An
influx of oil money has made Lisbon a playground for Angola's
upwardly-mobile middle class.
by Paul
Ames
weekend
themes
When Isabel
dos Santos, Africa’s richest woman, made a rare public appearance
at an art-show opening in Portugal’s northern city of Oporto last
month, the press came out in full force.
“She
exuded class, elegance and education,” gushed Caras, a celebrity
weekly, of dos Santos, Africa’s first female billionaire and
daughter of Angolan president José Eduardo dos Santos. She had just
unveiled plans for a merger between two major banks, Millennium BCP
and Banco BPI, which would create a new financial giant in Portugal.
The deal underscores the influence of Angolan capital in the
Portuguese economy, which is still struggling to recover from the
eurozone debt crisis.
“There are
strong, emotional ties between Portugal and Angola. They share a
language. There’s a cultural affinity, there are often family links
and friendships, but there’s a feeling that the historical roles
have been inverted,” says Celso Filipe, deputy director of the
Lisbon business daily Jornal de Negócios. “Portugal, which was the
colonizing country, has become colonized by Angolan investment,”
Filipe said.
The proposed
merger would create Portugal’s biggest bank, with combined assets
estimated at €124.6 billion. The new bank would be a major player
in Angola, Poland and Mozambique, in addition to controlling 30
percent of the Portuguese market. Dos Santos’ holding company
Santoro already owns 19.4 percent of BPI, and the Angolan state oil
giant Sonangol holds a similar stake in BCP. Forty-one-year old
Isabel dos Santos is leading a new movement of Angolan investors who
are pumping money into their former imperial ruler. Angola is the
only African country where outward investment exceeds the sum of
foreign money flowing in. From 2010 to 2014, Angolan investments in
Portugal rose from €645 million to €1.53 billion, according to
Bank of Portugal figures.
Angola’s
emerging middle class has made Lisbon its playground over the past
decade as Angola has been enjoying economic growth rates averaging
more than 8 percent. Their spending sprees in the boutiques of
Lisbon’s upscale Avenida da Liberdade have drawn envy, and derision
from locals. Last year, a hit Portuguese show featured a well-known
comedian in gaudy dress and black-face rushing from store to store,
accompanied by her gold-chained, hip-hop blaring offspring,
declaring, “I’ll buy it all.”
And as
Angolans are flocking to Portugal, tens of thousands of Portuguese
citizens have headed south to Angola, seeking an escape from
austerity and unemployment in Angola’s oil-fueled boom. The
migrants are providing Angola with workers for highly-skilled sectors
like construction, marketing, and education, all in short supply in
an economy that has yet to finish rebuilding the damage wrought by a
civil war that raged from 1975 until 2002, when dos Santos Sr.
finally defeated the UNITA rebel movement. In 2013, Portuguese
workers living in Angola sent over €304 million back to their
cash-starved homeland.
Money from
Angola has flooded into virtually every sector of the Portuguese
economy. But it’s not just Angolans who are spending their fortunes
in Portugal. Ever since the European Union and International Monetary
Fund rescued Portugal with a €78 billion bailout in 2011,
Portuguese Prime Minister Pedro Passos Coelho’s center-right
government has worked hard to lure foreign investment, raising over
€8 billion in a series of privatizations. Chinese buyers have
played a prominent role, snapping up a leading privatized insurance
company as well as major stakes in the country’s power grid
operator and main electricity generator.
To further
tempt investors, Portugal offers EU residency visas to anyone who
transfers €1 million in capital, invests €500,000 in property, or
sets up a company that employs at least 30 people. This “golden
visa” scheme has raised €1.39 billion since 2012. Chinese
investors make up over three-quarters of the 2,290 visa recipients to
date. Among others gaining visas are Brazilians, Russians, South
Africans and Angolans. The program has raised eyebrows in Europe amid
concern about immigration controls and organized crime. Opposition
lawmakers in Portugal intensified demands it be scrapped after the
arrest last year of senior immigration officials. Prosecutors are
suspicious of corruption involved in the granting of visas, after the
scandal forced then-Interior Minister Miguel Macedo to resign.
Critics say the effort reflects an investment-at-all-costs approach
that has allowed Angola’s government to gain a detrimental
influence in Lisbon.
President
José Eduardo dos Santos has held power for over 35 years, making him
one of the world’s longest-serving rulers. Among non-royal
heads-of-state only the leaders of Cameroon and Equatorial Guinea
have been in power longer.
Angola
abandoned Marxism to embrace the free market at the end of the civil
war in 2002, and dos Santos’ political allies amassed vast fortunes
as state assets were sold and peace led to the exploitation of oil
and diamond resources. According to the IMF, inequality in Angola is
among the worst in Africa. Over half the population of 21 million
survives on less than $2 a day. Transparency International’s
Corruption Perception Index ranks Angola near the bottom among 175
countries. Portuguese authorities are accused of turning a blind eye
to corruption to avoid alienating investors close to dos Santos’
regime, and allowing Angolan oligarchs to freely spend dubiously
amassed fortunes in Lisbon.
Official
rhetoric stresses the deep historic and cultural ties between the two
countries, and highlights Angola’s role as a partner – the
country is Portugal’s fourth-largest export market, with sales
worth €3.2 billion last year. “Angola is one of our biggest
partners … we are open to investments in Portugal that create
wealth here, but also that create wealth there,” Miguel Frasquilho,
head of the Portuguese trade and investment agency AICEP told
POLITICO. “We don’t distinguish between investors on the basis of
where they come from.
In recent
months, Angola’s expansion has been hit hard by taking oil prices.
Oil makes up more than 90 percent of the country’s exports and 70
percent of its tax revenue, the fall in crude oil prices has left the
country with a $7.35 billion spending gap, despite a rate of economic
growth that the IMF predicts will remain above 4 percent this year.
In response,
the government has cut public spending by a quarter, introduced
import quotas, delayed infrastructure projects and imposed steep
taxes on foreign currency transfers. All of which is hurting
Portugal. Exports to Angola fell by 30 percent over the first two
months of 2015. Portuguese companies complain of unpaid bills, and
Portuguese workers there can’t send money back to their families at
home. But officials in Lisbon are careful not to complain too loudly
about the Angolan measures – no doubt in order to avoid
repercussions when the market bounces back. “There are indications
the situation is stabilizing,” investment agency head Frasquilho
says. He noted that Angola remained Portugal’s fourth-largest
foreign investor last year – behind Brazil, the Netherlands and
Spain – despite the oil price slump.
Nevertheless,
Isabel dos Santos, who symbolizes the weight of Angolan investment in
Portugal like no one else, is pressing forward. Pulling off the
merger of Portugal’s two largest listed banks would strengthen her
position in both countries. Forbes estimates dos Santos’s net worth
at $3.4 billion. Besides her share in Banco BPI, her holdings in
Portugal include a 42.5 percent share in BancoBIC Portugal, as well
as significant shares in the energy company Galp Energia and the
leading telecommunications and media group NOS.
In her rare
media interviews, Isabel dos Santos fends off accusations that her
fortune was built on the back of her father’s power. “There’s
lots of people with family connections but who are actually nowhere,”
she told the Financial Times in 2013. “If you’re hard-working and
determined, you will make it and that’s the bottom line. I don’t
believe in an easy way through.”
The effort
to bring the banks together comes on the heels of her failed attempt
last year to prevent France’s Altice from taking over Portugal
Telecom. “We are bringing back a sense of ambition to the
Portuguese financial sector,” dos Santo’s office said in a
statement last month.
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