State company Gamek predicts the Capanda dam will reach its full energy-providing capacity of 500 megawatts by 2007

ESPITE Angola’s vast resources, decades of attacks on civilian installations and inflated military spending have left the country’s infrastructure in decay and the new government with the enormous task of reconstruction. Only 30% of the country has access to clean drinking water while telephone lines reach only 5 out of 1,000 people. No road repairs have been carried out since the 1970s. Lack of domestic investment during the war has led to urgent demands and great expectations of President dos Santos’ peacetime administration.

As part of its response, the government has established an agency to review investor applications and promote private investment. One of the main tasks of the National Private Investment Agency (ANIP) is the selective targeting of foreign investment that will facilitate economic and social development and the reconstruction of Angola.

Mr. Ari Carvalho, ANIP Administrator, elaborates, “Our objectives are to promote investment on a long-term basis in those areas that have suffered because of the war, where there is a low presence of industry and where development is needed.”
The agency’s task is greatly aided by the fact that Angola is potentially one of Africa’s richest sub-Saharan countries and offers investment opportunities in areas as diverse as the newly-liberalized financial sector and agribusiness.

Energy and Water
Two sectors ready for overhaul

The government of Angola has announced plans for a major rehabilitation of its power sector infrastructure. Significant portions of the country’s generation and transmission facilities were damaged during the civil war and consequently there is no distribution network outside the capital of Luanda.

Approximately 15% of the country has access to electricity, as the current capacity is 586 megawatts for 13 million inhabitants. In comparison, Illinois, a state with approximately the same population as Angola, has an energy capacity of almost 30,000 megawatts.

Although capacity is evenly split between thermal and hydroelectric units in the country, hydroelectric facilities generate more than two-thirds of Angola’s electricity.

However, of the country’s six hydroelectric stations, only three are currently functioning. The government has proposed a US$500 million investment over twenty years in the construction and restoration of power facilities, of which US$200 million would be spent on recovering the production capacity of the state-owned National Electric Company (ENE), through the rehabilitation of its hydropower stations.

Further plans include creating a national grid by linking the three current regional electricity grids and establishing linkages with neighboring countries. This project, coupled with the power plant rehabilitation, could provide the basis for Angola becoming a regional exporter of electricity.

Minister of Energy and Water, José Maria Botelho de Vasconcelos, states, “The scene constitutes a great challenge because the country has experienced a long war and the energy infrastructures were not saved from destruction.

“We are now in a reconstruction and restoration phase. We know that the solution to the energy problems in the country will only be possible by integrating public investments with private partners. At the moment, especially in energy and water sectors, Angola is a country of opportunity.”

However, the energy sector is closer to rejuvenation than statistics imply, due to the reconstruction of the Capanda dam. This will soon be supplying the country with a further 260 megawatts and is due to reach its full capacity of 500 megawatts by 2007.

State company Gamek has overseen construction on the dam since its conception in 1982 and General Manager José Sonnemberg Fernandes stresses the importance of rebuilding the energy sector.

“Even though Angola is a potentially rich country, it will not make progress if there is no development in the industrial sector. Industrial development cannot exist without electrical energy. When Capanda begins producing energy, the country’s industrial parks can really start to develop as they will have a constant power supply.”

The U.S. has also taken an active interest in the development of the energy sector as U.S. Ambassador to Angola, Christopher Dell, explains.

“In my view, energy should be the motor of economic development for Angola. The country has an abundance of energy resources, not just petroleum, but also natural gas, as well as a huge hydro potential. Therefore I have suggested that we assist by devising a national energy strategy to make the most effective use of the various resources.”

Another area facing the challenges of post-conflict restoration is the water supply. Mr. Lucrécio Costa, President of the Board of Directors for EPAL, the public water company in Luanda, says that extensive repair and investment is needed in both water processing and in distribution networks. However, Mr. Costa remains optimistic and also stresses Angola’s capacity as a regional provider.

“Angola is estimated to have an abundance of water for the next twenty to thirty years. I think that Angola’s development will be sustainable and it will need to provide services for its own population, and for its neighbors as well.”

Angola’s Ministry of Transport is focused on the modernization of ports, roads, airports, and railway networks

Transport
Improved connections are kickstarting commerce

Thirty years of war have imposed a heavy toll on Angola’s transport infrastructure. Destruction or lack of maintenance of roads, bridges, and railways, aggravated by the presence of land mines, has resulted in the isolation of large parts of Angola’s vast territory, which is approximately twice the size of Texas.

Consequently, the government has implemented an immediate short-term emergency infrastructure program and a broader 15-year development plan.

Minister of Transport, André Luis Brandao, comments, “The transportation sector for any country is always its backbone. In Angola, when we speak of transportation, we speak of two main areas: on the one hand, the immense deteriorated state that the war left infrastructures in, and on the other, the normal wear and tear that comes with time and usage.

“The government has already initiated an emergency program for rehabilitating the infrastructures, which will guarantee the circulation of people and goods throughout the country. However, we are also aware of the improvement and modernization needs of the main transport areas and will provide for them in the longer term: basically, new ports with capacity, the opening of airports for regional and international activity, and also the repair of the national railway system.”

