Interview: José Filomeno dos Santos – Chairman of the FSDA

Our focus is to diversify the sources of revenue of the government that are fully dependent on oil. So we will look for opportunities both domestically, in the continent, and internationally. More specifically, internationally we are starting off by looking at fixed income opportunities.

Over the next few months, we’ll be structuring investment opportunities in the alternative sector, in commercial infrastructure, agriculture, mining and so forth. As time goes on, we will look for further opportunities both in terms of equities and debt, listed or not listed internationally.

I believe you are interested in investing in the hospitality sector?
We believe that African growth will attract investors from other geographies and these people need a place to stay – so hotel rooms will become more and more in demand as time goes on. From our research, there are 90,000 international standard hotel rooms in Africa but half of these are in only three countries in North Africa.  So we see a very good growth potential there in terms of financial returns and also in terms of the social impact.
These facilities employ a lot of people and they create supply chains in terms of the services that a hotel needs. On top of that, they are real physical assets that give an extra security when international financial markets are as volatile as they are today.

What sort of infrastructure projects will you invest in?
The reason why the focus is on commercial infrastructure is because we understand that infrastructure benefits the society as a whole and the public, but it doesn’t necessarily mean that it will generate a profitable return for the investor.
As a Sovereign Wealth Fund, which is a government investment agency, we believe that we have to look at both ends, to make sure that the investment is needed by the society and that it generates enough returns to justify an investment.

Will you be investing through other funds or through a private equity model?
Probably it will be a typical limited liability partnership, where the fund will be the investor and there will be a specialised management team focusing on selecting the right targets and making the investment decisions based on the returns that it has agreed with the main shareholders.

I believe Quantum Global Fund is working with you?
Yes, we’ve been cooperating with Quantum Global for a while. We are discussing setting up joint investments in the hospitality sector. We found that Quantum Global’s approach in terms of investment in Africa is very different from a lot of the larger banks and asset managers, who typically just invest in debt.

How are you going to contribute to the diversification of the Angolan economy?
While the oil sector has attracted some of the world’s largest companies, we believe that what the SWF can do is develop investment opportunities that will attract large companies internationally to sectors different from oil in Angola.

Who do you report to?
We report on a quarterly basis to the Ministry of Finance. It’s a very detailed report, they have access to our bank statements, to our budget performance, to our income statements – so it’s a very detailed report.

Will there be contributions to the SWF on a yearly basis from the government?
Yes, there’ll be contributions on a yearly basis, if there is surplus in terms of the revenues of the government. The SWF is capitalised by a specific reserve account that accrues the equivalent of 100,000 barrels of oil per day, and this reserve account is used on an annual basis by the government for fiscal stability purposes, so if by year end this account is still positive, in the sense that it still has some reserves left, these reserves are then transferred on to the Sovereign Wealth Fund.

So before my last question, I’ll ask you a very quick one. Does the Dos Santos name act as a hindrance or as an advantage in the world of finance?
I’d say it certainly attracts a lot of attention, and in some cases that can be good and in other cases not so welcome, but overall we believe that it’s been pretty much neutral.