INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

The stabilizastion of the macroecomic indicators like external debt and inflation, the fiscal and duty reform to incentive the consumption of the national produts. The investors who wants to apply his capital in Angola will find real and profitable opportunities for business in the following areas:

FOOD PROCESSING AND AGRO-INDUSTRY

The agro-industry branch which, due to its produtivity, had previously contribute to ramk Angola among the most self-sufficient countries in basic food-stuffs before the independence period, and actually consisted of plants of more than 40 years old on average, is one of the sectors that suffered more than mos from effects of the war. Today, the agro-industrial sector needs all kind of inputs to operate. It is essentially a dysfunctional sector, as agriculre has stopped supplying essential raw-materials due to progressive under-utilization of most extention of the land mined during the war.

A) Edible oils and soap

a.1-The edible oils and margerine sub-branch that is composed of three plants whose prodution remain apporximately 12.000 and 7.000 tons/annum of vegetable oils, and 6.000 and 2.000 tons/annum of margerine, respectively in 1989 and 1992. one of the plants is privately owned and the remaining are state owned companies, but all of them are under privatization.

Since 1993, this sub-branch has almost stopped operations due to:
.the destrution of one its plants by the post election conflict
.Obsolecte technology, of more than 35 years old;
.Lack of raw-materials from agriculture sector, such as cotton, seeds, peanuts, sunflower.

a.2-The soap branch was composed until 1992, of four plants located in Luanda (2), Benguela (1) and Huambo(1), reaching 11.000 tons/yearly of available capacity in 1989. Presently, however it produces less tha 20.000 tons/year.

B)-The mining branch (corn and wheat fluor)

This branch in its turn consists of two sub-branchs:

b.1- the bakeries sub-branch (weat) is responsable for 382.320 tons of prodution, corresponding to approximately 80.5% of the total prodution in the country, including the informal market. But to secure this prodution, the consumption is estmate about 337.500 tons of weat flour of which only 72.000 tons can be produced in the countri; that means that the remaining demand (265.500 tons of weat flour) has to be impoted due to the lack of local capacity; therefore additional mills are to be set up.
In addition all of the existing mills are under private management contracts and are shortly going to be privated.

b.2- the cassava and corn milling sub-branch which, from 11 plants existing in 1987, has actually less than half of this number operational. The real prodution in the country reached at 35.535 ton of corn flour in 1990; in 1995 this volume was reduced approximately to less tha 4.000 tons.
Almost all the existing corn mills are either unther private management contracts or are privately owned companies, and those that are still state owned are shortly going to be privatised. The cassava flour is produced in the informal sector by micro mills and normally the volume is very insignificant.

b.3- The sugar milling branch

with 13.800 hectares under cane, Angola, with its four mills possed about 110.000 tons/year of prodution capacity in 1985, historical real prodution in the country reached at 70.000 tons of commercital sugar in 1974. Since 1991 no sugar was produced.
In order to nut the demand of sugar the government has decided to set up a program which consists of two phases:
a) Reabilitation and expansion of the sole remaining plant at Dombe Grande in Benguela Province.

b) constrution of new facilities or mills, if where and have feasibilty.

The seconde step of sugar industry reviving program will enter into force as soon as possible, namely after the start up of the Dombe Grand investment, whatever investors are invited to present thier proposals or if they prefer to go and seek other locations for new projects in this field.

b.4-The textil industry branch

The textil industry branch includes all the activities connetected with cotton processing, from the cotton seed up to the garments industries, this branch was an early participant in the first steps towards industrialization of the country, exctractive industry excluded. It represented yearly, in the 1961/75 period, appoximately 12% of the manufacturing gross value, after the food processing industry (36%).

But first of all it seems important to refer that since the middle of the 16th century, there was indication of grwth of cotton in Angola territory. This fact was confirmed only in 1872, after exported 1.000 tons of cotton to Portugal. Potentially, half of the national agricultural land is in good condition to produce high quality cotton and for a long time Angola was the 4th largest exporter in Africa, the Portuguese industries being the main consumers.

For the past ten years, this sector has faced a critical situation and the prodution of cotton has stopped forcing the country to import raw-materials: some of the main factories have been paralysed and almost all the fabric plants have closed down. The angolan Government is presently preparing a program aiming at rehabilitation the sector and the privatisation of the fabrics have already been privatised. The reactivation of cotton prodution is included in the program , being the starting point.

INDUSTRY DEVELOPMENT AREAS

For better realization performance and competitiveness of a free market economy, the Minitry of industry has selected some geographical areas to establish with the participation of the private sector “ïndustrial developing areas “where basic infratrures such as; electricity, water, telecommunications, warehouses and specialised services,as well as attractive incentives are going to be provided.

IDS, S INDUSTRIAL DEVELOPING SOCIETIES

The lack of capital that faces national citizens and the inefficiencies of local banks justify the constitution of IDS,S industrial zones.
Development societies as instruments for the decentralization, efficiency upgrading and feasibility of industrial private companies.

The IDS,s as independent financial societies, are out of reach from political pressure and are open to foreign participation primarily private companies. To ensure total openness to a market economy, the angolan state assures the autonomy of these societies.

The IDS is classified as a shareholder company of angolan right and its status is guaranteed by virtue of the use of venture capital, it participates in the capital of societies with a percentage between 5% and 45% until the company overcomes its start-up period and then the IDS can sell its shares to this company or, if this company is not interested in buying those shares to any other companies.

PRIVATISATION PROCESS

The process of privatisation of the state owned companies initially began in 1989 with the creation of the Divestitue office ( GARE- Gabinete de redimensionamento empresarial) throuth the Decree no 32/89 of 25th july of the Council of Ministers.

There is a political commitment to gradually privatise the state owned companies, reserving a minority state in some cases, where the presence of the state as a shareholder is madatory as in the following functions:

Promotion of employee participation
Assumption of whatchdog role such as in the environment, labour and monopoly aspects.

The Divestiture office (GARE), according to the terms of the law no 10/94, of august 31st- Law of privatisation, is responsable for the technical support to the process of re-dimensioning and privatisation of the state owned companies and financial stakes is in charge of preparation of proposals of strategies, analyses and advices, control, follow-up and partipate in the execution of the process of re-struturing and privatisation of state owned enperprises in the direct co-ordination with the Minister of the Finance.

THE MAIN GOALS OF THE PRIVATISATION PROCESS

The re-dimensioning and privatisation program aims essentially at improving efficiency of the public enterprises, the promotion and motivation of the private sector namely the class of the angolan enterpreneurs, as well as reducing the weigth and the importance of the state role in the economy.

THE PRIVATISATION PROCESS

The privatisation process is composed by different phases as follow;

A-Previous step

1-Diagnostic and survey of the enterprise
2-proposal of solution of the re-dimensioning
or model of privatisation
3-Approval of the sector Minister
4-GARE ( Divestiture office) advise
5-Finance Minister approval for the big size enterprize

B-Steps after decision
6-Nomination of the negotiation committee
7-Selection of consultants for the enterprise assets and shares evaluation
8-Enterprise assets and shares avaluation
9-Approval of the value of the enterprise or of its shares
10-Opening of the public tender
11-Proposals analysis and the selectio of the best proposal
12-Adjudication/ final decision