Ana Cláudia Rangel of Raposo Bernardo in Luanda looks at the latest legislative changes in Angola
Over the last decade, the development of the Angolan economy is essentially based on the exploitation of vast natural resources such as diamonds and oil. This reality led to the fact that Angola quickly became one of the African and world countries with the highest economic growth rates, ahead of countries such as China or Brazil.
Angola has seen a marked economic growth in the last 12 years and for 2014, according to International Monetary Fund forecasts, Angola's GDP is expected to grow an outstanding 5.3%.
Being a growing economy, Angola has become an unavoidable reality in the international scene, emerging as one of the most desirable destinations for foreign investment in several areas, such as construction and rehabilitation of infrastructure with special focus on infrastructure linked to the production and distribution of energy, water, construction of hydroelectric dams, industrial production, tourism, agriculture, transport, logistics, retail, distribution, consulting, human resources training, among others.
A clear sign of this are the recently announced investments, deriving from countries as USA, Spain, France and Portugal, which may reach one billion Euros in the coming years. Angola has a need for attracting foreign investment, which will provide a relief on public spending in those areas of investment. Regarding the so-called bureaucratic barriers to foreign investment, such as lack of skilled labor, or the difficulties in obtaining work permits for foreign workers leveraged by the encouragement to the hiring of local workers, they can be overcome with the right legal support and advice. The fundamental point is the experience, the know-how and the capacity to invest.
From a legal standpoint, the Angolan government is absolutely aware of the added value that foreign investment represents and has been increasingly producing legislation with a range that encourages solid and long-term investment in the country.
The Law 20/2011 - Private Investment Law - has established the legal framework regarding contractual requirements for the approval of investment projects and / or the granting of investment incentives, and these may hold the less determined attempts made by international investors, but has meant a huge step in players know what are the rules, and this is the most important when investing abroad.
Also, and this is a critical stage for success, the intentions of international investors will inevitably be scrutinised by the National Private Investment Agency (ANIP), and the investor must be well advised that the investment plan must be built and presented to converge with the strategy of the Angolan government. It is natural that the submitted project requires negotiations with the public authorities, which will prevent changes from both sides in the course or the project.
After this key procedure, the project is sent for approval by the Administrative Council of ANIP along with a binding opinion of the Ministry of Finance, except for projects with a value equal to or less than $10 million whose approval is made by the holder of executive power and after the Council of Ministers evaluation.
Any foreign investor is sensible on tax incentives and other fiscal advantages, and countries know that and compete hard. Investing in Angola has a good fiscal package accessed upon fulfillment of certain conditions, and not in the form of an automatic grant. Indeed, a minimum investment of $1 million is enough to apply and the project should be able to respond to economic criteria like: promote the most disadvantaged regions, especially in the countryside; increase national productive capacity or raise its added value; provide partnerships between domestic and foreign entities; induce the creation of new jobs for national workers and raising the qualification of the local workforce; provide effective domestic supply and rehabilitate; expand or modernise infrastructure intended for economic activity and, even more objectively, capable of directing investment to priority areas (agriculture, livestock breeding, industry, telecommunications and information technology, among others); be executed in development areas and other Special Investment Economic Zones (currently Luanda - Bengo); or be carried in the free trade zones of Angola. As one can understand, there are more opportunities than restrictions.
Besides the above-mentioned aspects, it is still possible for local companies to be granted a tax incentive that develops the Angolan business community, and the condition is that capital is held 51% or more by an entity resident in Angola.
As in many countries, companies can take different types of legal incorporations, depending on factors such as the investment capability, the aim and term of the investment, or even the multinational strategy.
Angola currently represents an attractive destination to foreign investors, benefiting from a continuous level of economic growth, an exchange rate gaining stability, a controlled inflation which is consistently reaching lowest historical levels and very important in the decision making, the increasing social and political stability.
Yes there are still constraints and challenges that must be balanced when deciding to elect Angola as a destination for large scale investment, but our experience is a fast developing economy that will not fail to compensate those who invested in it, duly advised in the terms that investment shall be made. The local legal support is still pretty everything for a good start of a successful project.
Challenges are to be beaten, and our firm has been participating in projects for Government companies and institutions, for foreign investors from China, Japan, USA, Canada, Brazil, Sweden or Iberia acting in sectors such as: oil and gas, renewable, banking, insurance, real estate, construction, automobile, technologies or telecommunications.
We can also highlight significant partnerships with referral multinational law firms, requiring local expertise to conduct major operations of banking, M&A, infrastructure, often involving the Angolan state.
Make no mistake, new comers reach Angola on a daily basis, with the intention to invest in huge projects, on a scale that compares with other similar countries worldwide and this is only the beginning, the next few years, leveraged by the petroleum fund and the stock exchange market, will be fascinating.
About the author
Cláudia Rangel is the head of general business law of the Angolan office, having dual nationality (Portuguese and Angolan).
Holding a degree in Law from the Moderna University of Lisbon, a comprehensive specific training and over 15 years of experience, Cláudia has successfully conducted many high-profile and complex operations in corporate, M&A, projects, restructuring and arbitration and represented major players in sectors like energy, oil and gas, banking and real estate. Cláudia is fluent in Portuguese and English.
About the author
Júlio Martins Junior is a senior associate of Raposo Bernardo.
Julio bridges the local and international team and practices, focusing especially on banking and finance, public procurement, project finance, public-private partnerships (PPP) and foreign investment.
He has been involved in major international investment projects in the Angolan and Cape Verdean jurisdictions, for players in sectors like real estate, projects, transportation, insurance, industrial production, among others. He holds a degree in Law by the Lusophone University of Lisbon, a post-graduation in Commercial Contracts and a master’s degree in Private Law, both by the Catholic University of Lisbon.