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Angola Infrastructure Report Q2 2011
Business Monitor International, April 2011, Pages: 61
Business Monitor International's Angola Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Angola's infrastructure industry.
Angola’s construction industry has been one of the outperformers in Sub-Saharan Africa (SSA) in terms of real growth rates over recent years. However, this must be viewed in context; the country has a relatively small industry size in value terms and has benefited from a sudden injection of oil wealth. Growth should continue on an impressive trajectory, especially over the near term, with a slight slowdown in growth projected over the medium term.
Key factors driving our optimistic outlook are:
- Continued investment into reconstruction following the extensive civil war (1975-2002). Not only was infrastructure devastated, but hardly any new investment took place over those decades. The country is now facing a severe infrastructure deficit, with investment essential to realise economic growth potential.
- The oil and gas sector in Angola is catalysing investments in support infrastructure, not only in industrial construction, but also transport infrastructure and commercial projects. With the oil price currently peaking, we see little slowdown in the industry, and therefore continued associated investment into construction projects.
- Housing investment is taking centre stage and is a focus of government expenditure. A number of projects – for tens of thousands of homes across the country – have been announced, with most due to start construction over the nest 12-18 months.
Despite our optimism there are a few risks to our outlook. One concern is the lack of communication between the different areas of government. This has led to confusion and will inevitably delay project procurement, as well as making it significantly more complex. Indeed, the confusion between two sections of the government was blamed for outstanding construction bills, which are likely to have dented Angola’s reputation as an investment destination. The other issue, tied to this latter point, is that of financing. The country is keen to employ concessions to build and operate infrastructure, however raising financing for projects is likely to be difficult, and only possible with a substantial development bank or credit agency guarantee. Both these factors threaten the procurement of infrastructure projects and therefore present downside risks to our outlook
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