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Algeria

Executive Summary

Algeria’s state enterprise-dominated economy is challenging for U.S. businesses, but multiple sectors offer opportunities for long-term growth. The government is prioritizing investment in agriculture, information and communications technology, mining, hydrocarbons (both upstream and downstream), renewable energy, and healthcare.

Following his December 2019 election, President Abdelmadjid Tebboune has promised economic and political reforms, though progress has been slow due to COVID-19, his own extended absences for medical reasons, and a lack of popular support. Algeria adopted a new Constitution in December 2020 and after dissolving parliament in February 2021, President Tebboune announced legislative elections will take place in June 2021.

In 2020, the government eliminated the so-called “51/49” restriction that required majority Algerian ownership of all new businesses, though it retained the requirement for “strategic sectors,” identified as energy, mining, defense, transportation infrastructure, and pharmaceuticals manufacturing (with the exception of innovative products). In the 2021 Finance Law, the government reinstated the 51/49 ownership requirement – with retroactive application – for any company importing items into Algeria with an intent to resell. The government passed a new hydrocarbons law in 2019, improving fiscal terms and contract flexibility in order to attract new international investors. The new law encouraged major international oil companies to sign memorandums of understanding with the national hydrocarbons company, Sonatrach. The government did not meet its goal of issuing all 43 regulatory texts enacting the legislation by March 31, 2021; thus far only 10 have been released. The Algerian government took several steps, including establishing a standalone ministry dedicated to the pharmaceutical industry and issuing regulations to resolve several long-standing issues, to improve market access for U.S. pharmaceutical companies.

Algeria’s economy is driven by hydrocarbons production, which historically accounts for 95 percent of export revenues and approximately 60 percent of government income. Following the significant drop in oil prices in March 2020, the government cut budgeted expenditures by 50 percent and significantly reduced investment in the energy sector. Though the 2021 budget boosted state spending by 10 percent amidst a modest recovery in global hydrocarbon prices, Algeria continues to run a persistent budget deficit. Despite a significant reduction in revenues, the historically debt-averse government continued to resist seeking foreign financing, preferring to attract foreign direct investment (FDI) to boost employment and replace imports with local production. Traditionally, Algeria has pursued protectionist policies to encourage the development of local industries. The import substitution policies it employs tend to generate regulatory uncertainty, supply shortages, increased prices, and limited selection for consumer goods. The government depreciated the Algerian dinar approximately 15% over the last year in an effort to conserve its foreign exchange reserves, resulting in significant food inflation.

The government has taken measures to minimize the economic impact of the COVID-19 pandemic, including delaying tax payments for small businesses, extending credit and restructuring loan payments, and decreasing banks’ reserve requirements.

Economic operators deal with a range of challenges, including complicated customs procedures, cumbersome bureaucracy, difficulties in monetary transfers, and price competition from international rivals particularly China, France, and Turkey. International firms operate in Algeria complain that laws and regulations are constantly shifting and applied unevenly, raising commercial risk for foreign investors. An ongoing anti-corruption campaign has increased weariness regarding large-scale investment projects. Business contracts are subject to changing interpretation and revision of regulations, which has proved challenging to U.S. and international firms. Other drawbacks include limited regional integration, which hampers opportunities to rely on international supply chains.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 104 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 157 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 121 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $2.7 billion https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 $4,010 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Algerian economy is both challenging and potentially highly rewarding. While the Algerian government publicly welcomes FDI, a difficult business climate, an inconsistent regulatory environment, and sometimes contradictory government policies complicate foreign investment. There are business opportunities in nearly every sector, including agribusiness, consumer goods, energy, healthcare, mining, pharmaceuticals, power, recycling, telecommunications, and transportation.

The urgency for Algeria to diversify its economy away from reliance on hydrocarbons has increased amid low and fluctuating oil prices since mid-2014, a youth population bulge, and increased domestic consumption of energy resources. The government reiterated its intention to diversify in its August 2020 plan to recover from the COVID-19 crisis. The government has sought to reduce the country’s persistent trade deficit through import substitution policies, currency depreciation, and import tariffs as it attempts to preserve rapidly diminishing foreign exchange reserves. On January 29, 2019, the government implemented tariffs between 30-200 percent on over one-thousand goods it assessed were destined for direct sale to consumers. Companies that set up local manufacturing operations can receive permission to import materials the government would not otherwise approve for import if the importer can show materials will be used in local production. Certain regulations explicitly favor local firms at the expense of foreign competitors, most prominently in the pharmaceutical sector, where an import ban the government implemented in 2009 remains in place on more than 360 medicines and medical devices. Frequent, unpredictable changes to business regulations have added to the uncertainty in the market.

Algeria eliminated state enterprises’ “right of first refusal” on most transfers of foreign holdings to foreign shareholders, with the exception of identified “strategic” sectors. Though the 2020 Complementary Finance Law eliminated the 51/49 domestic ownership requirement with the exception of “strategic sectors,” the 2021 Finance Law restored the requirement for importers of products for domestic resale, and regulations governing the auto industry released in September 2020 required automobile importers to be wholly domestically owned.

There are two main agencies responsible for attracting foreign investment, the National Agency of Investment Development (ANDI) and the National Agency for the Valorization of Hydrocarbons (ALNAFT).

ANDI is the primary Algerian government agency tasked with recruiting and retaining foreign investment. ANDI runs branches in Algeria’s 58 states (wilayas) which are tasked with facilitating business registration, tax payments, and other administrative procedures for both domestic and foreign investors. U.S. companies report that the agency is understaffed and ineffective. Its “one-stop shops” only operate out of physical offices and do not maintain dialogue with investors after they have initiated an investment. The agency’s effectiveness is undercut by its lack of decision-making authority, particularly for industrial projects, which is exercised by the Ministry of Industry, the Minister of Industry themself, and in many cases the Prime Minister.

ALNAFT is charged with attracting foreign investment to Algeria’s upstream oil and gas sector. In addition to organizing events marketing upstream opportunities to potential investors, the agency maintains a paid-access digital database with extensive technical information about Algeria’s hydrocarbons resources.

Limits on Foreign Control and Right to Private Ownership and Establishment

Establishing a presence in Algeria can take any of three basic forms: 1) a liaison office with no local partner requirement and no authority to perform commercial operations, 2) a branch office to execute a specific contract, with no obligation to have a local partner, allowing the parent company to conduct commercial activity (considered a resident Algerian entity without full legal authority), or 3) a local company with 51 percent of capital held by a local company or shareholders. A business can be incorporated as a joint stock company (JSC), a limited liability company (LLC), a limited partnership (LP), a limited partnership with shares (LPS), or an undeclared partnership. Groups and consortia are also used by foreign companies when partnering with other foreign companies or with local firms.

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. However, the 51/49 rule requires majority Algerian ownership in all projects involving foreign investments in the “strategic sectors” of energy, mining, defense, transportation infrastructure, and pharmaceuticals (with the exception of innovative products), as well as for importers of goods for resale in Algeria.

The 51/49 investment rule poses challenges for various types of investors. For example, the requirement hampers market access for foreign small and medium-sized enterprises (SMEs), as they often do not have the human resources or financial capital to navigate complex legal and regulatory requirements. Large companies can find creative ways to work within the law, sometimes with the cooperation of local authorities who are more flexible with large investments that promise significant job creation and technology and equipment transfers. SMEs usually do not receive this same consideration. There are also allegations that Algerian partners sometimes refuse to invest the required funds in the company’s business, require non-contract funds to win contracts, and send unqualified workers to job sites. Manufacturers are also concerned about intellectual property rights (IPR), as foreign companies do not want to surrender control of their designs and patents. Several U.S. companies have reported they have policies that preclude them from investing overseas without maintaining a majority share, out of concerns for both IPR and financial control of the local venture, which thus prevent them from establishing businesses in Algeria.

Algerian government officials defended the 51/49 requirement as necessary to prevent capital flight, protect Algerian businesses, and provide foreign businesses with local expertise. For sectors where the requirement remains, officials contend a range of tailored measures can mitigate the effect of the 51/49 rule and allow the minority foreign shareholder to exercise other means of control. Some foreign investors use multiple local partners in the same venture, effectively reducing ownership of each individual local partner to enable the foreign partner to own the largest share.

The Algerian government does not officially screen FDI, though Algerian state enterprises have a “right of first refusal” on transfers of foreign holdings to foreign shareholders in identified strategic industries. Companies must notify the Council for State Participation (CPE) of these transfers. In addition, initial foreign investments remain subject to approvals from a host of ministries that cover the proposed project, most often the Ministries of Commerce, Health, Pharmaceutical Industry, Energy, Telecommunications and Post, Industry, and Mines. U.S. companies have reported that certain high-profile industrial proposals, such as for automotive assembly, are subject to informal approval by the Prime Minister. In 2017, the government instituted an Investments Review Council chaired by the Prime Minister for the purpose of “following up” on investments; in practice, the establishment of the council means FDI proposals are subject to additional government scrutiny. According to the 2016 Investment Law, projects registered through the ANDI deemed to have special interest for the national economy or high employment generating potential may be eligible for extensive investment advantages. For any project over 5 billion dinars (approximately USD 38 million) to benefit from these advantages, it must be approved by the Prime Minister-chaired National Investments Council (CNI). The CNI previously met regularly, though it is not clear how the agenda of projects considered at each meeting is determined. Critics allege the CNI is a non-transparent mechanism which could be subject to capture by vested interests. In 2020 the operations of the CNI and the CPE were temporarily suspended pending review by the former Ministry of Industry, but a final decision as to their status has not been made.

Other Investment Policy Reviews

Algeria has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO). The last investment policy review by a third party was conducted by the United Nations Conference on Trade and Development (UNCTAD) in 2003 and published in 2004.

Business Facilitation

Algeria’s online information portal dedicated to business creation www.jecreemonentreprise.dz and the business registration website www.cnrc.org.dz are under maintenance and have been so for more than a year. The Ministry of Commerce is currently developing a new electronic portal at https://cnrcinfo.cnrc.dz/qui-somme-nous/ . The websites provide information about several business registration steps applicable for registering certain kinds of businesses. Entrepreneurs report that additional information about requirements or regulation updates for business registration are available only in person at the various offices involved in the creation and registration process. The Ministry of Foreign Affairs also recently established an Information Bureau for the Promotion of Investments and Exports (BIPIE) to support Algerian diplomats working on economic issues abroad, as well as provide local points of contact for Algerian companies operating overseas.

In the World Bank’s 2020 Doing Business report, Algeria’s ranking for starting a business was unchanged at 157 out of 190 countries ( http://www.doingbusiness.org/en/data/exploreeconomies/algeria ).

This year’s improvements were modest and concerned only three of the ten indicator categories. The World Bank report lists 12 procedures that cumulatively take an average of 18 days to complete to register a new business. New business owners seeking to establish their enterprises have sometimes reported the process takes longer, noting that the most updated version of regulations and required forms are only available in person at multiple offices, therefore requiring multiple visits.

Outward Investment

Algeria does not restrict domestic investors from investing overseas, provided they can access foreign currency for such investments. The exchange of Algerian dinars outside of Algerian territory is illegal, as is the carrying abroad of more than 10,000 dinars in cash at a time (approximately USD 76; see section 7 for more details on currency exchange restrictions).

Algeria’s National Agency to Promote External Trade (ALGEX), housed in the Ministry of Commerce, is the agency responsible for supporting Algerian businesses outside the hydrocarbons sector that want to export abroad. ALGEX controls a special promotion fund to promote exports, but the funds can only be accessed for limited purposes. For example, funds might be provided to pay for construction of a booth at a trade fair, but travel costs associated with getting to the fair – which can be expensive for overseas shows – would not be covered. The Algerian Company of Insurance and Guarantees to Exporters (CAGEX), also housed under the Ministry of Commerce, provides insurance to exporters. In 2003, Algeria established a National Consultative Council for Promotion of Exports (CCNCPE) that is supposed to meet annually. Algerian exporters claim difficulties working with ALGEX including long delays in obtaining support funds, and the lack of ALGEX offices overseas despite a 2003 law for their creation. The Bank of Algeria’s 2002 Money and Credit law allows Algerians to request the conversion of dinars to foreign currency in order to finance their export activities, but exporters must repatriate an equivalent amount to any funds spent abroad, for example money spent on marketing or other business costs incurred.

Angola

Executive Summary

Angola is a lower middle-income country located in southern Africa with a population of 32.9 million, a per capita income of USD 2,021. It saw its GDP drop to USD 62.72 billion in 2020 from USD 89 billion in 2019, according to International Monetary Fund (IMF) estimates. Angola was scheduled to graduate from lower middle-income country to middle income country status in February but secured a three-year extension on the eve of its graduation. Angola is a member of the Organization of the Petroleum Exporting Countries (OPEC) and maintains second position in oil production in sub-Saharan Africa after Nigeria with 1.2 million barrels per day. However, Angola has also experienced five years of consecutive economic recession since 2016, during which time it fell from the region’s third-largest economy to eighth in 2020.

In 2020, Angola saw its macroeconomic situation deteriorate with the unexpected COVID-19 pandemic and the plunge in crude oil prices compounding the country’s ongoing economic crisis and giving President Lourenço’s economic reforms a serious blow. This further diminished the country’s ability to reverse consecutive recessions and underscored the need to diversify the economy away from oil and gas. In response, the Angolan government (GRA) implemented a stimulus plan including social assistance measures and increased spending on health. Angola shut down international travel and carried out other strict countermeasures by June 2020, and to date, Angola has had relatively low numbers of both confirmed COVID-19 cases and deaths, raising hopes that the country will be able to avoid the impact of widespread cases.

Public debt soared to an estimated 120.3% of GDP in 2020, fueled by the depreciation of the kwanza and falling oil prices, but the implementation of debt reprofiling agreements and extension of the Debt Service Suspension Initiative should help reduce the risk of over-indebtedness. Inflation increased from 17.1% in 2019 to 21% in 2020. The Central Bank (BNA) has attempted to sustain the liberalization of the local currency, guarantee its stability, and control inflation while signaling more restrictive monetary policy to fight inflationary pressures.

The banking sector remains fragile with a credit appetite that prioritizes government over private sector led economic growth. The restructuring of two troubled banks is still ongoing. The Angolan authorities remain committed to implementing the three-year reform program supported by the IMF. The authorities also affirmed their commitment to improve governance and fight corruption.

Foreign direct investment increased by USD 2.59 billion in 2020 according to Angola’s Central Bank (BNA). The GRA did not engage in any significant activities that undermined U.S. investment. Due to the pressure to create jobs and spur economic growth, the GRA pursued structural reforms in 2020 aimed at assuring investors of a clean and transparent environment for investment. Recently a law permitting public-private partnership initiatives was passed and a revised Public Procurement Law and Portal were also introduced.

However, to curb the fast depletion of international foreign exchange reserves, the GRA introduced the local production Program to Support the Production, Diversification of Exports, and Substitution of Imports (PRODESI) in July 2020. PRODESI may constitute a non-tariff barrier to trade with American companies (the largest exporters of chicken quarters into Angola). In addition to PRODESI is a new local content law that passed in October 2020 which prioritizes Angolan human resources over expatriate labor, as well as the sourcing of raw materials and services from local companies for companies operating in Angola’s oil and gas sector.

Angola ranked 177 out of 190 in the 2020 World Bank’s Doing Business rankings. The business environment remains challenging for investors, particularly for carrying out overseas transfer of remuneration, payment for imports of goods and services, and payment of dividends. Angola is transitioning services provided by public institutions to the digital environment and working to reduce waiting periods and costs. The time required to obtain a building permit decreased from 373 days to 184 and the GRA has ended the public deed and tax obligations to start a business. The government also introduced a “one stop shop,” the Guiche Online Portal, in 2020, to improve the procedures for opening a business and the ASYCUDA platform to make customs clearances more efficient.

The fight against corruption and impunity provided investors a sense of security after several top government officials and the former President’s son were tried and sentenced to years in prison. The new penal code approved in February 2021 also increased the penalties for economic crimes to a maximum of 14 years to discourage corruption.

Energy and power, construction, and oil and gas are key sectors that have historically attracted significant investment in the country. However, as the country seeks to diversify the economy beyond the oil sector, public transportation, tourism, alternative energy, extractives, agriculture, fisheries, telecoms, and ports rehabilitation and management all hold potential as sectors for new investment.

Key Issues to Watch:

  • Angola is undergoing a process of privatizing over 195 state-owned assets, including those recovered from the fight against corruption. Foreign investors are encouraged to participate in the tenders.
  • Increased openness to competition in the private sector as well as due diligence in the acquisition of state-owned assets and assets previously belonging to PEPs listed in the privatization program.
  • Angola continues to benefit from a relatively stable and predictable political environment compared to its neighbors. However, mounting economic hardship and social discontent could cause the wave of demonstrations to continue.
Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 142 of 180 https://www.transparency.org/en/cpi/2020/index/
World Bank’s Doing Business Report 2020 177 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 Not listed of 129 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 254million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 2960 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Although the GRA demonstrated political will to significantly increase foreign direct investment (FDI), Angola remains a difficult operating environment for investment to thrive. FDI remains low, volatile, and largely concentrated in the extractives sector. The GRA continues to pursue an ambitious plan to reform the business and investment environment. The Private Investment Law (“PIL”) introduced in 2018 has proven to be slow to promote FDI and retain investment. At the end of May 2020, the Economic Committee of the Council of Ministers gathered to discuss some changes to the PIL, with a particular focus on attracting foreign investment through a mechanism to negotiate benefits and special conditions depending on the specific project. There have been, however, no legislative changes related to foreign direct investment since the enactment of the 2018 PIL and the Competition Law of 2018.

President João Lourenço implemented economic reform policies that provide a level playing field for domestic and foreign investors and leveraged efforts to combat and deter corruption and money laundering. Foreign investors were also encouraged to participate in the ongoing Privatization Program designed to privatize over 195 State-Owned Enterprises (SOES) by 2022. AIPEX, the country’s Private Investment and Export Promotion Agency is billed as the investors ‘one stop shop’ for business establishment. AIPEX is tasked with facilitating investment and is also supposed to manage the state’s investment portfolio to ensure the equitable implementation of the PIL and distribution of private investment, especially foreign investment. Theoretically the country prioritizes investment retention, but it does not appear to have institutional capacity to pursue and advocate for investment retention.

Limits on Foreign Control and Right to Private Ownership and Establishment

The 2018 PIL establishes the general principles and basis of private investment in Angola, determining the benefits and concessions that the GRA grants private investors and the criteria for accessing them, as well as establishing rights, duties and guarantees of private investors. The PIL is applied to private investments of any value, whether it is carried out by domestic or foreign investors, although waivers may exist under a bilateral agreement framework. Companies incorporated in conformity with the Angolan law, even with capital from abroad are, for all legal purposes, subject to the existing Angolan legislation. After the completion of a private investment project, foreign investors have the right, after approval by the GRA and settlement of taxes, to transfer abroad:

  1. Values corresponding to dividends;
  2. Values corresponding to the proceeds of the liquidation of their enterprises;
  3. Values corresponding to due compensations;
  4. Values corresponding to royalties or other earnings of remuneration from indirect investments, associated with the transfer of technology.

These processes are very bureaucratic and tedious. Foreign investors and companies with majority foreign ownership are only eligible for domestic credit after having fully implemented their respective investment projects.

On October 20, 2020 Presidential Decree No. 271/20, revoking Order No. 127/03, of 25 November 2003, was published, approving the new Legal Framework on Local Content in the Oil Sector. The statute aims to promote economic diversification, the participation of local businesses in the oil sector, the increase of domestic production and reduction of imports of goods for the sector, as well as the creation of employment and increased training of Angolans in the oil industry workforce. The statute establishes new rules on ‘Angolanization’ and procurement of goods and services for the sector, which will have a significant impact on company activities. For example, priority will be given to procurement of nationally produced goods and services, especially the obligation to contract Angolan companies included in the database approved by the National Oil, Gas and Biofuels Agency (ANPG). In addition, all companies operating in any segment of the petroleum-sector value chain will be required to present an annual local content plan to the ANPG. Failure to comply with the rules established in the new statute will result in fines in local currency to the equivalent of between USD 50,000 and USD 300,000. Additional penalties may also be applied, such as barring companies from entering new contracts or operating altogether.

Although the GRA eliminated the 35 percent local content requirement in foreign investment and encourages foreign companies to invest in the domestic economy, some FDI screening processes continue. Foreign ownership remains limited to 49 percent in the oil and gas sector, 50 percent in insurance, and 10 percent in the banking and telecommunications sectors, though there have been some exceptions recently in which the foreign investment goes beyond the limit. There are several objectives that the GRA seeks to accomplish through its FDI screening processes: 1) create jobs for Angolans or transfer expertise to Angolan companies as part of an “Angolanization” plan; 2) protect sensitive industries such as defense and finance; 3) prevent capital flight or other behavior that could threaten the stability of the Angolan economy; and 4) diversify the economy and increase competitiveness of local industries.

Other Investment Policy Reviews

Angola has been a member of the World Trade Organization (WTO) since 1996. The WTO performed a policy review of Angola in September 2015. At the government’s request, the last Investment Policy Review (IPR) of Angola’s business and economic environments was completed on September 30, 2019 by the United Nations Conference on Trade and Development (UNCTAD of Angola’s The IPR was part of a broader EU funded technical assistance project aimed to assist Angola in attracting and benefitting from FDI beyond the extractives industry and to support the GRA’s objective of increasing economic diversification and sustainable development. The full report and policy recommendations are accessible at: https://unctad.org/en/PublicationsLibrary/diaepcb2019d4_en.pdf

The review identified remaining policy gaps and bottlenecks, including the complex system for FDI entry and establishment, burdensome operational regulations, the persistence of restrictive business practices and a lack of institutional capacity and coordination. These affect the country’s ability to fully take advantage of its strategic location, abundant natural resources, and preferential access to external markets.

The Review also devoted special attention to investment in agribusiness and its contribution to sustainable development. It calls for measures to foster responsible investment and promote inclusive modes of production in agriculture. The recommendations emphasize the need to strike a policy balance between food security and export development objectives, improve access to land and infrastructure, and promote entrepreneurship and skills development.

Business Facilitation

The World Bank Doing Business 2020 report ranked Angola 177 out of 190 countries and recorded an improvement in Angola’s monitoring and regulation of power outages, and in facilitating trade through the implementation of an automated customs data management system, ASYCUDA (Automated System for Customs Data) World, and by upgrading its port community system to allow for electronic information exchange between different parties involved in the import/export process. To commence a business, investors typically register with the General Tax Administration (AGT) Social Security Institute (INSS), National Press, and a local bank Launching a business typically requires 36 days, compared with a regional average of 27 days, with Angola ranked 146 out of the 190 economies evaluated.

The Covid-19 pandemic highlighted the urgency of trade facilitation reform to improve competitiveness in non-oil business sectors. With this, export procedures in the country cost USD 240 and take 98 hours, compared to an average of USD 173 and 72 hours for sub-Saharan Africa. Many of the reforms necessary to improve conditions for Angolan businesses, such as automating customs procedures or creating a single window, are addressed by the World Trade Organization’s Trade Facilitation Agreement, which Angola ratified in April 2019. To facilitate opening, changing, or closing a company, the Guiche Único de Empresas one stop shop for investors (GUE) was folded into the Private Investment and Export Promotion Agency (AIPEX) in 2019. It combines the main public services for constitution of companies, GUE and AIPEX, allowing the investor to open and register companies and be able to access the tax benefits and other incentives resulting from the Private Investment Law.

On October 19, 2020, to facilitate the establishment of businesses and as a COVID-19 imposed biosafety measure, the GRA simplified procedures by creating an online registration portal for companies (www.gue.gov.ao). The online portal will allow for faster registry of companies (taking only 30-60 minutes) and replace the publication of the company registry in the Gazette (Diário da República), a procedure that took more than five days. There is still the option to set up a company in person, which is estimated to also take as little as 30 minutes to an hour. The cost to establish a sole proprietorship is USD 16 dollars and USD 54 for partnerships, corporations, and other entities. Payments are also made electronically.

In April 2020, to simplify bureaucracy and in anticipation of the economic slowdown eventually caused by COVID-19, the GRA proposed revoking the procedure for issuing business licenses for all economic activities and requiring companies to carry out statistical registration in the act of incorporation. With the abolition of the Company License Document (a commercial permit) and Statistical Registration, to begin business activities, companies need to register their activity with the local administration office. The office will issue an electronic operating license. Some exclusions from this regime are foreseen, such as those related to the trade in foodstuffs, live plant species, animals, birds and fisheries, medicines, car sales, lubricants and chemicals. For these sectors, a physical license is still required as they are considered high risk economic activities which may affect human, animal, environmental and state safety.

The state-run private investment and export promotion agency’s website is http://www.aipex.gov.ao/PortalAIPEX/#!/  . Contact Information: Departamento de Promoção e Captação do Investimento; Agencia de Investimento Privado e Promoção de Investimentos e Exportações de Angola (AIPEX). Rua Kwamme Nkrumah No.8, Maianga, Luanda, Angola Tel: (+244) 995 28 95 92| 222 33 12 52 Fax: (+244) 222 39 33 81.

Outward Investment

The Angolan Government does not promote or incentivize outward investment, nor does it restrict Angolans from investing abroad. Investors are free to invest in any foreign jurisdiction. According to data from the BNA, in 2018, the government did not invest abroad but received returns on previous investments abroad.

