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When President João Lourenço attended the World Economic Forum (WEF) in the Swiss city of Davos last January, he suggested that the winds of change were blowing in Angola. His message to investors was clear: the economic outlook seems grim, but Angola's poor record with corruption, its excessive dependence on oil and the mismanagement of public funds are over and he he is the only one to drive the ship.
While in Davos, he met key stakeholders, including Christine Lagarde – the managing director of the International Monetary Fund (IMF); the Prime Minister of Portugal, Antonio Costa; and Sergey Ivanov – the CEO of Russian diamond miner Alrosa. This year, however, will not participate. Did the winds stop blowing or the ship was hijacked?
The strange cases of Dr. Jekyll and Mr. Hyde
Skepticism about the new president and his policies is growing. Confidential Africa wrote this month that "his honeymoon was coming to an end when public attention shifts to the economy". Professor of Economics Justino Pinto de Andrade a Universidade Catolica de Angola say The Africa report in September he doubts that the culture of patronage has changed since Lourenço "surrounded himself with the same people as dos Santos". Also Marcolino Moco, whom Lourenço appointed as non-executive director of the state energy company Sonangol, in September 2018, also made headlines when he gave an interview in Paris. Jeune Afrique he threatened to resign if Lourenço had not kept his promises.
The positioning of Lourenço as a politician of modest origins and the declared determination to eradicate corruption at the highest levels are starting to disappoint. The key figures of the previous regime remain as influential as ever despite the apparent purge, during which Lourenço dismissed the sons of the former president, José Eduardo dos Santos, from their positions in Sonangol and the sovereign wealth fund, the FSDEA.
Most concerning so far has been the public protection of Lourenço by Manuel Vicente, who was managing director of Sonangol from 1999 to 2012, and vice president of Angola until 2017. In fact, many suspects of Vicente – not Lourenço – they would have succeeded in dos Santos. But a criminal case in Portugal against the former has stopped those ambitions. Shortly before the WEF in 2018, Lourenço criticized Portugal's attorney general for accusing Vicente of suspecting corruption and money laundering and asked to be tried in Angola.
In particular, Vicente is suspected of corrupting the Portuguese prosecutor Orlando Figueira for an amount of 763,500 euros as money laundering against him in 2011. This investigation concerned a purchase of a 4 million euro property in Estoril, Portugal , in 2007. Vicente has always denied the wrong fact. A month after the WEF, Portugal accepted Angola's requests. Figueira, however, was sentenced to six years and eight months in prison in December 2018. Portuguese prosecutors stated in their ruling that it was "evident that Vicente […] he was the owner of Portmill Limited e Portmill Limitada& # 39 ;, Two companies at the center of the case and in which Vicente held shares. According to the Portuguese media, the attorney general of Angola said that Vicente will be able to respond to the charges five years after the end of his term, which will take place in 2022.
Although Vicente is no longer in government, he remains a close ally of both Carlos Saturnino, new president of Sonangol, and José de Lima Massano, governor of the central bank – Banco Nacional de Angola (BNA) – from October 2017, when he was nominated by dos Santos. And according to an article in the Financial Times article last September, Vicente continues to be a counselor in Lourenço.
Moreover, other members of the "triumvirate" – a term commonly used to describe the three most powerful members of the dos Santos regime outside the presidential family that includes Vicente, as well as General Manuel Hélder Vieira Dias Júnior "Kopelipa" and General Leopoldino Fragoso do Nascimento & # 39; Dino & # 39; – remained in powerful positions. Despite the Angolan law preventing public officials from having commercial interests, all three have admitted to hold shares in Cobalt International Energy – a Texas-based oil company that filed for bankruptcy at the US Bankruptcy Court in the city of Houston in December 2017, after an agreement to sell concessions to Sonangol fell through a year earlier – second Mail & Guardian in 2012 they presumably also played a central role in the fall of Banco Espirito Santo de Angola in 2014, a subsidiary of Banco Espirito Santo of Portugal, through the toxic debt that had been contracted for Portmill Investimentos and Telecomunicações. But a number of other surveys and publications by authoritative online media also claim that they held stakes in a number of offshore branches and companies linked to Sonangol.
