Chinese Businesses Quit Angola After `Disastrous' Currency Blow
(Bloomberg) -- Tens of thousands of Chinese have left Angola because of the oil slump that’s hurt business and halted construction projects, according to the head of a commerce group.
The number of Chinese workers and business owners has fallen to about 50,000, a quarter of what it was four years ago, Xu Ning, the chairman of the Angola-China Industrial and Commerce Association, said in an interview in the capital, Luanda. Those who stayed are recovering from a “disastrous” 2016, with most Chinese-led construction projects still halted, he said.
“Last year was very bad, we lost a lot of money,” Xu said. “Many closed down their businesses and went back to China, crying.”
Business lost out as the Angolan kwanza slid to a black-market rate of 600 per dollar, cutting the value of contracts that were signed when the kwanza was 100 per dollar to a fraction of the original amount. Chinese business owners don’t have access to dollars from Angolan banks at the official exchange rate of 168 kwanza, and even those who hold foreign currency in local banks are unable to withdraw or transfer that money for businesses purposes, Xu said.
Bank of China
The average exchange rate on the street, where most Angolans buy dollars, is currently about 360 kwanza, according to KinguilaHoje, a website that tracks parallel rates. That’s down from 495 kwanza per dollar in December after the rate peaked at 600 kwanza from June through August, according to data compiled by Bloomberg.
“The exchange rate is normalizing, we can sell products and transfer a little bit of money,” Xu said.
Bank of China Ltd. is planning to open a branch in the country to facilitate Chinese investment, he said.
Angola has been struggling to cope with the impact of a slump in oil prices. In 2015, it was among the top five African countries that together accounted for 48 percent of annual revenue earned by Chinese construction companies on the continent, according to the website of the China Africa Research Initiative. The other four countries are Algeria, Ethiopia, Kenya and Nigeria.