Angola - introduction
Angola's 27-year civil war finally ended in 2002, at the cost of up to
1.5million lives. The depredations of the conflict have, unsurprisingly, caused
turmoil. The country's infrastructure is dilapidated and under-developed;
landmines still litter the countryside; and there are still hundreds of
Angola's sizable oil reserves are thought to be its potential salvation. In
2008, the country had an estimated nine billion barrels of reserves, making it
second-biggest producer in Sub-Saharan Africa after Nigeria. Unlike Nigeria,
however, Angola does not have to tackle a debilitating insurgency in its prime
oil-producing region but it does face many of the same challenges as the other
producing states, including corruption, lack of local capacity and skills,
political interference and the dangers of “Dutch Disease”.
The existing programme of “Angolanisation” has been largely unsuccessful, partly
due to the destabilising effects of the civil war, which the programme
and partly because of the absence of a unified and coherent regulatory
framework. There are a number of legal clauses requiring the inclusion of local
and equipment, particularly a 2003 Petroleum Order which stipulates the extent
which foreign companies can bid for various tenders. Contracts tend to require
certain quota of local workers, although this varies from contract to contract.
The lack of skilled labour and technical capacity is arguably the most
significant impediment to Angola's local content policy. In 2003, it was
only 15 per cent of the population were employed in industry and services; 85
cent were employed in agriculture, illustrating the extent to which Angola
remains a deeply rural country. To fulfil the government's local content
the industry grows over the next few years would require hundreds of skilled
workers which Angola will find very difficult to produce.
Angola's poor services, high crime rate and lack of amenities have caused
another problem for IOCs, as expatriate staff are reluctant to stay in the
without substantial financial inducements. Given the requirement to pay local
expatriate staff equally, this can lead to a spiral of wage inflation.
Despite these problems, many foreign firms are committing themselves to
“Angolanisation”, confident that, in the long term, it will result in lower
costs and a better relationship with the government. As the process continues,
local capacity – in the labour supply and the broader supply chain – will
although it will be an uphill struggle for both the government and for foreign
One of the success stories of Angola's local content drive has been neither a
state-run nor a commercial enterprise, but a civil society organisation, Centro
Apoio Empresarial (CAE). A project of the American NGO Citizens Development
Corps, CAE provides business training, financial and supply chain management,
other services to Angolan businesses hoping to strike contracts with IOCs. They
also act as a provider for IOCs, locating qualified Angolan companies for
competitive bids. According to the Commonwealth Development Corporation (CDC),
US$50 million in new contracts have been secured as a result of CAE's services.
The state-run oil company, Sonangol Holdings, is less reliable. It often serves
as joint venture partner, regulator and concessionaire, raising questions about
its intentions and the independence of its operation. On top of this are the
typical problems of a Sub-Saharan state oil company, including corruption, a
of transparency and murky ties to the executive branch.