World Report

As businesses prepare for privatisation, competition brings increased opportunity and firms gain new contracts

hat the ubiquitous Coca-Cola company has opened a second bottling plant in Angola could be taken as a sign that the country is on the road back to normality.
When the firm opened a plant in the capital, Luanda, last year, production of Coke went from zero to 14 million cases a year. This led to the opening of a second plant in the southern city of Lubango.
The big difference between Coca-Cola and Angola’s home-grown industry is that the former is in the private sector while much of the latter is state-owned.
What little industry the country has centres on food processing, although construction materials, steel production and chemicals are also important. But many factories lie idle due to lack of equipment and replacement parts, or they are running below capacity or else irretrievably damaged.
Excluding diamond mining, oil and ancillary services, the manufacturing industry contributed just 5.5 per cent of the gross domestic product in 1998. This situation is set to change, however, as the government plans to privatise many of the enterprises it owns.

Businesses scheduled for privatisation include three food companies in Lubango, which have lain dormant for more than 10 years. The state intends to retain a 40 per cent share in these companies, according to reports.
Another sign that times are changing is that brewing capacity tripled this year at Nocal, one of the largest breweries in Angola along with Cuca and Eka.
Among the biggest Angolan steel and tube producers, Fata (Fabrica de Tubos de Angola) and Metang (Metalurgica de Angola) are being prepared for sale. Both were established during the Portuguese colonial era and are now managed via a partnership by private Angolan firm Indufer, which has been asked by the government to prepare the two companies for privatisation.
Indufer president Jose Pinto Dias dos Santos Neto says: “The privatisation process is far advanced and on course to be concluded this year.”

According to Mr dos Santos Neto, the infrastructure of Fata and Metang was badly damaged during the war, which was why the government decided to install private management to revive them. “We have made several investments to improve the group,” he says.
“When Indufer started to rehabilitate Fata and Metang, many activities did not exist. For example, today we have a school furniture-making plant to support education in Luanda, and we have made investments in hotels and other areas.
“Any national or foreign company can participate in this privatisation,” he adds. “The management contract for rehabilitation, which we have made with the government, allows Indufer to work with any partner it desires.”
The two firms can process an annual 36,000 tonnes of steel. Indufer’s president says the plants will be working at 90 per cent capacity and yield a gross income of $15-18 million this year.

“After privatisation we intend to expand activities at the plants, and we will open new lines for the production of larger tubes to support the petroleum firms and for export. We are also going to diversify our activities,” says Mr dos Santos Neto. “We are installing two plants for the manufacture of metal furniture for schools. We make more than 3,000 desks a month and we are thinking about constructing a factory where we can prepare our own wood.”
Indufer is also engaged in the construction of accommodation for 400 of its workers at Cacuaco, near Luanda. The housing complex includes a clinic and a football field.
“The problem we face today is the distribution of our products across the country,” says Mr dos Santos Neto. “Most of the roads are in a bad condition and sometimes we have to use planes to trans-port our products, which is very costly.”
Competition is growing as well. Five new factories make corrugated metal sheets, although they are small businesses compared with Fata and Metang. “Our strategy is to increase output and reduce prices so that we can stay ahead of the market,” he adds.

An exclusive contract to supply Coca-Cola means a stable future for Angases, a producer of industrial and medical gas. The 52-year-old firm already has two production units in Luanda and one in Lobito where it makes electrodes. A new gas production plant in Lubango supplies the Coca-Cola bottling factory there.
Angases general manager Julio de Melo Araujo says more foreign businesses, mainly in petroleum production and exploration, are turning to Angases instead of importing gas. “It is better for them to work with us because the transport costs are lower – therefore the price is lower – so there is no point in importing gas from abroad,” he adds.
On average the firm makes $300,000 a month, but Mr Araujo expects this figure to rise. “The real changes will be in 2002 because we are currently investing significantly,” he says. “Next year we will be producing new products.”
There are plans to install another unit for the production of carbon dioxide in Lubango and several other projects are on the drawing board.

Much of this will be as a result of greater oil exploration and development in the petroleum sector. Angases is hampered by power failures and water shortages in Angola – contaminated water cannot be used in the gas-making process. This has been partially overcome by storing clean water in huge cisterns.
“The industrial sector in Angola is very different from how it was in the past,” says Mr Araujo. “There is a need to resurrect paralysed firms with no financial capacity so that they can improve by themselves. Today, about 90 per cent of Angolan industries are paralysed, although we are operational.”