Portugal is one of the smallest European economies, with a GDP of less than 3% of China’s and a population of less than 1% of China's. Its trade activities with the rest of the world are likewise dwarfed by those of China and barely worthy of comparison. However, when it comes to Africa – and specifically Angola – Portugal boasts a special kind of relationship. A former Portuguese colony, Angola has a lot in common with its former parent nation. 

Nearly 500 years of colonial rule (save for the eight year break in the 17th century when it was briefly ruled by the Dutch) gave Angola the Portuguese language and, inevitably, a substantial cultural heritage. The city of Luanda was built by the Portuguese and remained under their administration until full independence was obtained in 1975. The Portuguese may have left Angola that year, but the special relationship was never fully severed. As soon as the 25 year civil war ended and Angola opened up to the world, the Portuguese wasted no time in re-establishing strong ties. 

Between 2003 and 2008, Portuguese presidents and prime-ministers made four high level visits to Luanda, accompanied by a vast entourage of business leaders, while Angola’s President Jose Eduardo dos Santos reciprocated with an official visit to Lisbon in March 2009. Angola’s importance to Portugal is not hard to understand. It represents a strategic opportunity for its former coloniser: on the one hand it is an important gateway for Portugal (and through Portugal, for the EU) into the southern African region; on the other, it bolsters Portugal (and therefore again the EU) in international negotiations like those at the World Trade Organisation. Reciprocally, Portugal is an important ally for Angola in the international arena and effectively serves as a vital channel into European markets. This became especially apparent during Portugal’s term of EU presidency when it assumed a natural role of European interlocutor for Angola, safeguarding the country’s interests in the EU and promoting widespread recognition of Angola’s growing power and importance in Southern Africa. 

Portugal began to see the fruits of its coordinated efforts in the past five years. At the beginning of the new millennium, Angola ranked in 10th position as a market for Portuguese exports. Portugal had invested a mere EUR 40 million on the ground in Angola and by 2004 imported a modest EUR 1.8 million worth of crude oil from the country. However, by 2008 Angola moved up to 4th position among Portugal’s key export partners and with EUR 2 billion worth of trade became the country’s biggest trading partner outside of the EU, surpassed only by Spain, France and Germany. On-the-ground investments reached EUR 263 million in 2005, EUR 775 million in 2008 and a further EUR 557 million in 2009, while oil imports from Angola to Portugal in 2008 surged to almost EUR 400 million. Every major Portuguese bank now holds a minority stake or significant joint-venture operations in Angola. This generated combined deposit flows from Angola into Portuguese banks of close to EUR 114 million in 2009, compared to a mere EUR 6 million in 2005. 

What is significant about these figures is not their absolute value (the Chinese ones are much higher) but the staggering growth rates over a short period of time and the tactical importance of the sectors in which these growth rates are occurring. What is even more significant is the Portuguese involvement in the construction and engineering sector. Although it may seem like China is running the show in Angola - given the amounts it has invested and the size of the projects it has undertaken - the reality is actually rather different. Every major Portuguese construction company has been on the ground in Angola since the early 2000s with the top three (Escom, Soares da Costa, Teixeira Duarte) enjoying approximately 17% of the total market share, while the gross outstanding payments on completed projects to the Portuguese civil construction companies to date amount to around EUR 1.5 billion, according to reports. Massive Chinese investments in the Angolan infrastructure sector from 2007 to 2009 have not in fact had a major negative impact on the position of the Portuguese construction companies operating in the country. What the Portuguese have managed to do was capitalise on their reputation and cultural and historic ties with Angola, and deliver in accordance with the best international quality and transparency standards. China, on the other hand, has at times won projects competing most efficiently on price and not completely on quality, which has generated unexpected negative externalities and various conflicts of interest on the labour front. Even though China works to correct its mistakes, some might say: you will not likely have a second chance to make a first impression. 

Given such a convincing position that Portugal now occupies in Angola, one might be tempted to ask how it came that the Chinese managed to get such a strong foothold there in the first place?