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Foreign Direct Investment

According to UNCTAD’s World Investment Report 2022, Angola reported negative net FDI inflows of USD -4.15 billion in 2021, compared to USD -1.87 billion in 2020, as capital repatriation by multinational oil and gas companies accelerated. The stock of FDI in the country decreased significantly to USD 13.17 billion in 2021 from USD 17.32 billion in 2020. According to UNCTAD’s Investment Trends Monitor, global FDI momentum weakened in 2022 in the context of the war in Ukraine, rising food and energy prices, financial turmoil and debt pressures. The petroleum sector remains the main destination for FDI flows. Most of FDI in Angola comes from the Netherlands, France, China, Portugal and Brazil (IMF). In 2019, Trading company Toyota Tsusho and export credit agency Japan Bank for International Cooperation (JBIC) signed a deal to invest USD 650 million in the Namibe Bay project, the first Japanese private sector’s investment in Angola. In 2022, Brazil announced an investment portfolio of over 1.7 billion euros in the areas of military security, pharmaceuticals, construction, and agribusiness.

Rich in hydrocarbons, minerals, fisheries and agricultural land, Angola also has significant hydroelectric potential. The government is trying to improve the business climate and adopted favorable legislation in the last few years, including : a new Private investment law reducing the minimum capital requirement, facilitating capital repatriation, and eliminating the requirement that local investors have a 35% stake ; a Competition law ; a Privatization law and a law allowing the creation of free trade zones. A single contact mechanism enables investors to obtain the necessary permits in a simplified manner. The National Agency for Investment Promotion and Export (APIEX) aims to stimulate economic growth, diversify the economy, and expand private sector participation in Angola's economy. According to the latest The Economist’s Business Environment ranking, Angola’s performance is poor, occupying the 81st position out of 82 countries. Angola also occupies 116th place out of 180 in the Corruption perception index of the organization Transparency International, in continuous progress over the past years. In addition to its vulnerability due to dependence on oil revenues, Angola suffers from high levels of bureaucracy and an underdeveloped financial system, as well as widespread corruption, poor infrastructure, ineffective ports, abundant but unskilled labour and high costs on the ground for businesses.

 
 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) -1,866-4,355-6,142
FDI Stock (million USD) 21,59520,86114,719
Number of Greenfield Investments* 1795
Value of Greenfield Investments (million USD) 3,4372,594359

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Angola Sub-Saharan Africa United States Germany
Index of Transaction Transparency* 4.0 5.5 7.0 5.0
Index of Manager’s Responsibility** 6.0 3.5 9.0 5.0
Index of Shareholders’ Power*** 6.0 5.5 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Angola

Strong Points

The main assets of Angola are:

  • Political and economic stability regained around a broad consensus and under the leadership of a solid political majority after 27 years of civil war,
  • A large population makes the country the third-largest market in sub-Saharan Africa,
  • Important natural resources (second-largest oil producer in sub-Saharan Africa, mining production, diamond production),
  • Strong growth potential for non-oil sectors such as agriculture, construction and tourism,
  • A young and booming labour force,
  • Attractive for FDI in recent years.
Weak Points

Among the factors that are detrimental to foreign investment are:

  • High vulnerability to oil price fluctuations: 98% of export earnings come from oil production,
  • The suboptimal business environment with high market entry costs, heavy and relatively slow bureaucracy and overall low confidence in the current government by businesses,
  • Inadequate infrastructure,
  • The lack of qualifications of the workforce and a high unemployment rate (32.7% in 2020 - French Ministry for the Economy, Finance and Recovery) which sustains the high rate of poverty,
  • The weakness of the judicial system, the persistence of corruption and the lack of transparency in general and in the public accounts in particular,
  • High general government gross debt (120.3% of GDP in 2020 - IMF),
  • An underdeveloped financial system.
Government Measures to Motivate or Restrict FDI
The Angolan government is strongly in favour of FDI, perceived as a necessity for the diversification of the economy. In fact, the importance of the New Private Investment Act of 2018 and the President's new policy to promote trust in compliance by fighting against corruption are evidence of this. Investors, foreigners or not, theoretically have the same right of access to incentives, even if the policy of "Angolanization" aims to promote the employment of nationals. Private investment (domestic and foreign) is regulated by ANIP (Agência Nacional Pelo Investimento Privado). To benefit from the tax incentives and other benefits provided by this law, foreign entities must invest an amount equal to or greater than US$1 million. Regarding capital repatriations, the law guarantees foreign investors the right to transfer dividends or other income from a direct investment out of the country. Ever since 2020, importing capital from foreign investors willing to invest in Angolan companies is immuned from licensing by the Angolan central bank. The Agency also sets priority sectors such as agriculture and fisheries, processing industries, rail, road, airport and port infrastructure, telecommunications and information technology, fisheries and its derivatives, energy and water, social housing, health and education, hotel industry and tourism. These sectors present considerable investment opportunities given their potential and the incentives put in place.

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