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Angola Infrastructure Report Q1 2009
Market |
Construction |
Report Type |
Market Research |
Country |
Angola |
Published |
25 February 2009 |
Number of Pages |
58 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Angola's political risk profile received an upgrade following the recent smooth passing of the parliamentary polls, but the nation is not out of the woods yet. Difficult times lie ahead, with falling fiscal revenues and a presidential election in the pipeline. Short-term stability is relatively assured, as reflected in the country's score of 70.8 out of 100.0 in our proprietary short-term political risk ratings. However, poverty and inequality are still at large, and pose a risk to the longer-term outlook, as indicated by the low 38.6 score in our long-term political risk ratings. Indeed, Angola falls below Cote d'Ivoire (by 39.2%) and Sudan (by 42.1%) in our structural ratings.
Turning to the prevailing economic conditions, we note that Angola is set to suffer in 2009 as lower oil prices, reduced private investment, and curtailed government spending conspire to reduce real GDP growth to a forecast 8.9% from an estimated 12.2% in 2008 . Following the global financial crisis, we have slashed our 2009 growth forecast from a previous 13.4% published last quarter. This will have an impact on all strata of the economy, including the construction and infrastructure industry value for which we forecast negative real annual growth for 2009 of -3.2%.
Developed infrastructure is severely lacking in Angola, although significant opportunities do exist. A quick gloss of the construction, transport and electricity sectors attests to this:- Angola has experienced a post civil war reconstruction boom, aided by the spending of oil revenues and a US$2bn credit line from China (since increased to US$7bn). Large credit lines have also been received from Brazil, Portugal, Germany, Spain and the EU. That said, a shortage of construction materials is proving a significant bottleneck to the process.
According to the African Development Bank, 80% of transport infrastructure in Angola is not operational. This number alone highlights the severity of the situation and the problems that this creates for the entire economy, rendering any areas outside the main urban centres literally disconnected from them. This also raises the operational risks for construction companies in the country, which may face problems in a number of fields, from transporting materials to physically conducting operations.
Although the country is one of the most prolific in the world in terms of hydrocarbon resources, the power sector is yet to benefit. Only 12% of the population has access to electricity. According to data by the Energy Information Administration (EIA), the country has an installed generating capacity of 800 megawatts (MW), close to 70% of which comes from hydropower. The rest is from diesel-fuelled generators. Some of the key international players with a hand in the Angolan infrastructure sector include BCEG, CEGELEC, CGOC, Odebrecht and Prezioso.
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