Despite estimates from organizations such as the IMF and the United Nations Office on Drugs and Crime (UNODC), it is impossible to know exactly how much money is “legalised” every year. They put the sum between 2 and 5 per cent of the global GDP; if so, around $2.5tn was laundered in 2014, more than the GDP of the Russian Federation, India, Italy or Brazil. The tragedy for the world is that these vast sums come from some of the most insidious crimes: the trafficking of women and children, drug smuggling, illegal arms sales and the funding of terrorist organizations.
This is big business and it presents all of us in the frontier and emerging markets in Africa, in particular, with a difficult reality. Illegal transactions or financial discrepancies can take place anywhere in the world. There is, however, a lower risk of detection in African countries because our compliance programmes are often not as robust as they should be and in some cases simply ineffective. Read more
Six years after it was announced, Angola’s sovereign wealth fund is fully underway. It has received the final instalment of its $5bn initial endowment and has begun to take its funds out of cash and put them into longer-term investment.
In an interview with FT beyondbrics, José Filomeno Dos Santos (pictured), chairman of the Fundo Soberano de Angola (FSDEA), said that one third of the fund’s assets would be allocated to highly liquid securities such as cash, bonds and listed equities, one third into alternative investments in sub-Saharan Africa, and one third into what he called “opportunistic investments internationally: distressed assets that the fund could take advantage of, spin around and refocus.” Read more
The number of middle class households in 11 key sub-Saharan African countries – excluding South Africa – are set to triple to 22m by 2030, creating a burgeoning consumer market for items such as vehicles, insurance policies, property and health products, according to a Standard Bank research report.
Simon Freemantle, senior political economist at Standard Bank and author of the report, said the prospective boom in middle class households – those earning between US$8,500 and US$42,000 a year – is also likely to be complemented by a swelling in the number of lower middle class households that earn between US$5,500 and US$8,500 annually. Read more
By Jean-Claude Bastos de Morais
Small and medium-sized enterprises are the real engine of growth. In developed markets they form the backbone of industry, driving innovation and employing millions. The UK’s Department for Business, Innovation and Skills, for example, reported that there were 4.9m private businesses at the start of 2013, employing 24.3m people. All mature markets depend on small businesses to create jobs and drive innovation.
Emerging markets must follow suit if they are to stimulate enterprise and build a robust economy. This is why countries such as Angola need to ensure that the banking sector is not only liberalised and competitive but also prepared to create wider access to capital for SMEs. Read more
Following a decade in which Chinese largesse has helped to transform Africa’s prospects – and challenged the supremacy that western companies once enjoyed over the continent’s natural resources – Beijing has sent word to Washington that the world’s two biggest economies might combine their efforts to generate some much-needed electricity in one of the poorest.
The Democratic Republic of Congo, an expanse the size of western Europe that perennially ranks among the worst countries in which to do business, has known little but conflict and penury for decades. World Bank-backed plans to build a third dam at Inga are part of a broader vision for a dam complex capable of generating 40,000MW – twice the size of the Three Gorges dam in China. Read more
After a deal-making spree in Africa in 2013 that included investments in Ghana, Cote d’Ivoire and Kenya, private equity group Abraaj is on track for an equally active 2014.
Abraaj, which has $7.5bn in assets under management and is based in Dubai, expects to complete four transactions in the region by the end of the year, including in South Africa, Nigeria and Kenya, partner Sev Vettivetpillai told beyondbrics. Read more
Angola and Brazil have a lot in common: the Portuguese tongue, a delightful stretch of Atlantic coast and a reputation for beautiful people cavorting in beach-side bars. Brazil is Latin America’s powerhouse; Angola likes to think of itself, with some justification, as Africa’s emerging equivalent.
To oilmen and investors, however, the most intriguing thing the two nations share is a piece of geology that dates from the age of the dinosaurs, before the tectonic shifts that rent the landmass in which they were once conjoined. Read more
There is plenty of investment appetite for African stocks among institutional investors, and the continent’s financial markets are taking notice.
