Country outlook Angola

Transcription

1 Country outlook Angola

2 Form of Government: Semi-presidential republic Capital: Luanda Official language: Portuguese Population: 28,9 million inhabitants (216) Currency: Kwanza (AOA) Exchange rate: 1 EUR = AOA (31/3/218) 1 USD = AOA (31/3/218) GDP: $95 billion (.2% of world GDP) GDP per capita: $3,485 ($6,797 purchasing power parity) Ease of doing business: 175 nd in the world out of 19 according to the World Bank (Doing Business) Religion: Christian: 93.5% Time zone: Same time as mainland Spain Country outlook is a publication by CaixaBank Research that contains information and opinions from sources considered to be reliable. This document is for informative purposes only and CaixaBank is not liable in any way for any use made thereof. The opinions and estimates are those of the CaixaBank Research and are liable to change without prior notice.

3 Economic forecast GDP. Year-on-year change (%) The Angolan economy will recover very slowly in 218 and 219 thanks fundamentally to the rise in oil prices benefiting the country s key sector. However, the rate of GDP growth will remain at historical low levels due to a lack of recent investments, which has affected the oil sector and other productive areas. In this context, the macroeconomic stabilisation plan proposed by the Government in late 217 will help foster more balanced growth in the medium-term CPI. Year-on-year change (%) Inflationary pressures will continue in 218 as a result of the devaluation of the kwanza following the decision to suspend the exchange rate peg with the dollar. Controls on certain prices will not be able to fully compensate for the impact this will have on import prices. Inflationary pressures will ease in 219, as the pace of depreciation of the kwanza slows Economic policy Benchmark interest rate (%) and exchange rate (AOA/EUR) Fiscal balance (% GDP) Benchmark interest rate (left scale) Exchange rate (right scale) Current account (% GDP) Public debt (% GDP) In January of 218, the BNA decided to abandon the exchange rate peg with the dollar that it had established in April of 216 in the face of declining reserves from defending the currency. In the first weeks of fluctuation, the kwanza dropped 2% against the dollar and 28% against the euro. We expect the currency to continue depreciating through , to levels closer to the black market rate. The new exchange rate policy, after the first devaluations, is managed float: it fluctuates within a band (of 2% against the euro) and is determined in weekly auctions. The general government deficit will remain high in coming years, although it is expected to fall gradually thanks to rising oil prices (a sector that represents 5% of public revenues) and the fiscal consolidation measures proposed in the macroeconomic stabilisation plan (one of the key aspects is the introduction of new taxes). Moreover, Angolan authorities have been in talks with international creditors about restructuring part of its external debt. If this were to go forward, the threat of a possible default (a possibility that remains, though is less likely than in the past) would lessen. Financial conditions Private credit (% GDP) In the banking sector, the non-performing loans has risen sharply to 31.3% in early 218 (compared to 13.1% at the end of 216). Several banks do not meet the minimum capital requirements, including the BPC public bank, which is undergoing restructuring. This is a systemic bank. 17. Gross external debt (% GDP) The recovery of oil prices will halt the deterioration of the current account balance, which will nonetheless continue to have a rather large negative balance, making it difficult to correct the external debt problem. However, the reserves are still within the normal safety margins (though much closer to the limits following the decline in reserves seen in 217). Source: CaixaBank Research, based on data from Thomson Reuters Datastream, IMF, Bloomberg and Oxford Economics. 157

