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Strategies to enhance SME participation in Angola’s energy sector

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A view of Southern Angola from Namibia during last year’s WhyAfrica Road Trip. WhyAfrica will visit the Moxico Province of Angola this year as part of the 2023 Road Trip. Image credit: Leon Louw for WhyAfrica

Strategies to enhance SME participation in Angola’s energy sector

As Angola targets increased exploration and production (E&P) activities in 2023 and beyond, several strategies can be deployed to advance the participation of small to medium enterprises (SMEs) across the evolving energy sector in Angola.

Angola’s hydrocarbon market has experienced remarkable growth since the initial discovery of oil and gas in 1955, emerging as the biggest oil producer in Africa in 2023.

While much of the industry has been largely dominated by global energy majors such as ExxonMobil, Azule Energy, Chevron and TotalEnergies – which celebrates 70 years of active participation in the country this year – working in close collaboration with the government, the future of the industry and its contribution to the economy will largely depend on the participation of small to medium sized enterprises (SME).

A traditionally underestimated corporate group, SMEs bring to the sector fresh perspectives, innovation and diversification, while in turn deliver newfound economic contributions through job creation, supply chain development and market growth.

Introducing new ideas, business models and practices, SMEs foster a more dynamic and competitive market environment. As Angola enters into a new era of E&P growth, several strategies can be deployed to enhance the participation of SMEs across the industry.

Advancing capacity building and partnerships (Strategies to enhance SME participation in Angola’s energy sector)

Leveraging the already-strong presence of global energy majors in Angola, advancing local content through capacity building initiatives would not only strengthen the development of domestic capabilities but drive partnerships and collaboration across the industry.

Programs that focus on enhancing the technical, managerial and operational skills of O&G players can not only improve SME understanding of industry best practices, regulatory compliance, safety standards and project management, but empower these organisations to operate more efficiently.

Strengthening investment incentives and access to finance (Strategies to enhance SME participation in Angola’s energy sector)

Investment incentives in Angola’s oil and gas sector provide tangible benefits to SMEs, enabling them to overcome financial barriers, compete with larger corporations while driving innovation and project development.

Through the implementation of attractive fiscal policies, introduction of incentives such as tax breaks and exemptions, and ongoing regulatory support, the government can create a more conducive environment for SME participation.

Meanwhile, by improving access to finance for SMEs through the availability of loans, credit infrastructure and guarantees, the Government will lower the cost of doing business, reduce financial obligations and address barriers to entry, therefore enabling SMEs to allocate resources more effectively, generate higher returns on investment while fostering fair competition and a diverse market.

Creating robust regulatory frameworks (Strategies to enhance SME participation in Angola’s energy sector)

The Angolan Government has made significant strides towards enhancing its regulatory framework, ensuring transparency, stability and a level playing field for all participants.

Clear and predictable regulations provide confidence to SMEs, encouraging them to engage in the market by taking risks and seizing opportunities. Regulations such as the Private Investment Law (2018) establish the general principles and basis of private investment in Angola while amendments to the Hydrocarbon Law improve procedural certainty.

Under the October 2020 implemented Legal Framework for the Promotion of Local Content, the Angolan government outlines, among other provisions, requirements for the supply of goods and services to the oil and gas industry, identifying strategic opportunities for SMEs such as refining, petrochemicals, manufacturing, transportation, services and logistics.

With the aim to retain at least 10% of the value of goods and services in-country, the framework has opened up lucrative opportunities for SMEs active in the market.

Improving market access and opportunity (Strategies to enhance SME participation in Angola’s energy sector)

Improving market access for SMEs will not only promote inclusivity across the O&G industry (https://apo-opa.info/3NFaL8Y) but stimulate economic growth, competition and innovation while diversifying and encouraging local value addition across the market.

Platforms that foster collaboration, awareness and networking, such as the upcoming Angola Oil & Gas (AOG) conference (https://apo-opa.info/46A1Zl3) – which is organised by Energy Capital & Power and  scheduled for September 13-14 in Luanda –, represent key avenues for advancing market access and SME participation. Now in its third edition, AOG 2023 has built a reputation for fostering such connections across the Angolan oil and gas market, providing SMEs with the opportunity to partner with foreign companies and government agencies, participate in supply chains, subcontracting opportunities and joint ventures while enhancing their contribution to the country’s economic future.

On the back of local content, regulatory certainty and improved access to both financing and market opportunities, SMEs stand to play a much larger role in advancing the Angolan oil and gas sector.

This year’s edition of AOG 2023 will promote this very topic, eliminating barriers to entry for SMEs by connecting O&G players to opportunities, fostering new collaborations and progress across the sector.

Source: Energy Capital & Power

Strategies to enhance SME participation in Angola’s energy sector

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Strategies to enhance SME participation in Angola’s energy sector

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