The Angolan government
launched a $5 billion investment fund last month, publicizing
it as a new sovereign wealth fund. But questions remained as to
how exactly the fund would carry out what it calls a
"diversified approach" to investments in Angola and abroad.
The new fund, which the
government now calls the Fundo Soberano de Angola, replaces a
previous fund established by presidential decree in March 2011.
That was called the Fundo Petrolifero de Angola, referred to by
the IMF and ratings agencies as the Oil for Infrastructure
The previous fund was
managed by the central bank and consisted of revenues accruing
from the sales of 100,000 barrels of oil a day. The new fund
will be capitalized using the same pool of cash, says José
Filomeno Dos Santos, one of three members of the board of
directors and the Angolan president’s son.
"Our primary focus is
investing in developing the infrastructure that is needed,
locally and regionally," says Dos Santos. He says the fund has
a responsibility to help in the physical reconstruction of
Angola, which emerged from four decades of civil war in
However, in a video
presentation screened at the launch, Armando Manuel, economic
adviser to the president and the new fund’s
chairman, said: "The sovereign wealth fund will also have
fiscal responsibilities, to help stabilize the economy in terms
of high fluctuations in the business cycle, and help around
scenarios of excessive volatility in our tax returns."
Dos Santos says the fund will be audited separately from the
state’s budget, and that it "will not be within
the normal public-sector investment". He adds: "We
don’t foresee random withdrawals."
|Armando Manuel, economic adviser to the
president and the new fund’s
The government –
whose revenues are almost entirely dependent on oil –
has not made clear exactly when and how the fund could be used
to support the government’s fiscal accounts. Dos
Santos says the proportion of the fund that will remain in
low-risk, liquid assets is yet to be determined. He says the
president will decide the fund’s investment
"The launch of
Angola’s sovereign wealth fund is an important
component of a medium-term macroeconomic policy framework to
guard against volatility in the oil price," says Nicholas
Staines, the IMF’s resident representative in
Angola. The IMF approved the final release of a $1.4 billion
loan to Angola in March.
"A key part of this is
under what circumstances and what rules the budget can draw
upon the fund for stabilization or other purposes," says
Staines. "The government will need to clarify how the fund will
be accounted for within the fiscal accounts and in the central
bank’s foreign reserves."
Meanwhile, questions have
also been raised about the selection process involved in a
liquidity management contract for $3 billion of the
fund’s assets. That contract was awarded to a
little-known Swiss firm, Quantum Global Investment Management.
Dos Santos says Quantum has proved successful in similar
mandates for the Angolan central bank.
"Quantum is already known
and has built trust in Angola. That helped us gain this
mandate, as it needed to be awarded urgently," says Jean-Claude
Bastos de Morais, the Swiss-Angolan chairman of
Quantum’s advisory board. "We have been appointed
by the fund as a liquidity manager only, investing in highly
liquid assets, not equities or real estate."
According to the
firm’s website, Quantum’s advisory board
includes well-known figures in the financial world including
Marcel Rohner, former chief executive of UBS, and Ernst
Welteke, the former Bundesbank president. Welteke is also the
chairman of another firm that Dos Santos says is working for
Fundo Soberano de Angola: Stampa, a Swiss-based group that
helps companies in areas such as group accounting.
Although the new fund
says no conflicts of interest have arisen in
Quantum’s previous work in Angola, Dos Santos has
up to now been a business partner of Bastos de Morais and
Welteke in Banco Kwanza Invest, a Luanda-based investment bank.
Bastos de Morais launched the bank in 2008 under the name Banco
Quantum Capital. Welteke is the chairman.
Dos Santos resigned as a
director of Banco Kwanza Invest in June this year. He is now
selling his shares, according to a statement posted on the
bank’s website the week after the Fundo
Soberano’s launch. The statement said that the
bank does not work with the fund.
"The fund will probably have to establish procedures to
select international advisers that fit our objectives," says
Dos Santos. "As we speak, we are creating the conditions to be
able to assess the criteria for evaluating these type of