1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

A NG OL A
U S D 80 m . At the end of 1997, the Government of A n go l a
launched a privatisation programme for medium and large
companies to cover the 1998-2000 period. A task fo rc e
working on the development of a capital market has also been
a s ked to add ress the issue of privatisation. The 1998-2000
G overnment Programme includes some guidelines for the
privatisation pro c e s s ,and a list of enterprises to be privatised
has been ap p rove d .
I N V E S T M E N T C L I M A T E
I nvestment Incentive s
Fo reign investment is considered crucial to A n go l a ' s
reconstruction process and the promotion of fo re i g n
i nvestment is considered a priority. The fo l l owing are a few of
the current investment incentive s :
– Fo reign companies are guaranteed equal treatment to that
g i ven to local firms.
– N e a r ly all sectors of the economy are now open to fo re i g n
i nve s t m e n t ,including infrastructural deve l o p m e n t .
– Special fiscal incentives are offe red to fo reign investors who
e m p l oy a high pro p o rtion of A n golans and provide them with
p ro fessional training and benefits equal to fo reign employe e s .
– I nvestments less than USD5m no longer need prior
government ap p rov a l .
Besides being a member of SADC, A n gola also belongs to the
Common Market for Eastern and Southern Africa (COMESA).
Ta x a t i o n
The A n golan government re c e i ves most of its reve nue from its
oil and diamond mining activities. Ta xes on mining include:
– A surface tax levied according to the size of the surface are a
m i n e d .
– A royalty on 3 to 10 percent of the gross value of the
minerals pro d u c e d .
– Corporate income tax:A fixed rate of 40 perc e n t .
– A 15 percent withholding tax on dividends.
– A l l owances for depreciation are give n .
The oil industry also faces special tax rates - an oil pro d u c t i o n
t a x ,an oil income tax and an oil transactions tax (which ap p l i e s
o n ly to firms operating in the enclave of Cabinda).
Corporations face an industrial tax of 40 perc e n t , with some
companies being taxed on their actual pro f i t s , some on their
p re s u m p t i ve profits and some on estimated potential pro f i t s ,
depending on which group they fall into. A tax of 20 percent is
l evied on income exclusive ly from agricultural, fo re s t ry and
cattle-raising activities. Fo reign corporations are subject to the
same tax system and rates as local companies.
S h a reholders are taxed at a rate of 15 percent on income fro m
financial inve s t m e n t s ,although a lower rate of 10 percent may
ap p ly in some cases. Personal income tax rates range betwe e n
4 percent and 15 perc e n t ,depending upon the level of income.
No double taxation agreements have been concluded.
I nvestment Pro m o t i o n
A n go l a ’s investment promotion agency, the Institute for Fo re i g n
I nve s t m e n t ,was established fo l l owing the adoption of the new
i nvestment law in 1994, as a successor to the Fo re i g n
I nvestment Dire c t o r a t e. The institute is fairly new and has
limited cap a c i t y. Thus it has concentrated on the ap p roval of
i nvestments and to a more limited extent on assistance to
fo reign inve s t o r s . In the medium-term the Institute aims to
a dd ress and limit bureaucratic impediments to inve s t m e n t .
I nvestment Code
The New Fo reign Investment Law was passed in 1994, with the
aim of reducing the role of the government in the economy and
encourage greater private sector part i c i p a t i o n , with special
emphasis on fo reign inve s t m e n t .
Legal Protection of Inve s t m e n t
P ro p e rty law in A n gola will short ly be under rev i ew.This should
re m ove a major impediment to inve s t m e n t .A n gola is, h oweve r,
a member of MIGA.
I N V E S TMENT OP P OR T U N I T I E S
AND PROJ E C T S
O p p o rt u n i t i e s
A n gola has an abundance of natural re s o u rces which are not
c u rre n t ly being fully exploited. I nvestment opportunities lie in
almost eve ry sector of the economy :
– Oil and gas - ap p rox i m a t e ly 15 fo reign companies have
i nvested more than USD 8 billion in A n go l a .Oil companies
a re attracted by A n gola's low operating costs, f avo u r a b l e
g e o l o gy and good business terms. Recent discoveries suggest
that although investment is already significant in the sector,
t h e re is substantial scope for new inve s t m e n t .
– Mining - diamonds and iron ore especially.A n gola was once a
major producer of both these minerals. As far as diamonds
a re concerned, t h e re has been substantial informal activity.
The challenge is to limit the scope for smu g g l i n g , and to
formalise activities in the sector.
– A g r i c u l t u re - A n gola's variety of climatic zones and soil types
a l l ows for a diverse range of agricultural and agro - i n d u s t r i a l
p roduction ranging from coffe e, c o t t o n ,palm oil to tro p i c a l
fruits and vegetables and a variety of grains.The country has
b e t ween five to eight million hectares of arable land as well as
e x t e n s i ve grazing land. O n ly a small percentage of the
potential arable land is curre n t ly cultivated, while grazing
a reas are in the main unfe n c e d .T h e re is thus much potential
for growth in this sector.
– Fo re s t ry - there are natural fo rests as well as plantations.A
pulp mill, which would re q u i re extensive re h a b i l i t a t i o n ,i s
c u rre n t ly not in commercial use.
– Fisheries - the re d evelopment of the fishing industry could
also prove to be a profitable investment opport u n i t y.T h e re is
a need for the development of a fishing fleet and the
modernisation of freezer plants, canneries and factories.
– Tourism - A n gola offers a variety of experiences for tourists
with its beaches, r i ve r s , m o u n t a i n s , w i l d l i fe and cultural
a t t r a c t i o n s . T h e re are plenty of opportunities for the
construction of new hotels and the revamping of old ones.
O p p o rtunities could open up in the areas of ecotourism.
The investment promotion agency is fairly new and is intending
to improve its dialogue with the private sector during 1998.
T h ey are thus hoping to be able to provide lists of inve s t m e n t
o p p o rtunities obtained from the private sector in the future.
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