Doing business in Angola

Doing Business with Angola : A study of 181 countries done by the World Bank on Doing business in 2009 places Angola very low at 179 for enforcing a contract, 174 for employing workers and 168 for starting a business. The better ranks are in protecting investors at 53 and getting credit at 84. Detailed analysis can be seen at http://www.doingbusiness.org/ExploreEconomies/?economyid=7. Some basic realities that needs to be understood by any new entrant in Angola are- (i) The only major Port is not able to efficiently handle the traffic and ships wait for months at anchorage making the landed cost of inputs for industry as well as goods for consumers very high. (ii) Luanda is the most expensive city in the world where a hotel room, when available at all, could cost USD 400 per night, a loaf of bread USD 3 and a liter of milk USD 4. A decent two room apartment would cost USD 8,000 to 12,000 per month. (iii)The traffic situation in city proper is very poor with cars reduced to a bumper to bumper crawl . Public transport is either not reliable or very expensive. Best option for investors coming on short visit is to hire transport from reliable international car rental companies like Hertz and Avis. It is hoped that the authorities will improve in the coming years. (iv)It is economical and prudent to partner with a local businessman in the desired business venture . (v) The red tape , delay and corruption in public dealings is a major hindrance. (vi) There has been cases of business men being detained at airport customs and being subject to harassment in an arbitrary manner despite having valid visas.( vii) Infrastructure like water and electricity supply is in irregular supply and high office space rental costs considerably affect overheads.

Having said that, Angola has great opportunities for those who can dare. The two crucial requirements are (i) technological know how and (ii) contacts. The Angolan elite which a new foreign business man would invariably make friends with sooner than later is suave, well dressed, prefers niche brands and is sharp to recognize opportunities as well as threats.. The second aspect to be noted is the high margins in the business with tax holidays extending up to 12 to 15 years for a new manufacturing entity which is what has attracted thousands of Portuguese, Brazilian, South African and Chinese companies to Angola. Even a few Indians have set up businesses here.

One of the sectors that is really starving for investments and appropriate technology is civil construction (other than mega infra-structure projects like roads, ports, Railways etc that are done under credit lines mainly from China). Government has a plan to build a million homes, during the next 4 years, for low income group all over the country at a cost of USD 50 billion

Setting up Business. To set up an office/factory/plant in Angola, broadly the following steps are needed : (i) First of all, get the relevant documents of your company such as registration of the company with Indian authorities, evidence of payment of taxes, etc. attested from the Angolan Embassy in Delhi (tel 011-26146195, fax 26146184,) in Portuguese. (ii) Submit a formal application in the prescribed format in Portuguese (can be had from Angolan Embassy) to the Agencia Nacional de Investmento Privado (ANIP) with supporting documents of identification and legal, economic, financial & technical characterization of the Investor and of the proposed investment, in addition to the documents attested by Angolan Embassy. Minimum investment should not be less than one hundred thousand US Dollars. (iii) The ANIP shall examine the proposal and, if found in order, issue a Private Investment Registration Certificate (CRIP) within 30 days of receipt of completed application. (iv) ANIP shall write to the Angolan Central Bank (BNA). Applicant also has to apply to BNA for capital import licence through a credit institution authorized to deal in foreign currencies, together with a copy of CRIP. (v) ANIP will also write to customs about duties. Import of brand new machinery, equipment, etc. is 100% duty free. On used equipment, a 50% duty of the applicable rate is levied.(vi)The applicant has to register his company with the Guiche Unico Da Empresa (Tel 00 244 222 370676/371076, fax 370403, e mail guiche-unico@hotmail.com). (vii) The Angolan Ministry of Trade shall carry out an inspection of the machinery, equipment, premises and all other related requirements of the project. If found in order, the production can be started. For further details/clarification, you may

contact :

Mr. Antonio Prata
Manager
Agencia Nacional de Investmento Privado (ANIP)
Edificio do Ministerio da Industria(9th Floor)
Rua Cerqueira Lukoki, No. 25
Luanda
Tel 00 244 222 391434/331252
Fax 00 244 222 393381/393833
E mail santprata@hotmail.com
Website www.investinangola.org.com, www.investinangola.com

Investment Incentives

Angola initiated a process of profound alterations in the legal framework, concerning investment, aiming at the creation of investment attractions while at the same time trying to improve the macro-economic performance. The “Basic Private Investment Law” was approved in substation of the former “Foreign Investment Law”, which in comparison to the latter is characterized by the following innovations:

Based on the principle of equality and non-discrimination, the current law regulates national and foreign investment.

