Angola’s oil local content remains limited to 5%
By the AFREEQUE newsroom, based on Expansao
Six years after Angola’s oil local content regime came into force, businesses are complaining of a lack of opportunities, foreign competition and difficult access to financing. The share reserved for companies wholly owned by Angolan capital is only 5%, according to Expansão, citing Luís Lago de Carvalho of AECIPA.
Six years after Angola’s local content regime in the oil sector came into force, the share reserved for businesses wholly owned by Angolans has risen only from 3% to 5%. Industry associations cite structural obstacles to implementing the law, Expansão reports.
Luís Lago de Carvalho, vice-president of the Association of Service Providers to the Oil Industry in Angola (AECIPA), says little has changed for most local entrepreneurs. Some businesses have even lost their international partners since the law came into force, protecting services through exclusivity, preference and competition regimes.
Businesses also cite a lack of opportunities, foreign competition, difficult access to financing and the requirement to be paid in kwanzas. For purchases of goods and services abroad, Luís Lago de Carvalho advocates loans in foreign currency at rates of 5% to 8%, compared with 20% to 23% in local currency. He says international rates, sometimes as low as 2% to 3%, put Angolan businesses at a disadvantage.
By comparison, Nigerian national companies reportedly account for more than 60% of the country’s oil production, while the African Petroleum Producers’ Organization aims for 50% local content by 2030. In Angola, the law governing local content in the oil sector came into force in 2020.
