Opinion: New president, new prospects in Angola

The new president of Angola delivers his inaugural speech
President Joao Lourenco barely finished his inauguration speech on September 26 before changing the way business is done in Angola (source: dpa)

Angola’s parliamentary and presidential elections on August 23, 2017, marked the end of 38 years of rule by President Jose Eduardo dos Santos and the beginning of a political transition. From the outset, it was clear that Mr. Dos Santos’ designated successor, General Joao Lourenco, would face a dauntingly difficult task. Expectations inside and outside the country were running high, while there was little time to convince international partners and investors that real change was possible.

Moreover, as his candidacy for running under the ruling party’s banner was negotiated with his predecessor, Mr. Lourenco had little room for maneuver. He was therefore expected to adopt a wait-and-see attitude, leaving long-awaited reforms for indefinite future. Even though Mr. Dos Santos is no longer president, he remains the head of the People’s Movement for the Liberation of Angola (MPLA) party. As such, he takes precedence over the new president in the very powerful Political Bureau of the MPLA.

Military house

By the time of Mr. Lourenco’s inauguration, however, many argued that he needed to send quick and clear signals in two key areas: the fight against corruption and restructuring Angola’s economy to make it less dependent on hydrocarbons extraction. Steps taken in his first 50 days in office suggest that this is precisely what the new president is doing.

President Lourenco is keenly aware that the party, the armed forces and the intelligence and security services are the pillars of the Angolan power system

Mr. Lourenco’s cabinet features both familiar and new names, but the changes already put in motion could prove critical. General Manuel Helder Vieira Dias Junior, known as Kopelipa, the most trusted member of the former president’s entourage and his “military house” (a cabinet that assists the president in his capacity as supreme commander of the armed forces), left his key job as head of Angola’s Security Services. A relative of Mr. Dos Santos, General Kopelipa is an ingenious and sophisticated man whose long shadow covered all areas of internal and external security, intelligence and military procurement.

General Kopelipa’s departure caused another important casualty: General Antonio Jose Maria, the long-time head of military counterintelligence and watchdog over the security apparatus.

As a longtime MPLA official, President Lourenco is keenly aware that the party, the armed forces and the intelligence and security services are the pillars of the Angolan power system. Big state-owned firms – especially Group Sonangol (the national oil and gas company), Endiama E.P. (the diamond monopoly) and its trading subsidiary Sodiam, and Angola’s $5 billion sovereign wealth fund – are the system’s financial cash cows. The new president is comfortable with the party and the military; as for the intelligence and security apparatus, he is ready to take control through the new head of his military house, General Pedro Sebastiao. Many had thought that weeding out Mr. Dos Santos’ proteges from key positions would be a protracted process, but it is going quite swiftly.

State-controlled companies

On the economic front, the new president stresses the need for a total restructuring of Angola’s economy, building up the country’s great potential in agriculture, fishing and mining so that it no longer needs to function as a petro-economy. Angola used to be a powerhouse in diamond production, but the civil war that ended in 2002 and wild garimpo (prospecting) damaged the industry and caused foreign investors to pull out. Corrupt practices and favoritism also have contributed to the industry’s decline.

The diamond industry was a prowling ground for wealth-hungry relatives of President Dos Santos. His billionaire daughter Isabel and her husband Sindika Dokolo enriched themselves through privileged access to the Angolan Diamonds Society (Sodiam), which controls the bulk of Angola’s diamond trade. Sodiam CEO Beatriz de Sousa has been fired along with the company’s entire management board. The new CEO, Eugenio da Rosa, has been charged with boosting diamond exports.

The international oil giants are pushing for a revision of Angola’s regulations and production regime

President Lourenco also dismissed Endiama CEO Carlos Sumbula, replacing him with an experience diamond industry manager, Jose Manuel Ganga Junior. His mission, according to President Lourenco, is to implement fair and transparent business rules to bring big diamond investors such as De Beers back to Angola. These global players already have signaled their interest.

Crown jewel

The oil industry is another concern for the new president. Angola’s current production (about 1.7 million barrels per day (b/d) makes it the leading producer in sub-Saharan Africa after Nigeria. But the foreign companies operating in Angola – which include Total, Exxon and Chevron – have never felt comfortable with the special status of Sonangol, the “crown jewel” of Angola’s economy, and particularly with its production and fiscal privileges. The international giants are pushing for a revision of Angola’s regulations and production regime.

The former president of Angola with a uniformed bodyguard
Sept. 26, 2017: Angola’s former President Jose Eduardo dos Santos (front) attends his successor’s inauguration ceremony in Luanda (source: dpa)

President Lourenco’s first decisive step in that direction was to remove Isabel dos Santos as chair of Sonangol on November 15. Her firing was also huge political news. This complex oil and gas conglomerate represents a network of interests and a key base of political and financial influence for its managers. Mr. Lourenco has already appointed a special team to draft recommendations for how to streamline the industry, with obvious hope of improving investor confidence and encouraging future projects. New investment is crucial to avoid a production decline projected for 2019.

