1. ANGOLA Unlocking Emerging Opportunities Presentation to UK-Angola Investment Forum May 24, 2012 Elio Codato World Bank

2. Overall Macro Economic Situation  In 2011, Angola’s overall economic situation improved from the immediately preceding years:  Robust real growth of 4%  Declining inflation to 11% and exchange rate stabilized  Overall fiscal surplus increased to 10% of GDP with domestic arrears settled  International reserves reaching US$27 billion, equivalent to 6 months of imports  Trend is expected to accelerate in 2012 with growth forecast to reach 8%, helped by increased oil output

3. EMERGING SECTORS OF OPPORTUNITY  Non-oil sectors are playing an increasing role in the country’s economic success story and are contributing a higher share of GDP from 45% in 2008 to 55% in 2011  Housing and Transport Infrastructure:  Ambitious Housing Projects: Luanda and surrounding areas  Rehabilitation/development of Transport Infrastructure (roads, railways, bridges, airports) to regenerate existing networks and develop transport corridors within the country and with neighbors  Bringing construction and maintenance levels to SADC and international standards

4. EMERGING SECTORS OF OPPORTUNITY  Agriculture/Agribusiness:  Second largest sector (after oil and gas) and source of income for 60% of the population  Estimated 3 million hectares of arable land exist  Crops include cassava, beans, sweet potatoes, bananas, cotton, rice along with other fruits and vegetables  Historically, the country was a major world exporter of coffee and the potential remains for reinvigorating the agriculture sector  Potential for forestry and livestock production

5. EMERGING SECTORS OF OPPORTUNITY  Telecommunications: planned sector liberalization and expansion of coverage  Power: Construction of hydro-electric power plants, diesel-fired plants, and use of LNG in order to multiply the current capacity from 1000 MW to 5500 MW in the coming 5 years  Water: Second most endowed country in Africa in terms of water resources but significant investments needed to improve access to water in both urban and rural areas  Mining: Full potential to be fully explored but proven reserves of diamond, gold, iron, phosphate, copper and others

6. EMERGING SECTORS OF OPPORTUNITY  Tourism/Hospitality:  Significant potential for development (coastline, system of parks and natural reservations, unexplored landscapes)  Demand for rehabilitation/development of hotel and conference facilities in Luanda and surrounding regions  Financial and Other Services:  Banking system includes 23 banks (majority privately owned); sector is profitable but there is need for new products, services, and innovation to promote greater access to bank products  Insurance and pensions: new actors entering the market  Ongoing need for consulting, legal, and financial advisory services

7. Investment Climate Challenges  To unlock the competitiveness of these emerging sectors, lessen dependence on oil, and diversify the economy, Angola needs to dramatically transform its investment climate:  2011-2012 Ranking in Global Competitiveness Index : 139 out of 142  2012 Ranking in Trade Logistics Performance Index : 138 out of 155  2012 Ranking in Doing Business Index: 172 out of 183  Key Challenges include:  Infrastructure bottlenecks  Low labor productivity  Limited access to finance, especially for small and medium enterprises  Weak governance environment

8. Doing Business Results  Despite progress in certain areas, Angola’s overall performance on Doing Business remains low compared with its peers in the region

9. Business Perception of Main Constraints  According to the 2010 Enterprise Survey administered to 479 firms in Angola of all sizes and sectors (including informal) the top three investment climate constraints were: (i) Corruption; (ii) Access to Land; (iii) Access to Finance Percent of Firms Identifying the problem as the main obstacle

10. Government Reform Programs  Government recognizes importance of improving the investment climate in order to attain its diversification and job creation goals  Recent reforms include:  Guichet Unico (Single Window) which has reduced time and cost for business start-ups  Administrative reforms and IT upgrade which have reduced import / export time at the Port of Luanda (main port for the country)  Establishment of the Central de Riscos de Crédito (Credit Risk Bureau) to facilitate access to finance by providing updated borrower data to finance institutions  Government has launched an ambitious Public Investment Program to upgrade infrastructure and energy access  An Enterprise Development Program has been announced which aims to promote access to finance to SMEs, develop industrial poles, improve skills, and create linkages between large investments and smaller businesses

11. Angola Portfolio  5 Active Projects (US$461.5 million), 2 Trust Funds (US$5 million)

12. New World Bank Group Country Partnership Strategy  New Country Partnership Strategy under preparation covering 2013-2016  Strategy will have two main pillars and a foundation as follows:  Pillar One: Deepening Diversification for Inclusive Growth  Pillar Two: Enhancing the Quality of Decentralized Service Delivery  Foundation: Building Human Capacity and Institutions and Deepening Social Protection  Strategy will bring together all institutions in the World Bank Group, including:  International Finance Corporation (IFC): to catalyze investments and support business environment reforms  Multilateral Investment Guarantee Agency (MIGA): to facilitate foreign investments  World Bank Institute (WBI): to provide training and capacity development  Strategy will focus on knowledge transfer and developing partnerships with donors, civil society, and the private sector

13. Summary Conclusions  Angola presents a unique and exciting set of business prospects across a range of industries  The country continues on a solid growth trajectory with clear Government commitment for maintaining macro-economic stability  To unlock the many potential opportunities, significant reforms have to be undertaken at the policy and institutional levels which should be coupled with progress in physical infrastructure and human capital  The World Bank is ready to do its part to help Angola attain its stated social and economic development goals  The World Bank believes the private sector has an essential role in promoting lasting, broad-based, and sustainable growth through responsible business investments

14. Thank you! http://www.worldbank.org