ANGOLA: An Introduction to General Business Law

Investing in Angola 

Angola has immense economic potential, thanks to its wide variety of resources. Most of these resources remain undervalued and have been for decades, owing to the predominance of – and dependence on – oil production.

Following a recession that began in 2016, the Angolan economy started to recover in 2022 – with a real GDP growth of 3.3%, due in part to a 2.98% increase in oil and gas production (and 3.42% increase across the other sectors of the economy) – and is expected to strengthen further in 2023. Forecasts made by the Angolan government indicate an average annual growth of 3.95% from 2023–28. This is based mainly on the predicted growth in non-oil GDP, which is estimated at an average annual growth rate of 4.7% for the same period.

The country’s current policies are geared towards diversifying the economy and reducing petroleum dependency.Angola continues to be a vast market in terms of commodities, with increasing demand for infrastructure, energy (electric), manufacturing, transportation and transportation infrastructure – in particular, between the rural regions and the major cities.

Legal Framework 

Law No 10/18 of 26 August 2018 (the “Private Investment Law” (PIL)), as amended by Law No 10/21 of 22 April 2021, sets out the framework for investments in Angola, including investor protections, special rules on repatriation of funds by foreign investors, and incentives and benefits.

Under the PIL, private investors are granted rights and guarantees such as:

  - access to the judicial system;

  - rights to compensation in case of expropriation;

  - ownership, use, and lawful exploitation of land rights;

  - guarantee of non-intervention by the State;

  - industrial property and IP rights;

  - importation and exportation rights;

  - rights to transfer dividends and profits abroad;

  - proceeds resulting from the liquidation of their investments (upon payment of the taxes due); and

  - proceeds of indemnities and royalties or other earnings resulting from indirect investments related to the transfer of technology.

Investors in priority sectors and less developed zones of Angola are entitled to greater incentives and benefits. For the purposes of the PIL, the following are deemed priority sectors:

  - education, technical and professional training, scientific research and innovation;

  - agriculture, food and agro-industry;

  - specialised health units and services;

  - reforestation and industrial transformation of forest and forest resources;

  - textiles, clothing and footwear;

  - hospitality, tourism and leisure; and

  - construction, public works, telecommunications and IT, airway and railway infrastructures.

Oil, mining and financial institutions benefit from their own special regime, which is regulated by specific legislation.

Angola is party to several bilateral investment treaties (with Italy, Cabo Verde, Germany, Portugal, UK, Russia, UAE, South Africa and Brazil) that grant protection against expropriation or inequitable treatment of foreign investors.

Incentives and Measures to Improve the Business Environment

The PIL provides financial incentives (eg, access to credit through specific government programmes) in addition to other benefits, such as simplified and priority access to government services.

In 2022, the Tax Incentives Code was approved. This provided a wide range of tax incentives for private investment, including tax deductions, accelerated depreciation, tax credits, exemption, reduction of tax rates and customs duties, and tax deferrals.

During the past few years, Angola has enacted legislation to streamline foreign exchange procedures and facilitate inflows and outflows of capital. Changes have been introduced to reduce bureaucratic controls on the import and export of goods, current invisible transactions and capital transactions. In addition, the Angolan Central Bank (BNA)’s new regulation on Foreign Exchange Transactions in the mining sector was approved very recently.

The SIMPLIFICA project has also been initiated by the government of Angola. This project aims to simplify public administration procedures by eliminating red tape and reducing the number of players in the chain of decision-making power, thereby shortening the waiting time with regard to the provision of services by public administration bodies.

Trends  

The banking sector has also seen many changes related to the process of alignment with the highest international standards and compliance with Basel’s core principles for effective banking supervision – all seeking supervisory equivalence with the European Central Bank. To this end, the BNA approved and promoted changes to several legislative instruments (some of which related to its own powers and its role as a regulator) and imposed new and more demanding prudential regulation on banks.

Throughout 2022 and at the beginning of 2023, banks and other financial institutions have been asked by their respective supervisors to complete a questionnaire on ESG-related matters. This is believed to be the first step toward future ESG regulation of the financial market.

Specific Opportunities 

Privatisation   

The public business sector benefits from structural reforms designed to resize the role of the State in the economy and this consequently reduces the Treasury’s financial effort, promoting greater efficiency and transparency in public companies.

It is in this context that the privatisation programme has been implemented since 2019. In 2022, 32 privatisation processes were carried out. The privatisation of 46 assets and companies from different sectors (including industry, mineral resources and oil, telecommunications and transport) is projected for 2023. The transfer of these assets shall follow one of the following procurement procedures: privatisation via IPO, privatisation by public tender, and limited bidding by pre-qualification.

Public–private partnerships 

The World Bank is currently providing technical assistance to the governmental bodies entrusted with responsibility for conducting and assisting in the structuring of PPPs. A PPP Procedures Manual is also being prepared with the support of the World Bank.

The PPP Project Portfolio is expected to be updated in 2023 and priority projects are to be prepared and structured (namely, those projects whose feasibility studies were prepared by the World Bank). Some developments in relation to the identified PPP projects include (i) completion of project-structuring, launch of public tender, and award of private partner for the Águas de Cabinda PPP, (ii) execution of the contract for the conversion into PPP of the new bridge over the Kwanza River project, and (iii) launch of the public tender and award of the private partner for the Huambo sanitary landfill.

Energy 

In line with the Angola Energy 2025 policy, the Angolan Executive has been improving and modernising its energy, legislative and regulatory framework.

Angola has a chronic problem with energy distribution and, as a consequence, only 42.8% of the population had access to electricity in 2022. The target to be achieved is 50% by 2025. The Angolan government enacted a National Strategy for New Renewable Energies, which provides an in-depth look at the goals that the Angolan State wishes to meet by 2025.

Investments in the production and distribution of electricity will continue to be a priority, as this is critical for economic growth and improving the living conditions of the Angolan population.

While preserving oil production, Angola is also committed to the energy transition process and to sustainable energy – with a focus on sources such as hydropower, solar energy and wind energy. Priority targets include ensuring and improving access to energy services in rural areas based on renewable energy, developing the use of new grid-connected renewable technologies, and promoting and accelerating public and private investment.

Agriculture and fisheries 

In 2022, the implementation of the National Promotion Plan for Grain Production (PLANAGRÃO) was approved to increase the country’s grain production and reduce dependence on imports of wheat, rice, soybeans and corn. This programme has a duration of five years and amounts to approximately USD5 billion for financing private investment projects through the Development Bank of Angola (Banco de Desenvolvimento de Angola). The remainder will be earmarked for public investment-related projects.

The National Plan for the Promotion of Fisheries (PLANAPESCAS) was also approved by the Angolan government, with the aim of preferentially encouraging entrepreneurial fishing activity and increasing the production and processing of fish and salt. PLANAPESCAS has a financial package of approximately USD245 million spread over five years.