Bloomberg News

Angola’s Dos Santos to Extend 34-Year Rule as Proteges Founder

August 27, 2013

Angolan President Jose Eduardo dos Santos may extend his 34 years in power because the people who he’d like to replace him lack support from the ruling party.

Last year Dos Santos chose Manuel Domingos Vicente, 57, the former head of the national oil company, Sonangol, as his vice president and this year put his son, 35-year-old Jose Filomeno de Sousa dos Santos, in charge of a $5 billion sovereign wealth fund.

While both would continue the economic policies that have made Angola sub-Saharan Africa’s third-biggest economy neither have won favor with senior members of the Popular Movement for the Liberation of Angola, said analysts including Justin Pearce of the School of Oriental and Asian Studies in London and Leif Biureborgh, a Luanda-based analyst who advises companies including Ericsson AB.

“He’s not going to resign because he hasn’t found a credible successor that’s acceptable to the party,” Elias Isaac, Angola Director of the Open Society Initiative for Sub-Saharan Africa, said in an Aug. 21 interview in Luanda, the capital. “He’ll drag on.”

Dos Santos, who came to power in 1979, will turn 71 today, and the MPLA celebrates his birthday with rallies, parades and public announcements. He presided over Africa’s second-biggest oil producer through most of a 27-year civil war that ended in 2002.

The first step for succession is the election of a new party leader, Dos Santos told Portugal’s SIC television in June in the first formal interview he’s granted for several years.

Civil War

The president’s birthday isn’t an appropriate time to discuss succession, said Carolina Fortes, spokeswoman for the Luanda provincial party office.

In Africa only Teodoro Obiang Nguema Mbasogo, the leader of Equatorial Guinea, has been in power longer.

Founded in 1962 the MPLA fought a guerrilla war against Portuguese colonizers and then led the country from independence in 1975. The same year a civil war against the National Union for The Total Independence of Angola, or Unita, began.

Vicente ran Sonangol from 1999 until 2012, a period when the oil company nearly doubled the country’s production to 1.78 million barrels a day, second on the continent to only Nigeria, through ventures with companies including Total SA (FP) and Chevron Corp. (CVX:US)

He was appointed by Dos Santos as a special minister in charge of the economy before he was selected as the Angolan leader’s running mate in last year’s election, which the MPLA won with 72 percent of the vote.

‘Like Children’

“Vicente was parachuted in and the MPLA, a large party in which there’s always been debate, was saying don’t treat them like children,” Biureborgh said in an Aug. 20 interview in Luanda. “If there’s no wide-felt legitimacy it’s not sustainable.”

The vice-president is “technically competent,” earning the support of foreign oil companies, Biureborgh said. BP Plc (BP/) and Exxon Mobil Corp. (XOM:US) also operate in the country.

“Vicente as the next president of Angola would signal a continuation of the economic model that Angola has pursued so far, which is characterized by a relatively stable operating environment in the all important petroleum sector,” Markus Weimer, an analyst at Control Risks in London, said by e-mail. “For oil companies this makes Vicente an attractive prospect for the presidency.”

Continuity, Stability

Angola’s economy has expanded every year since 1994, with growth peaking at 22.6 percent in 2007, according to the World Bank. The $114 billion economy will probably expand 6.5 percent this year and between 7 percent and 8 percent next year, according to the central bank.

Dos Santos has appointed a second-in-command before, including former prime ministers Marcolino Moco and Lopo de Nascimento, and former vice president Fernando da Piedade Dias dos Santos, known as Nando, who were later cast aside and often blamed for problems, Pearce said.

“This strategy allows Dos Santos to present himself as a figure of continuity and stability and to limit the ambitions of any would-be successors,” Pearce said. “The old guy could be there until he’s dead or infirm.”

That Vicente didn’t have a leading role in the independence movement and the civil war lowers his standing in the eyes of the party, Biureborgh said.

Banks, Phones

“The issue for Dos Santos is to find someone to trust who will protect him” and his family after he steps down, Isaac said. His daughter, Isabel dos Santos, owns stakes in Banco BIC SA, the country’s biggest bank by branches, and Unitel SA, the largest mobile phone operator, as well as restaurants and nightclubs.

Angola ranks 157th out of 176 countries on Transparency International’s 2012 Corruption Perceptions Index. In 2011 the International Monetary Fund said the country transferred $32 billion to offshore accounts between 2007 and 2010. The money was in “excess” of debt servicing needs, the IMF said.

The president’s eldest son, Jose Filomeno, a former director of Luanda-based Banco Kwanza Invest, is tainted by the perception of nepotism because the president appointed him to head the sovereign wealth fund, which was started this year, Isaac said.

“A monarchistic effort would be very difficult,” Biureborgh said. “It risks splitting the MPLA which would be bad for the elite.”

‘Long-Term Game’

Other power brokers in the party, such as General Manuel Helder Vieira Dias Junior, known as Kopelipa, a state security official, are weak politically because they have numerous business deals, Biureborgh said. Vicente, who owned part of a company that sold a portion of its stake in an oil exploration concession with Cobalt International Energy Inc. (CIE:US) to Sonangol, faces the same scrutiny, Isaac said.

Powerful people within the party include former vice president Nando, Julius Mateus Paulo, the MPLA’s general secretary and General Jose Maria, head of the military intelligence agency.

Bornito Baltazar Diogo de Sousa, territorial administration minister, and Manuel Jose Nunes Junior, a member of parliament, as well as Nando are potential successors as are Antonio Paulo Kassoma, Pitra Neto and Joao Lourenco, London-based Africa Confidential reported in July, citing an unidentified party member.

The longer Dos Santos remains in power, the more pressure will increase for reform and better state delivery of jobs, education and health care, Alex Vines, head of the African program at Chatham House in London, said by e-mail. While the country is classified as “upper middle income” by the World Bank with gross domestic product per capita of $5,485, most people live on less than $2 a day, according to the United Nations.

The party could push him to step down ahead of the 2017 elections because he’s seen as a liability, Pearce said.

“Some see themselves as brokers, others have ambition,” Vines said. “This remains a long-term game and Dos Santos keeps everybody guessing about his intentions.”

To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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