Entrepreneurship in Angola
Angola is a south-central African country on west coast of the continent. It is the seventh largest country in Africa, bordering Namibia to the south, DRC – Democratic Republic of Congo to the North, Zambia to the east and the South Atlantic Ocean to the west. Luanda is the capital and the largest city in Angola.
Angola was colonized by the Portuguese in the 16th century, with settlements mainly in the coastal area as trading ports, only later moving interior into the country. The occupation was solely for the purpose of providing slaves for the Portuguese empire. Angola got its independence from the Portuguese in 1975, however the country witnessed a long civil war between 1975 and 2002.
The country is rich in mineral resources of diamonds, gold, petroleum and copper. Abundant forest cover that’s rich in wildlife. Post-civil war the economy of Angola has made tremendous progress, being the fastest growing economy in Africa and one of the fastest growing economies in the world. It has had an annual average GDP growth of 11.1% between 2001 and 2010. Diamonds and Oil contribute 60% to the economy.
However, the country is in the middle of huge socio-economic problems. The stark inequality between the rich and the poor is due to the corruption prevalent in most of the government offices, that end up hoarding most of the funds and the general public is kept in poverty. Angola was a breadbasket in the region, exporting bananas, coffee and sisal, but the civil war destroyed the fertile soil. A good chunk of the revenue from oil disappeared due to rampant corruption.
State of Entrepreneurship
Approximately 23% of the Angolan population is involved in some kind of entrepreneurial activity. About a quarter of the female and a fifth of the male population is into entrepreneurship. The people believe in learning the skills and knowledge necessary to start a business, but the lack of proper support from the government, bureaucracy, business unfriendly regulations and infrastructural issues make it difficult.
The country faces a humanitarian crisis because of the plundering of the mineral resources by the ruling parties during the civil war period. The ruling parties abolished the entire private sector enterprises and converted them into state run enterprises, introduced modern industrialization but corruption at the government level ensured that the funds were not adequately allocated.
The socio-economic inequality between the rich, powerful government office bearers and the poor general public is a contributing factor towards the necessity based entrepreneurship by the general population, which is venturing in to various economic activities just for survival, activities that does not lead in to any sort of innovation and development or brings about positive changes and upgrades the lives of the people.
The financial support in terms of private equity does not exist, venture capital firms are making investments from outside the country, which together with the locally available funds are used for various development projects across the country. China holds a major interest in Angola. Having lent billions of dollars for developing the country’s infrastructure and in being the largest trade partner for Angola. The scope to develop local traders in Angola is also diminished with the Chinese bringing in the merchandise directly during the trade shows. Banks are reluctant to fund small and medium enterprises let alone startups, due to the lack of credit history. Also, with banks being reluctant towards local aspiring entrepreneurs or small medium enterprises, then it becomes difficult for any foreign collaboration to happen. Foreigners who do have the financial bandwidth to take the high risks will still need to penetrate the bureaucracy, find some local partners not only to cut through the bureaucracy but also because Portuguese is the widely spoken language and that becomes an additional hurdle.
Entrepreneurship is never easy, and with the lack of a proper system it gets more challenging. However, if one keeps the Entrepreneurial optimism as the only important rule, then Angolans have a big opportunity to develop their entrepreneurial ecosystem, starting with addressing the infrastructural problems, to funding, healthcare, skill development and training.
PS: In addition to analyzing secondary research on the internet, it is always great to learn about actual on ground scenarios. A handful of startups were approached during the writing of this blog post, however no replies were received from them. Hence I would appreciate any references of Entrepreneurs and Startups who could be of use in understanding the ecosystem in the region.