Angola is planning to privatise many of its more than 250 state-owned firms, but there are fears that the process could be marked by cronyism and cement the oil-rich nation’s reputation as one of Africa’s most corrupt.
In an interview with Reuters, Angola’s secretary of state for public enterprises said there were too many state-owned companies and that some, especially those that were poorly run, should be sold to investors or liquidated.
”We need to reduce the complexity of the public sector. We need a new privatisation policy, keeping only companies that are essential for the state — the sector needs to be more hygienic and easier to run,” Augusto Tomas said on Friday.
Angola’s state-run sector ballooned in the late 1970s and 1980s when its Marxist government embarked on a massive nationalisation campaign that reached into virtually every corner of the economy.
Nearly three decades later state firms control vast assets in industry, fisheries, agriculture, banking and transport and communications. Even some bakeries are state-owned.
But the collapse of communism and an oil-fuelled economic boom has prompted Angola’s ruling Popular Movement for the Liberation of Angola (MPLA), a collection of reformed Marxists and Western-leaning technocrats, to embrace privatisation.
Officials have been further spurred by massive growth in private investment since the end of a 27-year civil war in 2002 and the need to find money to rebuild the country’s shattered infrastructure.
Some areas of the economy have already been privatised — independent banks and insurance companies have emerged in recent years and a private mobile telecommunications company has taken a large share of the burgeoning cellphone market.
Tomas noted that most state-firms were operating at a loss and that many were characterised by corruption, lack of transparency, bad management and loose accounting practices.
”The situation isn’t very good, but it is also quite delicate. We need to do a very profound, extensive job to try to restructure state companies,” he said. ”We want to eliminate the kinds of problems which exist. Angola must be a normal country.”
Angola’s Cabinet has approved a strategy to restructure the state-run economy, with new laws governing state companies and privatisation expected to come into effect by the end of 2007. Public firms have been given 60 days from July 30 to provide accounting and other information from 2004 to 2006.
Tomas said the government would tread carefully in the privatisation arena. ”We don’t plan to wash our hands with chaos but rather to implant a new order,” he added.
But observers said Angola, widely regarded as one of the least transparent economies in the world, had already demonstrated that it was not committed to an open privatisation process.
”Only certain private investors are allowed in. The process is not an open process in any sector,” said a Luanda-based foreign executive, who asked not to be identified.
”It is controlled by those wanting to expand the patronage system into a private format,” he said.
There are fears that Angola could end up adopting a Russian privatisation model in which firms were sold off at rock-bottom prices to government supporters and others with ties to the ruling party.
Alternatively, the country could follow in the steps of China, which has won praise for a more orderly sell-off of state firms.
”One of the key messages from there [China] is to do things gradually,” said a political analyst based in Europe. ”Either way, there are certain favoured interests or people who are expected to benefit hugely from this.”
Investor interest surrounding Angola’s privatisation is likely to gravitate toward the oil sector, which accounts for the lion’s share of the country’s earnings and fuels its booming economy.
Sonangol EP, which is entirely owned by the government and holds all rights to Angolan oil, has stated that it may seek listings on foreign stock exchanges, though it is unlikely to be listed on a future stock exchange in Angola. — Reuters