Angola: Uncertain succession process heightens political risks in two-year outlook

16 Mar 2016

Angola: Uncertain succession process heightens pol...


  •   President José Eduardo dos Santos’s surprise announcement on 11 March that he intends to step down at the end of his current term in 2018 has unnerved investors fearing political instability at a time of deteriorating economic prospects for Angola.
  •   As different contenders jostle for influence in the race for succession, Angola is likely to see frequent changes to senior government and military personnel in the next two years with potential implications for companies’ stakeholder relations.
  •   Popular opposition to the management of the succession process also risks fuelling unrest, which is likely to be met with an increasingly forceful security response during this sensitive period.

Despite the president’s pledge to step down, doubts remain over Dos Santos’s willingness to relinquish power. Dos Santos, who has been in power since 1979, has said on several occasions that he would step down without actually doing so and many in Angola still doubt his commitment to the transition process. The departure date also comes one year after Angola’s 2017 presidential elections, prompting suspicions that the pledge to step down is merely a concession to mollify opposition in the run up to the vote, which he may later renege on.

On this occasion, however, the prospects for change appear far more certain. For the first time, Dos Santos has set a specific date for the transfer of power, a factor that would make it more difficult for him to back out. Questions around his health and age – Dos Santos is 73 – have also increased pressure on the president to plan a managed succession that would protect his family’s extensive political and business interests after he has left office. Dos Santos, his family and close associates have amassed huge fortunes since the end of Angola’s 1975-2002 civil war, thanks largely to the country’s vast oil wealth. He will want to ensure an orderly and managed succession process to guarantee their continued political influence and to deter future investigations into their financial interests.

No clear successor

As the president has not nominated a successor, the recent announcement has opened up wide speculation as to who power will be handed to once he eventually steps down. Debate is currently focused on whether the leadership will go to either a family member or another senior official. Within the Dos Santos family, the two leading possible candidates are Isabel Dos Santos, the president’s daughter who is estimated to be the richest woman in Africa, and José Filomeno Dos Santos, the president’s eldest son who is head of Angola’s sovereign wealth fund.

Isabel has gained a high profile for her extensive business interests but has recently expanded her political credentials after being appointed in February to head three key government commissions overseeing: the restructuring of the national oil company Sonangol; the restructuring of the oil sector; and the urban redevelopment master plan for Luanda. These projects grant enormous power to Isabel, who has never previously held a government appointment, placing her in charge of the oil sector, which accounts for around 95 percent of state revenues, and one of the government’s landmark infrastructure projects. José Filomeno has a more established reputation as an administrator, having managed Angola’s USD 5 bn sovereign wealth fund since 2013. However, in both cases, the prospect of a dynastic succession would face steep opposition from within the ruling MPLA, where many officials see the transition period as an opportunity to extend their influence. MPLA officials are particularly opposed to power being handed to Isabel, who is deeply unpopular among the wider population.

As such, Dos Santos will likely be under pressure to agree to a compromise candidate, who is outside his immediate family but can be trusted to protect his interests. Until recently, there was much expectation that Vice President Manuel Vincente would be the most likely choice. Vincente was CEO of Sonangol from 1999 to 2012, when he was promoted to his current position in what was widely seen as a stepping stone to the presidency. However, contracts signed during his time at Sonangol are now coming under scrutiny and Vincente is known to have a poor relationship with some senior figures within the armed forces. That Isabel Dos Santos, and not Vincente, was charged with restructuring the oil sector is a further sign of his waning influence.

Other candidates that have been suggested in local media, which is controlled by the MPLA and thus offers some indication of possible contenders, include Minister of Territorial Administration Bornito de Sousa and Minister of Defence João Manuel Gonçalves Lourenço. Both have military backgrounds and are long-standing MPLA figures, and would be better received by senior members of the party and the armed forces. However, much will depend on behind-the-scene negotiations to guarantee the immunity of the president and his family and to protect their political and business interests after the president’s departure. This will likely require members of the first family to maintain key political roles and possibly for Dos Santos to have a continued role within the MPLA party structure that would maintain his influence after he steps down as president. In these circumstances, Dos Santos may yet push for a lesser known figure who he feels confident he can influence after his departure from office.

Succession process fuels political tensions

The political uncertainties surrounding the succession process raise the prospect of a high degree of unpredictability around government policies and administration ahead of 2018. The next two years will likely see regular changes to key government personnel as different figures fall in and out of favour in the succession race. This is especially true in the oil and gas sector, which is already highly politicised, but particularly as the restructuring process led by Isabel Dos Santos may be aimed at removing rivals from office. As has already been seen with investigations into contracts awarded under Manuel Vincente, businesses that have close political connections may see their contracts come under increased scrutiny amid the infighting.

There is a further risk that these political tensions will undermine the government’s ability to manage the country’s deteriorating economic prospects. On 14 March, the government announced it would cut its 2016 budget by 20 percent, while ratings agency Moody’s had already put the country’s credit rating under review for downgrade. The government faces growing fiscal constraints as revenues from much of Angola’s oil exports go towards paying creditors to service an estimated USD 25 bn in debt that is collateralised with oil. The election in 2017 and the succession process will place an ever greater strain on public finances as the government and various factions within the MPLA seek to exploit state resources to fund patronage and reward allies. As a result, there will be a greater risk of non-payment in state-tendered contracts, especially in the construction sector as the government struggles to meet the huge commitments it has made as part of its infrastructure development programme.

In this context of growing political and economic tensions, the government is likely to be highly sensitive to any signs of unrest in the coming years. Over 2015, there was a notable crackdown on public dissent in Luanda, with police breaking up many small demonstrations with significant force. A dynastic succession would likely be deeply unpopular among the wider population, while opposition groups may attempt to use the controversies surrounding the succession process to mobilise supporters against the MPLA. This will increase the risk of protests in Luanda and opposition strongholds in Cabinda and Huambo, which will likely be met with a violent security response. 



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