Domestic investors prefer to invest in Portuguese-speaking countries, with few investing in neighboring countries in Sub-Saharan Africa. The bulk of investment is in real estate, fashion, fashion accessories, and domestic goods. Due to foreign exchange constraints, there has been very little or no investment abroad by domestic investors. Although investing in real estate is cheaper abroad, a few invest in real estate domestically. The average Angolan invests in affordable investments with quick returns.

Benin

Executive Summary

Benin has been a stable democracy since 1990, enjoying until recently a reputation for regular, peaceful, and inclusive elections. In 2019 and 2021, the government held legislative and presidential elections, respectively, which were not fully competitive. Elections-related unrest in 2019 and 2021 resulted in several deaths. In April, President Patrice Talon was reelected for a second five-year term.

Benin’s overall macroeconomic conditions were positive in 2020, though growth declined compared to previous years. According to IMF estimates, GDP growth slowed from 6.9 percent in 2019 to 2.0 percent in 2020. Most of the slowdown was driven by the COVID-19 pandemic and Nigeria’s partial closure of its borders that lasted from August 2019 to December 2020. In December 2020, Benin’s National Assembly unanimously passed the Government of Benin (GOB) 2021 budget, which projects economic growth to accelerate to 7.6 percent in 2021, higher than estimates from multilateral institutions. The IMF projection for growth in 2021 is 5.0 percent, and the African Development Bank projection is 4.8 percent. Port activity and the cotton sector are the largest drivers of economic growth. Telecommunications, agriculture, energy, cement production, and construction are other significant components of the economy. Benin also has a large informal sector. The country’s GDP is roughly 51 percent services, 26 percent agriculture, and 23 percent manufacturing.

President Talon launched an ambitious $15 billion five-year Government Action Plan (PAG) in 2016. The PAG lays out a development plan structured around 45 major projects, 95 sector-based projects, and 19 institutional reforms.  With the goals of strengthening the administration of justice, fostering a structural transformation of the economy, and improving living conditions, the projects are concentrated in infrastructure, agriculture and agribusiness, tourism, health, and education.  The government estimates that full implementation of the PAG will result in the creation of 500,000 new jobs and a leap in national economic and social conditions. The government intended that 61 percent of the PAG be funded through public-private partnerships (PPPs). Through the end of 2020 no public-private partnerships had been secured. Government critics allege that the Talon administration is using the PAG in part to channel resources and contracts to administration insiders.

Benin continues efforts to attract private investment in support of economic growth amidst reports of high-level corruption among government insiders and occasional failure to respect foreign investment contracts. The Investment and Exports Promotion Agency (APIEX) is a one-stop-shop for promoting new investments, business startups, and foreign trade. In 2020, APIEX worked with foreign companies to facilitate new investments, though some companies reported that the agency was under-resourced and hamstrung by bureaucratic red tape in other agencies and ministries. APIEX reported that business creation increased to 40,000 in 2020 from 13,000 in 2015.

In June 2017, a five-year, $375 million Millennium Challenge Corporation (MCC) compact with Benin entered into force. The Benin Power Compact is advancing policy reforms to bolster financing for the electricity sector, attract private capital into power generation, and strengthen regulation and utility management. Through the compact MCC is expanding the capacity and increasing the reliability of Benin’s power grid in southern and northern Benin. As two thirds of Benin’s population does not have access to electricity, the compact also includes a significant off-grid electrification project via a clean energy grant facility that supports private sector investment in off-grid power systems. This follows Benin’s 2006-2011 compact, which modernized the country’s port – the principal source of government revenue – and improved land administration, the justice sector, and access to credit.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 83 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 149 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 126 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 2 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 1,250 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Beninese government encourages foreign investment, which it views as critical for economic development and successful implementation of the $15 billion PAG. APIEX aims to promote foreign direct investment and reduce administrative barriers to doing business. APIEX serves as the single investment promotion center and conduit of information between foreign investors and the Beninese government. It is the technical body responsible for reviewing applications for approval under the Investment Code and the administrative authority for special economic zones (SEZs). The agency has significantly reduced processing times for registration of new companies (from 15 days to one day) and construction permits (from 90 to 30 days), but the World Bank 2020 Doing Business report indicates that it takes 88 days to deal with construction permits. In practice, APIEX faces capacity constraints, processing times can be longer than stated, and its website is often out of date and lacks information on the latest regulations and laws. The Investment Code, amended in 2020, establishes conditions, advantages, and rules applicable to domestic and foreign direct investment. Additional information on business startup is available at https://monentreprise.bj/  .

Limits on Foreign Control and Right to Private Ownership and Establishment

Beninese law guarantees the right to own and transfer private property. The court system enforces contracts, but the judicial process is inefficient and suffers from corruption. Enforcement of rulings is problematic. Most firms entering the market work with an established local partner and retain a competent Beninese attorney. A list of English-speaking lawyers and legal counselors is available on the Embassy’s website: https://bj.usembassy.gov/u-s-citizen-services/attorneys/

Other Investment Policy Reviews

Business Facilitation

In an effort to facilitate business travel and tourism, Benin implements a visa-free system for African nationals and an online e-visa system for other foreign nationals. The country is working to open four new trade offices abroad to enhance Benin’s international business opportunities. One is already underway in Shenzhen, China; others are planned for Europe, the United States, and the Middle East.

Benin’s 2017 Property Code made property registration simpler and less expensive in order to boost the real estate market, improve access to credit, and reduce corruption in the registration process. The measures apply to real personal property, estate and mortgage taxes, and property purchase receipts. In order to register property, individuals and businesses must present a taxpayer identification number (registration for which is free). Land registration and property purchase certifications are free, but there is a fee for obtaining a property title.

Benin Control – a private company operating under the supervision of the Ministry of Infrastructure and Transport – is charged with expediting customs clearances and minimizing processing barriers to clearing cargo at the Port of Cotonou. Benin Control makes it possible to obtain cargo clearance within as little as 48 hours after its off-loading at the Port of Cotonou, though in practice this can take longer. The reinstitution of the cargo inspection and scanning program known as PVI, first tried in 2012, resumed operations at the Port of Cotonou in 2017. Under the PVI program, Benin Control scans between 30 and 45 randomly selected shipping containers per hour. Benin Control bills all containers exiting the Port of Cotonou – regardless of whether they are selected for scanning – at the rate of 35,000 FCFA ($68) for a 20-foot container, and 45,000 FCFA ($78) for a 40-foot container.

The government, through the state-owned Benin Water Company (SONEB) and Beninese Electric Energy Company (SBEE), provides service connections to potable water and electricity free of charge to Small and Medium Size Enterprises and Industries.  Eligible companies are responsible for paying the water and electricity meter installation fees.  Online application is available at https://www.soneb.bj/soneb15/pme-pmi-raccordement-gratuit and https://www.sbee.bj/site/demande-de-raccordement-des-pme-pmi-conditions/

Outward Investment

2. Bilateral Investment Agreements and Taxation Treaties

Benin has bilateral investment treaties signed and in force with the Belgium-Luxembourg Economic Union, Burkina Faso, Canada, Germany, Kuwait, Netherlands, Switzerland, and the United Kingdom.  Benin is listed as a member country to International Investment Agreements with the Economic Community of West African States (ECOWAS), the West African Economic and Monetary Union (WAEMU), and the African Union.  The United States and WAEMU have an Agreement Concerning the Development of Trade and Investor Relations, which contains investment provisions.  Benin does not have a bilateral taxation treaty with the United States, though as of 2021 it was eligible under the African Growth and Opportunity Act (AGOA) to export certain items duty-free to the United States.

Botswana

Executive Summary

Botswana has a population of 2.2 million. Its central location in Southern Africa enables Botswana to serve as a gateway to the region. Botswana has historically enjoyed high economic growth rates and its export-driven economy is highly correlated with global economic trends. Development has been driven mainly by revenue from diamond mining, which has enabled Botswana to develop infrastructure and to provide social services. The economy grew by 2.3 percent in 2019, down from its growth of 4.5 percent in 2018, driven by performance of the mining sector (GDP 2019 report – Statistics Botswana). COVID-19 has had a detrimental impact on Botswana’s economy. The economic activity in the second quarter of 2020 (March to June) was 24 percent lower than it was in the same period in 2019 and Statistics Botswana projects a 7.7 percent contraction in 2020. Statistics Botswana’s figure is below the World Bank prediction of a 9.9 percent contraction. Both predictions are driven largely by diamond sales, with mineral revenues dropping by 67.2 percent. In the first quarter of 2021, diamond revenues recovered, but international tourism revenues did not. In recent years, inflation has remained at the bottom end of the central bank’s 3 to 6 percent spectrum, with headline inflation recorded at 2.2 percent in December 2020. According to the United Nations Conference on Trade and Development (UNCTAD), the total stock of foreign direct investment (FDI) in Botswana fell from USD 4.82 billion in 2018 to USD 260 million in 2019. The World Bank classifies Botswana as an upper middle-income country based on its per capita income of USD 7,961.

Botswana is a stable, democratic country with an independent judiciary system. It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system. In March 2020, Standard & Poor’s (S&P) downgraded Botswana’s sovereign credit rating for long-term foreign and domestic currency bonds from “A-” to “BBB+” and in May 2020, Moody’s set its credit rating for Botswana to A2 with a negative outlook. Botswana has minimal labor strife. It is a member state to both the International Centre for Settlement of Investment Disputes (ICSID) Convention and the 1958 New York Convention. Corruption in Botswana remains less pervasive than in other parts of Africa; nevertheless, foreign and national companies have noted increasing tender-related corruption. In 2020, the World Bank ranked Botswana 87 out of 190 economies on its Ease of Doing Business index, with Botswana’s rank falling by one place from 86 in 2019. Botswana also fell in the 2019 World Economic Forum’s Global Competitiveness Index to 91 out of 141, from 90 out of 140 in 2018.

The Government of Botswana (GoB) created the Botswana Investment and Trade Centre (BITC) to assist foreign investors. It offers low tax rates and has no foreign exchange controls. The BITC’s topline economic goals are to promote export-led growth, ensure efficient government spending and financing, build human capital, and ensure the provision of appropriate infrastructure. GoB entities, including BITC, use these criteria to determine the level of support to give foreign investors. The GoB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations in a business reform roadmap. Under this framework, the GoB introduced electronic tax and customs processes in 2016 and 2017. The Companies and Intellectual Property Authority (CIPA) built and successfully integrated the Online Business Registration System (OBRS) with Botswana Unified Revenue Services (BURS) and the Immigration Office. OBRS is designed to reduce the business registration process by more than 10 days. The Public Procurement and Asset Disposal Board (PPADB) has developed and is piloting an online bidding system to allow companies to bid for government projects regardless of where they are. The GoB also established the Special Economic Zones Authority (SEZA) to streamline sector-targeted investment in Botswana’s different geographic areas.

Due to COVID-19-related economic shortfalls, Botswana drew down heavily on its foreign exchange reserves and government savings. Sectors such as mining, tourism, trade, hotels and restaurants, construction, and manufacturing suffered significantly; however, rough diamond sales recovered somewhat in the second half of 2020. The government seeks to raise revenues through a Value Added Tax (VAT) increase form 12 percent to 14 percent effective April 1, 2021. In addition, the Withholding Tax on dividend income will increase from 7.5 percent to 10 percent, and several fees and levies charged for government services will also increase.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 35 of 176 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 87 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 89 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD -24 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 7,650 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GoB publicly emphasizes the importance of attracting (FDI) and drafted an investment facilitation law recommended by the 2014 Organization for Economic Co-operation and Development (OECD) Investment Review. While the draft was completed in 2016 with technical assistance from UNCTAD, it was never enacted. The draft is still under review and will be presented to Parliament for approval. The GoB has launched initiatives to promote economic activity and foreign investment in specific areas, such as establishing a diamond hub which brought more value-added businesses (i.e., cutting and polishing) into the country. Additional investment opportunities in Botswana include large water, electricity, transportation, and telecommunication infrastructure projects. Economists have also noted Botswana’s considerable potential in the mining, mineral processing, beef, tourism, solar energy, and financial services sectors. BITC assists foreign investors with projects intended to diversify export revenue, create employment, and transfer skills to Botswana citizens. The High Level Consultative Council (HLCC), chaired by the President, and an Exporter Roundtable organized by BITC and Botswana’s Exporters and Manufacturers Association (BEMA), are mechanisms employed by the GoB to focus on a healthy business environment for FDI.

Limits on Foreign Control and Right to Private Ownership and Establishment

Botswana’s 2003 Trade Act reserves licenses for citizens in 35 sectors, including butcheries, general trading establishments, gas stations, liquor stores, supermarkets (excluding chain stores), bars (other than those associated with hotels), certain types of restaurants, boutiques, auctioneers, car washes, domestic cleaning services, curio shops, fresh produce vendors, funeral homes, hairdressers, various types of rental/hire services, laundromats, specific types of government construction projects under a certain dollar amount, certain activities related to road and railway construction and maintenance, and certain types of manufacturing activities including the production of furniture for schools, welding, and bricklaying. The law allows foreigners to participate in these sectors as minority joint venture partners in medium-sized businesses. Foreigners can hold the majority share if they obtain written approval from the trade minister.

The Ministry of Investment, Trade, and Industry (MITI) administers the citizen participation initiative and takes an expansive interpretation of the term chain stores, so that it encompasses any store with more than one outlet. This broad interpretation has resulted in the need to apply exemptions to certain supermarkets, simple specialty operations, and general trading stores. These exceptions were generally granted prior to 2015 and many large general merchandise markets, restaurants, and grocery networks are owned by foreigners as a result. Since 2015, the GoB has denied some exception requests, but reports they have approved some based on localization agreements directly negotiated between the ministry and the applying company. These agreements reportedly include commitments to purchase supplies locally and capacity building for local workers and industry. BITC conducts due diligence on companies that are looking to invest in the country and the Directorate of Intelligence Services (DIS) handles background checks for national security.

Other Investment Policy Reviews

In December of 2014, the OECD released an Investment Policy Review on Botswana. ( http://www.oecd-ilibrary.org/finance-and-investment/oecd-investment-policy-reviews-botswana-2014_9789264203365-en ).

Botswana has been a World Trade Organization (WTO) member since 1995. In 2016, the WTO conducted a trade policy review of the Southern African Customs Union to which Botswana belongs ( https://www.wto.org/english/tratop_e/tpr_e/tp322_e.htm ).

Business Facilitation

To operate a business in Botswana, one needs to register a company with the GoB’s CIPA through the OBRS at:   https://www.cipa.co.bw/types-of-entities 

CIPA asserts that the company registration process can be completed in a day and is integrated with BURS which allows for a fast-tracked tax registration in 30 days. Additional work is required to open bank accounts and obtain necessary licenses and permits. The World Bank ranked Botswana 159 out of 190 in its ease of starting a business category.

BITC ( www.bitc.co.bw ), the GoB’s investment promotion agency, was designed to serve as a one-stop shop to assist investors in setting up a business and finding a location for operation. BITC’s ability to streamline procedures varies based on GoB entity and bureaucratic requirements. BITC assesses investment projects on their ability to diversify the economy away from its continued dependence on diamond mining, contribute towards export-led growth, and job creation for and skills transfer to Batswana citizens. BITC also hosts the Botswana Trade Portal ( https://www.botswanatradeportal.org.bw ) that is designed to ease trade across borders. It is a single point of contact for all information relating to import and export to and from Botswana and represents a number of ministries and parastatals.

Botswana has several incentives and preferences for both citizen-owned and locally based companies. Foreign-owned companies can benefit from local procurement preferences which are usually required for government tenders. MITI instituted a program in 2015 to give locally based small companies a 15 percent preferential price margin in GoB procurement, with mid-sized companies receiving a 10 percent margin, and large companies a five percent margin. Under this policy, MITI defines small companies as having less than five million pula in annual revenue reflected in their financial statements, medium companies with five to 20 million pula in revenue, and large companies with revenues exceeding 20 million pula. The directive applies to 27 categories of goods and services ranging from textiles, chemicals, and food, as well as a broad range of consultancy services. The government can also offer up to 50 million pula in funding through Citizen Entrepreneurial Development Agency (CEDA) to joint ventures between foreign and citizen owned companies.

For Companies Act registration purposes, enterprises are classified as: Micro Enterprises – fewer than six employees including the owner and an annual revenue below 60 thousand pula; Small Enterprises – fewer than 25 employees and an annual revenue between 60 thousand and 1.5 million pula; Medium Enterprises – fewer than 100 employees and annual revenue between 1.5 and 5 million pula; Large Enterprises – over 100 employees and an annual revenue of at least 5 million pula. This classification system permits foreigners to participate as minority shareholders in medium-sized enterprises in the 35 business sectors reserved for citizens.

Outward Investment

The GoB neither promotes nor restricts outward investment.

2. Bilateral Investment Agreements and Taxation Treaties

The United States and the Southern Africa Customs Union (SACU), which includes Botswana, signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) in 2008. The TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.

SACU has free trade agreements with Iceland, Liechtenstein, Norway, Switzerland, and the European Free Trade Association. SACU countries and MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay) signed reciprocal preferential trade agreements (PTA) in December 2008 and April 2009, respectively. The PTA establishes fixed preference margins as a first step towards the creation of a free trade area between SACU and MERCOSUR. Botswana has ratified the agreement and is awaiting remaining Member States to complete ratification for the agreement to be implemented.

For more information on SACU’s tariff regime see the WTO document: http://www.wto.org/english/tratop_e/tpr_e/s222-00_e.doc .

Botswana is also a member of the Southern African Development Community (SADC), and is currently implementing the SADC Protocol on Trade. For more information about SADC, visit: www.sadc.int.

In June 2016, Botswana signed an Economic Partnership Agreement (EPA) with the European Union as part of the SADC EPA Group. The EPA guarantees access to the EU market without any duties or quotas for Botswana and gives asymmetric access to the SADC EPA Group.

The EPA between the United Kingdom, the Southern African Customs Union, and Mozambique (UK-SACUM EPA) is complete and is expected to be implemented in the 2021/22 financial year.

Botswana has a trade agreement with Zimbabwe, which provides duty-free access for goods with at least 25 percent local content.

In 2018, Botswana signed the Tripartite Free Trade Area (TFTA) agreement consisting of 26 countries of the three Regional Economic communities of the Common Market for Eastern and Southern Africa (COMESA), East African Commission (EAC), and SADC.

The African Continental Free Trade Agreement (AfCFTA), of which Botswana is a signatory, commenced trading officially on January 1, 2021. AfCFTA was founded in 2018 to promote intra-African trade and to pave the way for a future continental customs union.

Burundi

Executive Summary

Burundi is located in Central Africa and is one of the six member states of the East African Community (EAC). Burundi is one of the world’s most impoverished countries, with almost two-thirds of the population living below the poverty line, approximately 90 percent of the population reliant on subsistence farming, and a youth unemployment rate of about 65 percent. Economic growth is insufficient to create employment for Burundi’s rapidly growing population and the new administration of President Ndayishimiye, in power since June 2020, is actively seeking to increase existing value chains and find new sources of employment and revenue.

The government of Burundi (GoB) is also seeking to attract more foreign direct investment (FDI). In sharp contrast with the isolationist tendencies of the last administration, since taking office President Ndayishimiye has made or hosted multiple state visits with potential trade and development partners in the region, including Tanzania, Equatorial Guinea, Gabon, Central African Republic, Ethiopia, and Egypt. Given the importance of agriculture, the GoB is promoting initiatives to modernize and diversify agricultural production, seeking to increase production of crops beyond coffee and tea. In order to attract FDI, the GoB must address longstanding issues of poor governance and weak institutional capacity, corruption, instability of the local currency, financial restrictions and capital controls that limit access to and expatriation of foreign exchange, a low-skilled workforce, poor internet connectivity, and limited/unreliable economic statistics. Since 2008, members of the executive branch have granted large discretionary tax or related exemptions to private foreign companies by presidential decree or ministerial order to attract FDI. These direct government-to-company agreements undermine the Burundian tax law and the investment code. In addition to reducing revenues for the state, these exemptions disadvantage private companies already operating in Burundi by granting advantages to select competitors. The corporate tax rate is 30 percent, with reductions for companies that employ certain numbers of Burundian nationals.

The GoB is also working to develop infrastructure, including photovoltaic and hydroelectric power plants, road construction to improve access to the country and projects that will contribute to regional trade, such as the rehabilitation of Bujumbura Port and the construction of a railway joining Burundi and Tanzania. Burundi’s landlocked location and infrastructure constraints severely limit transportation of goods. Demand for electricity and water significantly exceeds capacity, and the transmission system is old and poorly maintained, leading to rolling blackouts and outages. In the mining sector, which some industry players believe has great potential for development, activity has increased but overall yields remain low, and infrastructure needed to support an expansion of mining, including electricity and transportation, are insufficient.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 165 of 175 http://www.transparency.org/
research/cpi/overview
 
World Bank’s Doing Business Report 2020 166 of 190 http://www.doingbusiness.org/
en/rankings
 
Global Innovation Index 2019 128 of 129 https://www.globalinnovationindex.org/
analysis-indicator
 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 1.0 million https://apps.bea.gov/
international/factsheet/
 
World Bank GNI per capita 2019 USD 280 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD
 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Burundi (GoB) is generally supportive of FDI and seeks investment as a means to promote economic growth. Uneven implementation of laws and regulations, however, limits the predictability of the environment for Burundian and foreign investors alike. The GoB has not implemented laws, regulations, or economic or industrial strategies that limit market access or discriminate against foreign investors. There is a minimum initial foreign investment of $50,000, which does not apply to domestic investors. An overview of the legal framework for foreign investment can be found at: http://www.eatradehub.org/burundi_investment_policy_assessment_2018_presentation 

Based on the Burundi Investment Code enacted in 2008, the government established the Burundi Investment Promotion Agency (API) in 2009. API is the government authority in charge of promoting investment, improving the business climate, and facilitating market entry for investors in Burundi. API offers a range of services to potential investors, including assistance in acquiring the licenses, certificates, approvals, authorizations, and permits required by law to set up and operate a business enterprise in Burundi. API has set up a “one-stop shop” to facilitate and simplify business registration in Burundi. For now, investors must be physically present in country to register with API. API provides investors with information on investment and export promotion, assists them with legal formalities, including obtaining the required documents, and intervenes when laws and regulations are not properly applied. API also designs reforms required for the improvement and the ease of doing business environment and ensures that the impact of investments on development is beneficial and sustainable.

The GoB conducts dialogue with national and foreign investors to promote investment. API is the initial and primary point of entry for investors, but government ministries meet regularly with private investors to discuss regulatory and legal issues.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic companies have the same rights to establish and own businesses in the country and engage in all forms of activities. However, there are restrictions on foreign investments in weaponry, ammunition, and any sort of military or para-military enterprises. There are no other restrictions nor are there any other sectors in which foreign investors are denied the same treatment as domestic firms. There are no general limits on foreign ownership or control.

Article 63 of the 2013 mining code stipulates that the GoB must own at least 10 percent of shares in any foreign company with an industrial mining license and state participation cannot be diluted in the event of an increase in the share capital.

Burundi does not maintain an investment screening mechanism for inbound foreign investment.

Other Investment Policy Reviews

No investment policy review from a multilateral organization has taken place in the last three years. The most recent review was performed in 2010 by UNCTAD.

Business Facilitation

In addition to fiscal advantages provided in the investment code, Burundi has implemented reforms, including reinforcing the capabilities of the one-stop shop at API, simplifying tax procedures for small and medium enterprises, launching an electronic single window for business transactions, and harmonizing commercial laws with those of the East African Community.

Business registration takes approximately four hours and costs 40,000 Burundian francs (around $21). For more details and information on registration procedures, time and costs, investors may visit API’s website at https://www.investburundi.bi/ .

There is no specific mechanism for ensuring equitable treatment of women and underrepresented minorities.

Outward Investment

The host government does not have mechanisms for promoting or incentivizing outward investment. The host government does not restrict domestic investors from investing abroad.

Chad

Executive Summary

Chad is Africa’s fifth largest country by geographic/surface area, encompassing three agro-climatic zones. Chad is landlocked, bordering Libya to the north, Sudan to the east, Central African Republic (CAR) to the south, and Cameroon, Nigeria, and Niger to the west (with which it shares Lake Chad). The nearest port — Douala, Cameroon — is 1,700 km from the capital, N’Djamena. Chad is one of six countries that constitute the Central African Economic and Monetary Community (CEMAC), a common market. Chad’s human development is one of the lowest in the world according to the UN Human Development Index (HDI), and poverty afflicts a large proportion of the population.

The Government of Chad (GOC) is favorably disposed to foreign investment, especially from North American companies. There are opportunities for foreign investment in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Information Technology; Industrial Equipment & Supplies; Information & Communication; and Services.

Since oil production began in 2003, the petroleum sector has dominated economic activity and has been the largest target of foreign investment, including from U.S. companies. Agriculture and livestock breeding are also important economic activities, employing the majority of the population. The GOC has prioritized agriculture, solar energy production, gold mining, livestock breeding, meat processing, and information technology in recent years in an effort to diversify the economy and lessen fiscal dependence on volatile global energy markets.

