Real Estate & Construction

Developing the Provinces: Angola

Angola’s nationwide need for infrastructure and local content has presaged initiatives to extend economic progress to its provinces.

Photo by Neene du’Fran on Unsplash

Angola, like many other emerging markets, is chasing an ideal. The ideal of more equitable and nationwide development as its economy diversifies. To date, the massive oil and gas sector has largely floated the economy, whereby the capital Luanda the commercial center has seen the lion’s share of urban development, leaving much of the country severely underdeveloped.

In fact, in many cases existing production in the regions goes to Luanda for nationwide distribution. The government now aims for individual regions to become more independently dynamic by developing the sectors most suitable to each, be it textiles enabled by cotton production, services, or tourism.

This should progressively spur local content and a consequent decline in import dependency. Yet, with basic amenities such as potable water still in short order, development is a lengthy process requiring both state backing and economic tailwinds. This merits a brief glance at…

…Some Numbers

Angola’s five-year recession finally caught a glimpse of blue sky in 2021 as GDP inched up 0.8 %. Growth is forecast at a steady 3% for the coming few years. One factor behind the rise was the lifting of COVID-19 restrictions, and the non-oil sector, notably agriculture and services, compensated for oil sector contraction.

The following year the government aimed spending at sectors such as education, housing, agriculture, and communication. Yet, the challenges run deep as roughly one third of Angola’s rising population lives in poverty, while braving unemployment and inflation.

November inflation printed at 15.2%, albeit down from October’s 16.7%. Encouragingly, November’s number was the lowest since January 2016.

Testbed Benguela

Walter Campos is the CEO of Benguela-based Vertical Construção, primarily engaged in construction and engineering. An exporter of the materials used in their projects, he notes that “much of the nation’s industrial matrix still needs to be created.”

Once the parameters are consolidated, he continues, “it will be easier for companies to be able to acquire key raw materials, such as iron and plastic.”

Other parameters for regional development include local content, including a qualified workforce. Campos notes that the firm is “building a university that promises to bring considerable value [that] will have a student body 2,500 [and] we want to complete the project in 2023.”

Liquid Solutions

Infrastructure investment is fundamental to Angola’s economic progress. The government certainly appreciates the benefits of a small fish used to catch a larger one.

In Benguela province, the main investment rival to Luanda, the government has bet on water and housing infrastructure. Managing the Catumbela River is essential to regional plans for farming and fishing to feed the growth of downstream local manufacturing.

To that goal may be added tourism, and ultimately the rise of a service sector as living conditions improve.

Brazilian engineering conglomerate Odebrecht has been active in the region for close to 20 years, having constructed the initial stage of the Emergency Stage of the Waters of Benguela Program. That was a clean water initiative for the cities of Benguela, Baía Farta, Catumbela, and Lobito benefiting 1.6 million Angolans.

Another project involving containment dikes regulates the flow of the Catumbela, Coporolo, and Cavaco rivers, mitigating the flash floods that regularly damage property and occurs between November and April.

A longer-term proposition is to realize the river tourism potential of Benguela. Given its investment potential, officials view Benguela as an exemplar of social development for other regions, such as the coastal province of Cuanza Sul, also known as Kwanza Sul, which is primarily agricultural, and mostly known for coffee, cotton, fruit, rice, and tobacco production.

On the Right Road

In December 2022, Standard Chartered bank revealed financing for Angola amounting to EUR238 million dedicated to improving agricultural and transport infrastructure. Supported by the Export Credit Agency (ECA) the financing spans two projects signed with the Angolan Ministry of Finance.

Animal Magic

The first project, worth EUR142 million, involves the construction of a new bio-veterinary center for the production and development of animal vaccines. It will be situated in Angola’s third-largest city of Huambo. This bio-veterinary vaccination center, a project of the Angolan Ministry of Agriculture & Fisheries, will underpin another geared at boosting agricultural productivity and reducing import dependency for bio-vaccines. The facility will develop vaccines to tackle pathogens specific to Africa.

Economic Driver

Meanwhile, EUR96 million is destined to renovate a section of the EN140 national road spanning Mussende and Cangandala. The 98-km road exemplifies government determination to extend socio-economic development to the provincial capitals, in this case, those of Malange and Sumbe. And while the citizen of the Kwanza-Sul province will enjoy improved access to healthcare, education, and other social services, efficient logistics should grease the wheels of commerce.