The minimum amount for foreign investment was reduced from USD 250,000 to USD 100,000 in order to create room for small and medium investors.

The decision on the authorization of an investment is taken either by the National Private Investment Agency (ANIP) (up to USD 5 million) or the Council of Ministers(in cases of investment more than USD 5 million and investment into sectors which are subject to the granting of concessions or in which the pubic sector must be represented).

The approbation period for investments was reduced from 45 to 15 days and in cases regulated by the ‘Regulation of Prior and Contractual Declaration’ from 90 to 30 days.

An investment is approved by issuing a CRIP (Registry Certificate of Private Investment) that is handed over to the investor as soon as the process is authorized. The investor is thus notified of the fiscal and customs incentives applicable to his case.

Rapid obtainment of a license for capital-import, which is issued by the Angolan National Bank

ANIP-The National Agency for Private Investment has been nominated to perform as the first and foremost contact for investors. In order to facilitate its activities, aiming always at removing any obstacles that might obstruct investment-processes, ANIP is acting under direct supervision of the Chief of Government, who, in the case of Angola, is also the Head of State.

Under regulations of the Private Investment Law, the country is divided into three different zones (A,B & C-see list below) and priority-areas for investments were established. Thus, an investment in Zone A (Luanda, for example) will not be subject to the payment of industrial tax (the most important tax that is paid by commercial and industrial entrepreneurs whose rate is 35% of all profits), during a period of 8 years. In Zone B (Kwanza Sul for example), the tax-exemption is stipulated for a period of 12 years, and in Zone C (Huambo, Moxico or Cunene Provinces) 15 years are industrial-tax free.

As far as customs duties are concerned, the law stipulates exemption for equipment, including technical vehicles and raw materials for 3, 4 & 6 years in the respective Zones A, B & C. In the case of used equipment, the exemption is replaced by a reduction of 50%. These incentives can be applied to investments within the above mentioned zones, and also to investments in certain areas that are considered “priority sectors” by the Angolan State – such as:

Agricultural production (horticulture and animal-breeding)
Processing industry
Fish-processing industry (also for derivates, similar products)
Building industry
Education and health
Infrastructure, such as roads, railways, ports and airports
Telecommunications
Energy and water
Transportation equipment fro large quantities of goods and passengers

Angola is a country with an enormous potential – hydraulic power, mineral resources, very good conditions for agriculture, forestry and other resources. Angola is open for investors.

Zone A

Province of Luanda, the capital municipalities of the Provinces of Benguela, Huila, Cabinda and the Municipality of Lobito.

Incentives are

Customs Duties
Investment operations are exempt from payment of duties and fees
Industrial Tax
Profits yielded from investments are exempt from the payment of industrial tax
Capital Gains Tax
Companies that promote capital investments are exempt from the payment of capital gains tax
3 Years 8 Years 5 Years

Zone B

Remaining municipalities of the Provinces of Benguela, Cabinda and Huila, and Provinces of Kwanza Norte, Bengo, Uige, Kwanza Sul, Luanda Norte and Luanda Sul.

Incentives are

Customs Duties
Investment operations are exempt from payment of duties and fees
Industrial Tax
Profits yielded from investments are exempt from the payment of industrial tax
Capital Gains Tax
Companies that promote capital investments are exempt from the payment of capital gains tax
4 Years 12 Years 10 Years

Zone C

Provinces of Huambo, Bie, Moxico, Cuando Cubango, Cunene, Namie, Malanje and Zaire.

Incentives are

Customs Duties
Investment operations are exempt from payment of duties and fees
Industrial Tax
Profits yielded from investments are exempt from the payment of industrial tax
Capital Gains Tax
Companies that promote capital investments are exempt from the payment of capital gains tax
6 Years 15 Years 15 Years

Indian Companies in Angola There is a small Indian community, though the number is increasing by the day. There is very limited presence of Indian companies with Indian employees. Indians own a few small industrial units in Angola in the areas of steel, plastics and tractor assembly. There are more who have set up trading companies. One Indian national has invested US$ 5 million in a steel plant called “Best Angola Metal”. The company employs 70 Indians and 154 Angolans, with an annual turn over of approx US$ 10 million.

Mohan Exports (India) Private Limited has been making shoes and uniforms in Angola for the Angolan Army under a contract for the last six years. There are about 20 India based staff and 1500 local workers.