4 Rating B- B2 B The rating outlook is negative for Fitch and stable for Moody s and S&P. Moody s downgraded Angola s rating again in October of 217. A country has investment grade if its rating is BBB- or higher (S&P and Fitch) or Baa3 or higher (Moody s). Political situation The MPLA (the party of José Eduardo dos Santos) won the elections in August of 217. Following the victory, João Lourenço was chosen to be the new president. Despite Lourenço being the ruling party s candidate and a certain degree of continuity was expected, the new president has taken measures to distance himself from dos Santos. Although for the moment this strategy appears to be receiving internal support, the risk of a possible political regression cannot be ruled out. The new Government is decisively addressing the country s economic challenges. The macroeconomic stabilisation plan is a good example of this. It includes a more flexible exchange rate policy and major fiscal consolidation measures. Long-term outlook GDP growth (%) Population. Milions of inhabitants The outlook for long-term economic growth is slightly more favourable than in the short-term, and is supported by a young and growing population and by the dynamism of some sectors of the economy, which have proved their resilience in recent years. However, the downside risks of this scenario are significant. To counteract them, the government will have to invest heavily in education, health and infrastructure. Risks SHORT-TERM LONG-TERM Inflation - + Price of commodities lower than forecasted - + Political uncertainty - + Strong dependence on the energy sector - + Supply bottlenecks - + Poverty and social discontent - + Business environment STRENGTHS Young population. Natural resources. WEAKNESSES Low educational level. Infrastructure deficit. Institutional quality. Main sectors Oil and by-products, diamonds and agriculture. CIBI CaixaBank Index for Business Internationalisation POSITION IN COUNTRY RANKING PILLARS 5. Stability Accessibility Ease of operating SUBPILLARS Top Macroeconomic stability Distance, communications, and agreements with Spain Ease of operating a business Bottom Investment relations with Spain Similar tastes to Spain Infrastructures 4. Financial environment 3. Commercial attractiveness Africa Angola (Min. - Max. 1) Note: The CIBI Index measures the ease of internationalisation for Spanish companies in each country. The analysis is carried out for a total of 67 countries, resulting in a ranking that reflects their attractiveness to Spanish companies. In the global ranking, the lower the number, the easier the internationalisation. In the pillars, on the other hand, the higher the number, the easier the internationalisation. See the document CIBI. CaixaBank Index for Business Internationalisation, available at caixabankresearch.com/ Source: CaixaBank Research, based on data from Thomson Reuters Datastream, IMF, Bloomberg and Oxford Economics.

5 Taxation Angola s taxation system is similar to that of countries in southern Africa with a state-level structure except for some municipal taxes. Its main taxes are: Corporate tax: levied on all incomefrom economic activities in the country. There is a standard rate of 35% (industrial sector and services) and 2% (agriculture, livestock, forestry). All Angolan and foreign companies established in the country (offices) are required to pay it. Earnings distributed among company shareholders are also subject to 15% tax. Income tax: levied on both employee or selfemployed earnings, with the exception of compensation for dismissal, holidays, bonuses and sick leave. The tax rate varies from 17% to 52%, according to the income earned. Tax on consumption: varies according to the product or service. The following are taxed at 5%: telecommunication services, consumption of water or energy, consultancy services (fiscal, financial, accounting, etc.), port, airport and dispatch services, private security, real estate management, cultural events, sports events and acts related to rail, air or road transport. The following are taxed at 1%: all services related to the tourism industry, including hotels, restaurants etc and the distribution of machinery and equipment, irrespective of the economic sector in which it will be used. Investment In Angola, foreign direct investment for 215 was 8.68 billion dollars. In recent years, Angola has been the fourth largest recipient of foreign investment in the African continent (representing 6.9% of its total FDI), behind South Africa, Nigeria and Kenya. It is also ranked fourth in terms of investor perception as the most attractive place on the continent. The main investors in the Angolan market are Portugal, the Netherlands, South Africa and China. Spain is the seventh largest investor and each year increases its volume of investments as a result of the potential of Angola and the excellent political, economic and commercial relations that exist between the two countries. Establishment LOCAL COMPANY There are five types of company in Angola: Quota company (similar to Spain s limited liability company): It must have at least two shareholders, a minimum capital stock of 752 Euros and 75.2 Euros for each quota. Public Limited Company: the capital stock must be at least 15,54 Euros and must be divided into shares of equal value, the minimum amount being 3.7 Euros. The minimum number of shareholders is five. General partnership. Limited partnership. Branch. Angolans can set up a company without any kind of restriction. The most common forms are public limited and quota companies, as well as branches for foreign firms. The process for setting up a company is long and very bureaucratic. BRANCH Foreign investors are allowed to set up companies with 1% foreign capital except in the oil and diamond industries. A branch is the most widespread and dynamic form of representation in Angola for a company incorporated under foreign law and allows the investor to carry out commercial activities under the same conditions as a company incorporated under Angolan law, in spite of not having a legal personality, since branches are classed as local entities dependent on the parent company. The parent company is responsible for the activities carried out by the branch. Setting up a branch requires authorisation from the Angolan Export and Investment Development Agency (ANIP). REPRESENTATIVE OFFICE This can be used only during the preparation and proposal of the project that a foreign firm is going to carry out in the country, and must be approved by the National Bank of Angola (BNA). The following is also prohibited: receiving income, either in the national or foreign currency, carrying out mercantile acts on its own account with the exception of buying or renting premises to carry out its activity, and it must have a maximum of six workers of which at least 5% must be Angolan. Alliances strategic FREE TRADE ZONE There is no free trade zone in the country. JOINT VENTURE The law does not require a local partner in order to carry out economic activity in the country. Activities of the hydrocarbon sector and the mining and marketing of diamonds is prohibited.

