DOING BUSINESS in LUSOPHONE AFRICA

Transcription

1 DOING BUSINESS in LUSOPHONE AFRICA February 2014 Business Development Africa (UBD Africa)

2 OVERVIEW Population 20 million Population 513 thousand Capital Praia (125 thousand) Languages Portuguese (official) and Creole Capital Luanda (5 million) Languages Portuguese (official), Umbundo, Kimbundo, Kicongo and others Land boundaries Republic of the Congo, Democratic Republic of the Congo, Zambia, Namibia Population 165 thousand Capital São Tomé (60 thousand) Languages Portuguese (official) Population 23,5 million Capital Maputo (1,6 million) Languages Portuguesa (official), Emakhuwa and others Land boundaries Malawi, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe Source: OECD, Economist Intelligence Unit, IMF UBD África 2

3 KEY INDICATORS (2013) Population (thousand) Area (thousand sq km) Population density (pop/sq km) GDP (PPP) (USD M) Angola Cabo Verde Mozambique São Tomé & Príncipe Africa GDP per capita (PPP) (USD) GDP real growth (average ) 11,1 5,0 7,5 5,1 5,3 Fonte: IMF, Banco de Portugal UBD África 3

4 RESOURCES Natural resources Agriculture (main crops and others) Angola Cabo Verde Mozambique Oil, Gas Diamonds Iron ore Gold Bauxite Banana Sugarcane Coffee Corn Cassava Cotton Livestock Salt Basalt Limestone Kaolin Fish Gesso Banana Corn Sweet potato Sugarcane Coffee Peanut Gas Coal Bauxite Hydropower Cotton Cashew Sugarcane Tea Tapioca Corn Sunflower Potato Livestock Poultry São Tomé & Príncipe Oil Fish Hydropower Cocoa Palm oil Cinnamon Chili Coffee Banana Beans Poultry UBD África 4

5 GDP BY SECTOR Cape Verde (USD 1,867 mn) Angola (USD 104,116 mn) Angola 7% 1% Oil 10% 30% Manufacturing Construction Services 11% 44% 70% 20% 57% Agriculture, Fisheries Diamonds 22% 13% Others 8% 7% São Tomé & Príncipe (USD 248 mn) Sectors Primary Secondary Tertiary Mozambique (USD 12,572 mn) Mozambique Agriculture Manufacturing 1% 21% 31% 20% 65% 15% 46% 32% Trade and resp. services Transp. and com. 8% Prop. rentals and busin. serv. Taxes Mining 5% 11% 22% Other 11% 12% Source: IMF, Banco de Portugal, BPI UBD África 5

6 SADC 290mn CONSUMERS POTENTIAL MARKET Southern African Development Community (SADC) Population in 2013 P (Mn) 77,0 SADC = 295mn 51,7 46,3 22,923,020,8 17,114,5 13,1 Common Market until 2015 Single Currency until 2018 DRC South Africa Tanzania Mozamb. Madagas. Angola Malawi Zambia Zimbab. 2,2 1,9 2,1 1,3 1,1 0,1 Namibia GDP current prices in 2013 P (USD bn) 353,9 Lesotho Botsw. Mauritius Suazil. SADC = USD 637 Bn Seychel. 124,0 31,9 22,218,6 15,514,712,311,910,510,5 3,7 3,8 2,5 1,3 South Africa 13,7 Angola Tanzania Zambia DRC Botsw. Mozamb. GDP current prices per capita in 2013 P (k USD) Namibia Mauritius Madagas. Zimbab. Malawi Suazil. Lesotho Seychel. 7,5 9,1 6,8 6,0 5,7 SADC = USD 2.3k / pc 3,5 1,5 1,3 0,8 0,6 0,7 0,5 0,2 0,2 Angola is the second largest economy, after South Africa. Seychel. Botsw. Mauritius South Africa Angola Namibia Source: and IMF World Economic Outlook Swazil. Zambia Lesotho Zimbab. Mozamb. Tanzania Madagas. Malawi DRC UBD África 6

7 GDP AND INFLATION Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 25 GDP real growth rate (%) Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 30 Inflation rate (%) Lusophone Africa countries have been posting positive real GDP growth rates throughout the past decade but a steep slowdown in global economic activity in late 2008 resulted in recession in case of Cabo Verde. Economic growth has resumed in 2010, in case of Angola at a slower but still strong rate. Inflation has been declining in recent years and prices are all growing at single digit pace Source: IMF (World Economic Outlook October 2013) UBD África 7

