Situation Report: Angola enters a new era with an old guard

Angola’s long-sitting president steps down, but power remains within his family and immediate entourage of political cronies.

Africa’s second-longest serving president, José Eduardo dos Santos of Angola, confirmed in early February that he would not seek another term in office at the next legislative elections in August; the winning party nominates the president, who is confirmed by the national assembly. The announcement signals Angola’s most significant political event since Dos Santos came to power on 20 September 1979, after the former president died in office. Such an event would typically risk creating a power vacuum that, in turn, would lead to increased political competition and uncertainty, translating into political risk to businesses. However, the recent announcements are unlikely to produce any significant upheaval in Angola, and will signal continuity rather than disruption in the country’s political environment.

Succeeding the ‘father of a nation’

This was not the first time the 74-year-old Dos Santos announced he was stepping down. He has done so in previous elections since 2001 in order to purge political opponents posing a serious threat to his remaining in office. Dos Santos announced, again, in March 2016 that he was to quit, which was confirmed in February. The principal change since then has been the name of his successor.

Last year, the most likely official to succeed Dos Santos appeared to be the then-vice president, Manuel Vicente. As a former chief executive of the state-owned oil and gas firm, Sociedade Nacional de Combustíveis de Angola, E.P. (Sonangol), with long experience within the ruling party Movimento Popular de Libertação de Angola – Partido do Trabalho (MPLA) and good relations with the international business community, Vicente was ostensibly Dos Santos’ successor.

However, since last year, Vicente has somewhat fallen from grace due to allegations that he had laundered money and paid about USD810,000 in bribes to Portugal’s former prosecutor general, Orlando Figueira, to shut down a Portuguese corruption investigation into Vicente in 2012, when he was heading Sonangol. In early February, Portuguese prosecutors said they would formally charge Vicente, a move that is likely to worsen bilateral relations between Angola and its former colonial power.

The most likely contender to succeed Dos Santos at this point is the former minister of defence and current vice president, General João Lourenço. He was confirmed by the ruling party’s central committee as the top of the MPLA’s list of candidates (see box), and his running mate – the second on the MPLA’s list – would be the minister for territorial administration, Bornito de Sousa Baltazar Diogo. Both have long careers within the MPLA and the Angolan government, suggesting they will continue toeing the party line.

Angolan politics – a family affair

The forthcoming name changes at the helm of the Angolan government suggest that power will remain vested with the incumbent president, his family and political cronies. Although Dos Santos leaves the presidency after almost four decades in power, he will remain the president of the MPLA for at least another term; he was re-elected by the MPLA’s electoral convention in the capital Luanda last August with 99.6 per cent of the vote. While it is unlikely that Lourenço will become a mere puppet to Dos Santos, the incumbent is likely to exert influence over the next Angolan president, given his unrivalled support within the MPLA.

Furthermore, his children remain in control of the country’s key institutions. Last year, the president’s daughter Isabel dos Santos – Africa’s wealthiest woman according to U.S. magazine Forbes – was nominated as chief executive of Sonangol Group. Her appointment was announced in April 2016, shortly after her father had sacked the entire board of the company, which also operates in the sectors of banking, media, real estate and telecommunications. She promised to increase efficiency at the state-owned oil company, which was struggling to perform amid a global slump in oil prices. One of her first decisions was to sell off the company’s non-oil assets to focus on its core expertise. Her brother, José Filomeno, has been the chairman of Angola’s USD5 billion sovereign wealth fund, Fundo Soberano de Angola (FSDEA), since 2013.

While it is unlikely that Lourenço will become a mere puppet to dos Santos, the incumbent is likely to exert some level of influence over the next Angolan president

However, the fact that neither of Dos Santos’s children has been nominated as his successor, as some civil-society organisations had expected, suggests that the MPLA’s internal procedures to scrutinise candidates are stronger than many had foreseen. Nevertheless, as sub-Saharan Africa’s largest oil producer after Nigeria, and where revenue from oil and gas exports account for over 95 per cent of government revenue, it is clear that the Dos Santos family will remain central political figures due to their control of Angola’s key institutions – the MPLA, Sonangol and the FSDEA – even after President Dos Santos steps down.

While Angola’s political landscape will unlikely change dramatically in the one-year outlook, the likely accession of General Lourenço suggests there could be more political changes looming in the longer term. Lourenço, unlike others within Angola’s political elite, has a clean corruption record and is likely to have the capacity to bridge different political divides, being both a general and a long-serving MPLA official. This could reduce political competition, both in Angola and abroad; he is married to Ana Afonso Dias Lourenço, a former minister of planning and now executive director at World Bank Group, a consortium of five international organisations, including the International Bank for Reconstruction and Development and the International Development Association which together make up the World Bank.

Dos Santos’ succession will particularly interest the petroleum industry, and importers from China, India and the United States – the three largest markets for Angolan oil, according to data from the Observatory of Economic Complexity, an econometric project hosted by MIT Media Lab Macro Connections group. Angola’s extractive sector governance is among the most opaque in the world, and the change of president is unlikely to significantly alter the way oil and gas operations are conducted in Angola.

Sonangol is at the centre of the extractive industry as both the regulator and administrator of the sector. It also has exclusive right to explore and produce oil in Angola. Foreign oil and gas firms looking to start operations in Angola are legally required to co-operate with Sonangol, either through a production-sharing agreement or by a joint venture with the state firm. Most of the world’s largest oil firms operate in Angola, including the U.K.’s BP, the U.S. companies Chevron Corporation, ExxonMobil, Anglo-Dutch firm Royal Dutch Shell, and the Norwegian state-owned Statoil A/S. Furthermore, the national assembly does not have a mandate to investigate alleged malfeasance by state-owned companies, including Sonangol; only the president has that right. This leaves it pretty much up to Sonangol’s own internal checks and balances to maintain transparency, an assessment that is unlikely to be independent.

Despite the lack of change, new investors looking to enter the Angolan market, particularly those based in jurisdictions with stringent transparency laws, such as the European Union and the U.S., will be concerned by the lack of transparency and high levels of perceived corruption for business operations in-country.

Read the full article