Chad’s business and investment climate remains challenging. Private sector development is hindered by poor transport infrastructure, lack of skilled labor, minimal and unreliable electricity supply, weak contract enforcement, corruption, and high tax burdens on private enterprises. Frequent border closures with neighboring countries, exacerbated by COVID-19 restrictions, complicate international trade. The COVID-19 pandemic halted Chad’s modest 2019 economic recovery following several years of recession caused by low global oil prices and disruptive debt payments to Glencore. Existing IMF and World Bank programs aim to improve governance, increase transparency, and reduce internal arrears. Private sector financing is limited, and low GDP growth constrains government investment and private sector spending. Frequent rotations of key ministers and overzealous customs inspectors present further roadblocks. The GOC’s interest in maintaining a stake in investment projects is a dual-edged sword, facilitating access to key decision makers while introducing financial and operational risks.

Despite these challenges, the success of several foreign investments into Chad illustrates the business opportunities for experienced, dedicated, and patient investors. Successful investors often operate with trusted local partners to navigate the challenges of operating in Chad. The oil sector will mark 20 years of operations in 2023 and features several prominent American international oil companies, including ExxonMobil. Olam International entered Chad’s cotton market in 2018 and dramatically increased national cotton production. Mindful of the imperative to enact reforms, the GOC operationalized a Presidential Council to Improve the Business Climate in January 2021. With rich natural resources, minimally developed agriculture and meat processing sectors, ample sunshine, increasing telecommunications coverage, and a rapidly growing population, Chad presents an opportunity for targeted investment in key sectors.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 160 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 182 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 N/A http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 $700 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GOC’s policies towards foreign direct investment (FDI) are generally positive. Chad’s laws and regulations encourage FDI, and there are few formal restrictions on foreign trade and investment. Under Chadian law, foreign and domestic entities may establish and own business enterprises.

The National Investment Charter of 2008 permits full foreign ownership of companies in Chad. The only limit on foreign control is on ownership of companies deemed related to national security. The National Investment Charter guarantees both foreign companies and individuals equal standing with Chadian companies and individuals in the privatization process. In principle, tenders for foreign investment in state-owned enterprises (SOEs) and for government contracts are conducted through open international bid procedures. The National Investment Charter also offers incentives to certain foreign companies establishing significant operations in Chad, including up to five years of tax-exempt status.

Chad’s National Agency for Investment and Exports (ANIE, Agence Nationale des Investissements et des Exports), an agency of the Ministry of Industrial and Commercial Development & Private Sector Promotion, facilitates foreign investment. ANIE’s mandate is to contribute to the creation of a business environment that meets international standing, promote investment and exports, support the development of SMEs, and inform GOC decision makers about economic policy. ANIE acts as a one-stop shop for new investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign ownership or control. There are no sector-specific restrictions that discriminate against market access for U.S. or other foreign investors, and no de facto anti-foreign discriminatory practices.

Other Investment Policy Reviews

UNCTAD published a French-language Investment Policy Review on Chad in July 2019 ( https://investmentpolicy.unctad.org/publications/1212/investment-policy-review-of-chad ).

The World Trade Organization (WTO) published a joint trade policy review for Chad, Cameroon, Republic of Congo, Gabon, and Central African Republic in 2013 ( https://www.wto.org/english/tratop_e/tpr_e/tp385_e.htm ), and a standalone trade policy review for Chad in 2007 ( https://www.wto.org/english/tratop_e/tpr_e/tp275_e.htm ).

The OECD has not published any investment policy reviews of Chad.

Business Facilitation

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers a one-stop shop for filing the legal forms needed to start a business. The process officially takes 72 hours and is the most important legal requirement for investment. ANIE’s website ( www.anie-tchad.com ) provides additional information. Online business registration is not yet available via the Global Enterprise Registration web site ( www.GER.co ) or the Business Facilitation Program ( www.businessfacilitation.org ).

The World Bank’s Doing Business 2020 report ranked Chad 182 out of 190 countries for ease of starting a business, which included factors beyond registration such as permitting and access to office space, energy, and capital.

Contracts are tailored to each investment and often include additional incentives and concessions, such as permissions to import labor or agreements to work with specific local suppliers. Some contracts are confidential. Occasionally, government ministries attempt to change the terms of contracts or apply new laws broadly, even to companies that have pre-existing agreements that exempt them. Chad’s judicial system is weak, and rulings, including those relating to contract disputes, are susceptible to government interference. There is limited capacity within the judiciary to address commercial issues, including contract disputes. Parties usually settle disputes directly or through arbitration provided by the Chamber of Commerce, Industry, Agriculture, Mining, and Crafts (CCIAMA) or through an outside entity, such as the International Chamber of Commerce (ICC) in Paris.

Outward Investment

The GOC does not offer any programs or incentives encouraging outward investment. The GOC does not restrict domestic investors from investing abroad.

Côte d’Ivoire

Executive Summary

Côte d’Ivoire offers a fertile environment for U.S. investment, and the Ivoirian government is keen to deepen its commercial cooperation with the United States. The Ivoirian and foreign business community in Côte d’Ivoire considers the 2018 investment code generous with incentives and few restrictions on foreign investors. The ongoing COVID-19 pandemic slowed the economy in 2020 and created new financial burdens for the government as it sought to put health mitigation and economic stimulus measures in place. International organizations such as the IMF and World Bank see some cause for optimism for a recovery in 2021 and 2022. According to the IMF, Côte d’Ivoire’s GDP growth fell from 6.5 percent in 2019 to 1.8 percent in 2020, with a return to growth at a more robust 6.2 percent projected for 2021.

U.S. businesses operate successfully in the following Ivoirian sectors: oil and gas exploration and production; agriculture and value-added agribusiness processing; power generation and renewable energy; IT services; digital economy; banking; insurance; and infrastructure. In 2020, Côte d’Ivoire maintained its position of 110 out of 190 economies in the World Bank’s Doing Business ranking. Côte d’Ivoire was eleventh among the 48 sub-Saharan Africa countries, notably coming in ahead of Ghana, Senegal, and Nigeria.

Economically, Côte d’Ivoire is among Africa’s fastest growing economies and is the largest economy in francophone Africa, attracting regional migrant labor. Also, home to the headquarters of the African Development Bank, Côte d’Ivoire attracts a significant expatriate professional community.

Doing business with the government remains a significant challenge. The government has awarded a number of sole-source contracts without competition and at times disregarded objective evaluations on competitive tenders. An overly complicated tax system and a slow, opaque government decision-making process hinder investment. Other challenges include weak access to credit for small businesses, corruption, and the need to broaden the tax base to relieve some of the tax-paying burden on businesses. The government is introducing a local-content law for the oil and gas sector that, once passed, will put additional requirements for local hiring and procurement on companies operating in that sector.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 104 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 110 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 112 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 -$495 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 $2,290 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government actively encourages Foreign Direct Investment (FDI) and is committed to increasing it. Foreign companies are free to invest and list on the regional stock exchange Bourse Régionale des Valeurs Mobilières (BRVM), which is based in Abidjan and covers the eight countries of the West African Economic and Monetary Union (WAEMU). WAEMU members are part of the Regional Council for Savings and Investment, a regional securities regulatory body.

In most sectors, there are no laws that limit foreign investment. There are restrictions, however, on foreign investment in the health sector, law and accounting firms, and travel agencies.

Land tenure is a complicated and sensitive issue. Land tenure disputes exist all over the country owing to multiple forms of traditional collective tenure and the lack of formal private land ownership in most areas. Companies that wish to purchase land must have the property surveyed before obtaining title. Surveying is tightly controlled by a small group of companies and can often cost more than the value of the parcel of land. Freehold land tenure in rural areas is difficult to negotiate, however, and can inhibit foreign investment. Most businesses, including agribusinesses and forestry companies, circumvent the complicated land purchase process by acquiring long-term leases instead. There are regulations designed to control land speculation in urban areas, but they do not prevent foreigners from owning land.

The Ivoirian government’s investment promotion agency, the Center for the Promotion of Investment in Côte d’Ivoire (CEPICI), promotes and attracts national and foreign investment. Its services are available to all investors, provided through a one-stop shop intended to facilitate business creation, operation, and expansion. CEPICI ensures that investors receive incentives outlined in the investment code and facilitates access to industrial land. More information is available at http://www.cepici.gouv.ci/ .

Côte d’Ivoire maintains an ongoing dialogue with investors through various business networks and platforms, such as CEPICI, the Ivoirian Chamber of Commerce (CCI-CI), the association of large enterprises (CGECI), and the bankers’ association.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors generally have access to all forms of remunerative activity on terms equal to those enjoyed by Ivoirians. The government encourages foreign investment, including state-owned firms that the government is privatizing, although in most cases of privatization the state reserves an equity stake in the new company.

There are no general, economy-wide limits on foreign ownership or control, and few sector-specific restrictions. There are no laws specifically directing private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control in those firms, and no such practices have been reported.

Banks and insurance companies are subject to licensing requirements, but there are no restrictions designed to limit foreign ownership or to limit establishment of subsidiaries of foreign companies in this sector. Investments in health, law and accounting, and travel agencies are subject to prior approval and require appropriate licenses and association with an Ivoirian partner. The Ivoirian government has, on a case-by-case basis, mandated using local providers, hiring local employees, or arranging for eventual transfer to local control.

The government does not have an official policy to screen investments, and its overall economic and industrial strategy does not discriminate against foreign-owned firms. There are indications in some instances of preferential treatment for firms from countries with longstanding commercial ties to Côte d’Ivoire.

Other Investment Policy Reviews

Côte d’Ivoire has not conducted an investment policy review (IPR) through the OECD. The WTO last conducted a Trade Policy Review in October 2017, which can be found at https://www.wto.org/english/tratop_e/tpr_e/tp462_e.htm .

UNCTAD published an Investment Policy Review for Côte d’Ivoire in February 2020, which can be found at https://unctad.org/webflyer/investment-policy-review-cote-divoire 

The Government of Côte d’Ivoire provides information about sector policies and business opportunities in publicly available reports. More information can be found at: https://www.cepici.gouv.ci/ .

Business Facilitation

The CEPICI manages Côte d’Ivoire’s online information portal containing all documents dedicated to business creation and registration ( https://cotedivoire.eregulations.org/ ). All the necessary documentation for registration is available online, however actual registration must be done in person. Further information on business registration is also available on CEPICI’s website ( http://www.cepici.gouv.ci/ ).

Businesses can register at the CEPICI’s One-Stop Shop (Guichet Unique) in Abidjan. The One-Stop Shop allows businesses to register with the commercial registrar (Registre du Commerce et du Crédit Immobilier), the tax authority (Direction Générale d’Impôts) and the social security institute (Caisse Nationale de Prévoyance Sociale). The One-Stop Shop also publishes the legal notice of incorporation on CEPICI’s website. All necessary documents for registration are also available on the website. Registration takes between one and three days. The business licensing process, controlled by sector-specific governing bodies, is separate from the registration process.

Women have equal access to the registration process. There have not been any reports of discrimination in that regard.

Outward Investment

Côte d’Ivoire does not promote or incentivize outward investment.

However, the government does not restrict domestic investors from investing abroad.

Democratic Republic of the Congo

Executive Summary

The Democratic Republic of the Congo (DRC) is the second largest country in Africa and one of the richest in the world in terms of natural resources.  With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people.  Despite its potential, the DRC often cannot provide adequate food, security, infrastructure, and health care to its estimated 84 million inhabitants, of which 75 percent live on less than two dollars a day.

The ascension of Felix Tshisekedi to the presidency in 2019 and his government’s commitment to attracting international, and particularly U.S. investment, have raised the hopes of the business community for greater openness and transparency.  In January 2021 the DRC government became eligible for preferential trade preferences under the Africa Growth and Opportunity Act (AGOA), reflecting progress made on human rights, anti-corruption, and labor.  Tshisekedi created a presidential unit to lead business reform and improve DRC’s poor ranking of 183rd out of 190 countries in the World Bank’s Doing Business 2020 report.

The natural resource sector has historically attracted the most foreign investment.  The primary minerals sector is the country’s main source of revenue, as exports of copper, cobalt, gold, coltan, diamond, tin, and tungsten provide over 95 percent of the DRC’s export revenue.  The highly competitive telecommunications industry has received significant investment.  The energy sector has great potential, particularly in renewable sources such as hydroelectricity and solar.  Several breweries and bottlers, several large construction firms, and limited textiles production are active.  Given the vast needs, there are significant commercial opportunities in aviation, road, rail, water transport, and ports.  The agricultural and forestry sectors present opportunities for economic diversification in the DRC.

Overall, businesses in the DRC face numerous challenges, including poor infrastructure, an arbitrary taxation system, and a weak and corrupt bureaucracy.  The COVID-19 pandemic sent growth negative and worsened the country’s food security.  Armed groups remain active in the eastern part of the country, making for a fragile security situation that negatively affects the business environment.  Reform of a non-transparent and often corrupt legal system is underway.  While laws protecting investors are in effect, the court system is often very slow to make decisions or follow the law, allowing numerous investment disputes to last for years.

Investors hope a new Prime Minister and cabinet in 2021 will bring a government more responsive to the needs of investors for an improved business climate and a level playing field.  The government’s announced priorities include greater efforts against corruption, election reform, primary school education, and improvements to revenue collection.  Observers expect the economy to bounce back to positive growth based on renewed demand for its minerals.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 18/100 – 170/180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 36.2/100 – 183/190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/R https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $86 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 $530 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The ascension of Felix Tshisekedi to the Presidency in January 2019 and his welcoming attitude toward foreign direct investment (FDI), particularly from the United States, have raised hopes that the DRC government (GDRC) can impose and follow through on favorable FDI policies.  Favorable FDI laws exist, but the judicial system is slow to protect investors’ rights and is susceptible to political pressure and corruption.  Investors hope Tshisekedi can create a more favorable enabling environment by business climate reform, better rule of law, and tackling corruption. The DRC’s rich endowment of natural resources, large population and generally open trading system provide significant potential opportunities for U.S. investors.

The major regulations governing FDI are found in the Investment Code Act (No. 004/2002 of 21 February 2002). Current regulations reserve the practice of small retail commerce in DRC to nationals and ban foreign majority-ownership of agricultural concerns.  The ordinance of August 8, 1990, clearly stipulates that “small business can only be carried out by Congolese.”  Foreign investors should limit themselves to import trade as well as wholesale and semi-wholesale trade. Investors have expressed concern that the ban on foreign agricultural ownership will stifle any attempts to kick-start the agrarian sector.

The National Investment Promotion Agency (ANAPI) is the official investment agency, which provides investment facilitation services for initial investments over USD 200,000.  It is mandated to promote the positive image of the DRC and specific investment opportunities; advocate for the improvement of the business climate in the country and provide administrative support to new foreign investors who decide to establish or expand their economic activities on the national territory.  More information is available at https://www.investindrc.cd/.

The GDRC maintains an ongoing dialogue with investors to hear their concerns. There are several public and private sector forums which speak to the government on the investment climate in specific sectors.  In 2019 President Tshisekedi created the business climate cell (CCA) to monitor the improvement of the economic environment and the business climate in the DRC, and to interface with the business community.  The CCA in June 2020 presented a roadmap for reform.  The public-private Financial and Technical Partners (PTF) mining group represents countries with significant mining investments in the DRC. The Federation of Congolese Enterprises (FEC), which is a privileged partner of the government and the workers’ unions, has a dialogue on business interests with the government.  The FEC has relayed information to the government about the effects of the COVID-19 pandemic on the private sector.  The FEC is also tracking post-Covid-19 investment sectors.

Limits on Foreign Control and Right to Private Ownership and Establishment

The GDRC provides the right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity.

The DRC law reserves small commerce exclusively for Congolese nationals and does not allow foreign investors to own more than 49 percent of an agribusiness.  Many investors note that in practice the GDRC requires foreign investors to hire local agents and participate in a joint venture with the government or local partners.

The GDRC promulgated a mining code in 2018 which increased royalty rates from two to ten percent, raised tax rates on “strategic” metals, and imposed a surcharge on “super profits” of mining companies.  The government unilaterally removed a stability clause contained in the previous mining code protecting investors from any new fees or taxes for ten years.  Removal of the stability clause may deter future investment in the mining sector.  The Tshisekedi government has indicated that it is willing to reopen discussions on the new mining code.

The GDRC does not maintain an organization to screen inbound investment.  The Presidency and the ministries serve this purpose de facto.

Other Investment Policy Reviews

The DRC has not undergone a World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), or a United Nations Conference on Trade and Development (UNCTAD) Investment Policy Review in the last three years.  Cities with high custom clearance traffic use Sydonia https://asycuda.org/wp-content/uploads/Etude-de-Cas-SYDONIA-Contr%C3%B4le-de-la-Valeur-RDC.pdf, which is an advanced software system for custom administrations in compliance with ASYCUDA WORLD. (ASYCUDA is a large technical assistance software program recommended by UNCTAD for custom clearance management.)

Business Facilitation

The GDRC operates a “one-stop-shop” for Business Creation (GUCE) that brings together all the government entities involved in the registration of a company in the DRC.  The goal is to permit the quick and simple registration of companies through one office in one location.  In October 2020, President Tshisekedi instructed the government to restructure GUCE in order to ease its work with the various state organizations involved in its operation.  More information is available at https://guichetunique.cd/.

At the one-stop-shop, companies fill in a “formulaire unique” in order to register with the: Commercial Registry (GUCE); tax administration (Direction Générale des Impots); Ministry of Labor; and National Institute for Social Security (Institut National de Sécurité Sociale (“INSS”)).  The Labor Inspection Department and the National Office of Employment (l’Office National de l’Emploi (“ONEM”)) are also to be notified of the establishment of the company.  Companies may also need to obtain an operating permit, as required from some municipal councils.  The registration process now officially takes three days, but in practice it can take much longer.  Some businesses have reported that the GUCE has considerably shortened and simplified the overall process of business registration.

Outward Investment

The GDRC does not prohibit outward investment, nor does it particularly promote or incentivize it.

There are no current government restrictions preventing domestic investors from investing abroad, and there are no currently blacklisted countries with which domestic investors are precluded from doing business.

2. Bilateral Investment Agreements and Taxation Treaties

The U.S. DRC Bilateral Investment Treaty (BIT) was signed in 1984 and entered into force in 1989.  The BIT guarantees reciprocal rights and privileges to each country’s investors and provides that, should a claim arise under the treaty, it can be submitted to a dispute resolution mechanism through international arbitration.  U.S. companies have at times reported difficulties with the tax authorities from arbitrary enforcement of the taxation code.

The DRC has bilateral investment treaties in force with France, Germany, Switzerland, and the United States.  Treaties have been signed with Belgium-Luxembourg Economic Union, China, Egypt, Greece, India, Italy, Jordan, Portugal, Republic of Korea, South Africa, and Ukraine but these have not yet entered into force.  Kenya is currently negotiating a BIT. Lebanon, Côte d’Ivoire, and Burkina Faso have negotiated, but not signed, BITs with the DRC.  In October 2016, the DRC and Rwanda signed an agreement on a simplified trade regime covering only small-scale commerce between the countries.

The AfCFTA is a continent-wide free-trade agreement brokered by the African Union (AU) that began on 1 January 2021, but hard work lies ahead.  The DRC signed the African Continental Free Trade Agreement (AfCFTA) in March 2018 and ratified it in April 2021.  The Presidency will enact the law in 2021.  The agreement aims to facilitate imports and exports among member countries – with lower or no tariffs, free access to the market and market information, and the elimination of trade barriers – and offer numerous benefits to SMEs.

On January 1, 2021, the DRC again became eligible for benefits under the African Growth and Opportunity Act (AGOA), after a 10-year exclusion due to concerns over human rights violations. AGOA provides African countries with duty-free access to the U.S. market for over 1,800 products for 20 years. Congo’s main exports of copper, and cobalt were tariff-free under the United States’ Generalized System of Preferences trade program.

There is no bilateral taxation treaty between the United States and the DRC.  In 2015, Zambia and the DRC signed a bilateral taxation treaty that abolished customs taxes across their common border.

Djibouti

Executive Summary

Djibouti, a country with few resources, recognizes the crucial need for foreign direct investment (FDI) to stimulate economic development. The country’s assets include a strategic geographic location, free zones, an open trade regime, and a stable currency. Djibouti has identified a number of priority sectors for investment, including transport and logistics, real estate, energy, and tourism. Djibouti’s investment climate has improved in recent years, which has led to interest by U.S. and other foreign firms. There are, however, a number of reforms still needed to promote investment.

In 2019, according to the UN Conference of Trade and Development, FDI stock represented 52.5% of GDP, up slightly from 52.2% in 2018. Real GDP growth has remained between 5% and a little over 8% per year for the last five years. Inflation decreased to 0.1 % in 2018 then peaked at an estimated 3.3% in 2019 and decreased to 2.9% in 2020. In recent years, Djibouti undertook a surge of foreign-backed infrastructure loans to posture themselves as the “Singapore of Africa.” Major projects have included a new gas terminal and pipeline to Ethiopia, a new port, free zones, improved road systems, a railroad connecting Djibouti and Addis Ababa, and a water pipeline from Ethiopia. Djibouti launched the first phase of an ambitious port and free zone project, Djibouti Damerjog Industrial Development (DDID) free-trade zone, scheduled to be built in three phases of five years each. The project includes a multipurpose port, a liquefied natural gas terminal, a livestock terminal, dry docks and a ship repair area, a power plant and a factory that will produce construction materials. DDID which is expected to attract foreign investors, will offer all the preferential policies guaranteed by the free zone authority, such as tax exemption, minimized restrictions on foreign labor and competitive water and electricity rates. In April 2018, the Government of Djibouti enacted tax, labor, and financial reforms to improve its investment climate.

Djibouti remains below regional and world averages in the World Bank’s “Doing Business” reports but has been steadily improving in recent years from 171 in 2017 to 112 (of 190 countries) in the 2020 ranking. Various business climate reforms were introduced in 2020 with the objectives of improving competitiveness both regionally and internationally. These reforms included starting online registration for companies and the creation of Djibouti Port Community System platform which is a portal that provides a comprehensive set of online services to the business community.

Economic development and foreign investment are hindered by high electricity costs, high unemployment, an unskilled workforce, a large informal sector, regional instability, opaque business practices, compliance risks, corruption, and a weak financial sector. The World Bank estimated the government’s public debt-to-GDP ratio was 66.7% in 2019 with a projection of 69.9% in 2020 which will gradually decrease over the years. The majority of the debt is owed to Chinese entities.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 147 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 112 of 190 https://www.doingbusiness.org/
en/data/exploreeconomies/djibouti
Global Innovation Index 2019 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 3,540 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Djibouti’s laws encourage FDI, with state-run media providing favorable coverage of projects funded by foreign entities. The government sees FDI as a driving force behind Djibouti’s economic growth. Faced with a high unemployment rate of over 47%, FDI is expected to generate jobs.

There are no laws, practices, or mechanisms that discriminate against foreign investors. Navigating the bureaucracy, however, can be complicated. Certain sectors, most notably public utilities, are state-owned and are not open to investors. The state-owned enterprise (SOE) Djibouti Electricity (EDD) had a monopoly on electricity production for decades, however in July 2015, the Djiboutian government approved a bill liberalizing the production of electricity. The energy sector is now open to competition through Power Purchase Agreements, however EDD retains all rights to the transmission and distribution of electricity. The liberalization of production has resulted in the private development of wind, solar, and waste to energy resources.

Djibouti’s National Investment Promotion Agency (NIPA), created in 2001 under the Ministry of Finance, promotes private-sector investment, facilitates investment operations, and works to modernize the country’s regulatory framework. NIPA assists foreign and domestic investors by disseminating information and streamlining administrative procedures. In March 2017, NIPA’s one-stop-shop was officially inaugurated. The NIPA is the main coordinator of the one-stop-shop which houses several agencies. NIPA has identified several priority sectors for investment, including infrastructure and renewable energy.

A new Minister of Investment position was created in 2016 to further attract and reach out to potential investors. The Minister reports directly to the presidency.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have equal rights in establishing and owning business enterprises and engaging in all forms of remunerative activity. Furthermore, foreign investors are not required by law to have a local partner except in the insurance industry, and there, only if the company is registered as a local company and not a branch of an existing foreign company. There is no established screening process for FDI; it is encouraged and given favorable tax status. Specific terms are negotiated on a case-by-case basis. Many companies therefore have a unique status created by agreement with varying preferences and advantages. Some foreign companies choose to have a local partner to help them better navigate the local bureaucracy and cultural sensitivities.

Other Investment Policy Reviews

The OECD, WTO, and the UNCTAD have not conducted an investment policy review (IPR) for Djibouti in the last three years. Post is not aware of any other multilateral organization having an IPR for Djibouti in the last three years.

Business Facilitation

The government of Djibouti has facilitated the registration of business by reducing the capital needed for investment, simplifying the formalities needed to register with the Intellectual Property office, and simplifying certain tax procedures. The most important result is the finalization of a one-stop shop, called Guichet Unique, managed by NIPA. The Guichet Unique ( http://www.guichet-unique.dj ) brings together all the agencies with which a company must register.

Typically, a company registers with the following Djiboutian offices: Office of Intellectual Property, Tax office, and the Social Security office. Online registration is not possible; the normal registration process takes 14 days, according to the World Bank. In Djibouti, new businesses must have every document notarized to begin operations.