8 ECONOMIC GROWTH (PROJECTIONS) (1/2) Angola Cape Verde Mozambique Sub-Saharan Africa GDP real growth rate (%) Source: IMF (World Economic Outlook October 2013) Angola: economy will keep growing in the foreseeable future even though at more moderates rates if compared to period. Public investment, services, construction, manufacturing and Oil & Gas will support growth rates in the coming years. Cabo Verde: Investment in transportation and other tourism related facilities will help the archipelago return to average 5% a year growth rate in the coming years. Slow recovery in Europe, main source of tourists, still poses a threat to economic growth in Cabo Verde. Mozambique: Coal mining and Gas extraction will bolster the economy which expected to grow strongly in the coming years. Mineral resources potential present the best opportunity for strong and consistent economic growth and development for the country in a generation. UBD África 8

9 ECONOMIC GROWTH (PROJECTIONS) (2/2) São Tomé & Príncipe Sub-Saharan Africa GDP real growth rate (%) Source: IMF (World Economic Outlook October 2013) São Tomé: Oil production is already increasing investment in São Tomé and the economy is expected to take-off to new highs before 2018 on the back of Oil production that should start as soon as However after two majors (Chevron and Total) cut off their operation in São Tomé calling the investment not feasible, projected growth could be slower than projected by IMF and other institutions. Overall, the Sub-Saharan region of the continent is expected to post healthy growth rates in the years to come, maintaining the growth trend of its recent past. UBD África 9

10 EASE OF DOING BUSINESS EASE OF DOING BUSINESS OVER THE YEARS Ease of Doing Business Rank (1) Country Angola Cape Verde Mozambique São Tomé & P Source: Doing Business reports, World Bank 1) Addition of new countries, data correction and change of methodology may affect the results of previous year ranking, when this occurs the Ease Of Doing Business Ranking is corrected on the most recent year. NUMBER OF DOING BUSINESS REFORMS FROM DOING BUSINESS SUB-SAHARAN AFRICA Starting a business Dealing with Resolving insolvency 117 construction permits Enforcing contracts Getting electricity Trading across borders Registering property 126 Paying taxes 114 Protecting investors 113 Getting credit Source: Doing Business 2014 UBD África 10

11 IMPLEMENTATION DIFFICULTIES Problems related with the learning curve Lack of infrastructures Excessive bureaucracy High costs and setup difficulties Heavy weight of the informal economy Lack of qualified HR The implementation of projects in Lusophone Africa requires highly specialised advisory, aimed at minimising the investment costs and risks while reaping the maximum benefits of the existing opportunities UBD África 11

12 PRACTICAL CONSIDERATIONS Know the market Long term vision Partner Feasibility assessment Funding Local vs Parent company Local currency vs hard currency Investment budgeting Working capital Human resources UBD África 12

13 FINANCIAL SYSTEM Angola (1) Cabo Verde (2) Mozambique (3) São Tomé & Príncipe (4) Banks (#) Total Assets (MnUSD) (%GDP) (49%) (100%) (23%) 161 (38%) Deposits (Mn USD) Credit (MnUSD) Credit/Deposits 76% 73% 69% 82% ATMs (#) * 950* n.a. TPAs (#) * 9 147* n.a. Cards (#) * * n.a. Capital ratio 18% 13% 14% n.a. Source: Central Banks, BPI (1) Figures as of November 2013 (Banco Nacional de Angola) (2) Figures as of June 2013 (Banco de Cabo Verde) (3) Figures as of October 2013 (Banco de Moçambique) (4) Figures as of October 2013 (Banco Central de São Tome & Príncipe) * Figures as of December 2012 UBD África 13

14 THANK YOU

15 APPENDIX

16 GOVERNMENT REVENUES AND DEBT Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 60 Government Revenues excluding grants (% of GDP) Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 350 Government Debt (% of GDP) After alleviation from its international creditors, São Tomé & Principe has steadily reduced its Debt to similar levels of those of Cabo Verde. Angola s strong fiscal position backed by Oil sector taxation sets the country apart from its peer Lusophone countries. However, one should notice. Mozambique s recent economic growth which is helping the nation improve its overall fiscal outlook Source: IMF (Regional Economic Outlook Sub-Saharan Africa, October 2013) UBD África 16

