UK Export Finance has extended a $73 million loan to the government of Angola to support a project aimed at rehabilitating the country’s farms and livestock sector.
The initiative will focus on improving roads and power lines, training farmers and constructing processing and storage infrastructure necessary to support a 2,340-head cattle herd.
Construction is scheduled to begin next month in the northern city of Samba Caju and is expected to be completed within three years. UK Export Finance said the scheme would create 730 jobs directly and indirectly.
Announced in late July, the project will be led by the UK subsidiary of Incatuk, a rural development- and engineering-focused consultancy headquartered in Spain.
UK Export Finance’s mandate is to ensure that no UK export fails for lack of finance or insurance. Its lending consequently tends to be demand-driven, and agriculture has not therefore been a major focus.
Adam Harris, head of civil, infrastructure and energy at UK Export Finance, told Agri Investor he expected this to change.
“In a lot of the markets in Sub-Saharan Africa and in other parts of Africa, demand for our products and services has been relatively low,” he said. “One of the developments that we’ve seen in the last several years is an increase in demand and appetite for UK products in those countries.”
Harris said Angolan President Joao Lourenco has focused on a reform agenda that aims to diversify the country’s economy and reduce the $1.5 billion spent annually on imported food.
Angola has become the third-largest market for US poultry exports, according to an April USDA report. It noted Lourenco’s January decree aimed at reducing the country’s reliance on imports, which focused on 54, mainly agricultural, products.
Though the decree did not specifically include additional taxes or tariffs, the USDA report noted that the need for import permits could complicate US protein exports to Angola.
“Currently, there is no significant poultry and beef production in Angola, so they would still need to import for the foreseeable future,” the report said.
Harris said there were a number of international companies targeting Angola as an export destination, and that they “want to get their export contracts financed [and] are looking around to see who they can work with”.
He added: “There is probably a supply/demand mismatch at the moment between the amount of export credit capacity globally, and those companies that want to do business in that market [Angola] and companies that the Angolan government wants to work with.”
Harris said UK Export Finance had launched its first project in Angola last year. He said that the $73 million loan was part of a £750 million pot ($912 million; €815 million) the agency had earmarked for investment in the southern African nation, which has a population of 30.3 million.
Harris said other investments from that pot included the construction of a hospital and improvements to the electricity grid. He added that Incatuk and UK Export Finance were already in talks about where else on the continent they might be able to work together.