Angola, Africa’s largest crude oil producer after Nigeria, plans to use loan guarantees and investment to create thousands of companies and jobs, Minister of the Economy Abrahao Gourgel said.
Part of the $435 million plan called Angola Invests is to start or help 9,000 companies and generate 300,000 jobs to cut unemployment from a government-estimated 20 percent, Gourgel said in a May 10 interview in Luanda, the capital.
“We want to substitute national products for imports, promote exports and support entrepreneurship,” said Gourgel, who has held government posts since the early 1990s, including central bank governor. “We want to improve the employment rate, diversify the economy and increase national production.”
Angola is trying to support small and medium-sized businesses to diversify its economy away from crude oil, which accounts for about 40 percent of economic output and 70 percent of government revenue, according to the International Monetary Fund.
The country, rebuilding from a 27-year civil war that ended in 2002, wants to cut the red tape that has left it with a rank of 172 of 183 economies on the World Bank’s 2013 Ease of Doing Business Index and reduce unemployment that officials believe may spark unrest.
“The economic development of the country as a whole has bypassed a large proportion of the population,” Bath, U.K.- based risk consultancy Maplecroft wrote in a February report. “With 47.7 percent of the population under the age of 14, youth unemployment is likely to become an aggravating factor in social discontent, leading to protest in the longer term, with the potential for significant unrest.”
The government’s goal is to slow inflation to 8.9 percent by the end of the year from 9.11 percent in March while maintaining average annual growth at more than 7 percent for the next five years, Gourgel said. The $114 billion economy is forecast to expand 7.1 percent this year from 7.4 percent in 2012, according to the government and budget documents.
While Angola pumped 1.8 million barrels of oil a day in April, mostly from offshore fields operated by Total SA, Exxon Mobil Corp. and BP Plc, the capital-intensive industry accounts for only about 1 percent of jobs, according to the African Economic Outlook. Unemployment has averaged 27 percent since 2007, an Outlook report showed.
The project overseen by the Economy Ministry is targeting a $900 million boost to the economy, the minister said. It includes $100 million in loan guarantees for 70 percent of the value granted, and a $250 million capital-risk fund that gives the government temporary stakes in companies deemed to have “competitive advantages,” according to ministry documents.
Small and medium-sized businesses are eligible for loans at 5 percent interest and get tax breaks, according to the ministry. They’ll get access to credit from 20 of Angola’s 23 commercial banks. The program gives priority to investments in agriculture, mining, construction and services such as accountants, electricians and mechanics, government documents show.
“Angola Invests is a very good idea,” Luis Filipe Rodrigues Lelis, head of Corporate and Investment Banking at Banco Angolano de Investimentos SA, Angola’s largest bank by assets, said in an interview. “But being conservative, we had to tell many applicants to adjust to the reality of the economy.”
The government’s one-stop shop to set up a local business, called Guiche Unico da Empresa, is expanding across the country and reducing bureaucracy of approvals from different agencies. Retail and import-export companies are the most popular types, Guiche director Pedro Filipe said in an interview.
“Now a company can be created in three hours and we do about 450 a month,” Filipe said. “Five years ago we created 600 companies a year.”