Foreign direct investment (FDI) in Angola

FDI in Figures

According to UNCTAD’s World Investment Report 2024, FDI flows to Angola FDI flows to Angola remained negative for the sixth consecutive year in 2023 (-USD 2.08 billion) as companies in the oil sector continued to repay loans. Similarly, the stock of FDI in the country decreased significantly to USD 12.17 billion from USD 14.26 billion in 2022. The petroleum sector remains the main destination for FDI flows. Most FDI in Angola comes from the Netherlands, France, China, Portugal, and Brazil (IMF). The vast majority of foreign investment is directed towards the region of the capital Luanda (Angola’s Private Investment and Export Promotion Agency – AIPEX).

Rich in hydrocarbons, minerals, fisheries, and agricultural land, Angola also has significant hydroelectric potential. The government is striving to improve the business climate and has adopted favourable legislation in recent 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 AIPEX aims to stimulate economic growth, diversify the economy, and expand private sector participation in Angola's economy. Although known for its challenging business environment, Angola is endeavouring to enhance its investment climate and make strides in anti-corruption measures, democracy, governance, and human rights. Nevertheless, a sluggish and non-transparent judicial system poses a deterrent to investment and occasionally hampers contract enforcement efficiency. Likewise, the perception and occurrence of corruption continue to concern investors, especially outside the extractive industries. In September 2024, the EU-Angola Sustainable Investment Facilitation Agreement (SIFA) entered into force. It aims to attract foreign investment for sustainable development by improving the Angolan business environment, increasing regulatory transparency, promoting e-government, and enhancing stakeholder involvement. The agreement should benefit both foreign and local investors, particularly small and medium-sized enterprises. Angola ranks last among the 133 economies on the Global Innovation Index 2024 and 118th out of 177 countries on the latest Index of Economic Freedom.

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.

Bilateral investment conventions signed by Angola

Angola has signed a number of bilateral agreements. For more details, see the UNCTAD website.