With good economic relations, although not enhanced – the turnover between Angola and Germany was around US$20 million in 2019 – Angela Merkel’s visit overturned what could be a Pandora’s box for both countries.
Diversifying the Angolan economy, a recurring message from João Lourenço’s government – as it was in the time of José Eduardo dos Santos – involves boosting sectors other than oil, the main source of State revenue. It is in this field that the great opportunity lies. Salim Valimamade, professor at Catholic University in Angola, believes “that german investment is very welcomed in a time where our economy is struggling for recovery and needs urgently more investment to promote the diversification”.
João Lourenço mentioned this in his speech, in a frank and direct manner during the eighth edition of the Germany-Angola Economic Forum.
For Pedro Lauer, partner at Munich Partners, a company based in Luanda, “Angela Merkel’s visit to Angola, coupled with the deals and MoUs that were announced, is a clear sign that Germany values Angola as a strategic partner in Africa, and intends to enhance this relationship on many levels in the future. Several large German companies are already operating in Angola and, historically, ties between the two countries have been strong and solid. However, both sides agree that there is a lot of room to expand this strategic alliance even further”.
Altogether, 25 German companies are present in Angola and available for partnerships, responding to the chancellor’s challenge in Luanda. But there is a gap in doing business between the two countries. Pedro Lauer explains.
“The big question marks and obstacles for foreign businesses considering investing in Angola remain the same: the country’s dependency on oil, high inflation, foreign currency shortages, high operating costs, lack of a skilled workforce, and the efficiency of the rule of law, amongst other factors. Angola’s economic potential is beyond any doubt, but changing some fundamentals of the economy will take time”.
Time is precisely what the Angolan business community wants to gain from German know-how, its sophisticated technology and strong industries.
On the other side, “it is also an opportunity for Germany to diversify their exports and investments due to this commercial war happening between China and US that are changing the international trade worldwide, making US policies more restricted to imports”. African countries could be a good market for German products. So, the presence of Germany in Angola can be understood as their long-term view about Africa’s potential as a market, says the professor, an expert in investment analysis.
“If a German business decide to invest in Angola, it will only do so once it has a clear idea that it makes sense from a financial perspective, and because it trusts that it can add real value to the local market and stakeholders, such as the State, local businesses and other partners. Established German businesses are serious and reliable, and are generally considered to be highly desirable business partners by local entities”, says Pedro Lauer. “A company such as Munich Partners can make an important contribution towards assisting Angola in defining public policies, company management, attracting foreign investment, mitigating any costs inherent to the country risk, and supporting growth and social well-being”.
Starting with a Public Private Partnership project in the transportation sector could be a strategic investment since this provides other opportunities in other sectors as well, concludes Salim.
Besides the political will and effort, Angola and Germany need business preservation, because, as Pedro Lauer says – and he is a German citizen working in Luanda – “At the end of the day, the objective is to create a win-win situation for all stakeholders on a long-term and sustainable basis”.