Portugal banks on former colony Angola for bailout

Not so long ago thousands of Angolans were fleeing for Portugal. Now the tables have turned. Angola’s remarkable image makeover from a war-torn African backwater to a rising global oil power has been capped by news that it will provide a much-needed shot in the arm to its debt-ridden former colonial master.

President José Eduardo dos Santos said Angola was prepared to invest its burgeoning petrodollars in Portugal, which has been ordered to privatise struggling state-owned firms under an €80-billion International Monetary Fund (IMF) bailout. “We’re aware of the difficulties the Portuguese people have faced recently and in such difficult times we must use our trump cards,” Dos Santos said at a press conference with visiting Portuguese Prime Minister Pedro Passos Coelho.

Passos Coelho said: “This visit is of huge significance. It is a unique opportunity to build a base for stronger and closer ties between the two countries, their citizens, their companies and states. Remember that we are looking to privatise [state utility company] Energias de Portugal and [national grid] REN.”

Other Portuguese state-owned entities up for grabs include the national airline, TAP, and the Banco Português Negócios. Banco BIC of Angola will buy the distressed bank for €40-million, less than a fifth of its original market value.

Isabel dos Santos, the daughter of the long-serving president, is a part owner of BIC.

Given that the IMF forecasts Angolan economic growth of 11% next year, while Portugal’s will shrink by 1.8%, analysts say Angola’s financial aid to Portugal will grow.

“Angola already has large investments in Portugal’s private sector so it does view buying in it as an opportunity,” said an economist in Luanda.

Meanwhile, the booming economy, fed by a 1.8-million barrel-per-day oil industry, has prompted its Portuguese-speaking compatriots to flock south for business and work opportunities.

The Portuguese foreign ministry said tens of thousands of citizens have set up shop in Angola in the past year.

“Angola was at one point the Portuguese El Dorado,” a Luanda-based diplomat said, referring to the period of colonial rule that ended in 1975. “A lot of Portuguese who were born here then went back to Portugal, but their families are now coming back.”

Some Angolans have criticised the growing financial ties between Lisbon and Luanda, amid worries of capital flight and Angola’s own yawning poverty gap. “Now is not the time to help out the Portuguese if we can’t be sure the gap between the rich and poor doesn’t close,” a blogger posted on Página Global.

In 2008 two-thirds of Angolans lived on less than €1 a day, while only 25% of children were enrolled in primary school.—

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