Macroeconomic perspective for Angola

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1 Macroeconomic perspective for Angola Deutsch-Portugiesische Industrie- und Handelskammer Câmara de Comércio e Indústria Luso-Alemã Gustavo Lopes da Silva,Partner Lisbon, 15th November 2010

2 Content Page A. Roland Berger experience 3 B. Country macroeconomic perspectives 6 C. Recommendations for investing in Angola Roland Berger Strategy Consultants 2

3 3 A. Roland Berger experience

4 Source: Roland Berger analysis 4 Roland Berger Strategy Consultants is a truly global firm We provide strategic advice to the world's top decision makers Our profile Founded in 1967 in Germany by Roland Berger Presence in 4 continents Europe, America, Asia and Africa 41 offices in 29 countries, with approx. 2,000 employees 180 RB Partners currently serving approximately 1,000 international clients

5 Source: Roland Berger analysis 5 Roland Berger is deeply involved with the Angolan market, supporting key players in several industries INDUSTRY TOPICS > AVIATION > CEMENT > CONSTRUCTION > TOURISM > Market entry strategy > Building local partnerships > Business Valuation > Development strategy > OIL & GAS > Governance and organization

6 6 B. Country macroeconomic perspectives

7 Source: Angola Global; Press; Roland Berger analysis 7 Angola is located in sub-saharan Africa and has borders with Congo, Dem. Rep. Congo, Zambia and Namibia Angola key facts Congo Angola Namibia Botswana South Africa Dem. Rep. Congo Zambia Zimbabwe Mozambique Luanda 4,5 0,7 Benguela 0,1 Namibe 200 km 0,5 Uige Huambo 1,0 0,8 Lubango 0,7 Malange 1,2 Kuito 0,2 Luena Estimated city population [2009; M] > Capital: Luanda > Area: 1,25 million km 2 (3,5x Germany) > Population: 18,5 M > GDP 09 : $81,4 Bn > OPEC member since early 2007 > SADC member

8 Source: Economist Intelligence Unit; Roland Berger analysis 8 Angola has been experiencing tremendous economic growth, which is expected to continue going forward Angola historical GDP growth and forecasts [ ; % yoy] 20,6% 18,6% CAGR : 11,8% CAGR : 8,2% 21,1% historical Oil prices and production estimate Presidential elections > Real GDP is expected to reach $191,6 Bn in 2014, 1,3x current Portuguese GDP and 8,6% of current German GDP 11,7% 9,4% 6,2% 9,5% 7,8% 7,2% > World GDP CAGR is 2,9% -0,5% > Sub-saharan Africa GDP CAGR is 5,0%

9 Source: Angola Ministry of Finance; Economist Intelligence Unit; Roland Berger analysis 9 Despite a strong decrease in the dependence of Oil & Gas, Angola is still in the early stages of development GDP breakdown by industry / economic sector ($ Bn) Other Manufacturing Construction Services (telco, banking) Agriculture, forestry and fishing Commerce 45,2 5% 4% 9% 7% 17% 2% 81,4 1% 7% 8% 9% 12% 23% CAGR ,1% +40,9% +48,8% +21,7% +42,8% +34,7% Angola is still in the early stages of development > with construction doubling its weight in the GDP > with agriculture, forestry and fishing gaining significant share Oil & Gas 56% $25,2 Bn 40% $32,8 Bn ,2% > with tertiary services growing in line with overall economic growth having strong growth potential

10 Source: Angola Ministry of Finance; Economist Intelligence Unit; Roland Berger analysis 10 Angola ranks #18 in proven oil reserves oil production is expected to continue stable after an initial growth period Oil environment in Angola PROVEN OIL RESERVES (2010; Bn bbl) RANK OIL PRODUCTION ('000 bpd) OPEC member Saudi Arabia 262 Canada 175 Iran 138 Iraq 115 Kuwait 104 Algeria 12 Mexico 10 Angola 10 Azerbaijan 7 Norway 7 #1 #2 #3 #4 #5 #16 #17 #18 #19 # % %