6 Customs conditions FREE TRADE AGREEMENTS Currently belonging to: The Economic Community of Central African States (ECCAS). The Southern African Development Community (SADC). The Tripartite Free Trade Area COMESA - EAC - SADC. The Common Market for Eastern and Southern Africa (COMESA). The Generalised System of Preferences (GSP). The African Growth and Opportunity Act (AGOA). Commercial relations between the EU and Angola are carried out via the Economic Partnership Agreements (EPA), which started to be negotiated in 22. The EU grants Angola full freedom of access to its market with the aim of liberalising 8% of the commercial transactions with Angola over the next five years. The country is preparing all the requirements and conditions so that in 217 it can join the Free Trade Zone of the Southern African Development Community (SADC), the main customs union in the south of Africa made up of South Africa, Botswana, Namibia, Lesotho and Swaziland. FREE TRADE ZONE Despite not having a free-trade zone, Angola has substantially liberalised its foreign trade regime in recent years. Customs duties, for example, are relatively low (5%-1%). GENERALISED SYSTEM OF PREFERENCES (GSP) As a developing country, since February 21 it has been part of the EU initiative Everything But Arms (EBA), within the framework of the Generalised System of Preferences, allowing some of its products to access EU markets free from quotas and tariffs. Negotiations and protocol BUSINESS CULTURE It is important to make the initial approach through official channels when doing business in Angola. Angolans tend to be formal in business although the huge amount of corruption in the country must also be taken into account. They appreciate trust, visual contact and respect. Treaties AGREEMENTS Agreement between Spain and Angola for the mutual promotion and protection of investments. There is currently no agreement preventing double taxation between the two countries. The volume of business between the two countries exceeded 9 million Euros in 214, a figure that will undoubtedly increase at the same speed and to the same degree as the multiplication in the number of visas and the number of regular flights between Madrid and Luanda. Angola is Spain s third most important partner in Sub-Saharan Africa in terms of export value. Top fairs Expo TIC. Proyekta. Expo Trans. Agro Angola. Expo Uige. Flida. Websites of interest Spanish Embassy in Angola (Luanda): Av. 4 de Fevereiro 95, 1º andar, salas 9 a 12. C. Postal 361, Luanda. Tel: / Fax: Website: luanda/es/paginas/inicio.aspx. emb.luanda@maec.es Investing in Angola: Angolan Chamber of Commerce: Business Support Centre: National Customs Service: Angolan Export and Investment Development Agency: Payment and charging methods MEANS OF COLLECTION Given the National Bank of Angola s reduction in foreign reserves after the fall in the price of oil, which is causing delays in payments to foreign countries, an irrevocable letter of credit is recommended as well as buyer s credit for long-term operations. MEANS OF PAYMENT The most widespread and secure payment method between Angolan and foreign firms is documentary credit. EXCHANGE RATE INSURANCE International transactions are affected by market fluctuations and it is therefore advisable secure this kind of transaction against exchange rate risk. Angola also has high inflation and some instability in the fluctuation of its currency due to its dependence both on oil prices and its neighbouring countries. CaixaBank in the country The nearest CaixaBank office is South Africa. We may also assist you from our Central Services on (+34)

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