As if to add insult to injury for the Dos Santos clan, the new Sonangol chair appointed by the president is Carlos Saturnino, the former general manager of the firm’s exploration and production unit who had been fired by Mrs. Dos Santos just last year. When Mr. Saturnino reemerged as Angola’s new oil secretary (deputy minister) in October, it was a clear signal for Mrs. Dos Santos to resign – which she chose to ignore. Angola’s oil ministry (called the State Oil Secretariat) is now led by Paulino Jeronimo, another Sonangol board member sacked by Mrs. Dos Santos.

Greed factor

The fall of “the Princess”, as Africa’s richest woman was popularly known, culminated a benign purge of the Dos Santos family from public companies and signaled an end of the era of family nepotism that drained Angola’s resources. Some insiders of the ruling circles in Luanda claim that the former president, a solitary man who enjoys reading and has relatively austere tastes, has fallen victim to his children’s untamed greed. The fact that they came from different mothers who competed with each other for money and power only aggravated the scandalous grab of public resources that has now found its epilogue.

Angola’s Sovereign Wealth Fund (FSDEA), headed by the former president’s 39-year-old son, Jose Filomeno dos Santos, is expected to be the next in line for housecleaning. The president has a handy excuse, since allegations have surfaced that some FSDEA assets are being managed by a Swiss entrepreneur of Angolan origin who has been convicted of misappropriating funds and whose name has recently popped up in the Paradise Papers (a 1.4-terabyte set of leaked electronic documents related to activities of corporations and well-to-do individuals in so-called “offshore centers”).

President Lourenco also has ordered changes in public media – television, radio and the press – and appointed journalist Luis Fernando, respected for his open-mindedness and independence, as his cabinet’s news and media coordinator.

Personal style

Mr. Lourenco also ushered in a new era in terms of public conduct. He travels light and often, with only a small detail of bodyguards, having dispatched the presidential guard, his predecessor’s Pretorian force, back to the armed forces. On November 7, the president took the unusual step of holding a cabinet meeting in the northern province of Cabinda – an opposition stronghold where the ruling MPLA lost the elections to UNITA and also the base of a strong separatist movement.

Departing from the established presidential practice, Mr. Lourenco even spent the night in Cabinda. And during a visit to the provincial capital of Lubango (in southwestern Angola) to celebrate Independence Day, he demanded that a crowd of MPLA activists waiting for him to disperse – since he was now the president of all Angolans, not just members of one party.

President Lourenco’s shake-up of the state administration was perfectly legal

The president’s more open, relaxed political style, accompanied by gestures of goodwill toward the opposition – Isaias Samakuva, the leader of UNITA, was one of the first politicians received by Mr. Lourenco after the elections – contrasts sharply with that of his predecessor. This could give Angola’s new leader additional leverage.

Scenarios

Given President Lourenco’s fast start, and especially his apparent determination to curb corruption and special interests associated with the former administration, two scenarios are feasible:

  • Either Mr. Dos Santos and his partisans remain quiet and recognize that change is inevitable, peacefully accepting “purges” in the political and economic structures;
  • or the former president will try to use his MPLA presidency to stop Mr. Lourenco’s reform drive.

The second possibility appears less likely. Firstly, the available intelligence, particularly regarding Mr. Dos Santos’ poor health and his desire for an honorable retirement, suggests that he will resign from his party leadership post during an extraordinary MPLA congress expected in the first quarter of 2018. Secondly, while President Lourenco’s shake-up of the state administration was surprising in its decisiveness and speed, it was perfectly legal: corporate firings were restricted to the management and boards of state-controlled companies. Lastly, local observers are convinced that once the president has installed his new team, he will not act vengefully by going after the private fortunes and interests of the Dos Santos family.

While Mr. Lourenco’s new broom is appreciated inside and outside the country, the bulk of reforms will still lie ahead.

The International Monetary Fund already has a mission in-country, officially to advise and help the government in stabilization and reform. A devaluation of the kwanza (already heavily discounted in the “street market”) is expected.

Long seen as corrupt and unfriendly to investors, Angola stands a chance to start improving its international image once the ambitious new policies to diversify its economy are implemented. The country could benefit from the current keen interest of Western investors in sub-Saharan Africa.

Europe is facing continued migration from Africa. These movements are driven by insecurity, lack of jobs and local wars, as well as by the horrors of radical jihadism. In this context, a stable and more prosperous Angola, with a new government and new priorities, would become an important player and Western ally in the region.

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