Tables turn as Luanda buys up Lisbon's assets and former colonial families return to Portugal's 'el Dorado'

Not so long ago, thousands of Angolans were fleeing for Portugal. Now the tables have turned. Angola's remarkable image makeover from a war-torn African backwater to rising global oil power has been capped by news that it will provide a much needed shot in the arm to its debt-ridden former colonial masters.

President Eduardo dos Santos said Angola was prepared to invest its burgeoning petrodollars in Portugal, which has been ordered to privatise struggling state-owned firms under a €80bn (£70bn) International Monetary Fund bailout.

"We're aware of the difficulties the Portuguese people have faced recently and in such difficult times we must use our trump cards," dos Santos said at a press conference with the visiting Portuguese prime minister, Pedro Passos Coelho, according to Angola's state news agency Angop.

Coelho Passos added: "This visit is of huge significance. It is a unique opportunity … to build a base for stronger and closer ties between the two countries, their citizens, their companies and states."

"Remember that we are looking to privatise [state utility company] Energias de Portugal and [national grid] REN," he told Angola's state broadcaster.

Other state-owned entities up for grabs include the national airline Tap and the Banco Português de Negócios. Banco BIC of Angola is set to buy the distressed bank for €40m – less than a fifth of its original market value. Isabel dos Santos, daughter of the long-serving president, is a part owner of BIC.

Given that the IMF forecasts economic growth of 11% next year, while Portugal's will shrink by 1.8%, analysts say Angola's financial aid to Portugal will grow. "Angola already has large investments in Portugal's private sector so they do view buying in it as an opportunity," said one economist in Luanda, the Angolan capital.

Meanwhile, the booming economy, fed by a 1.8m barrel-per-day oil industry, has prompted its Portuguese-speaking compatriots to flock south for business and work opportunities. The Portuguese foreign ministry said tens of thousands of citizens have set up shop in Angola over the last year.

"Angola was at one point the Portuguese El Dorado," a Luanda-based diplomat said, referring to the period of colonial rule that ended in 1975.

"A lot of Portuguese who were born here then went back to Portugal but their families are now coming back."

Some Angolans have criticised the growing financial ties between Lisbon and Luanda, amid worries of capital flight and Angola's own yawning poverty gap.

"Now is not the time to help out the Portuguese if we can't be sure the gap between the poor and rich doesn't close," a blogger on paginaglobal posted.

In 2008, two-thirds of Angolans lived on less than €1 a day, while only 25% of children are enrolled in primary school.

Luanda has been ranked the most expensive city in the world for expatriates for the second year running, ahead of Tokyo, according to Mercer consultants.

Angola's breakneck growth is also affording Luanda some regional clout, with the country vying with Nigeria to become Africa's top oil exporter. It joins other African countries such as Ghana and Nigeria as among the fastest-growing economies in the world.

State oil company Sonangol, which has been criticised in the past for a lack of transparency, runs operations in almost every sector of the economy. In 2001, BP was forced to back down on plans to publish its oil-related earnings from Angola after President Dos Santos threatened to kick the British oil major out of the country if did so.