Retail Sector in Angola - Just the beginning

In the last few years the retail sector in Angola has been growing fast, with an increase of the available sales areas and the modernization of the sector. The retail sector's slow start is mostly related with the small size of the Angolan middle class and the weight of the informal market, between 90% and 95% by the end of the civil war.

The recent development of the sector is mostly explained by Angola's positive economic prospects and demographic characteristics. Angola is characterized by a growing and extremely young population. The Angolan population stands at c. 21 million and should reach 54 million by 2050 and the size of the current labor force is just a third of the size it is expected to reach in 2050.

Additionally, the government's efforts and policies to promote economic diversification, growth and employment. The last few years have been impressive, with the GDP per capita (PPP) going from US$ 2,603 in 2002 to US$ 6,247 in 2013. Looking ahead, the forecasts are very positive with the IMF expecting GDP per capita (PPP) to stand at US$ 8,074 by 2019.

Despite the bright future, major challenges lie ahead. First, it's necessary to boost local production, which in Angola is insufficient to supply its population. Second, to improve logistics. Third, the Customs Tariff Book implementation and effects must be monitored very closely. While we undoubtedly praise the goal of increasing local production, there are some risks attached with its implementation.

We believe the fast growth of the last few years is just the beginning. The existing players should expand as fast as they are able to, in an effort to strengthen their position. For the players that still haven't entered the market, the clock is running against them.