Abstract
Angola' s political risk profile received an upgrade following the recent
smooth passing of the
parliamentary polls, but the nation is not out of
the woods yet. Difficult times lie ahead, with falling fiscal
revenues and
a presidential election in the pipeline. Short-term stability is relatively
assured, as reflected
in the country' s score of 70.8 out of 100.0 in our
proprietary short-term political risk ratings. However,
poverty and
inequality are still at large, and pose a risk to the longer-term outlook, as
indicated by the low
38.6 score in our long-term political risk ratings.
Indeed, Angola falls below Cote d' Ivoire (by 39.2%) and
Sudan (by 42.1%)
in our structural ratings.
Turning to the prevailing economic conditions,
we note that Angola is set to suffer in 2009 as lower oil
prices, reduced
private investment, and curtailed government spending conspire to reduce real
GDP
growth to a forecast 8.9% from an estimated 12.2% in 2008 . Following
the global financial crisis, we
have slashed our 2009 growth forecast from
a previous 13.4% published last quarter. This will have an
impact on all
strata of the economy, including the construction and infrastructure industry
value for which
we forecast negative real annual growth for 2009 of
-3.2%.
Developed infrastructure is severely lacking in Angola, although
significant opportunities do exist. A
quick gloss of the construction,
transport and electricity sectors attests to this:-
Angola has experienced
a post civil war reconstruction boom, aided by the spending of oil revenues
and
a US$2bn credit line from China (since increased to US$7bn). Large
credit lines have also been received
from Brazil, Portugal, Germany, Spain
and the EU. That said, a shortage of construction materials is
proving a
significant bottleneck to the process.
According to the African
Development Bank, 80% of transport infrastructure in Angola is not
operational. This number alone highlights the severity of the situation and
the problems that this creates
for the entire economy, rendering any areas
outside the main urban centres literally disconnected from
them. This also
raises the operational risks for construction companies in the country, which
may face
problems in a number of fields, from transporting materials to
physically conducting operations.
Although the country is one of the most
prolific in the world in terms of hydrocarbon resources, the
power sector
is yet to benefit. Only 12% of the population has access to electricity.
According to data by
the Energy Information Administration (EIA), the
country has an installed generating capacity of 800
megawatts (MW), close
to 70% of which comes from hydropower. The rest is from diesel-fuelled
generators. Some of the key international players with a hand in the Angolan
infrastructure sector include
BCEG, CEGELEC, CGOC, Odebrecht and
Prezioso.
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