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Angolan fund to focus on infrastructure

Donwald Pressly

José Filomeno de Sousa dos Santos, the son of Angola’s President José Eduardo dos Santos, has just swept in and out of South Africa to market the country’s new $5 billion (R45bn) sovereign wealth fund, as well as to talk to fund managers and investors here.

Interviewed at the Mount Nelson Hotel, while he attended a conference of African countries that also have sovereign wealth funds, he was asked whether South Africa should follow the Angolan example. He replied that it was created to promote growth and improve socio-economic conditions in his country, but “South Africa is advanced in terms of industrialisation”.

He did not discount the possibility that the fund would invest in South Africa.

The Fundo Soberano de Angola was launched in October following on the heels of the Nigerian Sovereign Wealth Investment Authority, which was established with seed capital of $1bn in August.

The aim of African wealth funds – set up by countries with notable resource revenues – is to save and invest in good times so there is a kitty to tide countries over when times are lean. Tanzanian President Jakaya Kikwete has also stated his intention to ring-fence revenues from new gas discoveries.

“In the case of the Angolan sovereign wealth fund, it manages a reserve account created by the parliament. The entity itself is regulated by the head of state. We are part of a board responsible for managing the assets. We are audited at the end of the [financial] year by an independent firm.”

He added that the fund’s governance was “fully transparent” and it had an advisory board that co-ordinated local projects.

The aim was to increase the state’s reserves, “and improve the lives of the people of Angola. It gives you a broad investment spectrum, higher growth potential that is sustainable. It also directs us to invest in the people and ensuring the living standards improve… we have to invest primarily in the local economy and in projects that provide stimulus for other economic activity,” Dos Santos said.

Turning to investment in the southern African region, he said the focus would be on infrastructure, including transport and energy capital spending, “which would [in turn] permit industry to be set up to create employment and a dynamic business environment”.

Pressed on whether it was not a conflict of interest for the son of the head of state to be sitting on the fund’s board, the 34-year-old Dos Santos said, without blinking, that he was trained in finance.

“I am an Angolan, I have worked in the investment industry… I am obviously also the son of the president. I have, as a career, chosen the finance industry and recently taken up this official role [which] allows me to bring along my experience but also benefit the people of Angola on a larger scale.”

That, he believed sent out a positive message.

Asked if Angola was now politically stable, he noted that opposition parties in the country had grown across the board by about 10 percent in national elections last year.

“The elections have shown the will of the people… the government [the MPLA] has been re-elected, but we also have a strong opposition. The stronger opposition [means] stronger supervision of the government’s activities. The results have been positive.”

Asked why the fund was needed when it was the role of the state – through fiscal management – to promote social and economic upliftment, he said that while the state had a role in expanding public services, “there is a need to stimulate investment in the private sector” through the wealth fund.

The strength of the fund lay in its focus on investment management and on green fields investment.

Noting that he had been interacting with investment management companies based in South Africa and with central bank officials with experience in managing reserves, he said: “This was an opportunity to interact with these players to understand their experiences.”

Pressed on whether one of the fund’s focuses would be to develop the previously troubled south of the country – ravaged by the war between the MPLA and Unita – he said agricultural development in the south would be emphasised.

Angola was also encouraging Portuguese farmers – some of whom had left the country at independence in 1975 – to lease farm land.

He said all agricultural land was collective. “The government owns the land… and it provides leases with clear usage terms”. The leasing mechanism of state-owned agricultural land would be used to stimulate private investment in agriculture, he said.

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