Another effect of the transport infrastructure breakdown is the inability to distribute commodities within the country, which has contributed to making Angola highly dependent on imports.

An enhanced transport network would help in the creation of domestic industries. The establishment of proper links between provinces would also unleash the agricultural potential of the country as Mr. Ari Carvalho, Administrator with the National Private Investment Agency, points out.

“We are looking for what I call subsidiary investment – in food and cargo. For example, in Benguela they are throwing tomatoes away right now because they do not have the transport means to bring them to the city.”

Benguela, a city located on the south coast of Angola and the country’s second largest urban center, is home to the famous Benguela railway, originally constructed to transport ore from the Congo and Zaire in the early 20th century. Situated some 18 miles north of Benguela is the Port of Lobito. Considered in world navigational circles as one of the best ports on the African continent, its natural deep bay conditions and strategic location provide access to central and southern Africa and to both the Atlantic and Indian Oceans. The Port of Lobito is also thought to be the most efficient port in Angola.

Director General José Carlos Gomes hopes to one day see the Benguela railway extended to the Democratic Republic of the Congo, as the “imports and exports will really begin.” In preparation, Dr. Gomes has ensured that the Port of Lobito has the capacity and equipment to effectively deal with the increase in activity.

The Port of Lobito is considered to be one of the best ports on the African continent due to its strategic location providing access to both the Atlantic and Indian Oceans

“We have already installed infrastructure to correspond with every type of merchandise that may arrive in the future. Regardless of what we will import or export, we are ready. We have been preparing.”

The Port of Lobito ran at 15% capacity during the conflict years and is now up to nearly 50%. The continuing stability of the country’s political climate will most definitely allow the port to increase capacity further and become a regional transport hub. There are approximately 2000 stevedores working at the port, which is fully equipped with up-to-date IT, machinery, and storage facilities, in addition to a medical center.

UNITEL is one of Angola’s flagship companies within the growing telecommunications sector

Telecommunications
Liberalization has led to an increasing cell phone market

The telecom sector in Angola is beginning to mobilize, especially in the nation’s capital, Luanda. Although land lines currently reach less than 1% of the population, an increasing number of inhabitants have access to cellular phones. This phenomenon has taken less than two years to achieve. Laws governing the liberalization of the sector were passed in 2002, bringing an end to the monopoly of state-owned national telephone company Angola Telecom and allowing the entrance of new operators, who are actively seeking foreign partnerships.

Four additional landline operators have now been licensed, in addition to the expansion of the cellular phone market. As Angola Telecom continues to dominate the landline market, these four new providers are tending to concentrate on niche markets, as is the case with Mercury, a company originally founded in 1999 to provide support for the state oil company, Sonangol. Granted a landline license in 2002, Mercury now intends to offer its expertise in petroleum platform markets to other oil companies in the country, while extending the range of services it has been providing to Sonangol.

Regulations governing the liberalization of the Angolan telecom sector are contained in the White Book, a plan drawn up by the government to outline the future of the sector. A government priority, reflected in the White Book’s liberalized market conditions, is the extension of telephony and related services to all the provinces.

As National Director of Telecommunications Aristides Safeca explains, “The White Book defines a mission for the sector; to take telecommunications to all areas of the country, while ensuring quality and good prices.” This focus on development is repeated by National Private Investment Agency Administrator, Ari Carvalho. “Angola started anew as of April last year with new laws, and it is a country with a lot of potential, people, and natural resources. It is also a country that needs nurturing, and for someone to come in, not for a quick return but to help develop the country,” he says.

The governing and primary licensing body for the new telecom sector is the National Institute of Communications (Inacom). Minister of Posts and Telecommunications Licínio Tavares Ribeiro states, “Inacom is the department that will control the market: establish rules, the prices, and the links between operators.”

The launching of a new GSM (global system for mobile communications) network in April 2002 also ended the state’s monopoly on cellular telecoms. Currently, there are two mobile phone providers: Angola Telecom and UNITEL.

Angola Telecom uses the older CDMA cellular system while new mobile operator, UNITEL, is GSM-based. Consequently, UNITEL, founded in 2001, now has 66% of the market share. Partially owned by Portugal Telecom, UNITEL currently has over 100,000 clients, and aims to increase this number to more than 500,000 within three years.

Assistant General Manager Amilcar F. Safeca elaborates, “We are focused in the area of mobile telecommunications, as we consider it to be the one that will have the largest growth in the next few years. There is no question that the cellular phone will play an important role in Angola as the fixed line situation is very complex. The cellular phone has more advantages so we believe it will be the main motor for telecommunications in Angola.”

Another new operator on the scene is Telesil/Nexus, which is focused on providing Internet services, and hopes to connect 12,000 lines within the next few years.
CEO Rui M. dos Santos says, “Our niche market is basically the combination of services not provided by Angola Telecom, or at least not provided with the same level of quality. This mainly includes Internet services, together with voice service.”

The Ministry of Posts and Telecommunications is working with new operators such as Mercury to provide support for state oil company Sonangol and other oil enterprises