Outward Investment

The government neither promotes nor restricts outward investment.

2. Bilateral Investment Agreements and Taxation Treaties

Djibouti does not have a bilateral investment treaty (BIT), nor does it have a bilateral taxation treaty with the United States. However, Djibouti is eligible to benefit from the African Growth and Opportunity Act (AGOA). The Common Market for Eastern and Southern Africa (COMESA), of which Djibouti is a member, signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2001.

In March 2018, Djibouti signed the trade agreement for the African Continental Free Trade Area (AfCFTA), paving the way for a liberalized market for goods and services across the continent. A total of 54 countries have signed the agreement and Djibouti is one of 30 countries to have ratified the agreement. Djibouti has signed bilateral investment treaties with several countries. There is no publicly available list of these treaties, and the terms are not standardized from one treaty to the next. Other treaties to which Djibouti is a party include ESA (Eastern and South Eastern Africa)-EU Interim Economic Partnership Agreement, COMESA, Agreement for the Promotion, Protection and Guarantee of Investment among Member States of the Organization of Islamic Conference, Cotonou Agreement, AU Treaty, League of Arab States Investment, Arab League Investment Agreement, and Arab Economic Unity Agreement.

Business tax exoneration is given to all newly registered foreign and Djiboutian companies for the first three years of operations for those operating in Classes V through VIII (110,000 DJF (621 USD) to 513,000 DJF (worth of annual business taxes). For those above Class VIII (>513,000 DF (2,898) worth of annual business taxes) and for all banks, they are exonerated from the “proportional” business tax which is equivalent to 20% of their business revenues. Business value added tax (VAT) and consumption tax exoneration is provided to foreign and domestic businesses working in the hospitality, heavy- and light-industrial, real estate and land development sectors during the construction and onboarding phases of the project. As soon as the project begins operations, then the tax exoneration ends. For example, a hotel that is undergoing construction may receive VAT and consumption tax exonerations until the hotel opens for business.

Real estate and sales tax reduction from 10% to 3% is provided for all sales and purchases of land, buildings, and homes for all transactions made by any entity including individuals, foreign or domestic businesses, organizations, schools, etc. Previously, only businesses could receive a tax break of paying 5% sales or purchase tax on land and buildings in their first purchase.

Corporate (profit) tax exoneration is provided for all businesses that enter the market with an initial investment of 50 million DJF (282,486 USD) or more, for up to seven years.

Egypt

Executive Summary

The Egyptian government continues to make progress on economic reforms, and while many challenges remain, Egypt’s investment climate is improving.  The country has undertaken a number of structural reforms since the flotation of the Egyptian Pound (EGP) in November 2016, and after successfully completing a set of difficult macroeconomic reforms as part of a three-year, $12-billion International Monetary Fund (IMF) program, Egypt was one of the fastest-growing emerging markets prior to the COVID-19 outbreak.  Egypt was also the only economy in the Middle East and North Africa to record positive economic growth in 2020, despite the COVID-19 pandemic. Increased investor confidence and the reactivation of Egypt’s interbank foreign exchange (FX) market have attracted foreign portfolio investment and increased foreign reserves.  The Government of Egypt (GoE) increasingly understands that attracting foreign direct investment (FDI) is key to addressing many of its economic challenges and has stated its intention to create a more conducive environment for FDI.  FDI inflows grew 11 percent between 2018 and 2019, from $8.1 to $9 billion, before falling 39 percent to $5.5 billion in 2020 amid sharp global declines in FDI due to the pandemic, according to data from the Central Bank of Egypt and the United Nations Commission on Trade and Development (UNCTAD). UNCTAD ranked Egypt as the top FDI destination in Africa between 2016 and 2020.

Egypt has passed a number of regulatory reform laws, including a new investment law in 2017; a new companies law and a bankruptcy law in 2018; and a new customs law in 2020.  These laws aim to improve Egypt’s investment and business climate and help the economy realize its full potential.  The 2017 Investment Law is designed to attract new investment and provides a framework for the government to offer investors more incentives, consolidate investment-related rules, and streamline procedures.  The 2020 Customs Law is likewise meant to streamline aspects of import and export procedures, including through a single-window system, electronic payments, and expedited clearances for authorized companies. The GoE is still developing implementation rules for the Customs Law.

The government also hopes to attract investment in several “mega projects,” including the construction of a new national administrative capital, and to promote mineral extraction opportunities.  Egypt intends to capitalize on its location bridging the Middle East, Africa, and Europe to become a regional trade and investment gateway and energy hub, and hopes to attract information and communications technology (ICT) sector investments for its digital transformation program.

Egypt is a party to more than 100 bilateral investment treaties, including with the United States.  It is a member of the World Trade Organization (WTO), the African Continental Free Trade Agreement (AfCFTA), and the Greater Arab Free Trade Area (GAFTA).  In many sectors, there is no legal difference between foreign and domestic investors. Special requirements exist for foreign investment in certain sectors, such as upstream oil and gas as well as real estate, where joint ventures are required.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 117 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 114 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 96 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, on a historical-cost basis 2019 USD 11,000 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 2,690 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Egypt’s completion of the three-year, $12-billion IMF Extended Fund Facility between 2016 and 2019, and its associated reform package, helped stabilize Egypt’s macroeconomy, introduced important subsidy and social spending reforms, and helped restore investor confidence in the Egyptian economy.  The flotation of the Egyptian Pound (EGP) in November 2016 and the restart of Egypt’s interbank foreign exchange (FX) market as part of this program was the first major step in restoring investor confidence that immediately led to increased portfolio investment and should lead to increased FDI over the long term.  Other important reforms have included a new investment law and an industrial licensing law in 2017, a new bankruptcy law in 2018, a new customs law in 2020, and other reforms aimed at reducing regulatory overhang and improving the ease of doing business. Egypt’s government has announced plans to improve its business climate further through investment promotion, facilitation, more efficient business services, and the implementation of investor-friendly policies.

With few exceptions, Egypt does not legally discriminate between Egyptian nationals and foreigners in the formation and operation of private companies. The 1997 Investment Incentives Law was designed to encourage domestic and foreign investment in targeted economic sectors and to promote decentralization of industry away from the Nile Valley. The law allows 100 percent foreign ownership of investment projects and guarantees the right to remit income earned in Egypt and to repatriate capital.

The Tenders Law (Law 89 of 1998) requires the government to consider both price and best value in awarding contracts and to issue an explanation for refusal of a bid. However, the law contains preferences for Egyptian domestic contractors, who are accorded priority if their bids do not exceed the lowest foreign bid by more than 15 percent.

The Capital Markets Law (Law 95 of 1992) and its amendments, including the most recent in February 2018, and relevant regulations govern Egypt’s capital markets.  Foreign investors are able to buy shares on the Egyptian Stock Exchange on the same basis as local investors.

The General Authority for Investment and Free Zones (GAFI, http://gafi.gov.eg) is the principal government body that regulates and facilitates foreign investment in Egypt, and reports directly to the Prime Minister.

The Investor Service Center (ISC) is an administrative unit within GAFI that provides “one-stop-shop” services, easing the way for global investors looking for opportunities presented by Egypt’s domestic economy and the nation’s competitive advantages as an export hub for Europe, the Middle East, and Africa. This is in addition to promoting Egypt’s investment opportunities in various sectors.

The ISC provides a start-to-end service to the investor, including assistance related to company incorporation, establishment of company branches, approval of minutes of Board of Directors and General Assemblies, increases of capital, changes of activity, liquidation procedures, and other corporate-related matters. The Center also aims to issue licenses, approvals, and permits required for investment activities within 60 days from the date of request. Other services GAFI provides include:

Advice and support to help in the evaluation of Egypt as a potential investment location;

Identification of suitable locations and site selection options within Egypt;

Assistance in identifying suitable Egyptian partners; and

Aftercare and dispute settlement services. ​

The ISC plans to establish branches in each of Egypt’s Governorates by the end of 2021.  Egypt maintains ongoing communication with investors through formal business roundtables, investment promotion events (conferences and seminars), and one-on-one investment meetings.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Egyptian Companies Law does not set any limitation on the number of foreigners, neither as shareholders nor as managers/board members, except for Limited Liability Companies where the only restriction is that one of the managers must be an Egyptian national. In addition, companies are required to obtain a commercial and tax license, and pass a security clearance process.  Companies are able to operate while undergoing the often lengthy security screening process.  However, if the firm is rejected, it must cease operations and may undergo a lengthy appeals process.  Businesses have cited instances where Egyptian clients were hesitant to conclude long-term business contracts with foreign businesses that have yet to receive a security clearance. They have also expressed concern about seemingly arbitrary refusals, a lack of explanation when a security clearance is not issued, and the lengthy appeals process. Although the Government of Egypt has made progress streamlining the business registration process at GAFI, inconsistent treatment by banks and other government officials has in some cases led to registration delays.

Sector-specific limitations to investment include restrictions on foreign shareholding of companies owning lands in the Sinai Peninsula. Likewise, the Import-Export Law requires companies wishing to register in the Import Registry to be 51 percent owned and managed by Egyptians. Nevertheless, the new Investment Law does allow wholly foreign companies investing in Egypt to import goods and materials. In January 2021 the Egyptian government removed the 20-percent foreign ownership cap for international and private schools in Egypt.

The ownership of land by foreigners is complicated, in that it is governed by three laws: Law 15 of 1963, Law 143 of 1981, and Law 230 of 1996.  Land/Real Estate Law 15 of 1963 explicitly prohibits foreign individual or corporation ownership of agricultural land (defined as traditional agricultural land in the Nile Valley, Delta and Oases). Law 15/1963 stipulates that no foreigners, whether natural or juristic persons, may acquire agricultural land.  Law 143/1981 governs the acquisition and ownership of desert land. Certain limits are placed on the number of feddans (one feddan is approximately equal to one acre) that may be owned by individuals, families, cooperatives, partnerships, and corporations regardless of nationality. Partnerships are permitted to own 10,000 feddans. Joint stock companies are permitted to own 50,000 feddans.

Under Law 230/1986, non-Egyptians are allowed to own real estate (vacant or built) only under the following conditions:

  • Ownership is limited to two real estate properties in Egypt that serve as accommodation for the owner and his family (spouses and minors) in addition to the right to own real estate needed for activities licensed by the Egyptian Government.
  • The area of each real estate property does not exceed 4,000 m².
  • The real estate is not considered a historical site.

Exemption from the first and second conditions is subject to the approval of the Prime Minister. Ownership in tourist areas and new communities is subject to conditions established by the Cabinet of Ministers. Non-Egyptians owning vacant real estate in Egypt must build within a period of five years from the date their ownership is registered by a notary public. Non-Egyptians cannot sell their real estate for five years after registration of ownership, unless the Prime Minister consents to an exemption.

Other Investment Policy Reviews

In December 2020, the World Bank published a Country Private Sector Diagnostic report for Egypt, which analyzed key structural economic reforms that the Egyptian government should adopt in order to encourage private-sector-led economic growth. The report also included recommendations for the agribusiness, manufacturing, information technology, education, and healthcare sectors. https://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/publications_listing_page/cpsd-egypt

https://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/publications_listing_page/cpsd-egypt

The Organization for Economic Cooperation and Development (OECD) signed a declaration with Egypt on International Investment and Multinational Enterprises on July 11, 2007, at which time Egypt became the first Arab and African country to sign the OECD Declaration, marking a new stage in Egypt’s drive to attract more foreign direct investment (FDI).  On July 8, 2020, the OECD released an Investment Policy Review for Egypt that highlighted the government’s progress implementing a proactive reform agenda to improve the business climate, attract more foreign and domestic investment, and reap the benefits of openness to FDI and participation in global value chains. https://www.oecd.org/countries/egypt/egypt-continues-to-strengthen-its-institutional-and-legal-framework-for-investment.htm  

https://www.oecd.org/countries/egypt/egypt-continues-to-strengthen-its-institutional-and-legal-framework-for-investment.htm  

In January 2018 the World Trade Organization (WTO) published a comprehensive review of the Egyptian Government’s trade policies, including details of the Investment Law’s (Law 72 of 2017) main provisions. https://www.wto.org/english/tratop_e/tpr_e/s367_e.pdf 

https://www.wto.org/english/tratop_e/tpr_e/s367_e.pdf 

The United Nations Conference on Trade Development (UNCTAD) published an Information and Communications Technology (ICT) Policy Review for Egypt in 2017, in which it highlighted the potential for investments in the ICT sector to help drive economic growth and recommended specific reforms aimed at strengthening Egypt’s performance in key ICT policy areas.   https://unctad.org/en/PublicationsLibrary/dtlstict2017d3_en.pdf 

https://unctad.org/en/PublicationsLibrary/dtlstict2017d3_en.pdf   

Business Facilitation

GAFI’s ISC ( https://gafi.gov.eg/English/Howcanwehelp/OneStopShop/Pages/default.aspx ) was launched in February 2018 and provides start-to-end service to the investor, as described above.  The Investment Law (Law 72 of 2017) also introduces “Ratification Offices” to facilitate obtaining necessary approvals, permits, and licenses within 10 days of issuing a Ratification Certificate.

Investors may fulfill the technical requirements of obtaining the required licenses through these Ratification Offices, directly through the concerned authority, or through its representatives at the Investment Window at GAFI.  The Investor Service Center is required to issue licenses within 60 days from submission. Companies can also register online.  GAFI has also launched e-establishment, e-signature, and e-payment services to facilitate establishing companies.

Outward Investment

Egypt promotes and incentivizes outward investment. According to the Egyptian government’s FDI Markets database for the period from January 2003 to January 2021, outward investment featured the following:

  • Egyptian companies implemented 278 Egyptian FDI projects. The estimated total value of the projects, which employed about 49,000 workers, was $24.26 billion.
  • The following countries respectively received the largest amount of Egyptian outward investment in terms of total project value: The United Arab Emirates (UAE), Saudi Arabia, Algeria, Kenya, Jordan, Ethiopia, Germany, Libya, Morocco, and Nigeria.
  • The UAE, Saudi Arabia, and Algeria accounted for about 28 percent of the total amount.
  • Elsewedy Electric was the largest Egyptian company investing abroad, implementing 21 projects with a total investment estimated to be $2.1 billion.

Egypt does not restrict domestic investors from investing abroad.

Equatorial Guinea

Executive Summary

The Republic of Equatorial Guinea is endowed with oil and gas resources that attracted billions of dollars in direct U.S. investment instrumental to extracting those resources. Discovery of oil in the 1990s resulted in rapid economic growth by the late 2000s. Growth has slowed as several operational oil fields have matured and are now in decline. Equatorial Guinea is among the world’s lowest ranking countries in various global indices, including those for corruption, transparency, and ease of doing business. Some companies have reported that these ratings underscore the challenging and opaque environment in which both local and foreign businesses must operate, with corruption, perceptions of a biased judiciary and a burdensome, inefficient bureaucracy undermining the general investment climate in the country.

The government of the Republic of Equatorial Guinea is seeking investment in several underdeveloped sectors: agribusiness; fishing; energy and mining; petrochemicals, plastics, and composites; travel and tourism; and finance. The Equatoguinean domestic market is small, with an estimated population of 1.2 million, although the country is a member of the Central African Monetary and Economic Union (CEMAC) sub-region, comprising more than 50 million people. The zone has a central bank and a common currency – the CFA franc, which is pegged to the euro. Equatorial Guinea graduated from “Least Developed Country” (LCD) status in 2017 and recently reactivated its efforts to accede to the World Trade Organization. Equatorial Guinea became a full member of the Organization of the Petroleum Exporting Countries (OPEC) in 2017 and is a member of the Gas Exporting Countries Forum (GECF).

Equatorial Guinea’s economy has suffered from the effects of the COVID–19 pandemic. The drop in global demand and oil prices occasioned by the crisis, coupled with the drop in household consumption and the slowdown in business activities due to measures to contain the spread of the disease, exacerbated the country’s already serious growth problems. Real GDP shrank 6.1% in 2020, compared with 5.6% in 2019. It was the eighth consecutive year of recession due to growth problems in both the oil (–7.2 %) and nonoil sectors (–4.7%). On the demand side, investment contracted by 35%. Although output fell, prices rose. Inflation was 3% in 2020, up from 1.2% in 2019, the result of a pandemic-related decline in the terms of trade, reduced supply of essential goods, and a worsening monetary situation. As a result, the Bank of Central African States gave up trying to reduce liquidity in the banking system and proposed a series of measures to support the economies in the Economic and Monetary Community of Central Africa (CEMAC) by cutting the policy interest rate and the marginal lending facility rate from 3.5% to 3.25%, and from 6% to 5%, respectively.

The country’s gross domestic product (GDP) shrank nearly 50% between 2014 and 2019, from USD 21.7 billion to USD 11 billion. The economy is expected to grow 2.6% in 2021, a projection based on the successful completion of a large gas project and the recovery of the world economy by the second half of the year. The country is expected to again return to recession in 2022, with a real GDP decline of -4.4%. The inflation rate is expected to settle at 2.9% over the next two years, remaining within the CEMAC limit of 3%. The budget is expected to be in a deficit of 2.4% of GDP in 2021 and 1.5% of GDP in 2022. The current account balance is expected to remain in deficit at 6% of GDP in 2021 and 5.6% the following year. The country’s main risk factor, beyond the persistence of the pandemic, remains the lack of diversification of its oil-based economy, to which is added the structural weakness of inadequate human capital. Indeed, the country has a capacity deficit, particularly in terms of public finance management and governance, that hinders effective implementation of its economic and social transformation policy.

On December 18, 2019, the Executive Board of the International Monetary Fund (IMF) approved a USD 282.8 million, three-year Extended Fund Facility (EFF) for Equatorial Guinea. The arrangement was intended to support Equatoguinean authorities’ three-year economic program, which aims at further reducing macroeconomic imbalances and addressing financial sector vulnerabilities; improving social protection and human capital development; promoting economic diversification; and fostering good governance, increasing transparency, and fighting corruption—all with the overarching aim of achieving sustainable and inclusive economic growth. Equatorial Guinea’s Fund-supported program was also intended to serve as a mechanism to spur additional external resources as well as contribute to rebuilding the CEMAC regional reserves. The new Minister of Finance, Economy and Planning, Valentin Ela Maye Mba, is tasked with improving the country’s economy and fiscal situation, including working with international financial institutions. The new three-year plan was supposed to increase revenue through greater tax compliance among individuals and greater public payment for utilities, such as water and electricity. Government leaders have publicly stated that good governance is important, and there were several bills proposed or passed in 2020 and 2021 to help, including the Fiscal Incentive Law to increase tax compliance by registering the tax obligations of individuals; and the Anti-Corruption Law, which has been under discussion for more than a year. Foreign businesses continue to express challenges and concerns about new regional banking and foreign exchange regulations implemented by the Bank of Central African States (BEAC) given the lack of liquidity in the local banking sector.

Despite various challenges, U.S. businesses have mainly had success in the hydrocarbons sector. Some U.S. businesses have profited in other sectors, such as technology and computer services. Various international companies continued to enter the market in response to new licensing rounds in the hydrocarbons and mining sectors. U.S. businesses may find investment opportunities in other sectors such as telecommunications, infrastructure, agriculture, mining, security, and transportation.

Since the onset of COVID-19, Equatorial Guinea has been proactive in safeguarding opportunities for foreign investors and continuing to drive capital into its hydrocarbon resources. Investors have reported that past commercial disputes have involved delayed payment, or non-payment, by the Government of the Republic of Equatorial Guinea to foreign firms for delivered goods and services. Certain companies reportedly exited the country with millions in unpaid bills.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 174 of 180 https://www.transparency.org/en/
countries/equatorial-guinea 
World Bank’s Doing Business Report 2020 178 of 190 https://www.doingbusiness.org/en/data/
exploreeconomies/equatorial-guinea
 
Global Innovation Index 2020 NA https://www.globalinnovationindex.org/
analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $908 https://apps.bea.gov/international/factsheet/factsheet.cfm 
World Bank GNI per capita 2019 $6,460 https://data.worldbank.org/indicator/
NY.GNP.PCAP.CD?locations=GQ
 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of the Republic of Equatorial Guinea is still actively soliciting foreign investments. The government considered 2019 to be the “Year of Energy,” with new licensing rounds for hydrocarbons fields and various events to encourage investment. This was supposed to continue into the 2020 “Year of Investment,” focusing on hydrocarbons, mining exploration, and petrochemicals, which was disrupted by the pandemic. In 2017, the Government started the donor facilitation initiative with the World Bank, as part of a strategy towards membership in the World Trade Organization. The government also passed a law to establish a “Single Window” for investors and simplify the process to register a business, which launched in Malabo in January 2019 but was generally moribund pending identification of priority investment areas from the April 2019 third national economic conference, the final report for which has yet to be published. The government continued to partner with the World Bank on reviewing improvements to the process. A second office was expected to open in Bata in 2020 but was put on hold due to COVID-19

Statutorily, the Minister of Economy, Finance, and Planning approves investment permits. A new state entity, Holdings Equatorial Guinea 2020, was created to help guide diversification efforts. This entity was expected to serve as a hub for foreign investors. For now, however, investors still work with the relevant government ministries to negotiate contracts. The government, including at the highest levels, has regular meetings and conferences with business leaders and investors, though we are unaware of any formal business roundtable. For example, in November 2018, the World Bank and the Singapore Cooperation Programs led a conference in Equatorial Guinea on improving the business climate.

The country’s Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima, has been leading a campaign to increase investment. In response to the COVID-19 pandemic and its effects on oil prices and African economies, the Minister of Mines and Hydrocarbons granted oil and gas companies a two-year extension on their exploration programs. The Ministry of Mines and Hydrocarbons will also encourage flexibility on the work programs of producing companies to ensure growth and stability in the market. The measure reflects broader efforts to drive global investment into Equatorial Guinea in line with its 2020 Year of Investment campaign. The extensions may particularly aid U.S. companies, which represent the majority of investment in Equatorial Guinea’s energy sector and are currently in the early stages of exploration and seismic interpretation of several new areas in existing offshore blocks. The Year of Investment, which was to include several in-country conferences and a global investment roadshow, was adapted to COVID-19 restrictions by using webinars and video conferencing to connect with investors. In February 2021, a consortium led by Noble Energy/Chevron, Marathon Oil, and EGLNG achieved the first gas flow from the successful execution of the Alen Gas Monetization project, a $475-million investment representing the first phase of Equatorial Guinea’s Gas Mega Hub plan. The Ministry of Mines and Hydrocarbons is currently promoting several capital-intensive projects – including the construction of modular oil refineries, a gold refinery, liquefied petroleum gas strategic tanks, a urea plant, and the expansion of a compressed natural gas project – which are open for investment. In December 2020, the Ministry announced a forecast of $1.1 billion in foreign direct investment in oil and gas activities in 2021.

The government also took several steps to support small and medium enterprises suffering during the pandemic, such as delaying and lowering tax payments, temporarily reducing the cost of electricity, and providing some small grants for micro-enterprises.

The Equatoguinean authorities have been willing to receive and protect all Foreign Direct Investment, including through changes in the country’s legal framework in recent years.

Currently there is no law or practice that discriminates against investors based on their origin, sex, age, race, political creed, or religion. The Law on the Investment Regime of the country establishes in Article 12 that the State commits itself to fair and equitable treatment for all investors. Decree No. 72/2018, dated April 18, 2018, and amended Article 2 of Decree No. 127/2004, dated September 14, 2004, eliminates the requirement of having an Equatoguinean partner to invest in the country’s non-oil sector.

Law 7/1992 and Law 54/1994 provide for the creation of an Investment Promotion Center, which must advise the government on investment policies, promote investments and support investors with information and in the resolution of conflicts. These Laws also provide for the creation of a National Investment Commission. Neither the Center nor the Commission is currently operational. Given the need for these types of organizations, in 2015, through Decree No. 134/2015, the Government mandated the Ministry of Commerce and Business Promotion to create and start up an agency to promote, integrate and coordinate the national policy of attraction of investors. In April 2021, this task was still in process and expected to start operating in 2023.

In November 2018, the Government organized a high-level seminar on the business climate in Equatorial Guinea with participation of the public and private sectors and development partners. For three days, they reflected on the position of Equatorial Guinea in each of the parameters of the Ease of Doing Business Ranking and the International Competitiveness Index of the World Economic Forum. As a result of the recommendations of this seminar, the government issued Decree 109/2019, creating a committee in charge of improving the national business environment, bringing together representatives of the government, private sector, and civil society to debate and propose reforms. The World Bank has subsequently partnered with the government to create and implement a plan to improve the business climate.

Even though the country does not currently have an investment promotion agency, the Ministry of Commerce has prioritized the implementation of a national agency for investment promotion within its Enhanced Integrated Framework program with World Trade Organization. The ministry has plans to establish a Foreign Trade Single Window to complement the existing one for domestic businesses.

Limits on Foreign Control and Right to Private Ownership and Establishment

The government is generally supportive of foreign direct investment. The Foreign Investment Law (Decree 72/2018 of April 2018) modified the provisions of Decree 127/2004 stipulating that shareholder capital firms and companies operating in the petroleum sector must have Equatoguinean shareholders. The government requires that Equatoguinean partners hold at least 35 percent of share capital of foreign companies or companies created by foreigners in the hydrocarbons sector only. Equatoguinean partners must also account for one third of the representatives on the Board of Directors. Apart from the hydrocarbons sector, investments must not be part of public-private partnerships with a government entity. The Minister of Mines and Hydrocarbons generally approves any major deal in the hydrocarbons sector. Decisions regarding larger investment deals may rise to the presidential level. U.S. investors may reach out to the Equatoguinean Embassy in the United States for guidance regarding connection to the appropriate ministry for outreach efforts.

