I would like to give some background information about the project before I comment on my trip. An Angolan company, xxxxx, asked for a five year buyer credit from Turk Eximbank to purchase a flour plant worth $20,000,000 from a Turkish manufacturer, yyyyy. Before the buyer credit allocation process begins, the receivables of yyyyy machinery have to be insured. The insurance has to start in the beginning of the manufacturing period, because yyyyy Machinery will manufacture and ship parts of the flour plant over 18 months. Therefore, the insurance will cover 6.5 years, including the set-up period. xxxxx had indicated that they could issue an L/C through two Angolan banks, BPC or BAI, as a collateral to the loan before we started the credit allocation process.
I visited Angola from December 1st to 4th, 2015 to examine the financial figures of BPC and BAI that work with xxxxx. Some Angolan banks are having trouble meeting some of their obligations on time since the beginning of the reduction of oil prices in 2014. I visited BPC and BAI to assess their most recent financial situation, because I was worried about their creditworthiness, and hence their ability to honor their L/Cs. I also wanted to get information about the political situation in Angola and examine the facilities of xxxxx.
I met with the higher ranking officials of BPC and BAI to examine their financials on December 2nd in Luanda, which is the capital of Angola. I asked the director of BPC to comment on their overdue obligations. On the one hand, he acknowledged that BPC is having trouble meeting its obligations on time. On the other hand, he stated that BPC is a state-owned bank therefore The Central Bank of Angola will support them to increase their FX liquidity position by mid-December. Alternatively, the CEO of BAI stated that BAI doesn’t have any issues with meeting its obligations on time despite the dollar shortage in Angola. Additionally, he said that BAI’s shareholders are wealthy enough to put additional capital if the bank is financially stressed. I already had the 2014 financial statements of BPC and BAI before I went to Angola. I wanted to obtain the semi-annual financial statements of both banks in 2015 to understand how the recent reduction in oil prices affected them. However, both banks declined my requests, because they informed me that they publish only annual financial statements.
In the afternoon of December 2nd, I visited the Turkish Embassy in Luanda to get information about the political situation of Angola. I met with the ambassador, who briefly informed me. According to the ambassador, Angola will be politically stable in at least the short run until the election in 2017 and most likely afterwards.
On December 3rd, I arrived in Lobito to examine the facilities of xxxxx as well as their relationship with the local government and inhabitants of Lobito. I visited xxxxx’s head office, their logistics center and the land where the flour plant will be built. All the facilities were up to date and seemed to function properly. I met with Lobito’s governor, who encouraged me to invest in the food industry in Lobito. He said that the Angolan government supported food related investments by giving priority to payments to foreign investors of the food industry to offset the effects of the dollar shortage in Angola. The local population seemed to get along well with the company.
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