Angola is a potentially rich country, characterised by abundant reserves of natural resources such as oil, natural gas, diamonds and other minerals, a vast hydrographic network, vast expanses of arable land and a tropical climate that is very favourable for agriculture, livestock, fishing, hunting and rural tourism.
After achieving independence, in 1975, Angola was ravaged by a civil war that lasted nearly 30 years, resulting in the massive destruction of its basic infrastructures, with deep negative consequences for its economic and social development. Upon the end of the war, in 2002, the country regained peace and stability. It took on the great challenge of national reconstruction, which entailed rebuilding its physical infrastructures, completely destroyed by the war, and developing integrated social projects of paramount importance, in order to restore the social and human fabric that was irreparably damaged as a result of the armed conflict. Therefore, the country’s current political and economic stability is a key factor for attracting direct investment in the various sectors, with a view to increasing internal production and contributing to diversifying its economy.
Despite the current difficult environment, brought about by the economic and financial crisis affecting countries and markets all around the world, Angola’s prospects for growth and development are rather encouraging. The country’s Gross Domestic Product (GDP) is at USD 130.03 billion (2004) and its economic growth rate is one of the highest in the entire African continent. However, even with the drop in crude oil prices in the international market, Angola’s GDP continues to grow at a more or less stable rate of 6.8% (2013), 3.9% (2014) and 3.0% (2015 – estimated).
Angola is the second largest producer of crude oil in Sub-Saharan Africa (after Nigeria), with current production figures pointing to nearly 2 million barrels per day. Crude oil exports are the country’s main source of revenue, accounting for 97.35% of annual exports and making up about 46.8% of GDP (2014). The drop in oil prices, and the consequent decrease in revenue, is posing great challenges for the internal market, which calls for the necessary and inevitable readjustment of governmental projects and programmes across the board. However, such challenges can be turned into opportunities for innovation and for the redirecting of the available resources, which can go towards investment projects that contribute to increasing non-oil GDP, thereby progressively reducing the country’s dependence on one single export.
Investment opportunities
The process of national reconstruction and diversification of the economy opens a wide range of business opportunities across the various sectors. Private investors have access to all sectors of the Angolan economy, including construction and infrastructure development, with the exception of sectors classified as ‘sensitive’, namely national security and defence, which are under the exclusive responsibility of the State.
The economic and social sectors currently offering the highest number of investment opportunities are:
- Agriculture, Livestock Production and Forestry
- Manufacturing and Processing Industries
- Fisheries and Aquaculture, including fish processing
- Construction and Housing Support
- Healthcare (Preventive Medicine, Pharmaceutical Industry, etc.)
- Education (Regular Education and Technical-Vocational Training)
- Transport and Telecommunications
- Hospitality and Tourism
- IT and Management Technology
Angola’s New Private Investment Act
With the aim of improving the business environment and making the Angolan market more attractive for private investment, as well as for direct foreign investment, the Government passed the new Private Investment Act (Law no. 14/15 of 11/8/2015), which lays down the general framework for private investment in Angola.
The new law sets out the principles and rules for access to benefits and other facilities provided by the State, most notably, tax, customs and foreign exchange incentives, which favour the establishment of partnerships for the implementation of development projects, mainly related to construction, expansion and rehabilitation of infrastructures across the various sectors. Such benefits include exemption from industrial tax over specific periods of time and rebates on customs duties paid on imports of raw materials, equipment and capital goods.
Although this law applies to internal investments in a minimum global amount equivalent to AOA 50,000,000.00 (fifty million Kwanzas) and to all foreign investment regardless of the global amount, the granting of fiscal incentives is subject to the following criteria:
- Internal investments, whose global amount is equivalent to a minimum of USD 500,000.00;
- Foreign investments, whose global amount is equivalent to a minimum of USD 1,000,000.00.
Fiscal reliefs can be granted for a maximum period of 10 years, depending on the nature and amount of the investment, the targeted sector, the location of the project, its social impact, the number of jobs created, the volume intended for exports and the national gross value added.
The attribution of fiscal incentives for investment operations divides the country into two development zones, as follows:
Zone A – the province of Luanda and the cities of Benguela, Lobito and Lubango.
Zone B – the provinces of Cabinda, Zaire, Uíge, Lunda-Norte, Lunda Sul, Malanje, Bié, Huambo, Moxico, Cuando-Cubango, Cunene and Namibe and the remaining municipalities of the provinces of Benguela and Huíla.
The division also includes Special Economic Zones and Development Hubs, and the introduction of the concept of Free Zones is also on the agenda.
Under the terms of the new legislation, which is complemented by the Public-Private Partnership Act (Law 2/11 of January 2011), foreign investment in the fields listed below must be made under a partnership with a national citizen, an Angolan private company or a publicly owned enterprise in which they hold at least 35% of the share capital and actively participate in the management, which must be reflected in the shareholder agreement:
- Electricity and Water
- Transports and Logistics
- Telecommunications and TI
- Construction and Public Works
- Tourism and Hospitality
- Media
In short, in addition to the reasons stated above, there are other factors to consider when deciding whether or not to invest in Angola: its geographical location gives the country a strategic position, allowing it to serve as an access platform for the regional market of Southern Africa and land-locked countries. Moreover, Angola has no recorded occurrences of severe natural disasters such as floods, volcanic eruptions, cyclones or earthquakes that could endanger the physical environment, resources and facilities. Angola offers a stable and favourable business environment, a young and active population, a rising middle-class and a growing market, fuelled by major public investments for the construction and updating of economic and social infrastructures. That is why we believe this is the right time to invest in the emerging, vibrant and promising Angolan market.
