Angola's attractive economic growth & development

Angola has managed to avoid much of the upheaval that has roiled sub-Saharan African commodities and natural resources markets in the aftermath of the global financial crisis. It has made great progress after emerging from civil war in 2002.

With the third-largest population in the region, one of the fastest growing economies and political and economic stability, Angola remains attractive to sophisticated investors who want to cash in on the high-growth potential of such non-oil businesses as construction, tourism and financial services.

Angola is also committed to constitutional government, which is the foundation of any investment-friendly economy. Long-serving President José Eduardo dos Santos announced in December 2016 that he will step down, opening the way for elections this August. The expected peaceful transition of power will be a sign of maturing democracy and allow for continuity and stability.

Even though the country’s significant natural resources continue to be suitable for financing large projects, oil-rich Angola is working to de-link itself from the volatility of crude oil prices.

As Africa’s second-largest oil producer, Angola was impacted by lower oil prices in the past few years. The government responded by diversifying the economy and creating a comprehensive reform program including the gradual elimination of most fuel subsidies. It also extended its successful social protection program, Cartão Kikuia, designed to fight poverty.

The Angolan government has enacted reforms designed to reduce the hurdles for doing business in the country. These include improving infrastructure and workforce training, streamlining the bureaucratic process of registering and operating businesses and strengthening the judicial system and financial sector.

To make investment more attractive, Angola enacted a series of liberalization measures and incentives. They include reducing fees and requirements to register a company and eliminating minimum capital requirements. The country has also lowered property transfer taxes and strengthened its credit information system.

Angola also has lowered corporate income tax rates from 35 to 30 percent. It has made paying taxes easier and less costly by reducing the frequency of advance payments of corporate income tax and increasing the allowable deductions for bad debt provisions. Labor rules were also relaxed allowing for increased flexibility in staffing and benefits.

By investing in its port infrastructure and administration, introducing a mandatory registration for all traders and a license requirement for export and import transactions, the country streamlined trading and introduced best-in-class international standards.

The government is eliminating barriers to foreign direct investment. All investors, foreign and domestic, have the same right of access to incentives, while policies meant to encourage employment of local labor remain in place to ensure job creation and economic expansion benefit all segments of society.

Angola’s private investment legislation was overhauled in 2015 to offer more attractive incentives that include relief from the industrial tax and the tax on capital gains and capital appreciation.

The new law is meant to attract more foreign and domestic investment by simplifying procedures and enhancing tax benefits. Overall it creates a more transparent and manageable compliance process that cuts red tape and reduces the cost and difficulty of doing business in Angola.

Progress has been slow but sure. Angola still has challenges to face such as its high rate of inflation. But considering the brutal civil war that wracked the country only a generation ago, the results have been impressive.

Angola is No. 81 out of 190 economies on the strength of minority investor protection index. In sub-Saharan Africa, it ranks No. 6 on the Protecting Minority Investors Ranking, which is above the regional average and behind only South Africa, Mauritius, Nigeria, Namibia and Botswana, according to the Doing Business Report 2016.

Angola is on a path to steady growth and is no longer subject to the boom-and-bust cycle that links so many developing countries’ economies to oil prices. A report from the Economist Intelligence Unit is cautiously optimistic that the Angolan economy will continue to grow by an annual average of 2.7 percent until 2021.

Trading Economics, a collection of global economic indicators, is even more optimistic, estimating that the Angolan economy will grow at a 3 percent annual clip.

This doesn’t match the go-go double digit growth rate of the oil-boom years, but it puts Angola’s economy on a steady and, more importantly, sustainable glide path to the future.