Angola began selling state-run lender Banco de Comercio e Industria to test investor appetite for some of the country’s biggest companies including oil giant Sonangol, said Economic Coordination Minister Manuel Nunes Junior.
The sale of the nation’s 13th-largest bank by assets is part of a push by Africa’s second-biggest oil producer to raise cash and jump-start a moribund economy. Angola’s biggest-ever privatization program has so far resulted in the sale of 39 companies out of a total 195 assets earmarked for disposal by the end of 2022.
“This is the first privatization in the financial sector and its outcome will be very important to understand all those that follow,” Nunes Junior said in a written response to questions. Potential candidates to buy BCI will be selected this month to take part in a tender to buy 100% of its shares in one single block through the Luanda stock market, he said.
The government will then attempt to sell stakes in banks including Banco BAI, the country’s biggest private lender by assets, and insurance company Empresa Nacional de Seguros de Angola, Nunes Junior said. The sale of stakes in state-run oil company Sonangol, diamond firm Endiama and national airline TAAG are slated for next year.
The government plans to sell as much as 30% of Sonangol, the economic engine of Angola’s oil-dependent economy. The stake is worth about $6.4 billion, according to Baltazar Miguel, a member of Sonangol’s board.
Nunes Junior, who’s in charge of reviving an economy that has been mired in recession for the past five years, expects a rebound in growth to help draw investors. Gross domestic product may expand about 1% this year on the back of higher oil prices and rising output from the non-oil sector, he said. Zero growth was forecast in the 2021 budget.“This economic growth forecast involves some risks,” said Nunes Junior, citing a possible decline in oil production due to Angola’s ageing oil fieldsand the negative impact of the Covid-19 pandemic on the sector. “Lack of rain in late 2020 and early 2021, which may negatively affect agricultural production, must be added to these risk factors.”President Joao Lourenco’s fight against corruption has led to a “new paradigm” that’s improving Angola’s image with investors, said Nunes Junior, 59, who holds a PhD in Public Finance from the University of York in the U.K. The changes that have been instigated will help build a real democratic state and a market-based economy that is able to diversify away from oil, he said.
“There’s a need to ensure that nobody is above the law,” said Nunes Junior. “We are aware that there is still a lot to do, but there is a Chinese proverb that says that a long journey begins with the first step. The first step has been taken and well taken.”
Angola ranks 142nd out of 180 countries in Berlin-based advocacy group Transparency International’s annual Corruption Perceptions Index.
The minister also said Angola’s $4.5-billion program with the International Monetary Fund has helped the country carry out important reforms and increase transparency. He didn’t comment on the likelihood of Angola requiring a new IMF program after the current plan expires at the end of this year.
“Regarding Angola’s future relationship with the IMF after the conclusion of this program, it’s a subject that we will deal with and deepen in due time,” he said.
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