Angola - Project Financing Angola - Project Financing
Given the constraints on government revenues and spending, project financing for government projects increasingly depends on external sources, such as international commercial or export credit agencies, all of which typically require a sovereign government guarantee. Domestic credit for private sector projects is extremely limited. Several government supported local currency credit lines managed through commercial banks for priority sectors exist, though Angolan companies complain of long review processes and difficulty securing such financing. Angolan commercial banks are generally not willing to provide guarantees for foreign currency loans due to the foreign exchange risk. Angolan government sovereign guarantees that were available in the past for high profile projects have become scarce or non-existent, a trend that seems to correlate with the Angolan government’s increased debt load. That said, in April 2019, the U.S. Export-Import Bank signed a Memorandum of Understanding with the Angolan Ministry of Finance to support U.S. exports to Angola.
The Overseas Private Investment Corporation's (OPIC) political risk insurance and financing is available for projects in Angola with at least 25 percent U.S. participation. U.S. investors can apply for OPIC insurance, including coverage under the “Quick Cover” program for projects valued at less than USD 50 million. The last project to be implemented by OPIC was a USD 9.8 million loan to support the Luanda Medical Center to provide treatment and outpatient services. OPIC’s portfolio in Angola currently totals over USD 20. million, and since opening operations in 1994 OPIC has supported projects in energy, services, health care manufacturing, and financial services sectors.
The U.S. Trade and Development Agency (USTDA) promotes economic growth in emerging economies by facilitating the participation of U.S. businesses in the planning and execution of priority development projects in host countries. In Angola, USTDA has provided feasibility study grants to support project development in the transportation, electricity, and port industries as well as Reverse Trade Missions to the United States focused on housing and agribusiness sectors.
Multilateral Development Banks
The AfDB and World Bank provide project financing liquidity in several key areas of business and economic development in Angola that present solid opportunities for U.S. companies to participate in internationally competed tenders with secure international financing.
The AfDB has a portfolio of eight loans valued at a total of USD 122.4 billion for projects in the following sectors: agriculture, rural development, and environment (49 percent); social, including health and education (27 percent); water and sanitation (16 percent); and multi-sector (8 percent). The AfDB has also focuses on economic and social programs related to gender, education, private sector development, microfinance. The AfDB is increasingly focusing on large-scale infrastructure projects. Specific projects generating interest from U.S. companies include those in the electrical, fisheries, and railway infrastructure areas.
The World Bank Group portfolio in Angola includes major efforts in the water and agriculture sectors as outlined in detail under the “Best Prospect” sections of this report. The World Bank Water Sector Institutional Development Project (2008-2016), with a total project cost of USD 130 million was extended until 2019 with an additional World Bank loan of USD 120 million. It concentrates primarily (75 percent) on water projects in urban and peri-urban areas with the balance of the project related to wastewater/sanitation. The World Bank portfolio in Angola also includes programs in financial management, health, and education.
In agriculture, a second World Bank “Smallholder Agricultural Development and Commercialization” Project loan was signed in July 2016 for USD 70 million to help increase smallholder agriculture productivity, production, and marketing for selected crops in the project areas.
Currently under development with the Angolan Government is a major World Bank “Commercial Agriculture Development Project”, which was estimated at USD 230 million in 2018. The proposed project development objective is to promote commercial agriculture development, increasing production and employment within selected value chains in targeted areas in Angola. The project target completion date is May 2024.
Angola is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), which provides insurance to foreign investors against such risks as expropriation, non-convertibility, and war or civil disturbance. MIGA also provides investment dispute resolution on a case-by-case basis.
U.S. Commercial Service Liaison Offices at the Multilateral Development Banks (African Development Bank, World Bank)
The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the African Development Bank and the World Bank. These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the African Development Bank (http://www.export.gov/afdb) and the World Bank (http://export.gov/worldbank).