Beyond Oil: Angola’s Privatization Program 2019-2022 angola


Beyond Oil: Angola’s Privatization Program 2019-2022

The Angolan economy has been heavily reliant on the oil sector since it started large-scale production in the late 1970s, with most of its economic activities located in the industry. Oil production and its supporting activities account for about 50 percent of the nation’s gross domestic product, over 70 percent of government revenue, and about 89 percent of its exports, making the government focus more on the industry.

However, the huge investment in the oil industry has created few linkages to other sectors of the economy. Other sectors such as the agriculture and manufacturing industry attract low investment due to poor contract enforcement and high cost associated with trading across borders. According to the World Bank doing business report, Angola ranks 177 among 190 economies in the ease of doing business and 174 among 190 economies in trading across borders.

Development Challenges

Despite the country's endowment in diamonds, hydroelectric potential, and rich agricultural land, the Angolan authorities have faced considerable challenges and made little progress in diversifying the economy, especially after the prolonged civil war resulting from poor governance, regulatory challenges, high government debt and poor infrastructure.

The nation has been suffering from a recurring economic recession since 2016, leading to a government debt burden amounting to approximately 127.1 percent of the GDP in 2020, the highest since the 27-year civil war ended in 2002. The GDP also reduced from $89.6 billion in 2019 to $ 62.44 billion in 2020 due to the fluctuation of oil prices and trade restrictions during the COVID-19 pandemic.

Angola Government Debt

In February 2021, the United Nations granted the Angolan government request to defer its exit from the UN group of least developed countries from 2021 to 2024 due to reduced revenue resulting from the decline in commodity prices and the negative impact of the pandemic on the economy.  This rapidly changing economy due to the pandemic effect is one of the major reasons the Angolan government needs strong stabilization measures such as the ongoing privatization program to share risks with the private sector and expand market opportunities.

Transforming a State-Led Oil Economy

Following recent changes in the oil markets and inflation due to reliance on imports for most consumer goods, many oil-dependent countries have started considering the diversification of their economies. Even before the oil prices plunged due to the COVID-19 pandemic, Sonangol, the Angolan state oil company, had recorded substantial losses, which has made the current government, led by President João Lourenço, decide to privatize most of Sonangol’s non-oil businesses by 2022.

Angola Inflation Rate, Average Consumer Prices

In efforts to lessen the nation’s debt burden and stimulate the economy, new privatization measures were launched to devolve business and economic initiatives to the private sector, with the government playing the role of regulator of economic development. The Angolan government enacted a privatization law (Law no.10/19) as a legal framework for all privatization and re-privatization in 2019. Article 6 of the law introduces a privatization program expected to be implemented within a timeframe. The privatization program was designed to indicate entities of the public business sector and assets to privatize and the period they will occur.

Privatization Program and Economic Recovery

Transforming Angola's oil-driven economy to a private sector-led economy is a long-term process in which the oil sector will continue to play an essential role in the transition period. To speed up economic recovery, the government adopted a structural reform to reduce inflation, achieve fiscal sustainability and improve the outcomes of other stabilization measures such as the National Development Plan 2018-2022, Public Sustainability Policy, and Macroeconomic Stabilization Program (MSP, 2018).

The privatization program, also known as PROPRIV, is an International Monetary Fund backed program and the latest economic reform approved by the Executive Power Holder through the Presidential Decree nº 250/19 for the period between 2019-2022. It presents Angola with an opportunity to transform into a diverse economy and provide foreign investors with a range of opportunities.

The program was developed to achieve the following goals by 2022:

  • Reduce the weight of the government in the economy
  • Promote entrepreneurship and national entrepreneurial capacity building
  • Promote competition, competitiveness, and efficiency of the national economy
  • Contribute to a better redistribution of national income
  • Increase financial resources of the public business sector by the financial allocation resulting from the sale of the privatized assets
  • Contribute to the development of the capital market
  • Reduce the weight of public debt in the economy.

The current government plans to reduce public debt and speed up economic activity with the revenue that will be generated from the privatization process.

How PROPRIV will be Implemented and Managed

The Angolan government aims to carry out important reforms and increase transparency with the implementation of this program. The privatization process is paired with the fact that foreign investment can be accomplished in a very flexible way through the 2018 Private Law (Law no 10/18). In conjunction with IGAPE, it has selected 195 companies under four categories to participate in PROPRIV between 2019 and 2022. 175 of the 195 companies will be sold by public tender, 11 by public auction and nine by initial public offer (IPO) to encourage transparency.

The public companies were selected from different sectors by taking these five factors into account:

  • The nature of the asset
  • Number of years with audited financial reports, with no reservations
  • Size (turnover and weight in GDP)
  • Attractiveness (results and cash flows)
  • Nature and volume of prior activities.

Using the five basic requirements, the 195 selected companies were sorted into four categories:

  • National Reference Companies (32)
  • Subsidiaries and assets of SONANGOL (50)
  • Industrial Units in the Special Economic Location (51)
  • Other companies and assets (62)

The privatization process will cover companies in the sectors of finance, telecommunication, agriculture, transport and tourism. Some of the popular companies selected are ENDIAMA, SONANGOL, TAAG, ENSA Seguros, BODIVA —Angola securities exchange, Banco Económico, Banco Angolano de Investimento and Banco Comércio e Indústria.

For proper implementation of PROPRIV, the government has partnered with the World Bank for cross-program support and IGAPE for program management, monitoring and implementation of the three-year program.

PROPRIV Implementation


Although state-owned enterprises still play an important role in the economy, implementing the privatization program will ensure that low-performing state-owned companies/assets are transferred to the private sector, and investment projects are efficiently exploited.

There is a possibility of implementation delay due to the pandemic effect. Hence, the economy will still have to depend on revenue from oil exports as oil prices and demand continue to rise till 2022.  Progress in privatization and rise in oil production coupled with increased oil prices is expected to boost investor sentiment in 2022, resulting in an increase in foreign direct investment inflows.

Continuing efforts of the current authorities, led by President João Lourenço, to improve the nation’s crude oil output is expected to enhance export volumes further in 2022. Also, the Angolan oil industry is expected to become more competitive due to the adoption of a new governance model by replacing the state oil giant Sonangol with a regulatory institute —National Oil, Gas and Biofuels Agency (ANPG) as the national concessionaire and launching oil block tenders extending until 2025.