social situation. In the whole world, more than 100 countries produce crude oil, the majority in small quantities and just for internal consumption.

Only ten larger producers, concretely Saudi Arabia, Russia, United States of America, China, Canada, Iraq, United Arab Emirates, Mexico, Iran and Kuwait, represent 64%, or two thirds of global production. However, other countries rely on the revenue of the oil exports for investing in infrastructures and social programs such as education, healthcare, social inclusion and for reducing poverty and hunger.

Mentioning only two countries in each Continent, we can indicate Angola and Nigeria in Africa, Brazil and Colombia in America, and Kazakhstan and Indonesia in Asia, as examples of countries that during the last decade have benefited of great advances in terms of ameliorating the quality of life of the population but, with the fall of the price of oil, they are now facing financial difficulties to maintain those programs, as well as  situations of  reduction or, in some, of recession, besides watching the inflation reignition.

Even still being the first African exporter of oil, Angola is a good example of a country that went from high growth rates to a slower path, forced to invert a long and positive cycle until 2013, being obliged to use internal mechanisms for compensate the fall of the value of exports and to maintain a positive, but lower, growth rhythm.  

Having accumulated exchange reserves during the good times and using the issuance of Public Internal Debt sustained by local banks, the State has succeeded to minimize the negative impacts of the drop in the exports, either through maintaining public investment, even lower, or launching new incentive schemes to private national and international investors, oriented for launching an active policy for diversifying the economy.

The essential point of this orientation is included into the Government Program "Angola Investe" that supports financially medium and small companies that have structural, credible and viable projects in agriculture, fishing, mining, manufactures, construction materials, tourism and other services, according with predefined parameters related to feasibility, dimension and job creation. Eligible projects are awarded with public guarantee of 70% and an interest subsidy and other incentives, as priority in the access to foreign currency for importing machinery and materials. Up to now, about 500 new projects have been approved, representing an investment of about 400 million Dollars, having Manufacture a share of 42%, followed by Agriculture with 35% and Tourism and other Services with 13%. About 20 Angolan banks have adhered to "Angola Investe", participating with prior evaluation of projects and support to corporate promotion and consolidation with the intention of diversifying the economy for increasing the domestic production and for compensating the reduction of the income from oil exports. Among those banks is "Banco SOL", one of the more dynamic Angolan banks, who gave growing attention to stimulate private entrepreneurs with projects that are priority for strategy sectors as Manufacture and Tourism, due to the increasing economic importance of those sectors and its capacity to create jobs - a national priority.

At Industrial level, "Banco SOL" is giving more attention to structural projects inserted into innovative "clusters" at the level of the national economy, trying to identify viable projects of competitive substitution of the import of final products that may easily be "made in Angola"; exported to neighbour countries, and to supply the domestic market.

At Tourism level, "Banco SOL" has recently celebrated a strategic protocol with the Ministry of Tourism for financing new projects of touristic interest promoted by medium and small companies and private entrepreneurs in any Angolan region. In fact, Angola has a great potential for developing Tourism, as spans along more than 2,000 km of coast in the South Atlantic, meaning that has tropical areas in the North, in the Province of Cabinda, near the equator, until desert areas in the South, in the Province of Namibe, at the border with Namibia.

In the last few years, Angola has received an annual average of about 500,000 foreign visitors, being only half the number tem years before. Today Angola has about 200 hotels of several categories and about 100 touristic lodges, with about 14,000 rooms.

The World Bank classify Angola among the emerging countries in terms of Tourism, because it already shows positive results in terms of quality and competiveness. Besides, being expected that about 70 million tourists will visit Africa in 2020, with a large majority going to Southern Africa, Angola shall benefit for being a member State in the region and being a neighbour of Namibia. Therefore, it needs to increase and to ameliorate the capacity to receive more tourists with more quality. That's the main reason why Banco SOL has elected Tourism as a strategic sector, wishing to give adequate support to investments in such an important sector.

Always attentive to new investments, Your VIP Partner Magazine, highlights the beauty and natural resources of Angola. For competing with neighbor countries Angola needs better infrastructures and to improve the network of hotels and lodges, and keep to reinforce social integration and the equality of life of less favored classes.  It is called so the attention of dynamic investors to the great potential of the trends of the Industrial Development and Tourism in Southern Africa, particularly in Angola. Despite the difficulties that the oil producing countries go through, Angola continues attracting private investment in many sectors that are today a priority for the diversification of the economy.

Investors already active in Angola consider that this is very attractive destination for new investments, despite normal initial difficulties that are normally solved with the help of specialized consultants or banks with a deep knowledge of this challenging country.


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