17 EXPORTS AND TRADE BALANCE Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa Exports of Goods and Services (% of GDP) Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa Trade Balance (% of GDP) Source: IMF (Regional Economic Outlook Sub-Saharan Africa, October 2013) Being an Oil exporting country Angola historically stands on strong Trade Balance while its Lusophone peers historically run on negative Trade Balance. Down the line, it is expected a general improvement in exports from all four countries. Mozambique and São Tomé will soon join the team of Oil & Gas exporters while Cabo Verde is investing in infra-structure to increase revenues from tourism. UBD África 17

18 EXTERNAL CURRENT ACCOUNT AND GRANTS Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa Source: IMF (Regional Economic Outlook Sub-Saharan Africa, October 2013) External Current Account (% of GDP) Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa Official Grants (% of GDP) Angolan External Current Account has been positive recently bar 2009 when price and demand for Oil fell from 2008 peak driving down exports. Mozambique posted a trade surplus in 2011 but like Cabo Verde and São Tomé the country is historically a net importer. Grants are still an important source of funds for São Tomé and Mozambique while it has no effect in Angolan accounts and its weight on Cabo Verdean GDP is diminishing to historic lows. UBD África 18

19 EXTERNAL DEBT AND RESERVES Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 350 External Debt (% of GDP) Angola Cape Verde Mozambique São Tomé & Príncipe Sub-Saharan Africa 9 Reserves (months of imports of goods and services) Source: IMF (Regional Economic Outlook Sub-Saharan Africa, October 2013) Angolan External Debt is slightly lower than regional average while other Lusophone nations are above Sub-Saharan average (10.8% of GDP in 2013). Regarding Foreign exchange reserves, like most countries in SSA, Mozambique, Cabo Verde and São Tomé stand on a very marginal position despite recent improvements. Gas exports should boost Mozambican ability to accumulate foreign reserves in the coming years. UBD África 19

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21 DOING BUSINESS 2014 UBD África 21

22 DOING BUSINESS 2014 UBD África 22

23 DOING BUSINESS 2014 UBD África 23

24 ANGOLA - PRIORITY AREAS Government goals Priority sectors Short term Reconstruction and expansion of Infrastructures Construction and Tourism Telecommunications, Energy & Water Expansion of the domestic supply of basic goods and services Substitution of Imports for domestic production Infrastructures Transports Agriculture and livestock Focus on the reconstruction process, development of the primary sector and industries of basic goods Fishery and related Human Resources and Health Industry (essential goods) There are investment opportunities in several sectors UBD África 24

25 ANGOLA - AGRICULTURE AS PRIORITY (1/2) Government goals Priority sectors Potential Difficulties Infrastructure expansion and rehabilitation Increasing supply of essential goods Agriculture Fishing Energy High fertile soils Rich Hydro resources Lack of know how Scarce qualified Human resources Lack of infrastructures Transports Weather Other Context costs Competitive substitution of imports Industrial development Human resources Logistics Qualification of Human Resources and Healthcare Construction Education and Healthcare Infrastructure rehabilitation Tariffs and Custom Fees Bureaucracy UBD África 25

26 ANGOLA - AGRICULTURE AS PRIORITY (2/2) Due to the lack or insufficient infrastructures, an integrated approach to the value chain has better chances of succeeding Seeds Agricultural equipment Access to land Fertilizers Retail Plant Harvest International Company X Player Public Public Entities JV Partner Local Partner Trade Logistics Small Farmers production Storage Know-how Incentives Processing Plants Transportation Funding Besides the participation of local economic players, other investors may add value by contributing with know-how and funding UBD África 26

27 EXPORT TO ANGOLA (1/3) 1st Know the market Visits to assess market potential, business mission, trade fairs (FILDA, PROJEKTA, etc.), direct contact with institutions (Chamber of commerce, banks, etc.) and local enterprises. 2nd Close the deal Payment conditions, delivery timings, Insurance, Incoterms, Banks and Other. Pre-shipment inspection optional. In Angola CREDIT INSURANCE COSEC Licensing pro-forma invoice via Ministry of Commerce in Angola. UBD África 27

28 EXPORT TO ANGOLA (2/3) 3rd Charge Before shipment: - Invoices up to USD Authorized - Invoices over USD : Letter of credit which demands down payment of 20% of total import value; SOLUÇÕES BPI ANGOLA EMPRESAS or A banking guarantee that matches total import value, issued by a foreign bank; After shipment: Central bank (BNA) authorization is not required Bank documents must be presented: Invoice, Freight, final DU (fiscal Documento Único) and provisional DU or License from Ministry of Commerce. UBD África 28