Kopelipa, the former head of the presidential security cabinet and widely regarded as one of the richest men in the country, is also married to Welwitschia "Tchizé" dos Santos, another of the daughters of the former president. The Portuguese authorities last year confirmed investigations into money laundering charges against him, particularly in relation to transactions between 2006 and 2013 in offshore accounts in the British Virgin Islands. At the time, Kopelipa was head of the national reconstruction office, GRN, which was in charge of improving infrastructure. Many millions of US dollars have been spent on Brazilian and Chinese construction projects, yet the Angola transport network remains abandoned in many parts of the country. Similar procedures have yet to be confirmed in Angola, although both Kopelipa and Dino have been removed from their positions in the Lourenço security apparatus.
French connections and arms agreements
While Lourenço has taken a tough hold against Portugal, relations have warmed up with another European power: France. Total has already announced a series of new investments in the country, pushing the Swiss trafigura merchant who had maintained an almost monopolistic position in the country until last year. This happened after Lourenço in December 2017, set up a working group to review the oil sector and "improve the current investment conditions in the oil and gas industry". In January 2018, Sonangol asked for new offers, suggesting that Trafigura's longstanding but opaque position was probably over. Although the details of contracts with Total are scarce, they are likely to be similar to those of Trafigura, which in 2017 were worth 450 million dollars.
Although Total has been present in Angola for a long time, the French oil majors are taking a more active role in the country's mining sector, underlined by its decision in May 2018 to launch Zinia 2 offshore development in Block 17 along with several other oil majors, including Anglo-Dutch BP and ExxonMobil based in the United States.
But Angola also has agreements with other companies with connections to France. One of these is Privinvest, based in the United Arab Emirates, which in September 2016 would sign an agreement with Angola worth $ 495 million to provide 17 patrol boats and a promise of technology transfers that would allow the construction of military ships in Angola . To do so, Privinvest would work with Simportex – a state enterprise (SOE) operating under the direction of the Angolan Ministry of Defense.
A Confidential Africa The article noted in February 2017 that the agreement had "a strong resemblance" with another agreement that Privinvest had signed with Mozambique some years earlier. This agreement is currently underway in US courts after Jean Boustani, a Privinvest executive, along with 12 others, was arrested and charged with conspiracy to commit fraud and money laundering in December 2018 and in January of this issue. year, respectively. Reportedly, this was in collaboration with former executives of the Swiss bank Credit Suisse and the Russian bank VTB, who were also charged, suspected of having facilitated improper payments to Mozambican officials and the country to take out more debts than it could realistically manage.
Presumably, the founder of Privinvest Iskandar Safa was at the center of the Mozambique agreement. The Wall Street newspaper in November 2016 reported that "Credit Suisse was involved in the negotiations in 2012, when the lender started discussions with the defense contractor Iskandar Safa, who negotiated an agreement to supply Mozambique with military and surveillance equipment through its Privinvest company ". Over the next two years, Credit Suisse together with VTB and the French bank BNP have raised $ 2 billion in bonds and loans for SOEs from Mozambique, loans that have more than doubled the debt guaranteed by the Mozambican government leading to a series of defaults. Apparently, "the proceeds of the business went directly from the banks to Privinvest rather than to the state-owned companies that borrowed money," reported WSJ.
Questions about the Angolan agreement are now starting to gain momentum. Firstly, because there is no publicly available business plan, which could outline how the apparently high number of boats will be manned by the thousand and strong Angolan sailors – considered a low number – and by the Navy's inexperience in building ships . Secondly, the agreement was signed at a time when Angola's finances are poor; while they were signed under dos Santos, Lourenço was then Minister of Defense. This means that he was probably aware of the trade agreements established by his ministry, although the extent of his involvement is not clear.
