Angola is an upper middle income country located in southern Africa with a $102 billion GDP, $4,100 per capita income, and a population of 25 million, according to IMF data. As sub-Saharan Africa’s second highest oil producing country in 2015 behind Nigeria at 1.8 billion barrels per day. Angola is the United States’ fourth largest trading partner in Africa (down from third in 2014). Angola’s natural resource wealth helped attract foreign direct investment and ensured strong economic growth over the past decade. But the economy has recently undergone a major structural shock due to lower crude oil prices, and forecasts for the coming years remain filled with uncertainty about the evolution of the country’s oil exports and international commodity prices. Angola’s real GDP declined 19 percent from $126 billion in 2014 to an estimated $102 billion in 2015 as a result of the decline in global oil prices and a significant devaluation in the local currency, the kwanza, and is forecast to decline by a further 20 percent in 2016. Growth of gross domestic product (GDP) is projected to remain subdued, at 3.3% in 2016 and 3.5% in 2017, down from 3.8% in 2015. Analysts expect GDP to grow 1.6% in 2017, up 0.1 percentage points from last month’s forecast. In 2018, the economy is expected to grow at 2.7%. Angolan growth is expected to average just 2.9% a year in 2017-21. Growth of the oil sector will average 4%, while the non-oil sector is expected to show a small improvement, growing by 3.4%, driven mainly by a strong recovery in agriculture. Inflation stood at 23 percent in the first quarter of 2016 from the 2015 annual rate of 14.3 percent, due to the devaluation and the removal of government fuel subsidies in early 2016.
Why invest in Angola
Angola’s huge natural resource that include oil, gas, diamonds, coffee, sisal, marble and iron among other natural resources are responsible for attracting investors into the country. The country’s planned investment in infrastructure has also attracted a number of international and regional players in the public sector.
The long-standing president, Jose Eduardo dos Santos, has offered to step down before the 2017 polls and João Lourenco, the country’s defense minister, will take over as leader of the ruling Popular Movement for the Liberation of Angola (MPLA) party. Lourenco will be presented at the party’s anniversary celebration on Dec. 10. The direction of policy is likely to remain broadly unchanged.
The population of Angola per census of 2014 was 20,172,332 people. According to United Nations the population of Angola is estimated at 26,402,486 in March 2017.
About 62.3% of the population of Angola lives in urban areas and Angola’s urban population is increasing at a rate of about 4% per year. In order to strengthen national institutional capacities for managing urbanization and and rural development ,the country has put in place a National Urbanization and Housing Programme for Luanda , a 2015-2030 Metropolitan Plan for Luanda and other urbanization projects across the country. The high urbanization has been as a result of rural to urban migration especially during the 27 years of armed conflict.
The highlights of World Bank score of doing business in Angola is summarized as follows;
|World 2017 Rank||World 2016 Rank||Change in Rank|
|Starting a Business||144||139||5|
|Dealing with Construction Permits||111||107||4|
|Protecting Minority Investors||81||78||3|
|Trading across Borders||183||183||–|
Angola ranks 182 out of 190 participants in the World Bank doing business survey.
Promotion of Investment
Angola has put in place a new private investment law (no. 184/15) and created a National Agency for Promotion of Investment and Exportations of Angola Agency (Agência para a Promoção de Investimento e Exportações de Angola – APIEX) . The Agency is the Angola’s investment and export promotion center tasked with promoting Angola’s export potential, legal framework, environment, and investment opportunities in the country and abroad. The effort of the agency is expected to lead to economic growth, diversification of the economy, expansion of private sector and enhanced private sector participation in Angola’s economic development. The investment law imposes local partnership requirements for foreign investment in key sectors that may prove counterproductive in the long run.
Unemployment and skilled labor
The Angolan labor force has limited technical skills, English language ability, and managerial ability. Many employers find it necessary to invest heavily in educating and training their Angolan staff. Angola’s labor force was estimated to be 10.51 million in 2015. The literacy rate is estimated to be 71.1 percent. A 2013 National Statistics Institute (SNI) study indicated the urban unemployment to be around 26 percent. Angola’s General Labor Law (Law No. 2/00), updated in 2015, recognizes the right of workers (except members of the armed forces, police and civil service) to form and join independent unions, to collectively bargain, and to strike, but these rights are either limited or restricted.
