"Our primary focus is investing in developing the infrastructure that is needed locally and regionally." That was the message to Euromoney from José Filomeno Dos Santos, former CEO and now chairman of Angolas new sovereign wealth fund, at the funds launch late last year.
It is puzzling, then, that according to the funds latest announcement confirming previous indications last year its first focus will be on the hospitality sector, in particular establishing a hotel fund for Africa and a hotel school to train staff.
Perhaps it should not come as a complete surprise. Despite the poor state of road, power and water infrastructure across Angola (not to mention the lack of adequate housing), much of the billions of dollars in state proceeds from oil exports have already ended up in Luandas real estate market.
Moreover, Dos Santoss fund would not be the first state-linked organization with a mandate to improve social conditions and sometimes to make money too that has worked on upmarket real-estate projects in cities where some would point to more pressing needs.
Take the World Banks private-sector arm, the International Finance Corporation, which is mandated to alleviate poverty and make financial returns. Earlier this year, Foreign Policy magazine discussed at length the IFCs $26 million loan to a 260-room Mövenpick hotel in Ghanas capital, Accra: a city whose centre the hotel has dominated since opening in 2011.
Another example is the Clinton Foundation (founded by the former US president). As part of its charitable work the foundation brokered a $45 million deal between Jamaica-based mobile phone firm Digicel and the Marriott hotel group for a 174-room hotel in Port-au-Prince a year after the 2010 earthquake devastated Haitis capital.
"Hotels are a well-established route to building sustainable economic success" is the view of Angolas new sovereign wealth fund, outlined in an emailed statement. Building hotels creates jobs, and servicing guests creates more jobs, says the fund.
Yet building power stations, roads and water-treatment systems also creates jobs. And such infrastructure has far more of a multiplier effect on the economy via industry and agriculture, not to mention offering services the mass of ordinary people in countries such as Angola and Haiti desperately need.
Although building a new five-star hotel might not be negative for an economy, Luanda and Port-au-Prince are hardly about to become tourist destinations. Businesspeople and aid workers go to such places because they have to. Take Lagos, Nigeria: its dirty and ill-managed hotels are exorbitantly priced, but still busy.
Hotels will do little to attract foreign direct investment just by making life comfortable for businesspeople. Electricity, roads, ports and a transparent bureaucracy are the key. But the hotel-investment conundrum speaks to deeper challenges for state-linked firms with social and financial mandates.
Sure, hotels can generate relatively easy returns on capital. But this might be partly because of real-estate market dynamics, which state or quasi-state investors can distort, particularly in such countries as Angola and Haiti, where the biggest investors might already be the state or the aid sector.