New $5bn Angolan fund

2012-10-20 13:30

Africa’s second-biggest oil producer, Angola, is starting a sovereign wealth fund with $5 billion (R43 billion) in assets to ease the impact of commodity-price volatility that prompted an International Monetary Fund (IMF) loan three years ago.

The Fundo Soberano de Angola, or FSDEA, is to be managed by a three-member board led by Armando Manuel, an adviser on economic issues to President Jose Eduardo dos Santos. Investments will include financial securities, and stakes in infrastructure and hospitality projects and other industries that may exhibit strong growth in sub-Saharan Africa, Manuel said.

The IMF promoted setting up a fund and cutting the quasi-fiscal operations of the state oil company Sonangol when it loaned Luanda $1.3 billion in 2008.

Manuel said: “The fund was created with the intention of using the best methods of investment for the development of infrastructure. It is an evolution of the resources fund that had been proposed using 100 000 barrels of oil a day.” Angola pumps about 1.8 million barrels of oil a day.

Joao Fonseca, the executive director at Angolan private bank BAI, said: “The government has concerns about the economy’s dependency on oil and how it must adapt and think about protection for the future and economic stability.”

The money will target domestic agriculture, water, power generation and transportation to attract foreign investment to Angolan infrastructure projects, according to fund documents. Hotel projects including a hospitality school are part of the plans.

The fund’s board includes Jose Filomeno de Sousa dos Santos, the eldest son of the president and a former board member of Banco Kwanza Invest SA, where he oversaw the earlier 100 000-barrels-a-day fund.

“My only professional link is with the oil fund, now reformulated as the sovereign fund,” the president’s son said, “we follow the law under which it is formed, the principles of transparency and good management of investments.”

– Bloomberg

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