Angola is Sub-Saharan Africa’s third largest economy, after South Africa and Nigeria (1). It is already one of Africa’s biggest oil producers, with an average output of 1.8m barrels a day since 2008, and its extensive reserves may be even greater than thought, since prospecting suggests its deposits have geological similarities with the very rich Brazilian oilfields. After nearly three decades of civil war (2), a national reconciliation programme has given the country political stability, which is attracting foreign investors. Angola is being courted by its former colonial master, Portugal, which has been forced to adopt drastic austerity measures. “Angolan capital is very welcome [in Portugal],” said the Portuguese premier Pedro Passos Coelho during a visit to Luanda last November.

The new Angolan bourgeoisie are buying real estate in Lisbon — which may have contributed to the rise in property prices — but most Angolan investment has been in Portuguese banks and energy firms: around $2bn, or 4% of the total value of companies listed on the Portuguese stock exchange. The figure is difficult to calculate, given the complex connections between Angolan and Portuguese banks. The Angolan oil firm Sonangol (Africa’s second largest company in 2010) has led this trend.

The flow of Angolan funds into Portugal accelerated in 2008. Sonangol took a major stake in Portugal’s largest private bank, Millennium BCP. Santoro Finance, owned by Isabel dos Santos, eldest daughter of Angola’s president José Eduardo dos Santos, is also involved: the Esperenza consortium, formed by Santoro and Sonangol, has a 45% stake in Portuguese group Amorim Energia, which has a 33.3% stake in the Portuguese state-owned oil company Galp Energia. Private Angolan banking firms, such as Bank of Industry and Commerce and Atlantic Private Bank, have established subsidiaries in Portugal.

In a few years, Angola’s banking has been transformed. The Portuguese Banco Espírito Santo was a pioneer, setting up operations in Luanda in 1993, soon after economic liberalisation, and establishing close relations with the government. Angolan mobile phone carrier Unitel, of which Isabel dos Santos is majority shareholder, has enjoyed spectacular growth thanks to its partnership with Portuguese telecoms companies, and claimed 6 million subscribers in 2010.

In March 2009, during Angolan president José Eduardo dos Santos’s visit to Portugal, a thousand businessmen met at the Ritz Hotel in Lisbon to discuss further strengthening economic and financial relations. Manuel Domingo Vicente, then chairman of Sonangol declared an interest in building a lasting relationship with Portugal (3). Presented as one of Africa’s most influential entrepreneurs, he is considered likely to succeed dos Santos as president. Soon after this visit, Sonangol and Portuguese state-owned bank Caixa Geral de Depósitos established an investment bank (based in Angola) to facilitate the development of infrastructure and heavy industry.

Heavy losses

Portuguese banks suffered heavy losses when the global financial crisis struck, as did their foreign shareholders. This did not discourage Sonangol, which helped Millennium BCP to recapitalise, enlisting the help of Bank of Brazil and a Chinese bank, yet Millennium BCP had too much exposure to Greek debt and posted a net loss of 786m for 2011. By contrast, Millennium BCP’s subsidiaries in Mozambique and Angola saw profits rise by 50%.

Frequently criticised by the International Monetary Fund for a lack of transparency in its management, Sonangol acts like a state within a state: it has established the equivalent of a sovereign wealth fund that it manages directly in conjunction with its 22 subsidiaries, which cover all economic activity. Sonangol also collaborates with China International Fund, a private Chinese firm based in Hong Kong. This resulted in the establishment of China Sonangol in 2004 and has helped Sonangol’s business diversification. With or without its Asian partner, Sonangol is present in many African countries, in Latin America (Cuba, Ecuador, Venezuela) and in the Middle East (Iraq, Iran).

Angolan corporate strategists see Portugal as the ideal platform for the internationalisation of their companies. They are conscious of being the masters now in their relationship with Portugal, yet Portuguese entrepreneurs benefit from the relationship. Portugal is going through a severe recession, and the opportunity to participate in Angola’s huge reconstruction and development projects, largely financed by the Angolan government, is a blessing for many. Of the 532 foreign companies operating in Angola — and controlling 40% of its gross domestic product — 38% are Portuguese (18.8% are Chinese). With unemployment in Portugal at 13%, Angola has attracted tens of thousands of workers, not all skilled. This worries the Angolan government, which regularly deplores the lack of opportunities for its young people. The official number of Portuguese nationals living in Angola rose from 21,000 in 2003 to over 100,000 in 2011. According to Angola’s consular service, there may be twice that number. The number of Angolans living in Portugal has fallen: the land of opportunity has moved south.