The Hydrocarbons Law and the National Content Regulation establish various requirements for international oil and gas companies that wish to operate in Equatorial Guinea. These include a minority partner stake for either the state oil company (GE Petrol) or the state gas company (Sonagas). In addition, there are national content requirements, many established in 2014 by the then-Ministry of Mines, Industry, and Energy, which apply to both producers and service companies, including that 70% of staff must be Equatoguinean, 50-100% of services (depending on category) must be procured from national company partners, and a percentage of the company’s revenue must be allocated to corporate social responsibility projects approved by the Ministry of Mines and Hydrocarbons (the Ministry was divided into two in 2017, including a separate Ministry of Industry and Energy). Ministerial Order 1/2020 (April 2020) established that companies can employ foreign laborers in the oil and gas sector for a maximum period of three years, though companies may apply for extensions in exceptional cases, with compliance overseen by the Ministry’s Director General of National Content. Minister of Mines Gabriel Mbaga Obiang Lima was quoted as saying, “With the release of this new order, the Ministry of Mines and Hydrocarbons intends to enhance the capacity of local service companies while guaranteeing the creation of local jobs for our trained and educated youth.” While Equatorial Guinea sought foreign direct investment in several of its capital-intensive energy and petrochemicals projects through its 2020 Year of Investment campaign, the country simultaneously prioritized the procurement of local goods and services and the stimulation of local jobs. The legislation follows the completion of capacity building and training programs, particularly at the gas and oil industry-supported National Technological Institute for Hydrocarbons in Mongomo. Given the generally low quality of education in the country, international companies complain about the difficulty of recruiting qualified locals.

Equatorial Guinea belongs to the Organization for the Harmonization of Business Laws in Africa (OHADA) and falls under the OHADA Uniform Act on the law of commercial companies and economic interest groups of January 30, 2014.

Law 4/2009 on the Land Ownership Regime in Equatorial Guinea establishes that foreigners cannot own land but rather purchase a lease with a maximum duration of 99 years.

The foreign investor is required to justify the origin of the funds used for the creation of a company in Equatorial Guinea.

In 2019, the government began its second attempt to join the Extractive Industries Transparency Initiative (EITI), submitting an incomplete application and meeting with civil society and other interested organizations. By 2020, the government established two EITI commission offices in Malabo and Bata — the largest cities — and published gas and oil contracts on its EITI website.

Other Investment Policy Reviews

In the past three years, the Government of the Republic of Equatorial Guinea has not conducted an investment policy review through any institutions, such as the Organization for Economic Cooperation and Development, the World Trade Organization, or the United Nations Conference on Trade and Development. In October 2019, the World Bank presented its Diagnostic Trade Integration Study (DTIS) that analyzed various sectors of the Equatoguinean economy and prospects for increased economic development and trade.

Business Facilitation

According to the World Bank’s Doing Business Report 2020, starting a business in Equatorial Guinea requires 16 procedures and usually takes 33 days, the same as in 2019. Equatorial Guinea was ranked 183 of 190 in the World Bank’s Doing Business Report 2020 for ease of “starting a business.” In 2017, the Government of the Republic of Equatorial Guinea passed Decree No. 67/2017, published in September 2017, to establish a “Single Window” or “single window” to simplify the process to register a business and speed the process to seven business days. The “single window” was launched in January 2019, after the Government of the Republic of Equatorial Guinea equipped facilities for processing applications, and trained staff. There is a webpage with information, https://www.ventanillaempresarialge.com/en/welcome/ , but businesses cannot yet register online. Generally, business must register with various agencies at the national level and some local offices. The Single Window does not eliminate steps, but it does consolidate visits to five offices into one. The below chart illustrates the steps that an entrepreneur can complete at the Single Window:

BEFORE NOW
Public Notary Single Window, Ministry of Commerce
Trade register Single Window, Ministry of Commerce
Ministry of Finance, the Economy, and Planning Single Window, Ministry of Commerce
Ministry of Commerce – General Direction of Commerce Single Window, Ministry of Commerce
Ministry of Commerce – Department of Business Promotion Single Window, Ministry of Commerce
Ministry of Labor Ministry of Labor
Social Security Administration (INSESO) Social Security Administration (INSESO)
Chamber of Commerce Chamber of Commerce
City Hall City Hall
Sectoral ministries according to the activity of the company Sectoral ministries according to the activity of the company

The country does not have a business facilitation mechanism for equitable treatment of women and underrepresented minorities in the economy. There are laws that make it illegal to discriminate against women. There is an ongoing effort from the government to include people with disabilities in public administration, including with internship programs and contracts.

By Presidential Decree No 45/2020 from April 24, 2020, the government reduced the paid-in minimum capital requirement for Limited Liability Companies to operate in the country from 1,000,000 XAF to 100,000 XAF. In 2019, the Government established a committee to monitor the country’s performance on the main indicators of ease of doing business, as well as to propose reforms to improve the national business climate. The committee — comprised of several CEOs, the private sector, business organizations and civil society — developed a roadmap with actions to be implemented to facilitate the establishment of companies in the country. While not possible to register online, the government is exploring the option for a business to register by phone.

In February 2020, registration of trade certificates and businesses were included in the Single Window. Currently, would-be investors can access government websites for information on setting up businesses in the country. This includes websites for:

  • Single Window [I https://www.ventanillaempresarialge.com/en/welcome/]
  • Ministry of Finance, the Economy and Planning [https://minhacienda-gob.com /]

Currently, work is being done to include records from the Single Window in the Ministry of Labor and in the National Institute of Social Security. A Ministerial Order is under discussion to include data of the Ministry of Labor in the Single Window.

The National Institute for Business Promotion and Development launched an entrepreneurship training program with financing available. The program teaches entrepreneurs – with a focus on microbusinesses — how to develop business plans around their ideas, with the best project selected for investment. The United Nations Development Program (UNDP) is one of the donors, with an emphasis on supporting female entrepreneurship.

Outward Investment

Although Equatoguinean citizens may legally invest outside the country, the government of the Republic of Equatorial Guinea does not promote foreign investment. The government and media do not praise or showcase Equatoguineans with business interests abroad. While there are no known restrictions on foreign investment, some individuals and companies have faced delays when transferring money overseas or converting local currency into foreign exchange, exacerbated by new CEMAC rules on foreign currency reserves enacted in 2019.

With technical assistance from UNDP, Equatorial Guinea is currently implementing the WTO Enhanced Integrated Framework program. This multilateral partnership is dedicated to assisting least developed countries (LDCs) use trade as an engine for growth, sustainable development, and poverty reduction. EG’s Action Plan through the Ministry of Commerce prioritizes promoting national products in the subregional and international markets. To encourage agricultural production, the Ministry plans to establish a national food certification institute within the Chamber of Commerce, pending funding from the government. The project was delayed by the pandemic.

After pausing all timber exports and firing the Minister of Agriculture, Timber, Livestock, and the Environment in the fall of 2020, the government lifted the export ban in October via Decree 93/2020. This authorized export of round wood, an industry dominated by Chinese companies. The previous decree had authorized only exports of transformed wood, with the goal of promoting the wood transformation industry in the local economy.

Eritrea

Executive Summary

With the exception of the mining sector, Eritrea’s investment climate is not conducive to US investment. Alleged political repression, along with technological isolation, limit investment.   Most commercial enterprises are state controlled or run by the sole political party, the Peoples Front for Democracy and Justice (PFDJ).  The Government of the State of Eritrea (GSE) is the largest employer in the country, and most citizens are required to participate in the country’s national service program, which often results in indefinite terms of service at very low wages in a wide range of public sector positions.  The national currency, the Eritrean Nakfa, is not convertible and there are restrictions on the repatriation of profits out of the country.  The national budget is not public.  The judiciary is not independent or transparent.  There is limited freedom of the press, international journalists are often barred from entry, and the government maintains control of the media.  Most profitable investments in Eritrea come about through direct negotiation with the government rather than market-based private investment.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 160 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2019 189 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 -$2 million http://www.bea.gov/international/factsheet/
World Bank GNI per capita 2011 $600 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Eritrean government professes a desire for more and more diversified FDI.  However, governmental control of the economy and the lack of robust business and investment legal code makes private investment difficult and financially risky.

The official 1994 Investment Proclamation No. 59/1994 states that all sectors (excluding domestic retail, domestic wholesale, import, and commission agency companies without a bilateral agreement of reciprocity) are open to any investors.  In practice, this law has been suspended and the ruling Popular Front for Democracy and Justice determines those sectors in which – and defines the terms under which – private investment is accepted.

The Investment Center, established in 1998, operates directly under the Office of the President; it does not publish any information related to its activities. In the past, the Center conducted public outreach to encourage members of the Eritrean diaspora to invest in Eritrea.  The Center has not conducted a large public event since 2012; senior Center officials have stated that the time for investments is not appropriate because investment developments must follow political developments.

There is no business ombudsman in Eritrea or other mechanisms to prioritize retention or maintain dialogue with existing investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

In practice, there is no fundamental “right” for either foreign or domestic private entities to establish or run business enterprises free from government interference.  All sectors of the economy are tightly controlled by the GSE, most large enterprises are either entirely or partially owned by the government or the PFDJ, and the government can order a business to close without explanation or legal recourse.

There are both statutory and de facto limits on foreign ownership and control of enterprises.  All foreign-owned mines must give a 10% stake to the Eritrean National Mining Corporation (ENAMCO), and ENAMCO has the option to buy another 30% equity in the project.  Regulations in other fields are not well established.

With some exceptions, such as mining, investment is de facto prohibited in most sectors of the economy.  The government has encouraged investment in the mining sector, and mining-specific regulations were adopted in 2011.  There are few other large foreign investments in the country.  The few foreign enterprises operating in Eritrea do so under non-public agreements negotiated directly between the companies or countries and a small group of officials from the GSE and the ruling political party.

There is no transparent GSE screening mechanism for approving inbound foreign investment.

Other Investment Policy Reviews

The GSE has undergone no recent third-party investment policy review.

Business Facilitation

The government has made no known efforts to facilitate business in Eritrea.  The government does not have a business registration website.  Businesses are required to register with six government offices (the Business License Office, the Ministry of Information, the Inland Revenue Department, the Ministry of Trade and Industry, the Ministry of Labor and Social Welfare, and the local municipality), and the registration process usually takes 84 days, according to the World Bank’s Doing Business report.

Outward Investment

Given the low level of capital accumulation in the economy, Eritrea is not a likely provider of foreign capital.  As part of its efforts to direct capital towards development, the GSE’s laws strictly control capital flows, currency exchange, and restricts domestic investors from making large investments abroad.  For example, monthly bank withdrawals are limited to 5,000 Nakfa, and dollars are generally unavailable for withdrawal.

Eswatini

Executive Summary

Eswatini is a small kingdom situated in one of the most dynamic and developed regions in Southern Africa. As a small nation of one million, Eswatini is working to position itself as an exporter that is open for business. Located between South Africa and Mozambique, Eswatini boasts of membership in two of the largest free trade regions on the continent: the Southern Africa Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA). An economic-minded cabinet installed in 2018 has pursued the challenge of reinvigorating Eswatini’s economy and improving the business climate. Eswatini is an AGOA eligible country; in March, 2021, the GoKE issued a comprehensive strategy to maximize the opportunities presented under the program. The Eswatini Investment Promotion Authority (EIPA) advocates for foreign investors and facilitates regulatory approval. Recent positive developments include the start-up of a 15000 sqm factory that began production this year of food products for the local and export markets.

The Swati government has prioritized the energy sector, particularly renewable energy, and developed a Grid Code and Renewable Energy and Independent Power Producer (RE&IPP) Policy to create a transparent regulatory regime and attract investment. Eswatini generally imports 80 percent of its power from the Southern African Power Pool. With both South Africa and Mozambique experiencing electricity shortages, Eswatini is working to increase its own energy generation using renewable sources. To that end, the country has launched a small handful of new photovoltaic projects, and has commissioned a 10 MW solar plant to reduce exports from South Africa. The Eswatini Energy Regulator in 2019 and 2020 issued Requests for Qualification for two independent power producers to supply electricity from solar and biomass. King Mswati III in February 2021 announced the development of a 300 MW thermal power plant at Lubhuku. Energy demand in Eswatini is estimated to be about 300MW. Information, Communications and Technology (ICT) is also an emerging sector, which Eswatini has tried to support through initiatives such as e-governance and the Royal Science and Technology Park. The digital migration program of the Southern African Development Community (SADC) presents ICT opportunities in the country such as cloud based storage systems.

With the emergence of Covid-19 the need for ICT business and infrastructure opportunities have found their way to the top of the priority list as ICT has become the core of the new normal.

Eswatini is seeking to redefine itself through the economic recovery strategy as an export-oriented, private sector led, economy.

Incentives to invest in Eswatini include repatriation of profits, fully serviced industrial sites, purpose-built factory shells at competitive rates, and duty exemptions on raw materials for manufacture of goods to be exported outside the Southern African Customs Union (SACU). Financial incentives for all investors include tax allowances and deductions for new enterprises, including a 10-year exemption from withholding tax on dividends and a low corporate tax rate of 10 percent for approved investment projects. New investors also enjoy duty-free import of machinery and equipment. In February 2018, the GKoE enacted the Special Economic Zones (SEZ) Act in an effort to attract foreign direct investment. SEZ investors may benefit from a 20-year exemption from all corporate taxation (followed by taxation at 5 percent); full refunds of customs duties, value-added tax, and other taxes payable on goods purchased for use as raw material, equipment, machinery, and manufacturing; unrestricted repatriation of profits; and full exemption from foreign exchange controls for all operations conducted within the SEZ.

Royal family involvement in the mining sector has discouraged potential investors in that sector. Eswatini’s land tenure system, where the majority of rural land is “held in trust for the Swati nation,” has discouraged long-term investment in commercial real estate and agriculture.

Eswatini has historically been a services economy with companies from South Africa being among the major employers, however due to developments in the Africa Continental Free Trade Area (AfCFTA), it is likely that strategic manufacturing for export will again take the lead in the near future as there is new enthusiasm towards foreign market opportunities.

Recent legislative reforms such as the enactment of the new Public Order Act and Sexual Offenses and Domestic Violence Act have meaningfully improved the country’s legal framework. After requalifying as an AGOA beneficiary in January 2018, Eswatini turned its attention to trying to qualify for Millennium Challenge Corporation (MCC) support. To advance these efforts, the country has launched an effort to improve its relatively poor rankings on MCC indicators such as political rights, civil liberties, and business start-up.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 117 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 121 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 Eswatini not included https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) N/A N/A https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $3,670 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of the Kingdom of Eswatini (GKoE) regards foreign direct investment (FDI) as one of the five pillars of its Sustainable Development and Inclusive Growth (SDIG) Program, and a means to drive the country’s economic growth, obtain access to foreign markets for its exports, and improve international competitiveness. While the government has strongly encouraged foreign investment over the past 15 years, it only recently adopted a formal strategy for achieving measurable progress. Eswatini does not have a unified policy on investment. Instead, individual ministries have their own investment facilitation policies, which include policies on Small and Medium Enterprises (SME), agriculture, energy, transportation, mining, education, and telecommunications. The Finance Minister in his annual state of budget address stated that the government aspires to have a one stop shop for business startups to streamline government processes to less than two weeks.

The Swati constitution states, generally, that non-citizens and/or companies with a majority of non-citizen shareholders may not own land unless they were vested in their ownership rights before the constitution entered into force in 2006. On the other hand, the constitution’s general prohibition “may not be used to undermine or frustrate an existing or new legitimate business undertaking of which land is a significant factor or base.” Furthermore, non-citizens and non-citizen majority-owned companies may hold long-term (up to 99 years) leases on Title and Swati Nation Land. Besides land ownership laws, there are no laws that discriminate against foreign investors. In 2019, the government listed some of its title deed land to make it available for long-term leasing for commercial purposes.

In practice, most successful foreign investors work with local partners to navigate Eswatini’s complex bureaucracy. Most of the country’s land is Swati Nation Land held by the king and cannot be purchased by foreign investors. Foreign investors that require significant land for their enterprise must engage the Land Management Board to negotiate long-term leases.

The Eswatini Investment Promotion Authority (EIPA) is the state-owned enterprise (SOE) charged with designing and implementing strategies for attracting desired foreign investors.

Eswatini’s Investment Policy and policies that support the business environment are online at https://investeswatini.org.sz/legal-and-regulatory-framework/ . EIPA services include: – Attract and promote local and foreign direct investments

  • Attract and promote local and foreign direct investments
  • Identify and disseminate trade and investment opportunities
  • Provide investor facilitation and aftercare services
  • Promote internal and external trade
  • Undertake research and policy analysis
  • Facilitate company registration and business licenses/permits
  • Facilitate work permits and visas for investors
  • Provide a one stop shop information and support facility for businesses
  • Export product development
  • Facilitation of participation in external trade fairs
  • BuyerSeller Missions

The GKoE continues its attempts to improve the ease of doing business in the country through the Investor Roadmap Unit (IRU). The IRU engages with businesses and government to review and report on the progress and implementation of the investor roadmap reforms.

EIPA has an aftercare division for purposes of investment retention, which is a direct avenue for investors to communicate concerns they may have. Most investors who stay beyond the initial period during which the GKoE offers investment incentives have opted to remain long-term.

Limits on Foreign Control and Right to Private Ownership and Establishment

Both foreign and domestic private entities have a right to establish businesses and acquire and dispose of interest in business enterprises. Foreign investors own several of Eswatini’s largest private businesses, either fully or with minority participation by Swati institutions.

There are no general limits on foreign ownership and control of companies, which can be 100 percent foreign owned and controlled. The only exceptions on foreign ownership and control are in the mining sector and in relation to land ownership. The Mines and Minerals Act of 2011 requires that the King (in trust for the Swati Nation) be granted a 25-percent equity stake in all mining ventures, with another 25 percent equity stake granted to the GKoE. There are also sector-specific trade exclusions that prohibit foreign control, which include business dealings in firearms, radioactive material, explosives, hazardous waste, and the printing of currency.

Foreign investments are screened only through standard background and credit checks. Under the Money Laundering and Financing of Terrorism (Prevention) Act of 2011, investors must submit certain documents including proof of residence and source of income for deposits. EIPA also conducts general screening of FDI monies through credit bureau checks and Interpol. This screening is not a barrier to investing in Eswatini. There are no discriminatory mechanisms applied against U.S. foreign direct investors.

Other Investment Policy Reviews

There have been no Investment policy reviews for Eswatini in the last 3 years. Through its membership in the Southern African Customs Union, its ratification of the African Continental Free Trade Agreement and its participation in the work of the WTO, Eswatini continues to pursue the importance of trade to development In 2015, the WTO performed a Trade Policy Review of the Southern African Customs Union, which includes Namibia, Botswana, Eswatini, South Africa, and Lesotho. In 2016, the Trade facilitation agreement was ratified; Eswatini’s portion of that review is available online: https://www.wto.org/english/news_e/archive_e/country_arc_e.htm?country1=SWZ 

Business Facilitation

Eswatini does not have a single overarching business facilitation policy. Policies that address business facilitation are spread across the spectrum of relevant ministries. The Investor Road Map Unit (IRMU) is the public entity responsible for the review and monitoring of business environment reforms. EIPA facilitates foreign and domestic investment opportunities and has a fairly modern, up-to-date website: https://investeswatini.org.sz  / . Certain GKoE application forms are available online at the EIPA website. Recent developments in the business facilitation space include the online registration of companies via the link www.online.gov.sz . As of 2020, the final steps (payment of statutory fees and registration fee) are now available online. According to the Doing Business Report, the process of registering a company in Eswatini takes approximately 10 days. In practice, the process can take much longer for foreign investors.

The main organization representing the private sector is Business Eswatini ( www.business-eswatini.co.sz ), which represents more than 80 percent of large businesses in Eswatini, works on a wide range of issues of interest to the private sector, and seeks to build partnerships with the government to promote commercial development. Through Business Eswatini, the private sector is represented in a number of national working committees, including the National Trade Negotiations Team (NTNT).

Outward Investment

Gabon

Executive Summary

Gabon is a historically stable country in a volatile region and has significant economic advantages: a small population (roughly 2 million), an abundance of natural resources, and a strategic location in the Gulf of Guinea. After taking office in 2009, President Ali Bongo Ondimba (ABO) introduced reforms to diversify Gabon’s economy away from oil and traditional investment partners, and to position Gabon as an emerging economy. Gabon promotes foreign investment across a range of sectors, particularly in oil and gas, infrastructure, timber, ecotourism, and mining. Gabon remains dependent on revenue from hydrocarbons.

The Gabonese investment climate is marked by hurdles related to establishing a new business, connecting to utilities, such as electricity and water, and transferring company ownership. Many companies also report difficulties in obtaining loans. Banks and other financiers struggle to release funds, especially to small and medium-sized enterprises (SMEs), due to a lack of guarantees and missing documentation. However, several business incubators active in the country are attempting to facilitate business activities. Gabon ranks 38th in Africa for the protection of minority investors and 43rd for the payment of taxes.

Gabon adopted a new hydrocarbon code and a new mining code in July 2019, to provide a modernized basis for the legal, institutional, technical, economic, customs, and tax regimes governing these sectors and to spur investment through a more stable business climate.

The COVID-19 pandemic caused two shocks to the Gabonese economy, forcing it into a recession. First, the decline in global demand and corresponding collapse in oil prices hit the country’s ledgers hard. Second, domestic demand plummeted under the government’s actions taken to halt the virus, such as border closures and a national curfew. A renewed wave of illness that began in January 2021 has compounded this situation.

Economic conditions in Gabon continued to weaken throughout 2020. Corruption and lack of transparency, including by inconsistently applying customs regulations, remain impediments to investment. Many international companies, including U.S. firms, continued to report difficulties in collecting timely payments from the government, and some oil companies have closed down operations altogether. Gabon is expected to call on the IMF in 2021 to help address its fiscal imbalances with a three-year extension to a previous Extended Fund Facility arrangement that was worth USD 642 million.

Historically, the mining, oil and petroleum, and wood sectors have attracted the most investment in Gabon. To attract more investors in those key sectors Gabon created a Special Economic Zone (SEZ) at Nkok near Libreville in 2010. This 1,350 hectare SEZ targets local and foreign investors, provides priority access to electricity and water and on-site legal and financial services, and is near the deep-sea port of Owendo. Originally set up through a partnership between Olam International Ltd, the Gabonese government, and the Africa Finance Corporation, it operates with a mandate to develop infrastructure, enhance industrial competitiveness, and build a business-friendly ecosystem.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 129 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2019 169 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 -172.0 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 7,170 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Gabon’s 1998 investment code conforms to the Central African Economic and Monetary Community’s (CEMAC) investment regulations and provides the same rights to foreign companies operating in Gabon as to domestic firms.

Gabon’s domestic and foreign investors are protected from expropriation or nationalization without appropriate compensation, as determined by an independent third party. Certain sectors, such as mining, forestry, petroleum, agriculture, and tourism, have specific investment codes, which encourage investment through customs and tax incentives.

Gabon established the Investment Promotion Agency (ANPI-Gabon) with the assistance of the World Bank in 2014. Its mission is to promote investment and exports, support SMEs, manage public-private partnerships (PPPs), and help companies establish themselves. It is designed to act as the gateway for investment into the country and to reduce administrative procedures, costs, and waiting periods.

Gabonese authorities have made efforts to prioritize investment. In 2017, the High Council for Investment was established to promote investment and boost the economy. This body provides a platform for dialogue between the public and private sectors, and its main objectives are to improve the economy and create jobs.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors are largely treated in the same manner as their Gabonese counterparts regarding the purchase of real estate, negotiation of licenses, and entering into commercial agreements. There is no general requirement for local participation in investments (see local labor requirements below). Many businesses find it useful to have a local partner who can help navigate the subjective aspects of the business environment.

There are no limits on foreign ownership or control. However, Gabon Oil Company, a state-owned enterprise (SOE) created in 2011, has an automatic right to purchase up to a 15 percent share in any hydrocarbon contract at market price. The standard practice is for the Gabonese President to review foreign investment contracts after ministerial-level negotiations are completed. In certain cases, the President has appeared to intervene to keep negotiations stalled at the ministerial level, even when the deal was on track to a mutually satisfactory solution.

The President takes an active interest in meeting with investors. The lack of a standardized procedure for new entrants to negotiate deals with the government can lead to confusion and time-consuming negotiations. Moreover, the centralization of decision-making by a few senior officials who are exceedingly busy can delay the process. As a result, new entrants often find the process of finalizing deals time-consuming and difficult to navigate.

Other Investment Policy Reviews

Gabon has been a World Trade Organization (WTO) member since 1995. In June 2013, Gabon conducted an investment policy review with the WTO. The government has not conducted any investment policy reviews through the Organization for Economic Co-operation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD) since 2017.

