Overview
PRODESI (Programa de Apoio à Produção, Diversificação das Exportações e Substituição das Importações) is the Angolan government’s flagship programme for supporting domestic production, diversifying exports, and reducing import dependency. Launched in 2018 and repeatedly extended, PRODESI is the primary implementation mechanism for the economic diversification goals articulated in the National Development Plan (PDN 2023-2027). The programme targets the development of agriculture, manufacturing, fisheries, and agro-processing sectors to reduce Angola’s estimated $3-5 billion annual food import bill and broaden the export base beyond oil.
Programme Structure
PRODESI operates through several coordinated mechanisms:
| Component | Description |
|---|---|
| Subsidized credit lines | Directed lending through commercial banks at reduced interest rates for priority sector investments |
| Import substitution targets | Specific product categories identified for domestic production to replace imports |
| Export development | Support for Angolan producers entering international markets |
| Technical assistance | Agricultural extension, business development services, and capacity building |
| Infrastructure support | Investment in storage, processing, and logistics infrastructure |
Priority Products
PRODESI identifies specific product categories where Angola has the potential to replace imports with domestic production:
- Agricultural products: Cereals (maize, rice), vegetables, fruits, poultry, eggs, dairy
- Processed foods: Flour, cooking oil, processed meats, beverages
- Building materials: Cement, steel, ceramics, glass
- Light manufacturing: Plastics, packaging, textiles, household goods
- Fisheries: Fresh and processed fish from Angola’s 1,650-km Atlantic coastline
Credit and Financing
PRODESI-linked credit is channeled through Angola’s commercial banking system, with the BNA providing regulatory guidance and, in some cases, concessional refinancing facilities:
- Interest rate subsidies: PRODESI loans are offered at below-market rates, partially funded by government subsidies. With the BNA policy rate at 17.5%, subsidized rates significantly reduce the cost of capital for qualifying borrowers.
- Guarantee mechanisms: Partial credit guarantee schemes reduce bank risk on PRODESI loans, encouraging lending to sectors and borrowers that might not qualify under standard credit criteria.
- Bank participation: Major banks including BAI, BFA, BIC, BPC, and BMA participate in PRODESI lending, deploying credit into the non-oil economy and partially offsetting the system’s low credit-to-GDP ratio of 14.63%.
Results and Challenges
PRODESI has achieved notable results in certain product categories, with domestic production of poultry, eggs, cement, and some agricultural products increasing since the programme’s launch. However, significant challenges remain:
- Infrastructure gaps: Inadequate roads, storage, cold chain, and power supply in rural areas limit agricultural productivity
- Scale constraints: Many domestic producers lack the scale to compete with imports on cost and quality
- Credit access: Despite subsidized rates, the 26-bank system’s overall lending capacity remains constrained, and many SMEs struggle to meet documentation requirements
- FX dynamics: The kwanza’s depreciation (USD/AOA at 914.60) increases the cost of imported inputs, creating both challenges (higher input costs) and opportunities (natural import protection) for domestic producers
Capital Markets Relevance
PRODESI’s impact on Angola’s capital markets includes:
- Bank credit quality: PRODESI loans in bank portfolios (including BAI, BFA, and others listed on BODIVA) carry sector-specific risks that affect bank asset quality assessments
- Non-oil GDP growth: PRODESI’s success in developing domestic production contributes to the non-oil GDP growth that underpins the economic diversification thesis
- Fiscal impact: Reduced imports decrease pressure on FX reserves ($15.3 billion) and improve the current account balance
- Potential listings: Successful PRODESI-supported enterprises could eventually become IPO candidates on BODIVA, expanding the equity market beyond its current ~$3.37 billion capitalization
Investor Considerations
Investors should view PRODESI as a barometer of Angola’s diversification seriousness. Key metrics to monitor include: agricultural output growth (INE data), import substitution rates for target product categories, PRODESI loan disbursement and repayment rates through the banking system, and the programme’s fiscal cost relative to government revenue constraints (debt-to-GDP at 59.9%). The IMF assesses PRODESI’s effectiveness as part of its Article IV evaluations, providing an independent assessment of whether the programme is achieving its structural objectives.