‘Angola Not Safe for Business’

Catherine Sasman

9 June 2011

Foreign companies should perform strict due diligence before making business deals in Angola, and ensure that joint ventures are formed in accordance with international, anti-corruption and money laundering laws.

This was the personal view of Rafael Marques de Morais of the National Endowment for Democracy at a platform of the National Democratic Institute in Washington, DC on May 12.

De Morais advised that foreign countries like the United States should make anti-corruption and freedom of expression central to their foreign policy towards Angola, which he said would help to promote greater and diversified investments.

Telecom Namibia made a hasty retreat from its investment into Angola’s telecommunications outfit Mundo Sartel with millions lost in investment, while Telecom’s Managing Director acknowledged that the Angolan market is “difficult politically, culturally, regulatory and logistically”.

De Morais is of the view that Angola is returning to a “fully-fledged authoritarian state” with the adoption of the 2010 constitution which consolidates power in the Office of the President, which overrides the basic constitutional principle of separation of powers. Other legal initiatives narrowing the democratic space in Angola, he said, is the 2011 Private Investment Law that prevents the establishment of a vibrant and autonomous private sector, and a proposed law on cyber crime that seeks to crack down on free speech and social media.

“This legal pyramid sums up the dismal state of democracy in Angola and its political economy,” said de Morais. “The measures lie at the heart of what has become the most defining issue in the country: the high levels of untrammelled corruption at all levels of power.”

President Eduardo dos Santos has been in power since 1975, making him the third longest serving African ruler after Libya’s Muammar Gaddafi and Teodor Obiang of the Equatorial Guinea.

Presidential powers were consolidated during the civil war years of 1975 to 2002 with the excuse that it was to centralise war efforts.

Since 2002, power remained centralised within the presidency, purportedly to maintain political stability.

On the other side of the social divide, said de Morais, was a token political opposition and an irrelevant civil society.

Today, the Office of the Attorney General remains under the purview of the President who gives direct instructions to that office, and no case against the government or public officials can be investigated without the President’s permission.

De Morais said the draft law on cyber space prohibits online posting or sharing of photographs, recordings or videos without the consent of those in the content. This includes a limitation on blogging, Facebook postings, and online media.

It further prohibits the sending or forwarding messages with the intent to, among others, “disturb the peace and tranquility or the personal, familiar, or sexual life of another person”.

Punishment for transgressing the cyber law range between two to eight years in prison.

State media and government institutions are exempt from the cyber law.

De Morais said President dos Santos included these articles in the cyber law, which did not appear in the draft law, in response to the popular uprisings in north Africa.

Economically, Angola was rated as one of the fastest growing economies in the world with Gross Domestic Product (GDP) growth of 14,2 per cent during 2005 to 2009.

In 2010, Angolan private investment accounted for more than 50 per cent of a total of US$4 billion. But the majority of Angolans – 54,3 per cent – live below the poverty line of US$1,25 a day.

About 30 per cent of the urban population has formal jobs, while the majority rely on informal economic activities.

De Morais said the law on private investment sets a minimum of US$1 million to qualify for private investment and State incentives, be that from Angolans or foreigners. He said in effect State resources are transferred to political cronies, with big private businesses becoming indistinguishable from the State apparatus, while SMEs are unable to flourish. He further charged that high-ranking public officials and their family members control the formal private sector, while the banking sector is headed by political office bearers.

The Deputy Speaker of the National Assembly, Joana Lina Baptista, is the board chairperson of the Banco Sol. MPLA Member of Parliament Jùlio Besso is the board secretary of the Banco Sol. And the Minister of War Veterans, General Kundi Paihama, is the board chairperson of the Banco de Comée Negó(BANC).

In the oil sector, said de Morais, Angolan government officials directly set up joint ventures with multinational companies while foreign nations lobby the government to expand their businesses.

So, for example, said de Morais, Cobalt International Energy formalised participation in two deep water oil blocks as an operator, for which there was no bidding.

Cobalt holds 40 per cent interest in each block, while Sonangol – which is the exclusive concession holder for oil and gas in Angola – holds 20 per cent in these blocks.

De Morais claimed that Cobalt formed a consortium with two private “phony” Angolan oil companies, Nazaki Oil&Gas (30 per cent), and Alper Oil (10 per cent).

De Morais said for democracy and the rule of law to take root in Angola, its citizens should strive for a devolution of the State to the people.

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