Business Facilitation

The government encourages investments in those economic sectors that contribute the greatest share to gross national product (GNP), including oil and gas, mining, and wood harvesting and transformation through customs and tax incentives. For example, oil and mining companies are exempt from customs duties on imported machinery and equipment specific to their industries. The Tourism Investment Code, enacted in 2000, provides tax incentives to foreign tourism investors during the first eight years of operation. The SEZ at Nkok offers tax incentives to industrial investors; the government has mused on the possibility of increasing the number of SEZs in a move to attract further investment.

ANPI-Gabon covers more than 20 public and private agencies, including the Chamber of Commerce, National Social Security Fund (CNSS), and National Health Insurance and Social Security (CNAMGS). It aims to attract domestic and international investors through improved methods of approving and licensing new companies and to support public-private dialogue. It has a single window registration process that allows domestic and foreign investors to register their businesses in 48 hours. There are, however, no special mechanisms for equitable treatment of women and underrepresented minorities in Gabon.

ANPI-Gabon’s website address is: https://www.investingabon.ga/

Outward Investment

One of ANPI-Gabon’s primary goals is to promote outward investments and exports. The Gabonese government does not restrict domestic investors from investing abroad.

Gambia

Executive Summary

Known as the “Smiling Coast of Africa,” The Gambia is a small country of roughly 2 million people located in West Africa. The Gambia has an active private sector, and the government has announced its support for encouraging local investment and attracting foreign direct investment. There is a government agency dedicated to attracting foreign investment and promoting exports and it provides guidelines and incentives to all investors whose portfolios qualify for a Special Investment Certificate.

The Gambia has a small economy that relies primarily on agriculture, tourism, and remittances for support. Although The Gambia remains heavily reliant on the agriculture sector, recent economic growth has been mainly driven by the services sector, including financial services, telecommunication and construction. The country also has a long trading history and is a party to several trade agreements, which have the potential to make it an attractive production platform for the region and beyond. Strides are also expected to be made in the energy sector (oil exploration and exploitation; renewable energies, specifically solar); natural resources (heavy mineral sands); agriculture (rice, cereal); processed foods production; tourism; and finally, infrastructure (roads, telecommunications systems, drainage systems, and bridges).

The Gambia is a member of the Economic Community of West African States (ECOWAS), a regional economic union of 15 countries located in West Africa. The Gambia’s major trading partners are Ivory Coast (15% of total imports) and China (15%). Others include: United States, Germany, India, and the United Kingdom.

With its young and rapidly growing population, Gambia provides a market with numerous opportunities for the sale of international products and services. Many Gambians have strong personal or professional ties to the United States, as well as a strong affinity for American brands. There is ongoing interest in new American brands, and many Gambians have opened shops aiming to exclusively sell American products. The quality and durability of American products are highly regarded. English is the official language and the business language across the country. Many Gambians are multilingual, speaking English and other regional languages.

Disputes over land ownership and use are a major problem in The Gambia. There are occasional disagreements in rural areas mainly in the West Coast Region over land ownership or succession. Most conflicts occur when community leaders sell a plot of land to multiple buyers. The Lands Office, responsible for recording and maintaining deeds, relies on an outdated manual record keeping system, with no digitization of land records, hindering efficiency and effectiveness and exacerbating land ownership conflicts.

Economy and Impact of COVID-19

While inclusive and sustained economic growth remains one of the main objectives of the Government of The Gambia (GoTG), the country’s strengthened economic growth trend that began following the peaceful transition of presidential power in 2017 was severely disrupted by the COVID-19 pandemic. For the first time in nine years, GDP contracted in 2020 to -1.5% against original forecasted 6.5% growth. The impacts of airport closures, land border restrictions, and the total collapse of the tourism industry continue to reverberate. The government has stated that economic recovery will be at the core of reform policy priorities for the upcoming year, with medium-term policy priorities anchored on achieving and sustaining a more diversified growth to improve the living standards of all citizens, in addition to creating a favorable environment for the private sector to thrive.

COVID-19 crippled the tourism sector and dampened economic activities throughout the country very early on. From April 2020 to October 2020, The Gambia was in a state of emergency with several restrictive measures put in place, including the closure or scaling down of businesses, schools, markets, restaurants, and nightclubs. For the remainder of the 2019-2020 season, the normally-lucrative tourism sector ground to a standstill as tourists returned to their home countries and many hotels and tourism service-related businesses shut down. The resulting drop in wages or loss of work altogether for Gambians employed in the tourism and service sectors reverberated throughout the local economy.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 102 of 179 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 155 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) N/A N/A http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 750 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness to and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GoTG has made increasing foreign direct investment a priority. It also aims to create a business environment that allows the private sector to be the engine of growth, transformation, and job creation. FDI is welcomed in almost every sector of the Gambian economy. There is no restriction on ownership of businesses by foreign investors in most sectors and local companies are not prioritized over local companies. While restrictions are limited, foreign investors and companies often complain about the excessive and inconsistently applied bureaucratic procedures and the decision-making process – and often lack of transparency – for public tenders and contracts.

The Gambia Investment & Export Promotion Agency (GIEPA) is the national agency responsible for the promotion and facilitation of private sector investments in The Gambia. Through the GIEPA, eight areas are identified as “priority sectors” which qualify for a Special Investment Certificate (SIC) that provides several incentives, including duty waivers and tax holidays. The Investment Section at Office of The President plans to start handling foreign direct investment matters.

To maintain dialogue with investors, The Gambia Competitiveness Improvement Forum was created as part of the 2015 GIEPA Act, which hosts sector-based forums to maintain dialogue with investors. GIEPA normally hosts forums at which investors comment on the government’s policies and action.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have a right to own business enterprises and engage in in all forms of remunerative activities in The Gambia. There are no limits on foreign ownership or control of businesses except in the operations of defense industries, which are closed to all private sector participation, irrespective of nationality. Apart from defense related activities, there are no sector-specific restrictions, limitations, or requirements were legally applied to foreign ownership and control.

Foreign investors are not denied national treatment (i.e. the same treatment as domestic firms) or MFN treatment (i.e. the same treatment as the most favored foreign investor) in any sector. There is no mandatory screening of foreign direct investment, but such screening may be conducted if there is suspicion of money laundering or terrorism financing. Investors subjected to such a screening may be asked for business registration documents and bank statements. As part of the country’s privatization program, foreign investors are treated equal to local investors.

Other Investment Policy Reviews

The WTO last conducted a Trade Policy Review (TPR) in January 2018. The Gambia has maintained its generally open trade and investment regime since the last TPR in 2010. The main trade policy reform has been the adoption of the five-band ECOWAS Common External Tariff (CET) from 1 January 2017. An executive summary of the findings can be found at: https://www.wto.org/english/tratop_e/tpr_e/tp465_e.htm . The United Nations Conference on Trade and Development (UNCTAD) conducted an Investment Policy Review in 2017. The review shows The Gambia has adopted an open regime for investment and a range of modern business regulation tools. However, supply-side constraints, vulnerability to exogenous shocks and remaining regulatory and institutional bottlenecks have negatively affected the development of the private sector and the country’s performance in attracting FDI. The report can be downloaded at: https://unctad.org/webflyer/investment-policy-review-gambia .

Business Facilitation

The Ministry of Justice, which offers a range of administrative services to foreign investors, is the point of entry for company registration. The government has drastically reduced the average number of days it takes to start a business in recent years, from 25 to two.

According to the 2020 Doing Business report, it takes six procedures and, an average of one to two days to start a business in the country. These procedures include registering a unique company name, notarizing company status, obtaining a tax identification number (TIN), registering employees with the Social Security and Housing Finance Corporation, registering with the Commercial Registry, and obtaining an operational license. While this can be done by anyone in theory, a local attorney who is familiar with the system can facilitate the process. In 2010, a Single Window Business Registration Desk was established at the Ministry of Justice. This initiative has reduced the number of days it takes to register a business in the country to one day.

Outward Investment

Foreign investment in The Gambia is facilitated by the GIEPA and the Gambia Chamber of Commerce and Industry (GCCI). The two organizations’ mandate includes export promotion and support for small and micro enterprise (SME) development. Domestic investors have no limitations when it comes to investing abroad. Post has been working with the American Chamber of Commerce to expand its role in facilitating trade between The Gambia and the United States.

Ghana

Executive Summary

Ghana’s economy had expanded at an average of seven percent per year since 2017 until the coronavirus pandemic reduced growth to 0.9 percent in 2020, according to the Ministry of Finance. Between 2017 and 2019, the fiscal deficit narrowed, inflation came down, and GDP growth rebounded, driven primarily by increases in oil production. The economy remains highly dependent on the export of primary commodities such as gold, cocoa, and oil, and consequently is vulnerable to slowdowns in the global economy and commodity price shocks. Growth is expected to rebound to 4.6 percent in 2021 from the shocks of COVID-19, according to the IMF, as a result of improved port activity, construction, imports, manufacturing, and credit to the private sector. In general, Ghana’s investment prospects remain favorable, as the Government of Ghana seeks to diversify and industrialize through agro-processing, mining, and manufacturing. It has made attracting foreign direct investment (FDI) a priority to support its industrialization plans and to overcome an annual infrastructure funding gap.

Remaining challenges to Ghana’s economy include high government debt, particularly energy sector debt, low internally generated revenue, and inefficient state-owned enterprises. Ghana has a population of 31 million, with over six million potential taxpayers, only 3.7 million of whom are actually registered to pay taxes. As Ghana seeks to move beyond dependence on foreign aid, it must develop a solid domestic revenue base. On the energy front, Ghana has enough installed power capacity to meet current demand, but it needs to make the cost of electricity more affordable through more effective management of its state-owned power distribution system.

Among the challenges hindering foreign direct investment are: costly and difficult financial services, lack of government transparency, corruption, under-developed infrastructure, a complex property market, costly and intermittent power and water supply, the high costs of cross-border trade, a burdensome bureaucracy, and an unskilled labor force. Enforcement of laws and policies is weak, even where good laws exist on the books. Public procurements are sometimes opaque, and there are often issues with delayed payments. In addition, there have been troubling trends in investment policy over the last six years, with the passage of local content regulations in the petroleum, power, and mining sectors that may discourage needed future investments.

Despite these challenges, Ghana’s abundant raw materials (gold, cocoa, and oil/gas), relative security, and political stability, as well as its hosting of the African Continental Free Trade Area (AfCFTA) Secretariat make it stand out as one of the better locations for investment in sub-Saharan Africa. There is no discrimination against foreign-owned businesses. Investment laws protect investors against expropriation and nationalization and guarantee that investors can transfer profits out of the country, although international companies have reported high levels of corruption in dealing with Ghanaian government institutions. Among the most promising sectors are agribusiness and food processing; textiles and apparel; downstream oil, gas, and minerals processing; construction; and mining-related services subsectors.

The government has acknowledged the need to strengthen its enabling environment to attract FDI, and is taking steps to overhaul the regulatory system, improve the ease of doing business, and restore fiscal discipline.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 75 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 118 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 108 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2019 $1,602 https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
World Bank GNI per capita 2019 $2,220 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Ghana has made increasing FDI a priority and acknowledges the importance of having an enabling environment for the private sector to thrive. Officials are implementing some regulatory and other reforms to improve the ease of doing business and make investing in Ghana more attractive.

The 2013 Ghana Investment Promotion Center (GIPC) Act requires the GIPC to register, monitor, and keep records of all business enterprises in Ghana. Sector-specific laws further regulate investments in minerals and mining, oil and gas, industries within Free Zones, banking, non-bank financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate. Some sector-specific laws, such as in the oil and gas sector and the power sector, include local content requirements that could discourage international investment. Foreign investors are required to satisfy the provisions of the GIPC Act as well as the provisions of sector-specific laws. GIPC leadership has pledged to collaborate more closely with the private sector to address investor concerns, but there have been no significant changes to the laws. More information on investing in Ghana can be obtained from GIPC’s website, www.gipcghana.com .

Limits on Foreign Control and Right to Private Ownership and Establishment

Most of Ghana’s major sectors are fully open to foreign capital participation.

U.S. investors in Ghana are treated the same as other foreign investors. All foreign investment projects must register with the GIPC. Foreign investments are subject to the following minimum capital requirements: USD 200,000 for joint ventures with a Ghanaian partner, who should have at least 10 percent of the equity; USD 500,000 for enterprises wholly owned by a non-Ghanaian; and USD 1 million for trading companies (firms that buy or sell imported goods or services) wholly owned by non-Ghanaian entities. The minimum capital requirement may be met in cash or capital goods relevant to the investment. Trading companies are also required to employ at least 20 skilled Ghanaian nationals.

Ghana’s investment code excludes foreign investors from participating in eight economic sectors: petty trading; the operation of taxi and car rental services with fleets of fewer than 25 vehicles; lotteries (excluding soccer pools); the operation of beauty salons and barber shops; printing of recharge scratch cards for subscribers to telecommunications services; production of exercise books and stationery; retail of finished pharmaceutical products; and the production, supply, and retail of drinking water in sealed pouches. Sectors where foreign investors are allowed limited market access include: telecommunications, banking, fishing, mining, petroleum, and real estate.

Real Estate

The 1992 Constitution recognized existing private and traditional titles to land. Given this mix of private and traditional land titles, land rights to any specific area of land can be opaque. Freehold acquisition of land is not permitted. There is an exception, however, for transfer of freehold title between family members for land held under the traditional system. Foreigners are allowed to enter into long-term leases of up to 50 years and the lease may be bought, sold, or renewed for consecutive terms. Ghanaian nationals are allowed to enter into 99-year leases. The Ghanaian government has been working since 2017 on developing a digital property address and land registration system to reduce land disputes and improve efficiency. (See “Protection of Property Rights p. 14)

Oil and Gas

The oil and gas sector is subject to a variety of state ownership and local content requirements. The Petroleum (Exploration and Production) Act, 2016 (Act 919) mandates local participation. All entities seeking petroleum exploration licenses in Ghana must create a consortium in which the state-owned Ghana National Petroleum Corporation (GNPC) holds a minimum 15 percent carried interest, and a local equity partner holds a minimum interest of five percent. The Petroleum Commission issues all licenses. Exploration licenses must also be approved by Parliament. Further, local content regulations specify in-country sourcing requirements with respect to the full range of goods, services, hiring, and training associated with petroleum operations. The regulations also require local equity participation for all suppliers and contractors. The Minister of Energy must approve all contracts, sub-contracts, and purchase orders above USD 100,000. Non-compliance with these regulations may result in a criminal penalty, including imprisonment for up to five years.

The Petroleum Commission applies registration fees and annual renewal fees on foreign oil and gas service providers, which, depending on a company’s annual revenues, range from USD 70,000 to USD 150,000, compared to fees of between USD 5,000 and USD 30,000 for local companies.

Mining

Per the Minerals and Mining Act, 2006 (Act 703), foreign investors are restricted from obtaining a small-scale mining license for mining operations less than or equal to an area of 25 acres (10 hectares). In 2019, the criminal penalty for non-compliance with these regulations was increased to a minimum prison sentence of 15 years and maximum of 25 years, from a maximum of five years, to discourage illegal small-scale mining. The Act mandates local participation, whereby the government acquires 10 percent equity in ventures at no cost in all mineral rights. In order to qualify for any mineral license, a non-Ghanaian company must be registered in Ghana, either as a branch office or a subsidiary that is incorporated under the Ghana Companies Act or Incorporated Private Partnership Act. Non-Ghanaians may apply for industrial mineral rights only if the proposed investment is USD 10 million or above.

The Minerals and Mining Act provides for a stability agreement, which protects the holder of a mining lease for a period of 15 years from future changes in law that may impose a financial burden on the license holder. When an investment exceeds USD 500 million, lease holders can negotiate a development agreement that contains elements of a stability agreement and more favorable fiscal terms. The Minerals and Mining (Amendment) Act (Act 900) of 2015 requires the mining lease-holder to, “…pay royalty to the Republic at the rate and in the manner that may be prescribed.” The previous Act 703 capped the royalty rate at six percent. The Minerals Commission implements the law. In December 2020, Ghana passed the Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431) to expand the specific provisions under the mining regulations that require mining entities to procure goods and services from local sources. The Minerals Commission publishes a Local Procurement List, which identifies items that must be sourced from Ghanaian-owned companies, whose directors must all be Ghanaians.

Power Sector

In December 2017, Ghana introduced regulations requiring local content and local participation in the power sector. The Energy Commission (Local Content and Local Participation) (Electricity Supply Industry) Regulations, 2017 (L.I. 2354) specify minimum initial levels of local participation/ownership and 10-year targets:

Electricity Supply Activity Initial Level of Local Participation Target Level in 10 Years
Wholesale Power Supply 15 51
Renewable Energy Sector 15 51
Electricity Distribution 30 51
Electricity Transmission 15 49
Electricity Sales Service 80 100
Electricity Brokerage Service 80 100

The regulations also specify minimum and target levels of local content in engineering and procurement, construction, post-construction, services, management, operations, and staff. All persons engaged in or planning to engage in the supply of electricity are required to register with the ‘Electricity Supply Local Content and Local Participation Committee’ and satisfy the minimum local content and participation requirements within five years. Failure to comply with the requirements could result in a fine or imprisonment.

Insurance

The National Insurance Commission (NIC) imposes nationality requirements with respect to the board and senior management of locally incorporated insurance and reinsurance companies. At least two board members must be Ghanaians, and either the Chairman of the board or Chief Executive Officer (CEO) must be Ghanaian. In situations where the CEO is not Ghanaian, the NIC requires that the Chief Financial Officer be Ghanaian. Minimum initial capital investment in the insurance sector is 50 million Ghana cedis (approximately USD 9 million).

Telecommunications

Per the Electronic Communications Act of 2008, the National Communications Authority (NCA) regulates and manages the nation’s telecommunications and broadcast sectors. For 800 MHz spectrum licenses for mobile telecommunications services, Ghana restricts foreign participation to a joint venture or consortium that includes a minimum of 25 percent Ghanaian ownership. Applicants have two years to meet the requirement, and can list the 25 percent on the Ghana Stock Exchange. The first option to purchase stock is given to Ghanaians, but there are no restrictions on secondary trading.

Banking and Electronic Payment Service Providers

The Payment Systems and Services Act, 2019 (Act 987), establishes requirements for the licensing and authorization of electronic payment services. Act 987 ( https://www.bog.gov.gh/wp-content/uploads/2019/08/Payment-Systems-and-Services-Act-2019-Act-987-.pdf ) imposes limitations on foreign investment and establishes residency requirements for company senior officials or members of the board of directors. Specifically, Act 987 mandates electronic payment services companies to have at least 30 percent Ghanaian ownership (either from a Ghanaian corporate or individual shareholder) and requires at least two of its three board directors, including its chief executive officer, be resident in Ghana.

There are no significant limits on foreign investment or differences in the treatment of foreign and national investors in other sectors of the economy.

Other Investment Policy Reviews

Ghana has not conducted an investment policy review (IPR) through the OECD recently. UNCTAD last conducted an IPR in 2003.

The WTO last conducted a Trade Policy Review (TPR) in May 2014. The TPR concluded that the 2013 amendment to the investment law raised the minimum capital that foreigners must invest to levels above those specified in Ghana’s 1994 GATS horizontal commitments, and excluded new activities from foreign competition. However, it was determined that overall this would have minimal impact on dissuading future foreign investment due to the size of the companies traditionally seeking to do business within the country. An executive summary of the findings can be found at: https://www.wto.org/english/tratop_e/tpr_e/tp398_e.htm .

Business Facilitation

Although registering a business is a relatively easy procedure and can be done online through the Registrar General’s Department (RGD) at https://egovonline.gegov.gov.gh/RGDPortalWeb/portal/RGDHome/eghana.portal  (this would be controlled by the new Office of the Registrar of Companies in 2021), businesses have noted that the process involved in establishing a business is lengthy and complex, and requires compliance with regulations and procedures of at least four other government agencies, including GIPC, Ghana Revenue Authority (GRA), Ghana Immigration Service, and the Social Security and National Insurance Trust (SSNIT).

According to the World Bank’s Doing Business Report 2020 , it takes eight procedures and 13 days to establish a foreign-owned limited liability company (LLC) to engage in international trade in Ghana. In 2019, Ghana passed a new Companies Act, 2019 (Act 992), which among other things created a new independent office called the Office of the Registrar of Companies, responsible for the registration and regulation of all businesses. The new office is expected to be in place in 2021, and would separate the registration process for companies from the Registrar General’s Department; the latter would continue to serve as the government’s registrar for non-business transactions such as marriages. The new law also simplifies some registration processes by scrapping the issuance of a certificate to commence business and the requirement for a company to state business objectives, which limited the activities in which a company could engage. The law also expands the role of the company secretary, which now requires educational qualifications with some background in company law practice and administration or having been trained under a company secretary for at least three years. Foreign investors must obtain a certificate of capital importation, which can take 14 days. The local authorized bank must confirm the import of capital with the Bank of Ghana, which confirms the transaction to GIPC for investment registration purposes.

Per the GIPC Act, all foreign companies are required to register with GIPC after incorporation with the RGD. Registration can be completed online at http://www.gipcghana.com/ . While the registration process is designed to be completed within five business days, but there are often bureaucratic delays.

The Ghanaian business environment is unique, and guidance can be extremely helpful. In some cases, a foreign investment may enjoy certain tax benefits under the law or additional incentives if the project is deemed critical to the country’s development. Most companies or individuals considering investing in Ghana or trading with Ghanaian counterparts find it useful to consult with a local attorney or business facilitation company. The United States Embassy in Accra maintains a list of local attorneys, which is available through the U.S. Foreign Commercial Service ( https://2016.export.gov/ghana/contactus/index.asp ) or U.S. Citizen Services (https://gh.usembassy.gov/u-s-citizen-services/attorneys/). Specific information about setting up a business is available at the GIPC website: http://www.gipcghana.com/invest-in-ghana/doing-business-in-ghana.html .

Ghana Investment Promotion Centre
Post: P. O. Box M193, Accra-Ghana
Note: Omit the (0) after the country code when dialing from abroad.
Telephone: +233 (0) 302 665 125, +233 (0) 302 665 126, +233 (0) 302 665 127, +233 (0) 302 665 128, +233 (0) 302 665 129, +233 (0) 244 318 254/ +233 (0) 244 318 252
Email: info@gipc.gov.gh
Website: www.gipcghana.com 

Note that mining or oil/gas sector companies are required to obtain licensing/approval from the following relevant bodies:

Petroleum Commission Head Office
Plot No. 4A, George Bush Highway, Accra, Ghana
P.O. Box CT 228 Cantonments, Accra, Ghana
Telephone: +233 (0) 302 953 392 | +233 (0) 302 953 393
Website: http://www.petrocom.gov.gh/ 

Minerals Commission
Minerals House, No. 12 Switchback Road, Cantonments, Accra
P. O. Box M 248
Telephone: +233 (0) 302 772 783 /+233 (0) 302 772 786 /+233 (0) 302 773 053
Website: http://www.mincom.gov.gh/ 

Outward Investment

Ghana has no specific outward investment policy. It has entered into bilateral treaties, however, with a number of countries to promote and protect foreign investment on a reciprocal basis. Some Ghanaian companies have established operations in other West African countries.

Guinea

Executive Summary

Guinea enjoys sizeable endowments of natural resources, energy opportunities, and arable land. However, political tensions, persistent corruption and fiscal mismanagement make the long-term economic prognosis for Guinea mixed. In this context, Guinea has increasingly looked to foreign investment to bolster tax and export revenues and to support infrastructure projects and overall economic growth. China, Guinea’s largest trading partner, has dramatically increased its role in the past few years with a variety of infrastructure investments. Investors should proceed with caution, understanding that the potential for profits comes with significant political risk. Over the past few years, the Government of Guinea (GoG) has implemented reforms to improve various aspects of the investment climate. For example, the GoG reduced property transfers fees from 2 to 1.2% of the value of the property. The time required to obtain a construction permit has been reduced and import procedures have improved. Since 2019, Guinea has implemented a permanent taxpayer identification number system that requires all payments to be made by “Real Time Gross System” (RTGS) immediate transfers.

Endowed with abundant mineral resources, Guinea has the raw materials to be an economic leader in the extractives industry. Guinea is home to a third of the world’s reserves of bauxite (aluminum ore), and bauxite accounts for over half of Guinea’s present exports. Historically, most of the country’s bauxite was exported by Compagnie des Bauxites de Guinee (CBG) (Bauxites Company of Guinea) [a joint venture between the Government of Guinea, U.S.-based Alcoa, the Anglo-Australian firm Rio Tinto, and Dadco Investments of the Channel Islands], via a designated port in Kamsar. While CBG still retains the largest reserves, the Societe Miniere de Boke (SMB) (Mineral Society of Boke), a Franco-Sino-Singaporean conglomerate, has recently surpassed CBG as the largest single producer of bauxite. New investment by SMB and CBG, in addition to new market entrants, are expected to significantly increase Guinea’s bauxite output over the next five to ten years. Guinea also possesses over four billion tons of untapped high-grade iron ore, significant gold and diamond reserves, undetermined amounts of uranium, as well as prospective offshore oil reserves. Artisanal and medium-sized industrial gold mining in the Siguiri region is a significant contributor to the Guinean economy, but some suspect much of the gold leaves the country clandestinely, without generating any government revenue. In the long term, the Government of Guinea projects that its greatest potential economic driver will be the Simandou iron ore project, which is slated to be the largest greenfield project ever developed in Africa. In 2017, the governments of Guinea and China signed a USD 20 billion framework agreement giving Guinea potentially USD 1 billion per year in infrastructure projects in exchange for increased access to mineral wealth. In 2018, the Chinese Group TBEA invested USD 2.89 billion in the bauxite and alumina sector. The project includes development of a bauxite mine, the construction of a port, railroad, and power plant to facilitate the supply chain. The project is estimated to generate USD 406 million in annual revenue for Guinea.

