A changing market in AngolaAugust 11, 2021
Ricardo Santos, country senior partner for PwC Angola, talks to The Energy Year about emerging requirements from customers of Angola’s consultancy sector and the key steps companies must take to ensure business survival. PwC provides professional services, with a focus on audit and assurance, tax and consulting.
How has PwC Angola adapted its operations to the Covid-19 pandemic?
Covid-19 has presented several challenges and it was totally unexpected. We were fortunate because we already had the adequate technology infrastructure in place to maintain business continuity and to ensure remote workforce productivity.
Prior to Covid-19, we were already working with digital platforms and web-based cloud systems to facilitate remote work. With the pandemic, we simply had to maximise the use of those tools and it required some investment to increase the capacity of our bandwidth and such. But the technology was in place, so we just had to leverage it. Before the pandemic, most of our teams worked closely with our clients at their premises, so our people are very used to working outside of the office from various locations.
The biggest challenge was making sure that our teams could continue working together remotely from their homes. In the end, the technology and tools we have allowed us to overcome that challenge.
Another difficulty was dealing with clients, some of which were not as prepared as others to work remotely, so sometimes communication became very difficult. From the beginning of the crisis, our main priority was to ensure our people were safe and we took a number of measures to mitigate potential risks. The situation continues to evolve daily and weekly, so the key is to be agile and have the ability to adapt quickly.
How has Angola’s consultancy industry adjusted to changing customer expectations?
The market changed significantly in 2020 and we have identified several emerging customer requirements and needs over the past few months. Clients have been asking for assistance in areas such as management consulting – restructuring and rethinking strategies – as well as in more traditional areas like tax advisory due to new laws and regulations coming out in the past year.
Companies have been looking for ways to improve efficiency of their business processes and a number of them are focusing on upskilling their people as an enabler of efficiency.
Although the audit and assurance business segment has been negatively impacted by the economic recession in general, there have been instances where we have received additional requests from investors and managers who have had to monitor and manage their businesses remotely and for whom having assurance from an independent party on companies’ reports and figures has become even more important.
There are also several significant initiatives taking place in the public sector such as the setting up of the ANPG [National Oil, Gas and Biofuels Agency] and a big transformation programme for several government agencies and ministries.
How is the pandemic affecting M&A transactions in the country?
These kinds of circumstances usually lead to consolidation processes, acquisitions and mergers and we’ve seen a lot of interest from potential investors. There are certainly many opportunities but given the high degree of uncertainty and lack of visibility about the duration of the pandemic, investors are probably waiting for the right time to go for it. What we have seen so far has been about exploring opportunities and preparing for those acquisitions and mergers, which are likely to happen in the near future.
From a business advisory perspective, what steps would you say companies must take to ensure business survival?
In the short term, most companies are trying to ensure they have enough cash to sustain their operations. There is a saying that companies don’t go bankrupt because they don’t make a profit – they go bankrupt because they don’t have money to pay their bills. Most companies are trying to secure cash to meet their short-term obligations and they are trying to reduce costs to the absolute minimum. Many companies have faced or may face in the future the worst-case scenario of having to shut down for weeks or months and facing long periods with no cash generation.
When thinking more strategically, companies should look at more efficient ways of doing things – in particular how they interact with their staff, suppliers and customers. Transforming the organisations by upskilling their employees is a process companies will have to embrace to give them the skills and tools required to work in a totally new environment.
What is your perspective on the new presidential decree on local content development in Angola’s oil and gas industry?
I believe it is a great initiative; however, we see challenges in terms of implementation. There have been similar efforts in the past to enhance local content and not all of them have been successful. In the past, we have seen companies acquiring services or recruiting locally only for the sake of compliance and not because they saw an actual benefit.
There is a general view that in many instances those processes were fairly ineffective in terms of developing sustainable local content and actually contributed to increased inefficiencies and increased costs. That should be avoided this time. Local content done in the right way will be beneficial for the country and for businesses. But the difficulty is meeting requirements and leveraging the benefits of skillset development for sourcing products locally and becoming more agile as a company.
How can the current environment be used as an enabler for local content?
I believe many companies have learned from the past and are now looking at local content as an opportunity to enhance efficiency. The pandemic situation could accelerate the development of local content if approached correctly. The government shouldn’t just try to enforce the law but they should rather work with companies to find efficient ways to implement local content without pushing it in specific areas or with specific timing that might not be feasible. Implementation could take longer in some areas and the government should be aware of that.
You want to use local resources efficiently and make them competitive. That’s not always easy and might require investment from companies but also from the government. Companies have a role to play in developing people and giving them the tools, and the government should promote the right education and create a qualified resource pool.
At PwC, we’ve been recruiting people from local colleges and universities, and also people from the diaspora who studied abroad. That’s how we build our practice. At the moment, around 90% of our staff is local. Achieving that figure required a lot of investment.
How would you rate the attractiveness of the business environment in Angola?
It is recognised that Angola has not been the most competitive country from an investment perspective. The government is fully aware of that and has been trying to improve the investment environment. There are still a lot of challenges, but we also see a lot of interesting opportunities in different areas that may not have been explored in the past, such as agriculture and manufacturing.
Angola is a very interesting consumer market – it currently has 30 million people and its population is expected to continue to grow at very high rates over the coming decades, so the potential consumer market is huge.
The global market is getting more and more mature and there is a lot of competition, so the fact that there are still many areas of the Angolan economy and market which heavily rely on imported goods and services could actually be looked at as an advantage. There is still little competition in certain market segments here, so if you can do things locally in an efficient way to compete with imports, that could be very interesting, and the government has the will and incentive to support that.
There are also structural challenges like education and skills development, which still require a lot of investment from companies. I believe the government has made a great deal of effort over the past two years to remove existing obstacles in the way of foreign direct investment.
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