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Angola Infrastructure Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: June 2009 Product Code: R302-6580 Description Angola's economy minister, Manuel Nunes, announced in mid-February that the country is expected toregister growth of over 3% in 2009. We have a more bearish attitude, noting that reduced oil exports anddeclining government spending will result in a forecast 0.8% contraction of the economy in 2009. Thiswill have an impact in all areas of the economy, including the construction and infrastructure industryvalue.In BMI’s Q309 Angola Infrastructure Report, we forecast that industry value real annual growth in 2009will be 2.3%. Growth will remain on the positive side, and BMI believes that there are opportunities inthe transport and downstream oil and gas sector. However, the growth rate for 2009 is a marked declinefrom the double digit numbers estimated the previous years. It should, however, be noted that forecastsare exceptionally difficult, as official data only goes up to 2003, making our historical data from 2004onwards an estimate. Real growth in fixed capital formation/capital investment colours our forecasts. Fuelled by rising oil windfalls, capital investment growth reached its peak in 2006. It continuedregistering double digit growth in 2007 and 2008. However, the decline in oil prices and the globalfinancial crisis simultaneously reduced oil revenues and investor risk appetite. This resulted in (expected)declines in the rate of growth of the total capital investment from an estimated 20% in 2008 to 2% in2009. The value of government capital investments, meanwhile, is expected to decline from an estimatedAOA401bn (US$5.4bn) in 2008 to AOA322bn (US$3.9bn) in 2009. Preparations for the Africa Cup of Nations football tournament in 2010 could prove to be a key thrust forthe infrastructure sector. Angola reportedly plans to spend US$1bn in preparation for hosting the 2010African Nations Cup football tournament. Among the top investments will be four new stadiums built byChina's Shanghai Urban Construction Group [SUCG]. Meanwhile, the national airport administrator,Empresa de Navegaçao Aerea (Enana), is investing US$400mn in the rehabilitation of all airports in thecountry. We are skeptical to what extent the full US$1bn can be absorbed by the sector in a period ofabout 10 months, given institutional deficiencies and the acute shortage of building materials. Nevertheless, though, it represents an upside to our forecasts. Linguistic ties and common heritage have attracted the largest Portugese and Brazilian infrastructureplayers to Angola. Portugal’s Mota Engil has been one of the oldest firms operating in Angola’sinfrastructure sector. In Q109, the company announced that was looking to expand its operations in thecountry. Brazil’s Odebrecht also has a very active presence in the country, and was responsible for theconstruction of the largest hydropower plant in the country, the 520MW Capanda hydropower plant. Portugal’s Edifer also established a presence in Angola three years ago, and is planning to expand itsoperations in the country. China’s presence in Angola will also play a pivotal role in the development of infrastructure as the Asiangiant pursues its strategy of oil-for-infrastructure in the continent. Some of China’s largest companies,including SUCG, Sinohydro and China Railways are actively involved in building Angola’sinfrastructure. Table of Contents
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