Coordinator of the Africa Renewable Energy Initiative (AREI) under the African Union, President Conde is styling himself and Guinea as a leader in renewable energy. The amended 2013 Mining Code stipulates that raw ore producers in Guinea begin processing raw ore into refined or processed products within a few years of development, depending on the terms of the individual investment and the mandate with the Ministry of Mines. U.S.-based companies are in varying stages of proposing LNG projects to furnish this upcoming tremendous energy need. China is reportedly offering coal-based solutions to meet the potential demand.

Guinea’s abundant rainfall and natural geography bode well for hydroelectric and renewable energy production. The largest energy sector investment in Guinea is the 450MW Souapiti dam project (valued at USD 2.1 billion), begun in late 2015 with Chinese investment, which likewise completed the 240MW Kaleta Dam (valued at USD 526 million) in May 2015. Kaleta more than doubled Guinea’s electricity supply, and for the first-time furnished Conakry with more reliable, albeit seasonal, electricity (May-November). Souapiti was expected to begin to producing electricity in late 2020. Due to the pandemic, the dam will begin producing electricity in 2021. A third hydroelectric dam on the same river, dubbed Amaria, began construction in January 2019 and is expected to be operational in 2024. The Chinese mining firm TBEA is providing financing for the Amaria power plant (300 MW, USD 1.2 billion investment). If corresponding distribution infrastructure is built, and pricing enables it, these projects could make Guinea an energy exporter in West Africa. In addition, U.S.-based Endeavor planned to finish work on Project Te, a 50MW thermal plant on the outskirts of the capital by the end of May 2020 but project completion was delayed due to the COVID-19 pandemic and delays in payment by the Government of Guinea. The government is also looking to invest in solar and other energy sources to compensate for hydroelectric deficits during Guinea’s dry season. Toward that end, the government has entered into several Memoranda of Understanding with the private sector to develop solar projects.

Agriculture and fisheries hold other areas of opportunity and growth in Guinea. Already an exporter of fruits, vegetables, and palm oil to its immediate neighbors, Guinea is climatically well suited for large-scale agricultural production and export. However, the sector has suffered from decades of neglect and mismanagement, lack of transportation infrastructure, and lack of electricity and a reliable cold chain. Guinea is an importer of rice, its primary staple crop. President Alpha Conde has expressed his personal desire to see Guinea’s long-term economy based on agriculture and renewables rather than extractives.

Guinea’s macroeconomic and financial situation is weak. The aftermath of the 2014-2016 Ebola crisis left the government with few financial resources to invest in social services and infrastructure. Lower natural resource revenues stemming from a drop in world commodities prices and ill-advised government loans strained an already tight budget. In 2018 the government borrowed excessively from the Central Bank (BCRG), which threatened the first review of Guinea’s current International Monetary Fund (IMF) program. Lower than forecast natural resource revenues in 2019 due to heavy rains and political violence threatened the fourth review, which Guinea passed in April 2020. In December 2020, the Executive Board of the IMF completed its fifth and sixth reviews of Guinea’s economic performance. The completion of these reviews enabled the immediate disbursement of USD 49.47 million – bringing total disbursements under the program to USD 166.60 million.

There is a shortage of credit, particularly for small- and medium-sized enterprises, and the government is increasingly looking to international investment to increase growth, provide jobs, and kick-start the economy. On March 13, 2020, Guinea confirmed its first Covid-19 case. The pandemic negatively impacted the well-being of households, particularly those working in the informal sector, who have limited access to savings and financial services. Additionally, election related violence surrounding both the March 2020 legislative election and constitutional referendum, as well as the October 2020 presidential election, all negatively impacted Guinea’s growth prospects.

Guinea has passed and implemented an anti-corruption law, updated its Investment Code, and renewed efforts to attract international investors, including a new investment promotion website put in place in 2016 by Guinea’s investment promotion agency to increase transparency and streamline processes for new investors. However, Guinea’s capacity to enforce its more investor-friendly laws is compromised by a weak and unreliable legal system. President Alpha Conde inaugurated the first Trade Court of Guinea on March 20, 2018.

The Private Investment Promotion Agency (APIP-Guinea), under the supervision of the Ministry of Investments and Public Private Partnerships in partnership with the African Development Bank (AfDB) and the International Finance Corporation, organized the Guinea Investment Forum (GUIF) from February 24-26, 2021 in Conakry. The main objective of the event was to mobilize public and private investors for financing and other business opportunities. The forum hosted 1,600 participants, (including 600 in-person and 1,000 online) which included government, technical partners, financial institutions, as well as local and international private sector representatives. The forum saw 51 agreements signed for private projects in mostly the construction, agrobusiness, and hydrocarbon industries. Additionally, the construction and agrobusiness sectors reported an estimated USD221 million in announced financing after the event.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 137 of 180 https://www.transparency.org/en/cpi/2020/index/gin#
World Bank’s Doing Business Report 2020 156 of 190 http://www.doingbusiness.org/en/rankings

Rankings (doingbusiness.org)

Global Innovation Index 2020 130 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 268 https://apps.bea.gov/international/factsheet/factsheet.cfm 
World Bank GNI per capita 2019 USD 930 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=GN 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Guinea has increasingly adopted a strong, positive attitude toward foreign direct investment (FDI). Facing budget shortfalls and low commodity prices, the GoG hopes FDI will help diversify its economy, spur GDP growth, and provide reliable employment. To that end, the government has reduced land transfer fees, and improved procedures for import and construction permits. Guinea does not discriminate against foreign investors, with the exception of a prohibition on foreign ownership of media. One area of concern is that mining companies have negotiated different taxation rates despite mining code requirements. According to the 2020 World Investment Report, FDI in Guinea fell from USD 577 million in 2017 to USD 45 million in 2019. In late 2015, the U.S. Embassy facilitated the establishment of an informal international investors group to liaise with the government. The group has not been very active since. There is the Chambre des Mines (Chamber of Mines), a government-sanctioned advisory organization that includes Guinea’s major mining firms. Guinea’s Agency for the Promotion of Private Investment (APIP) provides support in the following areas:

  1. Create and register businesses
  2. Facilitate access to incentives offered under the investment code
  3. Provide information and resources to potential investors
  4. Publish targeted sector studies and statistics
  5. Provide training and technical assistance
  6. Facilitate solutions for investors in Guinea’s interior

On March 13, a presidential decree changed the responsibilities of APIP into a public agency under the technical supervision of the Ministry of Investments and Public Private Partnerships, and under the financial supervision of the Ministry of Economy and Finance.

More information about APIP can be found at: http://apip.gov.gn/ 

Limits on Foreign Control and Right to Private Ownership and Establishment

Investors can register under one of four categories of business in Guinea. More information on the four types of business registration is available at http://invest.gov.gn/page/create-your-company. There are no general limits on foreign ownership or control, and 100 percent ownership by foreign firms is legal in most sectors. Foreign-ownership of print media, radio, and television stations is not permitted. The 2013 Mining Code gives the government the right to a 15 percent interest in any major mining operation in Guinea (the government decides when an operation has become large enough to qualify). Mining and media notwithstanding, there are no sector-specific restrictions that discriminate against market access for foreign investment. Despite this lack of official discrimination, many enterprises have discovered the licensing process to be laden with bureaucratic delays that are usually dealt with by paying consultant fees to help expedite matters. The U.S. Embassy may be able to advocate on behalf of American companies when it is aware of excessive delays.

According to the Investment Code, the National Investment Commission has a role in reviewing requests for approval of foreign investment and for monitoring companies’ efforts to comply with investment obligations. The Ministry of Planning and Economic Development hosts the secretariat for this commission, which grants investment approvals. The government gives approved companies, especially industrial firms, the use of the land necessary for their plant, with the duration and conditions of use set out in the terms of the approval. The land and associated buildings belong to the State, but can also be rented by or transferred to another firm with government approval.

Other Investment Policy Reviews

There has been no investment policy review conducted by the UN Conference on Trade and Development or the Organization for Economic Cooperation and Development within the past several years. The World Trade Organization (WTO) last conducted a review of Guinea in 2018. The 2018 report can be viewed here: https://www.wto.org/english/tratop_e/tpr_e/tp470_e.htm .

Business Facilitation

APIP is the Guinean agency that promotes investment, helps register businesses, assists with the expansion of local companies, and works to improve the local business climate. APIP maintains an online guide for potential investors in Guinea (http://invest.gov.gn). Business registration can be completed in person at APIP’s office in Conakry or through their online platform: https://synergui.apipguinee.com/fr/utilisateurs/register/. The only internationally-accredited business facilitation organization that assesses Guinea is GER.co, which gives Guinea’s business creation/investment website a 4/10 rating. It takes roughly seventy-two hours to register a business. APIP’s services are available to both Guinean and foreign investors. The “One Stop Shop” at APIP’s Conakry office can provide small and medium sized enterprises (SMEs) with requisite registration numbers, including tax administration numbers and social security numbers. Notaries are required for the creation of any other type of enterprise.

An SME in Guinea is defined as a business with less than 50 employees and revenue less than 500 million Guinean francs (GNF) (around USD 50,000). SMEs are taxed at a yearly fixed rate of GNF 15 million (USD 1,500). Administrative modalities are simplified and funneled through the “One Stop Shop”. In December 2019, the Prime Minister inaugurated the “Maison des PME” (“The SME House”) a public-private partnership between the Societe Generale bank and APIP to help local SMEs expand and develop.

Outward Investment

Guinea does not formally promote outward investment and the government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Guinea has bilateral investment agreements with Benin, Burkina Faso, Cameroon, Canada, Chad, China, Egypt, France, The Gambia, Germany, Ghana, Italy, Lebanon, Malaysia, Mali, Mauritania, Mauritius, Morocco, Serbia, South Africa, Switzerland, Tunisia, Turkey, and the United Arab Emirates. Although Guinea does not have a Bilateral Investment Treaty or Free Trade Agreement with the United States, the Economic Community of West African States (ECOWAS) and the United States signed a Trade and Investment Framework Agreement (TIFA) in May 2014. There is no Bilateral Tax Treaty between Guinea and the United States. The TIFA created a Council on Trade and Investment responsible for identifying and removing trade impediments between the United States and ECOWAS countries.

Lesotho

Executive Summary

The Kingdom of Lesotho is a country open to and eagerly seeking foreign direct investment (FDI). Government, business, labor, and civil society leaders all strongly agree that attracting FDI is vital to Lesotho’s future. In 2020, the government of Lesotho (GOL) undertook many promising initiatives to make doing business in Lesotho easier. That said, during the same period GOL took or proposed measures that concerned foreign entrepreneurs and investors. These included measures that treat foreign-owned businesses differently than in the past and which suggest to some foreign observers a turn towards economic nationalism. Which trend leads in 2021 will have tremendous impact on Lesotho’s attractiveness as a destination for FDI.

Among the important reforms undertaken in 2020, GOL introduced new e-licensing and e-registration platforms that promise to greatly reduce the time for business creation and licensing. New protocols for customs procedures promise to streamline importing and exporting. And at the highest levels GOL has announced that to help Lesotho recover from the COVID-19 pandemic, GOL will focus on making Lesotho an attractive destination for FDI.

While GOL clearly recognizes the importance of FDI and has continued to enact policies to make foreign investment easier, 2020 also saw the rollout of rules intended to protect local entrepreneurs from foreign competition in designated sectors. In recent years, many migrants from Asia and other parts of Africa have started business in these designated sectors and the current government has announced aggressive measures to reverse this trend. These sectors—such as small retail food sales and basic auto repair—are dominated by small and micro enterprises but some do have participation by medium-sized foreign-owned firms.

Although these regulations will have a negative effect on some foreign investors, they will have low impact on overall FDI because most businesses in the designated sectors are relatively small. However, the government has also enacted other regulations, such as requiring foreign investors to renew their business licenses yearly instead of every three years, a condition that many foreign investors describe as onerous to the point of impossibility given the bureaucratic challenges. Moreover, recent policy debates within the government around proposals to mandate a minimum percentage of local ownership of all enterprises have caused real concern. While some foreign entrepreneurs and investors operating in Lesotho dismiss the likelihood of such regulations being enacted, others remain wary. The overall uncertainty has had a chilling effect on FDI as potential investors wait for clarity on the regulatory framework.

Lesotho’s economy and FDI were badly affected by COVID-19 in 2020, with several foreign-owned textile factories closing or cutting back on operations due to the global downtrend in demand. Other challenges include corruption; while not pervasive, corruption is a problem with Transparency International’s Corruption Perceptions Index ranking Lesotho as 83rd out of 180 countries. Despite these challenges, GOL is refining the services it offers foreign investors, and Lesotho retains advantages such as ready access to the South African and regional markets as well as lower labor, electricity, and communications costs than neighboring countries. Lesotho also has a government that remains focused on providing jobs to its citizens, and which has publicly proclaimed its eagerness to work with foreign investors—especially those ready to partner with locals.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 83 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2019 122 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 130 of 140 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $3 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 N/A http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Lesotho (GOL) is generally open to FDI and successive governments have tried to attract FDI as a key component of national development. However, recent years have seen increasing critiques in Lesotho’s press and politics of foreign investors who repatriate their profits rather than reinvesting in Lesotho. This has resulted in a series of populist polices and policy proposals intended to protect opportunities for local investors and entrepreneurs, but which may inadvertently dampen Lesotho’s attractiveness as a destination for foreign investment. Lesotho follows World Trade Organization (WTO) laws and regulations, but the law makes some distinctions between local and foreign investors in some industries (see “Limits on Foreign Control and Right to Private Ownership and Establishment”).

Lesotho’s investment promotion agency, the Lesotho National Development Corporation (LNDC), is responsible for the initiation, facilitation, and promotion of Lesotho as an attractive investment destination.  LNDC also undertakes investment project appraisals, provides pre-investment and after-care services, risk management, trade and investment research, and strategic planning.  It also ensures investors’ compliance with the country’s legal frameworks.  Through LNDC, the government actively encourages investment in manufacturing and agriculture sectors. LNDC also implements the country’s industrial development policies.

LNDC provides the support services described above to foreign investors and regularly publishes information on investment opportunities and the services it offers to foreign investors.  Furthermore, LNCDC offers incentives such as long-term loans, tax incentives, factory space at discounted rental rates, assistance with work permits and licenses, and logistical support for relocation.  LNDC maintains an ongoing dialogue with foreign and domestic investors by attending annual trade and investment forums both locally and internationally. For more information on LNDC, please visit:  http://www.lndc.org.ls  . 

Limits on Foreign Control and Right to Private Ownership and Establishment

Lesotho is open to foreign investment and there are no economy-wide restrictions applied to foreign ownership and control. However, GOL has passed laws and regulations intended to limit foreign ownership to large scale businesses in complex sectors while reserving small scale businesses in designated sectors exclusively for the indigenous citizens of Lesotho (“Basotho”). The Trading Enterprises Regulations of 2011 (TER 2011) and the Business Licensing and Registration Regulations of 2020 (BLRR 2020) reserve certain businesses for Basotho and limit foreign investors to operating these businesses as minority shareholders with a maximum of 49 percent shareholding. The reserved 47 businesses include acting as an agent of a foreign firm, barber, butcher, snack-bar operator, domestic fuel dealer, dairy shop proprietor, general café or dealer, greengrocer, broker, mini supermarket (floor area < 250m2), and hair and beauty salon.  Most businesses affected by these regulations are micro or small enterprises, but some mid-sized foreign owned firms will be affected.

The Business Licensing and Registration Act 2019 (BLRA 2019) requires foreign investors to provide a capital of $123,152 or provide proof of investment of $123,152 during registration or renewal of their traders’ licenses or to have deposited $123,152 with a local institution. However, the Central Bank of Lesotho Act of 2000 stipulates a foreign investment minimum threshold of $250,000.  While pleased that the new law indicates a reduction in the minimum sum that they must invest, many foreign investors are concerned that this discrepancy was not clarified in the BLRA 2019 legislation.

BLRA 2019 requires foreign investors to renew their business identification card annually while locals are only required to renew their business identification cards after three years. Some foreign entrepreneurs operating in Lesotho have complained that the process of renewing their business identification cards annually is extremely onerous. BLRA 2019 also requires foreign investors to transfer technology and business expertise to local investors. Many foreign entrepreneurs operating in Lesotho complain that this requirement is poorly articulated and arbitrarily enforced.

The Mines and Minerals Act No.4 of 2005 restricts mineral permits for small-scale mining operations on less than 100m2 to local ownership.  Diamond mining, regardless of the size of the operation, is subject to the large-scale mines licensing regime, which has no restrictions on foreign ownership; however, GOL reserves the right to acquire at least 20-35 percent ownership in any large-scale mine.  By law, the Ministry of Trade and Industry is instructed to screen foreign investments in a routine, nondiscriminatory manner to ensure consistency with national interests.

Other Investment Policy Reviews

Lesotho’s investment policy was approved by Cabinet and became law in early 2016.  The policy was developed with assistance from the United Nations  Conference on Trade and Development (UNCTAD)   http://unctad.org/en/pages/PublicationArchive.aspx?publicationid=503  ) .  The government has not undertaken any third-party investment policy reviews in the past three years.

Business Facilitation

In 2016, the government launched a “One Stop Business Facilitation Centre” (OBFC), to make it easier to do business and facilitate FDI. OBFC places all services required for the issuance of licenses, permits, and imports and exports clearances under one roof.  The portal provides transparency and predictability to trade transactions and reduces the time and cost of trading across borders. The OBFC web site is  http://www.obfc.org.ls/business/default.php  . 

The process of company registration includes: a work permit application with the Ministry of Labor and Employment, a visa application and resident permit with the Ministry of Home Affairs, a trader’s license with the Ministry of Trade and Industry, tax clearance with Lesotho Revenue Authority, a police clearance with the Ministry of Police and Public Safety, and a medical clearance with the Ministry of Health.

In November 2020, the OBFC held a twin launch of e-Regulations and e-Licensing. The e-Regulations provides a clear step by step process to register a business. This also stipulates requirements, costs, time and contact details for registering a business. The e-Licensing allows foreign investors to apply online for obtaining a business license. This initiative has reduced instances of fraud and manipulation. It takes a maximum of 5 days to issue both industrial and traders licenses. For more information on e -licenses, please visit: www.Lesotho.elicenses.org  . For more information on e-regulations please visit: http://www.lesotho.eregulations.org  .

Outward Investment

Lesotho provides incentives to investors who export outside the country. Export manufacturers obtain a full rebate of customs duty paid on their inputs imported to produce for markets outside Southern African Customs Union (SACU). The government does not restrict domestic investors from investing abroad.

The government facilitates quality standard processes and export permits for outward investment.  For AGOA exports, the Ministry of Trade and Industry, LNDC, and Lesotho Revenue Authority provide support including on export requirements.  Other agencies such as the U.S. Agency for International Development Southern Africa Trade Hub provide capacity to the government for the implementation of AGOA.  The government has assigned Lesotho Standards Authority to assist investors who export to the Republic of South Africa (RSA).

Liberia

Executive Summary

Liberia’s developing economy offers a wide variety of opportunities for investment, especially in natural resources such as mining, agriculture, and forestry (timber), but also in more specialized sectors such as infrastructure (including energy and telecommunications) and financial services. With its largely commodities-based economy, Liberia relies heavily on imports, including for more than half of its cereal needs like rice, Liberia’s most important staple food. The COVID-19 pandemic has negatively affected many sectors of the economy, which contracted in 2019 and 2020. However, the International Monetary Fund projects a return to positive growth in 2021.

Given its limited capacities, Liberia is also heavily dependent on foreign direct investment (FDI) to fulfill its development goals and growth potential, but foreign investors generally find the country a very difficult place to do business.  Investors report negotiations with government are often lengthy, and long-established concession agreements can subsequently face calls from government officials and lawmakers for unilateral changes. They also report resistance from local communities, which claim the government has not consulted with them about land use.  Communities and employees often expect concessionaires and other large investors to provide significant support including education, healthcare, and housing. Foreign investors report that the government sides with communities and employees when such issues arise, irrespective of concession or contractual agreements.

Low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access (especially outside urban areas), and pervasive government corruption constrain investment and development. Most of Liberia lacks reliable power supply, though efforts to expand access to the electricity grid are ongoing through extension of a grid from the Mount Coffee Hydropower Plant, the West Africa Power Pool’s cross border electrification projects, and other internationally supported energy projects. The 2020 World Bank Doing Business Survey ranked Liberia 175th out of the 190 economies surveyed. Public perception of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s Corruption Perceptions Index. Low public trust in the banking sector has resulted in most cash being held outside the banks. This, combined with high banknote mutilation, inadequate currency replacement planning, and low use of mobile money platforms, means hard currency is regularly in short supply.

The government-backed Business Climate Working Group (BCWG) continues to work with both public and private sector stakeholders to explore opportunities for creating a business-friendly environment.  Increased collaboration between business chambers, industry associations, and the Liberian government could improve the investment climate, and international donors continue to work on investment climate issues as well. Despite the abundance of challenges, Liberia remains a country rich in natural resources, agricultural land, and abundant rainfall. Agribusiness and extractive industries investors, in particular, can find that Liberia merits careful consideration. Several large international concessionaires have invested successfully in these sectors in Liberia.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 137 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 175 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in Liberia ($M USD, historical stock positions) 2019 -$94 Million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 $580 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Government officials describe Liberia as “open for business” and the government supports a Business Climate Working Group (BCWG) to improve the investment climate. A March 2019 BCWG-led forum resulted in an executive order which cancelled Import Permit Declaration requirements and extended residency visas and work permits from one to five years. These improvements have since been renewed. Charged with facilitating foreign investment in Liberia, the National Investment Commission (NIC) develops investment strategies, policies, and programs to attract foreign investment and negotiate investment contracts or concessions. The NIC, the BCWG and other private sector groups, such as the Liberia Chamber of Commerce (LCC), facilitate dialogues through formal business roundtables on investment climate issues. They also meet with investors and government officials to discuss and suggest solutions to critical policy issues.

However, some business leaders report difficulties in obtaining meetings with government representatives to discuss new policies perceived to damage the business climate. In 2020, the BCWG was not actively engaged except that it convened infrequent meetings to discuss and resolve critical regulatory issues affecting the business climate. A weak legal and regulatory framework, lack of transparency in contract award processes, and corruption continue to inhibit foreign direct investment. The 2010 Investment Act prohibits and restricts market access for foreign investors, including U.S. investors, in certain economic sectors or industries. See “Limits on Foreign Control and Right to Foreign Ownership and Establishment” below for more detail.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities may own and establish business enterprises in many sectors. The Liberian constitution restricts land ownership to citizens, but non-Liberians may hold long-term leases. See Real Property, below for further detail. Liberia does not maintain an investment screening mechanism for inbound foreign investment. Per the Investment Act (“The Act”) and Revenue Code, only Liberian citizens may operate businesses in the following sectors and industries:

  1. Supply of sand
  2. Block making
  3. Peddling
  4. Travel agencies
  5. Retail sale of rice and cement
  6. Ice making and sale of ice
  7. Tire repair shops
  8. Auto repair shops with an investment of less than USD 550,000
  9. Shoe repair shops
  10. Retail sale of timber and planks
  11. Operation of gas stations
  12. Video clubs
  13. Operation of taxis
  14. Importation or sale of second-hand or used clothing
  15. Distribution in Liberia of locally manufactured products
  16. Importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make)

The Act also sets minimum capital investment thresholds for foreign investors in certain other business activities, industries, and enterprises. (See Section 16 of the Act: http://www.moci.gov.lr/doc/TheInvestmentActof2010(1).pdf .) For enterprises owned exclusively by non-Liberians, the Act requires no less than USD 500,000 in investment capital. For foreign investors partnering with Liberians, the Act requires no less than USD 300,000 in total capital investment and at least 25 percent aggregate Liberian ownership.

Other Investment Policy Reviews

The government appears not to have undergone a third-party investment policy review to date.

Business Facilitation

All businesses must register with and obtain authorization from the  Liberia Business Registry (LBR)  to conduct business or provide services in Liberia.  LBR services are available to local and foreign companies at its head office in Monrovia. See  http://lbr.gov.lr/ .

Most of Liberia’s commercial laws and regulations are not publicly available online. The NIC chairs an ad hoc cabinet-level Inter-Ministerial Concessions Committee (IMCC) that convenes often lengthy bidding and negotiation processes for long term investment contracts such as concessions.  The establishment of a concession requires ratification by the national legislature, approval by the President, and printing of handbills. The Liberia Revenue Authority (LRA) handles tax payment processes and administration. The National Social Security and Welfare Corporation (NASSCORP) handles related social security processes.