Effective July 2013, all companies operating in Angola are required to operate in kwanza , the local currency and use local banks to make all payments, including payments to suppliers and contractors located outside of Angola. Plummeting oil prices are negatively affecting the local currency, the kwanza. New foreign exchange restrictions designed to shield the currency are making it increasingly difficult for investors and business owners in Africa’s second biggest oil producer to repatriate capital or pay for imports. Effective April 15, 2016, Angolan citizens are permitted to carry up $10,000 into or out of the country with Angolan residents subject to a $5,000 limitation. The limit on transit of local currency is 50,000 kwanzas. Angola’s new private investment law, passed in August 2015, discourages investors from repatriating profits within the first several years of their investments by imposing higher taxes on dividends and profits. Investors face severe constraints in sending remittances abroad as profits and dividends repatriation are not prioritized for foreign exchange allocation in the current restrictive Central Bank auction process.
In June 2014, the Ministry of Justice and Human Rights (MINJHR) opened the Center of Legal Alternatives for Conflict Resolution. Among other functions, the Center provides consultation, mediation, and arbitration of contract disputes for both Angolan and foreign businesses. The process is designed to be faster and less costly than the traditional court system. Angola is a member of the Multilateral Investment Guarantee Agency (MIGA), which can provide dispute settlement assistance as part of its political risk insurance products. Angola is not a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Award (the New York Convention), the World Bank’s International Center for Settlement of Investment Disputes (ICSID) and the United Nations Convention on the International Sale of Goods (CISG).
Key development challenges
- Angola heavily relies on oil revenues and imports that leaves the economy vulnerable to external shocks;
- According to World Bank Poverty Reduction and Economic Management team Angola needs to address a number of key structural weaknesses that threat its positive growth;
- The low rate of investment may threaten the planned longer-term economic development and
- The country has weak financial systems and lacks reliable financial information to correctly measure the efficiency and competitiveness of the economy.
Angola ranked 164 least corrupt nation out of 175 countries and scored a low corruption perception index 0f 18%, according to the 2016 Corruption Perceptions Index reported by Transparency International. To address the corruption concerns, Angola has incorporated regional anti-corruption guidelines and incorporated them into their domestic legislation. Angola does not have an independent body to investigate and prosecute corruption cases. The institutions of Audit Court, the Inspector General of Finance, and the Office of the Attorney General are charged with responsibility for handling corruption cases.
The country is secure, but with the ongoing elections, one is advised to avoid political gatherings and demonstrations and respect advice and instructions given by local security authorities.
Restrictions and attitude towards foreign investment
According to this law, responsibility for assessing foreign investments falls to the government ministry overseeing the sector where the investment will occur. For investments under $10 million, oversight and approval is under the jurisdiction of the Economic Commission of the Council of Ministers. For investments over $10 million, the Office of the President must approve and provide oversight. The private investment law distinguishes between foreign and local investors by establishes a lower bar for Angolan investors to be able to access fiscal incentives offered by the Angolan government: local businesses must invest a minimum of $500,000 versus the $1 million required of foreign investors. The private investment law also sets a minimum of 35 percent local participation/partnerships in foreign investments for electricity and water, tourism and hospitality, transportation and logistics, telecommunications and information technology, construction, and media sectors. The law expressly prohibits private investment in the areas of defense, internal public order, state security; banking activities relating to the operations of the Central Bank and the Ministry of Finance; administration of ports and airports; and other areas where the law gives the Angolan government exclusive responsibility for its operations.
Intellectual Property (IP) Rights
Angolan law recognizes the protection of intellectual property rights. Angola’s National Assembly adopted the Paris Convention for the Protection of Industrial Intellectual Property in August 2005, incorporating the 1979 text, and the patent cooperation treaty concluded in 1970, and amended in 1979, and 1984. The Ministry of Industry administers intellectual property rights for trademarks, patents, and designs under Industrial Property Law 3/92. The Ministry of Culture regulates authorship, literary, and artistic rights under Copyright Law 4/90. Angola is a member of the World Intellectual Property Organization (WIPO) and follows international patent classifications of patents, products, and services to identify and codify requests for patents and trademark registration. There are currently no statistics available regarding counterfeit goods seized by the Angolan government. INADEC (Instituto Nacional de Defesa dos Consumidores), under the umbrella of the Ministry of Commerce, tracks and monitors the seizure of counterfeit goods.
Angola is rich in natural resources including oil, minerals, gold, diamond, bauxite, petroleum, uranium, phosphates, copper, iron ore, feldspar and land.
Investment Climate in Angola has been summarized to include the following
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