COVID-19: Angola begins partial reopening of economy

Angola, one of Africa's economic powerhouses, is navigating through challenging times as it grapples with the economic fallout of the COVID-19 pandemic. The country recently lifted its Covid-19 state of emergency and has begun a partial reopening of its economy, allowing businesses to operate at 50 percent capacity. To shed light on the current situation and the government's response, Rui Oliveira, the CEO of BFA Asset Management, provided insights in an interview on CNBC Africa. One key theme that emerged from the discussion was the impact of the government's injection of 100 billion kwanzas into the economy through quantitative easing. Oliveira clarified the amount and highlighted that negotiations with the central bank had been ongoing for a while. The funds have been utilized to their full extent, but the ultimate impact on liquidity and economic recovery remains uncertain. The CEO emphasized the need for these funds to translate into tangible benefits for businesses and the overall economy. Oliveira also discussed the broader economic outlook for Angola in 2020, noting that GDP is projected to contract by 2.3 percent. With oil prices hovering between $20 and $35 per barrel, the country faces significant challenges in achieving financial stability. Additionally, the government is set to revise its annual budget, signaling a shift towards privatization and restructuring initiatives, including the reorganization of the largest public bank, BPC, and the sale of shares from Sonangol. Despite the current macroeconomic challenges, Oliveira expressed optimism about the potential for foreign investment in Angola. He highlighted the country's appeal to investors seeking yield and emphasized the importance of effectively communicating Angola's credit story to attract investment. Looking ahead to 2021, Oliveira foresees Angola being part of foreign investors' portfolio rebalancing and FX hedge strategies, provided that the country continues on a path of reform. The discussion also touched on Angola's COVID-19 situation, with 92 confirmed cases and 38 recoveries. Despite the relatively low number of cases, the economic impact of the pandemic remains a pressing concern. Oliveira hinted at the possibility that the country's economy may have been able to weather the storm without a complete shutdown, suggesting that a different approach may have been beneficial. As Angola seeks to navigate the dual challenges of economic instability and public health, the path to recovery will require a combination of effective monetary policy, fiscal reform, and a concerted effort to attract foreign investment. The coming months will be critical in determining Angola's economic trajectory and its ability to emerge stronger from the current crisis.