Advances in infrastructure are being matched by advances in international and accounting standards

HE ANGOLAN economy has been at the mercy of civil war since 1975 and the effects of this are widespread. Although agriculture was a driving force in the country’s economy prior to the conflict, providing the main livelihood for 85% of the population, today oil production and its supporting activities are keeping the country afloat.

The sector currently represents about 45% of GDP and over 90% of export revenues, and increased oil production should bring about 6% GDP growth in 2003. Consequently, Angola’s positive GDP growth rates are due primarily to the strength of its oil sector, which has very few linkages to other sectors of the economy.

Unemployment affects more than half the country and much of the country's food must still be imported. To fully take advantage of its rich natural resources - gold, diamonds, extensive forests, Atlantic fisheries, and large oil deposits - Angola will need to continue reforming government policies.

While the government has made progress in bringing inflation down, from 325% in 2000 to about 106% in 2002, substantial investments in post-conflict reconstruction have impeded the ability to fully implement International Monetary Fund reforms.

Regional economic imbalances remain a concern for the government. As Mr. Carlos Feijó, Angolan legal scholar and academic, says, “The economical factor is fundamental in the unity construction process of the nation. Development must have a national dimension. It must avoid inequalities among the diverse regions of the country and among the diverse populations.”

President dos Santos and his administration are aware that increased transparency is key in their reform efforts. The Angolan Audit Court, which has recently been granted increased autonomy, was created in order to address corruption and transparency issues within an appropriate legal framework.

Mr. Juliao António, President of the Audit Court, elaborates, “The fundamental objective of the Court is to control the application of public resources by all those who are employed in the public finance administration and those who are engaged in managing public funds. We have been operating for two years now and, although the training takes time, I would say that we are off to a good start.”

Increased transparency has also been taken seriously in the national petroleum company, Sonangol, which has taken measures to adopt international accounting standards.

MANUEL VICENTE President and CEO of Sonangol

Manuel Vicente, President and CEO of Sonangol, states, “For a long time, there were joint accounts between the state and Sonangol, but as Sonangol no longer makes payments in the name of the state, we have closed the joint accounts. We are also now respecting international accounting standards and in 2004, we shall formally enter IAS (International Accounting Standards).”

The United States has been helping in this reform process by providing technical assistance to the Angolan judicial system. U.S. Ambassador to Angola Christopher Dell also stresses the importance of recent initiatives on the part of the Angolan government to secure a stable investment climate in the country and to ensure that all investors are treated alike.

“An economy shouldn’t work on the basis of a series of exceptions; you want it to be one set of rules for everybody to ensure predictability and stability in the business climate,” he remarks.

“The government understands this and they are attempting to streamline the procedures that are required to establish a business here.”

As well as ensuring that all foreign companies are treated equally, the new private investment law allows investors to transfer profits and dividends resulting from the sale of investments abroad, and simplifies and speeds up investment procedures. Mr. Ari Carvalho, Administrator with the National Private Investment Agency, says that ongoing government efforts to improve the business climate in Angola will be maintained.

“We are continuing to build an infrastructure for the investor so that when he arrives, there are fewer complications with visas, permits, etc. Basically, we are committed to getting the basics together on how to treat a potential investor in our country.”