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Reversal Of Fortunes: Portugal Turns To Former African Colonies For Help

Article illustrative image Partner logo Sunset in Angola's capital Luanda

LISBON – In an ironic twist of history, crisis-ridden Portugal is looking to its former colonies for economic relief.

Booming economies, a shared language and cultural references – these colonies have much to offer. Besides Brazil, Portugal’s traditional ally, Angola has become Lisbon's latest strategic partner: "Angolan investments started to increase five years ago and have boomed these past three years," explains Carlos Bayan Ferreira, an executive from gas company Galp Energia who is also president of the Portugal-Angola Chamber of Commerce. "They are investing in every sector: banks, energy, but also industry, restaurants, real estate, wine..."

For Portugal, which has been facing recession for the past two years, the booming Angolan economy, with its double-digit growth rate, is a godsend. Since the end of the civil war in 2002, Angola's financial reserves have boomed thanks to its oil riches.

"The country was facing two major issues: It needed to invest this money but also win credibility and respect from the IMF, as the country is often criticized for its level of corruption," explains Nicolau Santos, deputy-director of Portuguese leading weekly Expresso. "In this global strategy, is there any better partner than Portugal?"

During an official visit to Angola's capital Luanda in November 2011, Portugal's Prime Minister Pedro Passos Coelho, publicly invited the former colony to invest in the wave of privatizations launched by Lisbon.

The exact amount of Angolan investments in Portugal remains unclear. The business world has its secrets, especially in Angola. But for Alex Vines, a researcher at the British think-tank Chatham House, "No other European country is more dependent economically on a former African colony." In 2009, Angolan investments in Portugal totaled an estimated 116 million euros. This figure was only 1.6 million in 2002. In 2010, 3.8% of the Lisbon Stock Exchange capitalization (2.18 billion euros) was in Angolan hands.

The main investors are Isabel Dos Santos, the President's daughter and Africa's richest woman, and Angolan gas company Sonangol. Their main areas of interest are banks, energy and telecommunications. Dos Santos owns nearly 30% of ZON Multimedia, 20% of Portugal's fourth biggest bank Banco BPI and 40% of Amorim Energia. She also owns part of gas company Galp, Portugal Telecom and Banco Buc Portugues. Sonangol is the main shareholder of Millennium BCP, Portugal's biggest private bank. New acquisitions should follow: Luanda has just raised a sovereign fund, administered by José Filomeno dos Santos, the son of the Angolan president, whose main goal is to invest petrol money in Angola and abroad.

A spot of bother

This economic rush raises many questions. Ruled for the past 33 years by President José Eduardo dos Santos, Angola's growth dividends aren’t shared by all and the political power is concentrated in the hands of a happy few.

"They are investing in strategic sectors and also more and more in the media," says Nicolau Santos. His newspaper, Expresso, belongs to the Impresa media group. Two percent of the group is owned by Angolan conglomerate Newshold, which recently bought Portuguese weekly Sol and is targeting the forthcoming privatization of public television TVP.

Negotiations have begun between an Angolan investor and Joaquim Oliveira, head of Controlinvesmente, which owns Diario de Noticias (the main daily newspaper in the north of Portugal) as well as the TSF radio station: "We don't have the same concept regarding freedom of speech. In a few years time, we might be in a spot of bother because of that," says the journalist.

Businessman Carlos Bayan Ferreira does not share the same concerns. "Our relationship with Angola is one of the solutions to the crisis in Portugal, thanks to this new cash flow and the amount of jobs it creates for Portuguese companies that can no longer rely on the declining national market," he says.

Angola is now Portugal's fourth biggest customer behind Spain, Germany and France. It is now Portugal's first partner outside the European Union (Brazil only ranks 10th), and buys machinery, vehicles, medical drugs and wine. In Luanda, Angola's capital city, the real estate market is booming and Portuguese construction firms have found new opportunities. Around 140,000 Portuguese nationals are believed to work in Angola.

"Compared to Chinese investors for instance, our main asset is that we know each other and that we trust each other. It is the same thing for Mozambique," said Carlos Bayan Ferreira. With an annual growth rate of 7%, Mozambique, another former Portuguese colony in Africa, has also become an El Dorado. Around 20,000 Portuguese people have already moved to Maputo, Mozambique's capital city.

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