Oil’s Fair In Ice Cream And War

Forbes Africa
Published 10 years ago
Oil’s Fair In  Ice Cream And War

Ilha de Luanda, the tongue of land that stretches out into the sea from the bay of the Angolan capital, is littered with palm trees, upmarket beach clubs and restaurants. This is where Pedro Godinho started selling ice cream during Angola’s civil war, when the island was a clean, peaceful getaway from Luanda’s crowded chaos.

Godinho’s company, Prodiaman, is headquartered on Jango Valeiro, on the seaward side of Ilha de Luanda—the site where he sold his first ice cream during the war decades ago. Prodiaman employs 370 people in oil and gas, diamonds, security, engineering, real estate and restaurants. Next to the office, where accountants are plotting the company’s target of $50-100 million in annual turnover within two years, is the small shop that still sells the best ice cream in town.

Godinho, 49, looks almost half his age. He is tall, slim, wears an elegant, obviously expensive suit and a pristine white shirt. An air of smooth sophistication swirls around him, but there is something about his laid-back, slightly hoarse way of speaking that suggests he has been through a few rough patches on the way to riches.

“Since independence in 1975, Angola had a communist regime. After the fall of the Berlin wall in 1989, we saw a big change in our political system. I joined Sonangol in 1980, when I was still studying to become a civil engineer,” he says.

“Sonangol at the time was implementing a philosophy which stated that all operations should be Angolanized. And Texaco was operating a brand new platform, for which Sonangol also wanted to recruit Angolans. It was almost impossible back then to find local skilled people. In 1981, Sonangol asked me to work on Texaco operations. That is how I joined Texaco.”

Working for an international company from a capitalist country was the best possible decision Godinho could have made at the time. His secretary walks in with a contract. He signs it casually, without missing a beat.

“I stayed with Texaco offshore on block 2 until 1987. That year I quit and earned my engineering degree at university. I was then invited to join Chevron. But Texaco also invited me, and I decided to go back. My salary at Texaco as an engineer was $300 a month.”

As his story unravels, Godinho launches into colorful memories of wartime Angola in the 1980s.

“Buying a car in those years was extremely difficult. To get one, you had to write many letters, which had to pass through various official institutions. But at one point, the Angolan government sold a Nissan Patrol at a very low price by Angolan standards. The exchange rate on the street at that time was 10,000 kwanzas [to the] dollar. Just to give you an indication of what prices were like: by selling two boxes of beer you could buy a round-the-world flight. Angola’s economic situation was abnormal.

“There were only two ice cream stores in Luanda in those years. I used to take my kids there. While I was waiting, I saw many people walk in and out. That’s when it dawned on me. ‘Bingo!’ I thought, ‘I will start an ice cream business.’ A friend of mine insisted that I should buy the Nissan Patrol. I said: ‘With my salary, I’d regard it as my second wife! I’d rather buy an ice cream machine.’”

From then on, things moved quickly. “I didn’t know a thing about ice cream, so I asked around. A week later, I called a friend who worked at a bank and told him about my plan. ‘But you’re a Texaco engineer!’ he said. ‘I’m only going to sell ice cream in my free time,’ I told him. My friend agreed to help, and bought me two ice cream machines. Now all I needed was a place to put them.

“I wanted to be on the Ilha. Angola is a hot country, so you need to be at the sea. One day, I took a car and drove all along it. I remember knowing: ‘Today is the day.’ I knocked at every restaurant’s door with my two ice cream machines. They all said: ‘Are you crazy?’ But at Valeiro, a restaurant built in 1935, they said ‘Yes’.

I only wanted 12 square meters, and they charged me $1,000 a month. I could have flown around the world and come back with goods instead. But I didn’t want to lose this opportunity, so I said: ‘Okay, I’ll do it,’ and we signed a contract. For 18 months we just worked to pay salaries and build our store.”

Godinho was innovative enough to outshine his two competitors. “The others were making ice cream with 50kg bags of UN refugee milk powder bought on the black market. It wasn’t good quality milk; at times it even caused diarrhoea. I wanted high-quality milk—Nestlé—although it was very expensive.

“Twenty years ago, ice cream in Angola was sold in cones. But because of the sun, it melted within two to five minutes. So we used plastic cups instead. We also sold our ice cream at half the price of our competitors. That’s why it took us 18 months to start making a profit.”

Soon, demand outstripped supply and Godinho embarked on new adventures. “We had 12 ice cream machines by then, and decided to diversify our economic activity. The Angolan government offered companies the opportunity to invest in diamonds, so I created Prodiaman (Produção de Diamantes) in Lunda Sul, a partnership with the South African company Petra Diamonds.”

Then disaster struck.

“In 1995, the Angolan war intensified. Five of Prodiaman’s employees were killed, UNITA burnt all our equipment and our partner left the country. Our next quest was a safer business. The answer to that was oil, because the Cubans were protecting American interests in oil-rich Cabinda. We identified services we could offer these oil companies. Again, the Angolan government and state oil company Sonangol provided opportunities for private investment.”

Godinho began representing the English company Axia Serck Baker and sold $30 million worth of equipment to Exxon Mobile in block 15 on their behalf. American company NATCO bought Axia, and Godhino stayed as their representative.

“NATCO had a subsidiary: Test Automation Control. This company requested our support in getting Sonangol interested. Sonangol suggested forming a joint venture on block 0 in 2003, which was the first joint venture we created. We got a contract on block 0, which is operated by Chevron and employs about 90 expats and 120 Angolans. In 2006, one of our companies—Prodoil SARL—successfully made a bid for 20% of block 1/06. That block was operated by Tullow Oil.

“In 2004, we formed a joint venture between Prodoil (40%) and American engineering company Paragon Inc (60%). We are now also involved in projects on block 0 with Chevron, and on block 15 with Exxon.”

Godinho’s steep journey uphill was interrupted a second time, during the economic crisis of 2009 and 2010. “Our business was seriously affected because most of our projects are financed by international lenders. In real estate development, loan approval procedures were extended to years instead of months. In the oil and gas industry, operators struggled to get financing. That either left us—the service provider—without contracts, or tremendously delayed the contract and the project’s execution.

“Our joint venture partners also struggle when operators stop investing, which decreases the number of projects and contracts. During the oil price crisis in 2008, projects worth $140 per barrel stopped being viable. Oil prices reached $30 per barrel at a certain point. That led to the suspension of many projects.”

Godinho says that despite the economic crisis, doing business in Angola is a daily battle. “Something you normally do in a year takes five to six years in Angola. Only 5% of your time is dedicated to business. It’s a nightmare.”

This is supported by World Bank research. In its Ease of Doing Business report for 2011, Angola ranks 163 out of 183 countries. On the other side of the coin, Angola has a healthy 12% economic growth forecast for 2012—at a time when many countries are struggling for growth.

Bureaucracy is a major problem and connections, Godinho says, are key.

“I believe the government wants to support the private sector, but only multinationals in the oil and diamond sector are seeing the results so far.

“The problem is that the government consists of two to four guys, while the system consists of millions of people. You can’t expect a mosquito to carry an elephant.”