Despite this, the Privinvest order replaced another that Simportex had signed with the Brazilian navy to provide seven Macaé-class patrol ships for $ 170 million. It is worth noting that the Macaé ships are built in Brazil but designed by Building Mécanique de Normandie (CMN), a French subsidiary of Privinvest Shipbuilding Group. The CMN was the same company that had to supply military ships and build a shipyard in Mozambique. At the time, Simportex was managed by a close associate of Kopelipa: Luís Manuel da Fonseca de Sotto Mayor Pizarro. Furthermore, he was one of many other military officers promoted to the rank of Brigadeiro in September 2017.
The new currency flows, while the debt grows
Meanwhile, money and credit continue to flow, as the early announcements and actions of Lourenço to overshadow the family of the former president have probably fueled optimism among international investors. During the first two quarters of 2018, Angola has received over $ 1 billion in credit commitments from Western banks, including a $ 700 million loan from Credit Suisse. In May, BNA raised over $ 2 billion in a Eurobond note of two 10-year and 30-year maturities. The bonds were in excess, reflecting a strong optimism about the new beginning of Angola under Lourenço. In December, the International Monetary Fund finally signed a three-year, $ 3.7 billion extended credit plan: the Washington-based financier would pay $ 900 million immediately – to support the government's budget and a massive spending program .
This was added to the growing mountain of debts that Angola had signed in 2018, many of which will eventually be guaranteed by the government and, consequently, by the Angolan tax payer. The international credit rating agency Moody & # 39; s Investors Service has resumed this concern when at the end of April it lowered the investment rating of the Angola from B2 to B3 with stable prospects, warning against the growing debt of the country that has claimed to present high liquidity risks over the medium term. The IMF also noted this in its review of December 2018, which estimated the debt-GDP of Angola to 90%; it was just over 62 percent of GDP a year earlier.
Other macroeconomic indicators underline the growing concerns. The new debt subscription is mainly a reprofiling of expiring obligations, while the decline in average oil prices in 2014 severely damaged the country's reserves of US dollars, essential for imports and maintaining stability of the Kwanza, which the BNA fluctuated in January 2018. In addition, the country has struggled to come out of a recession even though oil prices have slightly rebounded in the last two years. Although the World Bank projects this year the economy of Angola will grow by 1.8 percent, it will take a lot of discipline from the finance ministry to keep a ceiling on spending, to prevent the deficit from growing again. Added to this is that Sonangol – the government's money cow – has steadily lost its income targets since 2014, continuing to underwrite a new debt that has struggled to repay. In addition, the state budget for this year was calculated on average crude oil prices at $ 68 per barrel, according to the influential journal Confidential Africa – an optimistic projection given that average prices of Brent crude were just over USD 61 per barrel in mid-January.
Time of reckoning
The fact that Lourenço continues to trade with the same individuals and companies involved in such a massive investigation of corruption calls into question his true intentions. Other people are starting to wonder if the initial investigations into the corruption against dos Santos were just for demonstration, since no one has yet been tried, not to say condemned. An amnesty law introduced last year that allowed the wealthy Angolans to repatriate stolen public funds without running the risk of any criminal proceedings has expired, but there has been no news that these funds were repatriated during the amnesty # 39; last year.
Angola's commitment to the companies that have helped the Mozambique debt spiral, while it is raising a lot of debt on the capital markets, is worrying, especially considering the increasingly gloomy economic prospects of Angola. The economy remains very dependent on China, which accounts for most of its oil exports as part of the country's debt to Beijing. Meanwhile, the global economy shows strong signs of slowing, with a decline in demand in China. Furthermore, the closure of the US government, which lasts from moment to moment, will seriously slow growth forecasts for that country – some say it will grow by 0% this year – indicating that oil prices will not recover in one to two years of perspectives. This will have a knock-on effect on the Angolan economy and its inability to generate revenue, could it be time to replace your economic advisor, Mr. President?
Distributed by Apo Group on behalf of Verdade
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