29 EXPORT TO ANGOLA (3/3) Charge Every payments are registered in banking application linked to BNA. Each and every import must be settled by a single bank in Angola, including cases of multiple payments. Payment of invoices with over 360 days of shipment date: Central Bank approval required. Services / Current invisibles specific requirements: - Contracts up to AKZ (roughly USD ) do not need approval / license, except for contracts of technical assistance or management by foreign entities/individuals which must be authorized by the Ministry of Economy. UBD África 29

30 EXPORT TO MOZAMBIQUE (1/2) 1st Know the market Visits to assess market potential, business trip, local trade fairs (FACIM, TEKTÓNICA, etc), meetings with Chambers Of Commerce (CCIPM/CCIMP), AICEP and other institutions (Banks, clients, etc) 2nd Close the deal Negotiate Payment conditions, Delivery timings, Insurance, Incoterms, Banks and other conditions. In Mozambique BPI SOLUTIONS MOZAMBIQUE COMPANIES Licensing of pro-forma invoice by the Ministry of Commerce. UBD África 30

31 EXPORT TO MOZAMBIQUE (2/2) 3rd Get paid Payments of trading operations do not demand prior authorization from Banco de Moçambique (Mozambican Central bank). Payment of goods are made by presenting the following documents: Invoice, Shipment document and DU ( Documento Único ). Payments of services/current invisibles are made by presenting the following documents: Contract, Invoice, Tax payment document. UBD África 31

32 Business Council for Africa Thursday 20 th February am 2.30pm Opportunities in Lusophone Africa Hosted by

33 It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. Charles Darwin

34 Who we are A Portuguese law firm which assumes a particular entrepreneurship to assist in international transactions focused on the Brazil / Europe / Africa axis, with special emphasis on the African Portuguese-speaking countries (PALOP), through the following partnerships: Partner Mota Veiga Advogados L.O. Batista Schmidt Valois Miranda Ferreira Agel Arnaldo Silva & Associados Armando Mango Advogados MC&A (associated office) Posser da Costa e Associados Location Angola Brazil Cape Verde Guinea Bissau Mozambique S. Tomé and Príncipe MC&A has a multidisciplinary and specialised team, whose experience guarantees the best assistance to clients and their projects, with emphasis on the areas of law most linked with international transactions and investment. Lusophone Africa Event Simmons & Simmons, London, 20 February

35 Angola The Republic of Angola is located on the west coast of Africa, has an area of 1,246,700 km2 and around 20 million inhabitants. The capital city is Luanda, which is the country s main port and administrative centre with a population of around 5.5 million people. The 1,650 kilometer coastline is bathed by the Atlantic Ocean and its main ports are Luanda, Lobito and Namibe. Second fastest growing economy in the world. The effective growth rate of the GDP, in 2012, was 10.5%, equivalent to USD 116 billion. The main investment opportunities include production and export of: o Liquefied natural gas; o Refined petroleum products; o Energy and renewable; o Primary sector. Lusophone Africa Event Simmons & Simmons, London, 20 February

36 Mozambique The Republic of Mozambique is located in Southeast Africa and bordered by the Indian Ocean to the east, with an area of approximately 801,590 km2 and circa 23,9 million inhabitants. The capital city is Maputo, which is also one of the countries main harbors, apart from Beira, Nacala, Xai-Xai, Inhambane and Quelimane. One of the countries with biggest economical growth expectations in the world. It is estimated that, in 2020, Mozambique will reach Angola s 2012 GDP. Currently, Mozambique s GDP amounts to USD 23.9 billion. The GDP has known effective growth rates: 2009: 6.3% 2010: 6.8% 2011: 7.2% 2012: 7.5% 2013: 7.9% (estimated) The Government of Mozambique actively promotes private investment in the sectors of agriculture, tourism, public infrastructures, including energy, and mineral resources (coal, aluminium and titanium). Lusophone Africa Event Simmons & Simmons, London, 20 February

37 Cape Verde / Guinea-Bissau / São Tomé and Príncipe Cape Verde is an island country, spanning an archipelago of 10 islands located in the central Atlantic Ocean, 570 kilometers off the coast of Western Africa. The islands cover a combined area of slightly over 4,000 km 2. Guinea-Bissau is a country in West Africa. It is bordered by Senegal to the north and Guinea to the south and east, with the Atlantic Ocean to its west. It covers 36,125 km² with an estimated population of 1,600,000. It is undergoing a period of political instability. With a population of 190,000, São Tomé and Príncipe is the second- -smallest African country. It consists of two archipelagos around the two main islands: São Tomé and Príncipe, with areas of, respectively, 250 and 225 kilometers. The main investment areas are agriculture, tourism and infrastructures. One of the most active and growing areas at this stage are mobile telecommunications. The country s main industries are linked to oil exploration, tourism and agriculture. Lusophone Africa Event Simmons & Simmons, London, 20 February

