Doing Business in Angola’s Oil and Gas Sector Demands Patience and Adaptation

In Angola, like so many emerging markets around the globe, change is constant and the challenges to quality of life often seem insurmountable. The two most commonly used words here are complicado and confusão—complicated and confusion. In short, chaos reigns.

In 2002, Angola’s 27-year civil war came to an end, removing obstacles to commerce and reinvigorating the hope of a people downtrodden by decades of conflict. Angolans were ready to begin building toward a brighter future. Yet, despite the country’s new peace and political stability, on any given day, a weak infrastructure and a persistent culture of cronyism created obstacles to progress. Imports could be delayed in port for months at a time. Rains flooded the streets. Rolling blackouts struck different sections of the city for hours or days at a time. Three times during my 18-month stay in Luanda, trucks transporting goods across the country were sucked into sinkholes that spontaneously collapsed in the middle of the road, stopping traffic for hours.

Consistency drives performance everywhere, but in places like Angola, consistency itself is a challenge. Successful leaders in this environment demonstrate a steadfast vision, quietly and patiently continuing onward no matter what obstacles—or sinkholes—might erupt in their path. Anyone who interacts with these leaders can spot their inner confidence, determined and happy to achieve incremental progress toward their vision.

CAE Enterprise Center Helps Angolan Businesses Succeed

Eduardo Pembele, a tailor from Luanda, Angola, is a leader who managed to keep his business running during the war. He’d lost friends to diseases, and over the years he, his family, and employees had to stop working for periods of time due to the conflict.

As the war ended, he was ready to reinvigorate his business. Pembele wanted to compete for a contract from the oil and gas industry, Angola’s leading industry quickly opening to outside investment. But, he was unsure how to begin. He made his way to the Center da Apoio Empresarial (CAE), a business development center in Luanda founded in 2005 by a consortium of international and local oil and gas operators to cater to the needs of smaller Angolan companies seeking to win contracts from international oil companies.

At the time, multinational companies were entering the market, hoping to take advantage of the increased peacetime opportunities in the country. Angola had become the second-largest producer of oil and gas in Africa. But instead of hiring locally, many oil and gas companies imported the goods and services they needed. This meant that few Angolans benefitted directly from the increase in investment.

To counteract that, the Angolan government and oil and gas operators established agreements called local content requirements, which ensure foreign entities operating in a country make meaningful investments in the economic capacity of the host country. The intention is to leave a percentage of the profits in-country, by purchasing a regulated amount of products and services from Angolan companies.

This was a big opportunity for Angolan businesses, but despite their enthusiasm, most were unprepared to compete. Many small businesses were unaware of international health and safety standards. Large multinational corporations have arduous procurement processes that small businesses the world over struggle to meet. In Angola, structures are not up to international code and most companies do not follow internationally accepted accounting principles. They often didn’t know how to become part of an approved buyers list. The risks of entering the sector are high and require immense investment of money and time not only to undertake a bid, but to successfully fulfill a contract once won—requiring a capital output most Angolan companies aren’t able to afford. Even for those that had the financial resources, the consulting services to implement business improvements were in short supply locally.

CAE was established to aid in the fulfillment of local content agreements. Businesspeople like Pembele came to CAE for assistance, excited by the prospect of the immense wealth they could gain from even one small contract.

Finding the Heart of Local Industry

I arrived in Luanda in the summer of 2006 as a member of MBAs Without Borders, formerly the MBA Enterprise Corps, to volunteer at CAE. During my year in Angola, I worked with the oil and gas operator procurement teams to identify gaps in their supply chain and to find local companies to fill them. We spent the bulk of our time working one-on-one with Angolan companies on completing a due diligence process to enable them to win contracts. This process included confirming that a company was at least 51 percent Angolan owned, had at least three years of financial records, and was compliant with safety regulations in their place of business.

Beyond the individual consulting, our eight-person staff led training sessions on the procurement process, business ethics, financial management, supply-chain management and other sector-specific information for local businesses. We built relationships with the banking sector so that our clients could access more trade finance.

Pembele wanted his company to be part of the “gold rush,” but he had never worked with a multinational corporation before. CAE served as a much-needed resource, providing him with services and guidance as he sought to enter the oil and gas services market.

Beyond the high-level local requirements and business process improvements, Pembele also had to ensure that the fabric he used and the style of the coveralls he produced met the fire standards regulated by the industry. To do so, he had to travel to various locations around the globe to source the appropriate material, not something the dressmaker had previously done for his business. We would often meet at his shop to discuss his progress towards meeting the international requirements and his strategy for transitioning his business from a local tailor to an international-standard uniform manufacturer.

As I began my work at CAE, Pembele instantly found a place in my heart. There was something about his quiet, yet hopeful demeanor that made me want to help him win one of the many contracts open to local suppliers. Pembele was an innovative and progressive leader. He recognized that the world around him was changing and that those changes would affect the business he was trying to run. He was ready to adapt his operations to meet the new reality of operating in a global business space.

Embracing the Power of Change in the Face of Uncertainty

During my time in Angola, I learned one of the most important leadership lessons of my career: few things in life are certain, but the specter of change is constant. Many people think of leaders as those who create a following, but in my experience, the test of true leadership is being able to create a culture that allows people to confidently navigate the uncertainty of change. A good leader doesn’t tell me to do things. Rather, she helps me think through a situation and determine the best way forward.

Pembele was an effective leader because of his openness to change and uncertainty, which encouraged those around him to follow his lead. He, like so many Angolans, was soft-spoken, but his vision empowered his employees to move forward. By the time I completed my year in Angola, he was awarded a small contract to supply 100 coveralls to one of the largest operators in country.

 It has been 40 years since Angola gained its independence from Portugal, and 13 years since the end of the civil war. Approximately 30 percent of the population still lives below the poverty line. Though the country is extremely dependent on oil—90 percent of Angola’s nearly $10 billion exports come from the petroleum industry—peacetime has brought with it more opportunities than Pembele ever dreamed possible when we first met. Pembele “graduated” the CAE process, expanding his business operation. Like many other leaders, he continues to strive for a better future for himself, his family, and his country.

Since I left Angola, I have dedicated my professional life to helping others perform at their best. Having the CAE experience as my foundation for business development, I returned to the United States and became an executive coach. Being able to take the lessons I learned in Angola and apply them across a spectrum of industries and realities is something that I continue to treasure.

Photo: Maia Wagner
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