Angola's sovereign wealth fund is looking at opportunities in gold, copper and silver mining in sub-Saharan Africa as the continent's number two oil producer tries to diversify its sources of revenue, its chairman said on Wednesday. Jose Filomeno dos Santos, son of long-serving President Jose Eduardo dos Santos, also said fiscal pressure on the government from this year's collapse in oil revenues may force it to push through long-delayed private sector reforms.
"It's not the best situation for the nation," dos Santos junior told Reuters. "It's probably going to be an incentive for reforms to take place to enable the private sector to take part." In particular, he mentioned a possible overhaul of land-ownership regulations to facilitate private investment in domestic agriculture and mining. Oil accounts for around half of output in sub-Saharan Africa's third-biggest economy, 80 percent of tax revenues and 90 percent of export earnings, leaving it dangerously exposed to price shocks.
Even after massive spending cuts, the government is predicting a budget deficit of 7 percent of GDP this year and the currency, the kwanza, has gone into freefall, losing 30 percent of its official value against the dollar, and double that on the black market. The $5 billion fund, known by the Portuguese acronym FSDEA, is still a long way from providing any sort of significant state funding buffer. As of the end of 2014, it had $4.88 billion under management, just over half of it invested in fixed income assets across the globe.
This year, it allocated $250 million each to three funds dedicated to private equity investing in mining, timber and agriculture, with a focus on domestic and regional ventures in Angola's back yard in southern Africa, dos Santos said. He did not provide details but said the fund was exploring investment opportunities in gold, copper and silver mining.
The 2015 slump in commodity prices has hammered the value of mining projects in regions such as northern Zambia and southern Democratic Republic of Congo's copper belts, as well as gold mining ventures from South Africa to Tanzania and Ghana. Dos Santos also confirmed he had been reappointed as FSDEA chairman for another three years, brushing aside charges of nepotism by saying the 3-year-old fund's "solid" track record spoke for itself in a country known for its official secrecy.
"The fund has been established. It's up and running. It's investing at a time that normal private investors are maybe a little bit shy," dos Santos said. "Over the last three years we've managed to have an investment policy which is open for people to look at. We've been presenting the audited numbers to the general public." Besides mining, timber and agriculture, the FSDEA has earmarked $500 million for Africa's hotels sector, and $1.1 billion to commercial infrastructure.
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