38 Key issues to consider Investment climate Legal Regime / Issues Partnering with local businesses Corruption Regional politics Cultural issues Reputational issues Corporate Social Responsibility Skills Transfer Lusophone Africa Event Simmons & Simmons, London, 20 February

39 THANK YOU!

40 Business Council for Africa Thursday 20 th February am 2.30pm Opportunities in Lusophone Africa Hosted by

41 Interim Cross-Border Power Generation Ressano Garcia, Mozambique

42 Who We Are World leader in Temporary Power and Temperature Control Our fleet comprises of 17,745 generators which in aggregate amounts to over 9,100 MW of generating capacity Headquarters in Scotland Aggreko PLC is listed on the London Stock Exchange (AGK.L), is a member of the FTSE-100 index 5700 staff

43 Locations Supporting industries worldwide from over 190 locations

44 Aggreko in Africa 92% of the workforce comprised of African Nationals 1.6 GW in operation across the continent Supplying EDM, NamPower and Eskom via the SAPP network

45 Project Background + = Interim Cross-Border Power Generation

46 Ressano Garcia Power Project 1. Gas Pipeline and Pressure Reduction 3. HV Transmission Lines and Permanent Substation 2. Power Generation Site

47 Project Timeline Phase I 110 MW delivered in 20 weeks 2012 Contracts signed with EDM & Eskom Site preparation Installation of generators Project inauguration 5 March 10 March 12 March 15 April 10 June 25 June 18 July Mobilisation of equipment Installation of substation Testing and commisioning

48 Project Timeline Phase II 122 MW delivered in 13 weeks 2013 Contracts signed with EDM & NamPower Site preparation Testing and commissioning 12 March 15 March 18 March 1 April 16 May 21 June Mobilisation of equipment Installation of generators on site Phase II operational

49 Award Winning Project

50 Customer Testimonial Eskom NamPower EDM We are pleased that we are now receiving This EDM, innovative power its from role approach as this the national to securing power an utility effective and system power innovative cross-border project. Our supply relationship operator for in the Mozambique with people of Namibia provided is the a great support example required of the to Mozambique is very important to spirit Eskom, of Southern and make we the are African Aggreko keen cooperation. to Ressano Garcia This unique project project a reality. will see more cross-border projects in the contribute By region. adding to fast-track, the provision additional of a reliable power power to the supply national across grid, Brian Dames Namibia EDM and is directly support contributing the continued to the development development of the of Eskom Chief Executive Officer Mozambique while at the same time supporting the country. socioeconomic development of the wider Paulinus SADC Shilamba region. NamPower Augusto Managing Sousa Fernando Director EDM Chief Executive Officer

51 Business Council for Africa Thursday 20 th February am 2.30pm Opportunities in Lusophone Africa Hosted by

52 Torres Kianda, Angola Case Study 2014

53 Case Study Torres Kianda Mixed-Use Development Luanda, Angola Client Panservice S.A Completion March 2015 Value 215m Services Programme and project management

54 Case Study Torres Kianda Mixed-Use Development Plot is 103,000m 2 situated on the bay front Four commercial office towers with retail elements and basement car parking Shopping centre includes 56 units spread across 2 levels and landscaped courtyard Curved facades covered with glass and polymer concrete to imitate white stone

55 Challenges Design Changes due to market conditions Was 50% office space, 50% apartments. Now 100% office space Added 9 months to programme Technical challenges Water ingress beachside location Business culture Slow client decisions All business conducted in Portuguese, not English Company must be registered in Angola Visas for foreign staff

56 Responses Design Changes due to market conditions Used Portuguese designers & engineers to smooth transition Technical challenges Overcome by integrating Portuguese and local firms in the project team. Business culture Can t really prevent slow client decisions Use bi-lingual staff or staff with dual nationality trained and qualified in Europe Mace took the decision to enter a strategic partner with a local company to facilitate market entry Development programme for local staff to build capacity long term.

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58 Business Council for Africa Thursday 20 th February am 2.30pm Opportunities in Lusophone Africa Panel Discussion Hosted by