11 Source: Economist Intelligence Unit; Roland Berger analysis 11 China, USA and Brasil are now key trading partners imports and exports are expected to grow ~ 15% annually until 2014 Characterization of key economic foreign flows IMPORTS (2008; % of total) EXPORTS (2008; % of total) FOREIGN DIRECT INVESTMENT (2009; $ Bn) Portugal China USA 17,1% 15,2% 11,0% China 32,9% USA 28,7% France 6,0% Current FDI stock represents 90,5% of GDP 7,8-1,2 6,7 Brazil 10,2% South Africa 4,5% Consumer goods 61,6% Capital goods Intermediate goods 27,3% 11,1% Crude oil 96,1% Diamonds 1,8% Others Inward flow Outward flow CAGR : 15,3% CAGR : 14,4% Inward FDI CAGR : 3,8% Note: Consumer goods are goods that are ready to be consumed (such as clothes and food); Capital goods are goods that are used as capital in the productive process (such as plant machinery); Intermediate goods are goods that still need to be transformed in order to become consumer goods (such as clinker) 2,1% Net FDI flow

12 Source: Economist Intelligence Unit; Roland Berger analysis 12 Construction and Oil & Gas companies from China and Brazil are already present in Angola Relationship with key foreign countries CREDIT LINE ($ Bn; 2009) KEY FOREIGN COMPANIES NON EXAUSTIVE China ) CONSTRUCTION AND BUILDING MATERIALS Brazil 1,8 Portugal 1,4 OIL & GAS Germany 0,5 SERVICES 1) Estimate

13 Source: Economist Intelligence Unit; Roland Berger analysis 13 Macroeconomic outlook is expected to be stable with a reduction of foreign debt with oil proceeds Evolution of key macroeconomic indicators EXCHANGE RATE (Kz:US$) CONSUMER PRICES INCREASE FOREIGN DEBT (% of GDP) % 13% SOUTH AFRICA 09 : 7,1% BOTSWANA 09 : 8,1% NAMIBIA 09 : 8,1% MOZAMBIQUE 09 : 3,3% 1) 13% 13% 12% 13% 18% 20% SOUTH AFRICA 09 : 25,7% BOTSWANA 09 : 14,2% NAMIBIA 09 : 8,8% MOZAMBIQUE 09 : 42,3% 17% 14% 12% 10% Recovery of oil prices will allow the BNA to re-establish the peg to the US$ 1) Government is responsible for the price policy in Mozambique Strong increases in consumer prices are expected, but at a fairly constant rythm Oil proceeds are expected to be in part used to decrease dependency on foreign debt

14 Source: Economist Intelligence Unit; Roland Berger analysis 14 The Government of Angola wants to have an active role in the economic development of the country Expected developments for the business environment in Angola PRIVATE ENTERPRISE AND COMPETITION > There has been an effort from the Angolan Government to channel oil funds to productive investment areas ( bpd) and foster private enterprise and competition examples are the planned Banco de Desenvolvimento de Angola (BDA) and Bolsa de Valores de Angola, Luanda's stock exchange SOCIAL INTERVENTION > Several programs will be launched to foster areas as diverse as agriculture and rural development, social housing ("Uma casa para todos" 1 million houses planned), urban recovery, infra-structures and the manufacturing industry FUNDING > Angola is trying to diversify funding sources, decreasing the importance of China and accessing credit from other sources, such as the Paris Club, Brazil, Russia and South Africa LABOR MARKET > There is a lack of skilled manual workers and local managers, a gap which is expected to remain or widen in the forthcoming years due to strong economic growth

15 15 C. Recommendations for investing in Angola

16 Source: Roland Berger analysis 16 Angola has a promising macroeconomic outlook but access to foreign investors can be a challenge Recommendations for companies investing in Angola 1 Invest together with local partners or advisors you can trust 2 Physical presence as a must 3 4 When doing business in Angola be an Angolan Attention to credit concession and expatriation of capital

17 17 THANK YOU Gustavo Lopes da Silva Partner Rua Castilho, andar Lisboa Phone Fax

ANGOLA OVERVIEW 15% 15% 15% OGE FMI 589$ 89$ 589$ 589$ 589$ 589$ OGe. OGe. OGe 100% FMI OGe 123% %

ANGOLA OVERVIEW 15% 15% 15% OGE FMI 589$ 89$ 589$ 589$ 589$ 589$ OGe. OGe. OGe 100% FMI OGe 123% % $ MI FMI 15 FMI 89.45 789.45 89.452 789.452 789.45 123% 123% 123% % 00% 00% 300% 300% 300 00% 23% % 15 15 7.5% 7.5%.5% 7.5% 7.5% 7.5% 7.1 9$ 7.1589 7.1589 7.1 123.250 123.250.250 89$ 89$ 10.545k 10.545k