Nigeria, South Africa, Kenya and Angola have all recently pushed ahead with plans to deepen and improve their financial markets. But there is still a long way to go. Read more
Luanda: up go the costs
If you thought that London / HK / Mumbai / [enter your city here] was a bit on the expensive side, spare a thought for those in Luanda and Juba.
The capitals of Angola and South Sudan are the 1st and 3rd most pricey oil and gas towns in the world for expats, according to hydrocarbons news provider Rigzone. Sifting through the latest cost of living data produced by ECA and Mercer International, Rigzone reckons both capitals now beat Perth and Moscow, and are separated only by Norway’s Stavanger, when it comes to their power to lighten your wallet. Read more
Nigeria’s oil industry may be rich and vast, but it’s also messy, marred with oil thefts and other complications that hurt production. It also happens to be the biggest oil producer in Africa.
But not for long, industry experts say. The continent’s next largest oil producer Angola, which has less of Nigeria’s hassle, could upstage it as early as 2014. In May this year Angola produced more oil than Nigeria, a warning signal that it now on track for the continent’s top spot as the biggest oil producer if Nigeria fails to shake up the industry. Read more
2012 was a great year for frontier-market hard-currency bonds, and Angola hopes to get in on the action in 2013. The oil producer announced on Friday plans to raise $1bn from a debut eurobond issue later this year. Read more
Californian oil major Chevron has given the go-ahead to a $5.6bn development project of an Angolan offshore oil field which will be the company’s second largest investment in African crude to date after its Agbami field in Nigeria.
The Mafumeira Sul project, run through Chevron’s subsidiary Cabinda Gulf Oil Company, is scheduled to begin production in 2015, and will eventually pump 110,000 barrels of crude oil per day from five new platforms, Chevron said. Read more
When it comes to trade, sub-Sarahan Africa is highly exposed to the eurozone, isn’t it? You would think so, given the warnings from the IMF to that effect.
But park your assumptions for one minute. Yes, any eurozone slowdown hurts African trade. But not by as much as a slowdown from other parts of the world, and the eurozone dependency is falling. Read more
Forget sovereign debt for a moment. This is turning into the year of sovereign wealth, with Angola becoming the latest African country to create a fund to invest some of the proceeds of growing oil riches.
The sovereign wealth fund – known as Fundo Soberano de Angola (FSDEA) – will start with $5bn in assets, and look to invest primarily in sub-Saharan Africa. Angola joins Nigeria and Tanzania in launching or planning to launch a SWF in 2012. Read more
With emerging market debt markets booming, is now time for African nations to join in? If Zambia’s recent bond is anything to go by, the answer would be a firm ‘yes’ – as many analysts are fond of pointing out, Zambia’s yield on its 10-year bond is lower than that of Spain.
So what’s stopping African countries jumping in and issing international bonds? Read more
After 33 years in power, José Eduardo dos Santos has finally been elected president of Angola. Observers universally expected him to win last Friday’s polls. Many even predicted the questionably wide margin of victory. Nevertheless, the election has changed the war-scarred southern African petro-state.
In the words of one long-serving Angola-watcher, “the fear barrier has been broken”. Neither the denunciations of a ruling party that has held power since independence in 1975, nor the thuggery of pro-regime militias, could deter the dissenting vanguard that has begun to challenge the status quo. Read more
Daewoo Shipbuilding & Marine Engineering, the world’s third-biggest shipbuilder by sales kicked off the week with a $1.9bn order to build five production platforms for an unidentified African-based customer.
This is almost a quarter of its revenue from offshore platform deals last year. The news of the contract, which ends in 2016, on Monday sent DSME’s share price up 1.8 per cent and left observers puzzling who might be the client. Read more
If you always want what you can’t have, that must be why so many investors have been desperate for a piece of Angola. The oil-rich economy was booming for much of the past decade, but it’s been near impossible for portfolio investors to get exposure.
So there was great anticipation when Angola began talking last year about issuing a debut eurobond – initially mooted at $4bn. This year a shocking arrears crisis seemed to kill off the ambitious plan, as well as the investor ardour. But it’s now coming back to life. Read more