Angola Launches $5 Billion Sovereign Wealth Fund

Angola is an African nation that is trying to get it right. While many nations in sub-Saharan Africa are in turmoil, Angola has been steering in the right direction for years now. This is one of the nations in Africa where investors in frontier markets can probably sleep a little bit better at night as the nation becomes more and more commercialized and after it has enough capitalized companies to launch a stock market. The nation is making a bet on itself with the launch of a sovereign wealth fund with an investment of $5 billion.

The sum of $5 billion might not sound like much when you think of other sovereign wealth funds from Norway, Singapore and the Middle East. It is a substantial size when you consider the size and economy of Angola. The CIA World Factbook estimates a population of about 18 million people, with about 4.5 million or so of that population living in the capital city of Luanda. The estimated gross domestic product for 2011 was put at about $117.2 billion on a purchasing power parity basis. Angola runs at a budget surplus and its entire government expenditures in 2011 were projected to be almost $35.3 billion. The CIA World Factbook also estimates that Angola’s reserves of foreign exchange and gold came to $28.35 billion as of the end of 2011.

The fund is called the Fundo Soberano de Angola (FDSEA) and will make investments in Angola and internationally. This FDSEA has a mandate to promote the economic and social development of Angola and generate wealth for the country’s future generations. It was no easy task and did not occur overnight. The president of the nation is José Eduardo dos Santos, and he formally announced plans for the fund back in 2008. The law was passed by the nation’s parliament in 2011.

There is also a set strategy here to invest in infrastructure and hospitality sectors as two of the first sectors targeted for investment. The infrastructure investments are said to focus on sectors with immediate development potential such as agriculture water, power generation and transport. After looking at the funds website it also says that the FSDEA will gradually diversify its investment portfolio across a number of industries and asset classes including global private and public stocks; bonds; foreign currencies; financial derivatives; commodities; treasury bills; and real estate and infrastructure funds.

JON C. OGG