According to the World Bank, establishing a business requires five procedures and 18 days. Foreign companies must obtain investment approval from the NIC if they seek investment incentives. Foreign companies must use local counsel when establishing a subsidiary. If the subsidiary will engage in manufacturing and international trade, it must obtain a trade license from the LBR. For more information about investment laws, bilateral investment treaties, and other treaties with investment provisions, please see  https://investmentpolicy.unctad.org/country-navigator/121/liberia .

Outward Investment

The government neither promotes nor incentivizes outward investment but neither does it restrict Liberian citizens from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Liberia has bilateral investment treaties (BITs) with France, Germany, and Switzerland. It also has a BIT with the European Union under the Economic Community of West African States (ECOWAS) Economic Partnership Agreement. See: https://investmentpolicy.unctad.org/international-investment-agreements/countries/118/liberia . Liberia is a party to the Trade and Investment Framework Agreement (TIFA) with ECOWAS, the ECOWAS Supplementary Act on Investment, the Liberia-U.S. Trade and Investment Framework Agreement, the ECOWAS Energy Protocol, the Cotonou Agreement, the Revised ECOWAS Treaty, the African Union (AU) Treaty, and the ECOWAS Protocol on Movement of Persons, Right of Residence, and Establishment. See: https://investmentpolicy.unctad.org/country-navigator/121/liberia .

Liberia is a signatory to the following investment-related instruments (IRIs): the Multilateral Investment Guarantee Agency (MIGA) Convention, the International Centre for Settlement of Investment Disputes (ICSID Convention), the New York Convention, the UN Code of Conduct on Transnational Corporations, the UN Guiding Principles on Business and Human Rights, ILO Tripartite Declarations on Multinational Enterprises, the World Bank Investment Guidelines, the New International Economic Order UN Resolution, the Voluntary Partnership Agreement with the EU, the Economic Partnership Agreement with the EU, the Charter of Economic Rights and Duties of States, and the Permanent Sovereignty UN Resolution.

Liberia enjoys preferential access to the U.S. market under the Generalized System of Preference (GSP) and the African Growth and Opportunity Act (AGOA). Liberia and the United States do not have a bilateral taxation treaty.  See https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z .

Libya

Executive Summary

Libya presents a challenging investment climate. Reconstruction needs, severely underserved consumer demand, and abundant natural resources provide many opportunities for domestic and foreign investors, and the Government of National Unity (GNU), which took office in March 2021, has expressed a strong desire to receive greater foreign investment and partner with foreign companies. Nonetheless, the country’s prospects for foreign investment continue to be hampered by security risks posed by the presence of non-state militias, foreign mercenaries, and extremist and terrorist groups, and opaque bureaucracy, onerous regulations, and widespread rent-seeking activity in public administration.  The Libyan government has a long history of not honoring contracts and payments, and several U.S. firms continue to be owed back payments for work done before and after the 2011 revolution. The sectors that have historically attracted the most significant investment into Libya are: oil and gas, electricity, and infrastructure.

Following years of civil conflict, Libya’s warring parties signed a ceasefire in October 2020 that paved the way for a United Nations-facilitated political process that resulted in the country’s first unified national government since 2014. The GNU is an interim government charged with leading the country toward national elections scheduled for December 24, 2021. Despite the current government’s limited time-horizon, Prime Minister Dabaiba has committed his administration to creating a more enabling business environment and to engaging U.S. companies, particularly in the fields of healthcare, electricity, security, and oil and gas.

Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves.  Most government revenues derive from the sale of crude oil.  Libya’s oil production has been making a gradual recovery from repeated attacks on oil infrastructure by ISIS-Libya and other armed groups in 2016 and a nine-month forced shutdown in 2020 due to the civil conflict. Production has reached 1.3 million barrels per day (bpd) as of March 2021.  Technocrats heading the NOC, an independent, apolitical institution, continue to lay the groundwork for the long-term development and stabilization of the energy sector.

The Privatization and Investment Board (PIB), supervised by the Ministry of Economy, is the primary governmental body for encouraging private foreign investment in Libya.

The Investment Law of 2010 provides the primary legal framework for foreign investment promotion. Passed prior to the 2011 revolution that toppled the Qadhafi regime, the law lifted many FDI restrictions and provided a series of incentives to encourage private investment. No significant laws related to investment have been passed since the revolution.

Perceived corruption is deeply embedded in Libya and is widespread at all levels of public administration. The lack of transparency or accountability mechanisms in the management of oil reserves and revenues, the issuance of government contracts, and the enforcement of often ambiguous regulations continue to provide government officials with substantial opportunities for rent-seeking activities.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 173 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 186 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 TBD https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 TBD http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Libyan government’s efforts to attract FDI, primarily through the PIB and NOC, are relatively recent. Until the 1990s, FDI was only permitted in the oil sector through sovereign contracts to which the state was a party. A number of foreign investment laws were passed in subsequent years to encourage and regulate FDI, culminating in “Law No. 9 of the year 1378 PD (2010) Regarding Investment Promotion” (known as the 2010 Investment Law). Though promulgated prior to Libya’s 2011 revolution, the law remains in effect. This new law lifted many FDI restrictions and provided a series of incentives to qualifying investments, such as tax and customs exemptions on equipment, a five-year income tax exemption, a tax exemption on reinvested profits and exemptions on production tax expert fees for goods produced for export markets. It also allowed for investors to transfer net profits overseas, defer losses to future years, import necessary goods, and hire foreign labor if local labor was unavailable. Foreign workers may acquire residency permits and entry reentry visas for five years and transfer earnings overseas.

The law regulates the establishment of foreign-owned companies and the setting up of branches in representative offices. Branches are allowed to be opened in a large number of sectors, including: construction for contracts over LYD 50 million; electricity works; oil exploration; drilling and installation projects; telecommunications construction and installation; industry; surveying and planning; installation and maintenance of medical machines and equipment; and hospital management. However, the investment law restricts full foreign ownership of investment projects to projects worth over LYD 5 million, except in the case of limited liability companies, and requires 30 percent of workers to be Libya nationals and to receive training. Foreign investors are prevented from owning land or property in Libya and are allowed only the temporary leasing of real estate. Investment in “strategic industries” – in particular, Libya’s upstream oil and gas sector, which is controlled by the NOC – requires a foreign entity to enter into a joint venture with a Libyan firm that will retain a majority stake in the enterprise. It is not clearly defined which industries other than upstream oil and gas may be considered strategic.

The most important investment promotion institution Libya is the PIB, established in 2009 to assume responsibility for the Libyan privatization program and oversee and regulate FDI activities. The PIB’s screening process for incoming FDI to Libya is not clearly defined; the bidding criteria and process for investment are not published or transparent, and it is therefore not clear whether foreign investors have faced discrimination. The PIB states that it reviews bids or proposals for general consistency with Libya’s national security, sovereignty, and economic interest. The Minister of Economy must give final approval to all FDI projects, at the recommendation of the PIB. There is no information available on the timeline of the approval process or any potential outcomes of the process other than an affirmative or negative decision by the PIB or Minister of Economy. The PIB maintains that it keeps all company information confidential. U.S. firms have repeatedly expressed frustration about the slow pace by which the Libyan government makes business-related decisions. Despite these complaints, some U.S. firms have successfully invested in Libya, particularly in the country’s oil and gas sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

The ownership of real estate in Libya is restricted to Libyan nationals and wholly-owned Libyan companies. The 2010 Investment Law permits the ownership of real estate in Libya by locally established project vehicles of foreign investors. However, such ownership is limited to leasehold ownership only. Foreign investors are allowed lease property from public holdings and private Libyan citizens, according to Article 17 of the 2010 Investment Law. There is considerable ambiguity in both the public and private rental markets; many aspects of these arrangements are left to local officials.

Other Investment Policy Reviews

Libya has not undergone any recent investment policy reviews by the OECD, UNCTAD, WTO, or any other international body. An ongoing UN-facilitated audit of Libya’s banking sector may provide insights into the disposition of Libya’s assets in recent years.

Business Facilitation

Business registration procedures in Libya are lengthy and complex. The Ministry of Economy is the main institution for processing business registration requirements. The Libyan government does not maintain an online information portal on regulations for new business registration or online registration functionality for registering a new business. There are multiple corporate structures based on the type of business undertaken (e.g. limited liability, joint venture, branch office) and each has specific registration requirements. Some requirements apply to all businesses, including: obtaining a Commercial Register certificate, registering with the Chamber of Commerce and the tax and labor departments, and obtaining a working license. If a company will be importing items, a statistical code will be required. If the company will be obtaining letters of credit in Libya, a Central Bank code will be required. A specialized agent must complete these tasks on behalf of the registering company. For the simplest corporate structure (limited liability with no Central Bank code) the process can take two to three months if the registration agent is familiar with the procedures.

Outward Investment

Libya is a member of the Islamic Corporation for the Insurance of Investment and Export Credit, which provides investment and export credit insurance for entities in member states. FDI outflows in 2018 were USD 315 million, compared to USD 2.7 billion in 2010. The Libyan government does not formally promote or incentivize outward investment. Stress in the banking sector has reduced liquidity, and this has negatively affected the ability of Libyan citizens to acquire the hard currency to invest abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Libya has signed bilateral investment protection agreements with China (2010 – not in force), Republic of Congo (2010 – not in force), the United Kingdom (2009 – not in force), Turkey (2009), Singapore (2009), Indonesia (2009 – not in force), Slovakia (2009 – not in force), Russian Federation (2008), Spain (2007), Kenya (2007 – not in force), India (2007), Iran (2006), San Marino (2006 – not in force), Republic of Korea (2006), Tunisia (2005), Germany (2004), Cyprus (2004), Qatar (2004 – not in force), France (2004), Serbia (2004), Belgium-Luxembourg Economic Union (2004), Ethiopia (2004), Switzerland (2003), Malta (2003 – not in force), Portugal (2003), Croatia (2002), Austria (2002), South Africa (2002 – not in force), Algeria (2001- not in force), Ukraine (2001), Italy (2000), Morocco (2000), Belarus (2000), Bulgaria (1999), Gambia (1995 – not in force), Syria (1993), and Egypt (1990). Libya has entered into a double taxation agreement with the following countries: Algeria, Belarus, Egypt, India, Italy, Kuwait, Malta, Pakistan, Singapore, Sudan, Saudi Arabia, Tunisia, and the United Kingdom.

Libya does not have a bilateral investment treaty, a Free Trade Agreement, or a bilateral taxation treaty with the United States, but signed a Trade and Investment Framework Agreement (TIFA) with the United States in December 2013 that the Libyan government ratified in February 2019.

Madagascar

Executive Summary

Much anticipated momentum on planned policy and institutional reforms and significant infrastructure projects in support of Madagascar’s investment climate did not materialize as investors had hoped in the last year. The Government of Madagascar’s 2019 Plan Emergence de Madagascar (PEM) is the Government of Madagascar’s blueprint for the country’s economic revival. However, it remains without an implementation plan that will translate aspirations into policy and then into action. Combined with the economic shocks inflicted by COVID-19, including several months of nation-wide confinement, growing concerns about transparency in decision-making, uneven anti-corruption measures, and variable respect for sanctity of contract and rule of law, Madagascar presents a more mixed investment landscape than a year ago.

After four years of steady growth, the World Bank had projected that the GDP would grow 5.2 percent in 2020 but instead it shrank 4.2 percent for the year. Sharp declines in exports, increased layoffs and factory closures, disruption of inputs and order cancelations for Malagasy products caused major economic disruptions in the short to medium term. Economic activity picked up in the last quarter of 2020 once the government lifted confinement orders. At the time of writing, COVID-19 case numbers are on the rise again, and the government may be compelled to implement new confinement measures.

A GOM Multi-Sectoral Plan (PMDU) to boost economy activity during the pandemic was not implemented. Instead, GOM financial reporting shows that, as of March 18, 2020, 80 percent of the funding disbursed for COVID-19 response went to subsidize public utility JIRAMA; the remaining 20 percent was split amongst multiple categories including medical outlays, special teacher allowances, social assistance, and assistance to businesses. Many in the private sector viewed this as a missed opportunity to utilize the USD 840 million in donor assistance that Madagascar received during 2020.

2020 saw delays on many fronts: opening of the new international airport terminal; finalizing the terms of the hydroelectric projects Sahofika and Volobé; resolving the concerns surrounding the opening of the Base Tulear mine in the south-west; and finalizing the investment law and the revisions to the mining code. Without new progress on pending high-profile investments which are foundational to Madagascar’s future growth prospects, it is unclear how the GOM will meet its aspirational development and investment goals. Whereas, momentum shifting toward a more business-friendly approach, it would present opportunities for investments and partnerships in infrastructure, textiles, energy, tourism, agri-business, mining, and health.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 149 of 180 (score 25/100 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 161 of 190 (score 47.7) http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 115 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 520 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Rajoelina government’s PEM strategy has stressed the importance of attracting foreign direct investment (FDI) to achieve its ambitious economic growth goals. Since the Rajoelina administration took office in January 2019, the GOM has promoted Madagascar as an attractive investment destination by sending delegations across Africa, Europe, and Asia to make the case while also organizing trade shows in Madagascar.

The marketing push has not yet translated into actual policy and certain developments have called the GOM’s commitment to new FDI into question. Some cases in point include the following: the GOM’s failure to sign the Power Purchase Agreement its officials negotiated for Sahofika, a large hydroelectric project developed by Themis and backed by U.S. private equity firm Denham Capital and AfDB amongst others. The 200 MW USD 1 billion hydroelectric project is slated to bring electricity to 8 million new customers. The World Bank backed Volobé project appears stalled as well. Over 15 months ago, the GOM suspended work at Base Tulear, the Australian company Base Resources’ USD 560 million investment into ilmenite mining, leaving the entire project’s future uncertain. In 2021, the GOM overturned a decision by troubled national utility JIRAMA to implement the World Bank-recommended OPTIMA electricity tariff program to adjust pricing and stanch losses at JIRAMA. The World Bank continued to negotiate with the GOM but has warned that the GOM’s actions could jeopardize new funding of USD 75 million and a multi-annual program worth USD 400 million.

The GOM says it is actively seeking FDI and increased participation from the Malagasy private sector. However, the business community continues to express frustration about poor transportation infrastructure, expensive yet unreliable supply of electricity and water, endemic corruption and the uneven nature of the anti-corruption initiatives, and weak enforcement of rules and regulations as impediments to investment, foreign or domestic. In addition, the business community is concerned about the lack of transparency in awarding contracts, uncertainty about agreed terms for contracts and tenders, and centralized decision-making which has caused confusion and backtracking. The GOM drafted amendments to the mining code in late 2019 which included several provisions on ownership and taxes that worried investors and interest groups and forced a return to the drafting table. Mine operators, though, left the review committee for the legislation in late 2020, arguing that the decision-making process was unfair and some GOM proposals were not economically viable.

The existing investment law allows foreign ownership of businesses and does not discriminate against foreign-owned enterprises. There is no legal requirement that citizens own shares of foreign investment, nor any restriction on the mobility of foreign investors. The regime for visas, residence, and work permits is neither discriminatory nor excessively onerous. A new version of the law is pending clearances by senior decision makers and is expected to clarify access to land and address issues of corporate social responsibility and sustainability.

The Economic Development Board of Madagascar (EDBM), an investment promotion agency, has several objectives – to strengthen the competitiveness of the Malagasy private sector, to increase FDI, to develop and recommend business incentives for private investments in Madagascar, and to provide a one-stop shop to help investors set up or expand their business through tailored services by specialized advisors. EDBM’s move toward digitalization and paperless procedures, to enable the online creation of companies and the provision of online tools for startups & SMEs in search of investors’ support, are expected to simplify the business set up process further.

Limits on Foreign Control and Right to Private Ownership and Establishment

Broadly speaking, there are no general, economy-wide limits on foreign ownership or control. Any individual or legal entity, domestic or foreign, is free to invest and operate, in accordance with the laws and regulations.

Foreign and domestic private entities are free to establish and own their business enterprises and engage in all forms of remunerative activities. Except for the telecommunication sector, where foreign ownership is restricted to 66 percent, foreign investors can retain full ownership of their company and repatriate their earnings without restriction. Certain strategic sectors such as banking, insurance, mining, oil, and gas, medical, and pharmaceuticals have extra regulatory provisions which apply to all investors, foreign and domestic.

There is no official discrimination against foreign investors, who are treated on par with local investors, although foreign investors have reported delays in getting permits and problems finding their way through Madagascar’s convoluted bureaucracy.

Madagascar has no formalized investment screening mechanism for inbound foreign investment. Economic Development Board of Madagascar (EDBM) does conduct a review which is submitted to the licensing authority and final ratification of foreign investment must be completed by the President’s Office.

Other Investment Policy Reviews

In the past three years, the government has not undergone any third-party investment policy reviews (IPRs) through a multilateral organization such as the OECD, WTO, or UNCTAD.

Business Facilitation

In 2006, Madagascar set up the Economic Development Board of Madagascar (EDBM), a one-stop shop for receiving, processing, and delivering the required administrative documents to speed up the approval of all investment projects. Its primary recommendation for a foreign company seeking to start a business in Madagascar is to consider collaborating with a local business. Many foreign companies seek local partners to ease their introduction to the market and make new contacts. Post recommends the retention of competent local counsel and/or a local representative.

EDBM is fine-tuning an online registration service to launch in the second quarter of 2021 which should shorten the registration timeline and provide more clarity on the rules for investment. Working in conjunction with the concerned public institutions and technical and financial partners, EDBM’s reforms will establish a paperless process for business creation (companies and sole proprietorships) while putting in place a unique identifier for each company. Through close collaboration with municipalities, the Ministry of Territory Development-Habitat-Public Works, and the national utility company JIRAMA, EDBM aims to modernize the issuance of building permits at the municipal level, starting in the capital city.

While Madagascar placed 161 out of 190 in the 2020 World Bank’s overall Doing Business rankings, it ranks 80 out of 190 (Scoring 88.5) for ease of starting a business in the same report. EDBM handles business registrations, which takes on average of eight days after receipt of complete documentation and is amongst the shortest in Sub-Saharan Africa (21.5 days for the SSA region). Companies will need to secure a physical local address with a signed lease before attempting to register. EDBM assists both local and foreign investors in registering and operating their businesses. At the EDBM one-stop shop, companies can obtain their business identification cards, tax registration confirmations, commercial registration numbers, and apply for visas, work permits or professional cards. They must also register for social security and health insurance. Companies in Madagascar are free to open and maintain bank accounts in foreign currency.

Outward Investment

The GOM does not offer incentives to promote outward investment. However, many wealthy entrepreneurs have diversified their investment base by investing in Europe, the United States, Mauritius, and the Middle East.

There are no restrictions on capital outflows from Madagascar to the rest of the world, but companies and individuals must fill out a form showing the reasons for the transfers. Domestic investors who invest abroad must comply with the foreign currency control mechanism enforced at the state and commercial bank level with close monitoring by the Finance Ministry.

Malawi

Executive Summary

The Government of Malawi (GOM) is eager to attract foreign direct investment and opportunities are plentiful for investors comfortable operating in frontier markets. Political risk in Malawi is manageable as the country has been largely free of political violence since gaining independence in 1964. Malawi has no significant tribal, religious, regional, ethnic, or racial tensions that could lead to violent confrontation. Malawi demonstrated its stability after the presidential election was rerun in 2020 when all political actors accepted the opposition win and power was transferred peacefully.

The GOM has several initiatives to help investors do business in the country. The Malawi Investment and Trade Center’s One Stop Center helps navigate relevant regulations and procedures, a process that can be challenging without local knowledge. The government also hosts Investment Forums to attract investors into the country, though with the COVID19 pandemic the forums have failed to take place. The Government of Malawi emphasizes private sector led development in the newly launched Malawi Vision 2063 development plan.

The agriculture and energy sectors are two areas of the Malawi economy that offer opportunity for investment. Agriculture accounts for 25% of GDP and 80% of Malawi’s exports, but the sector is prone to shocks such as Cyclone Idai and floods which hit the country in 2019, damaging infrastructure. Efforts to recover from the flooding damage have been slowed by the pandemic. Nonetheless, many opportunities exist for investment in agriculture, particularly in agribusiness and agro processing. The energy sector also provides opportunity for investment. In 2020, the U.S. International Development Finance Corporation (DFC) financed a multi-million dollar Solar Power Generation deal in Malawi, which has been approved by GOM and will roll out as planned. The solar power agreement followed the completion of MCC’s $350 million energy compact in 2018. Other opportunities in the energy sector, include mining, transport, and ICT.

Challenges for investment in Malawi are typical of developing countries. GOM has made efforts to combat corruption but it remains a major problem. Scarcity of skilled and semi-skilled labor is another serious impediment to businesses. Shortages are most acute in occupations such as economics, engineering, law, IT, and medicine/health. Infrastructure investment also lags and, as a land-locked country, port access depends on neighboring countries. Formal and informal trade boundaries may restrict both imports and exports, yet the economy is heavily reliant on imports. While power infrastructure has improved, power outages remain a significant impediment to investment.

In general, there are adequate legal instruments to protect investors, and foreign investors generally receive national treatment. All investors have access to Malawi’s legal system, which functions well and in an unbiased manner but is notoriously slow. There is an established mediation process to work with parties to overcome disputes and preempt court proceedings. All investors have the right to establish, acquire, and dispose of interests in business enterprises. Foreigners require a business residency permit to carry out any business activity in Malawi. All new land acquisitions are under leases, but foreigners may be limited to a 50-year renewable lease, compared to 99 years for Malawians.

The Government seeks to ensure the availability of foreign exchange for business transactions and remittances to attract investors and spur economic growth. There are no restrictions on remittance of foreign investment funds if the capital and loans initially came from foreign sources and were registered with the Reserve Bank of Malawi.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 129 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 109 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 111 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 70 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 380 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Malawi is open to foreign and domestic investment and grants national treatment to all investors. Foreign investors may invest in almost any sector of the economy and may access government investment incentives. There are no restrictions on ownership, size of investment, source of funds, investment sector, or whether the products are destined for export or for domestic markets. Furthermore, an investor can disinvest 100%, make international payments, and cannot be forced into local partnerships. However, the Malawi Stock Exchange limits an individual foreign investor to 10% of any company’s initial public offering (IPO) and the stake of all foreign investors in an IPO is limited to 49% of total shares of the company.

The GOM prioritizes investment retention and maintains an ongoing dialogue with investors through the Malawi Investment and Trade Center (MITC), Ministry of Trade, Ministry of Industry, Public Private Partnership Commission, and other government agencies. The Malawi Confederation of Chambers of Commerce and Industry ( MCCCI ) represents all sectors of the economy and has been successful in lobbying the GOM on issues affecting the private sector. In recent years, the government has hosted Malawi Investment Forums to present a platform for marketing the country, fostering partnerships, and bringing in foreign direct investment.

Limits on Foreign Control and Right to Private Ownership and Establishment

The GOM does not impose restrictions on the ownership or location of investments. It permits FDI in all sectors of the economy except for those sectors or activities that may pose a danger to health, the environment or national security. Restrictions are not imposed on fund source, destination, or final product. There is, however, a requirement for companies registered in Malawi to appoint at least two Malawian residents as directors.

There are some limitations on foreign ownership of land. Under the Land Act of 2016, neither Malawians nor foreigners can acquire freehold land. Foreigners can secure lease-hold land for terms up to 50 years, after which the lease may be renewed. In addition, foreigners can only secure private land when no citizen has made an equal offer for the same land.

During the privatization of government assets, Malawian nationals are offered preferential treatment including discounted share prices and subsidized credit. A 2017 amendment to the Public Procurement and Disposal of Assets (PPDA) Bill includes an indigenization clause that calls for “the prioritization of all bids submitted to give preference to sixty percent indigenous black Malawians.” In 2020, GOM gazetted the Micro Small and Medium Enterprises (MSMEs) Participation Order, which empowers government ministries, departments and agencies (MDAs) to allocate procurements below certain thresholds to MSMEs. GOM is also in the process of gazetting Indigenous Black Malawian (IBM) Preference regulations, which orders MDAs to offer 60% of national competitive bidding procurements to IBM ( PPDA Legal Instruments ).

There is no government policy to screen foreign direct investment but minimum investment capital for foreign investors is $50,000. Such investors must register with MITC  and RBM . Registration of borrowed invested funds allows investors to externalize profits to pay back loans contracted abroad and repatriate funds when disinvesting. MITC has revised the threshold for capital requirements but is waiting for gazetting to make the threshold official. The new thresholds will depend on the sector and will be revised upwards ( MITC Malawi ).

Other Investment Policy Reviews

WTO last performed a periodic Trade Policy Review of Malawi in April 2016. The full report can be accessed at WTO TPR  . OECD and UNCTAD have not conducted reviews for Malawi.

Business Facilitation

MITC  assists foreign and domestic investors of all sizes to navigate relevant regulations and procedures of starting a business. It operates a One Stop Center where representatives from the Registrar General , the Malawi Revenue Authority , the Department of Immigration , and Ministry of Lands, Housing and Urban Development  are available to help potential investors. MITC’s main website, the iGuides  and its online trade portal ( www.trade.mitc.mw ) ( http://www.malawitradeportal.gov.mw/ ) provide further information.

In addition to MITC’s One Stop Center, businesses can register online at Registrar General , although the process may take longer and the website is sometimes inaccessible. To operate in Malawi, a business must register with the Registrar General, the Malawi Revenue Authority and often the Ministry or regulatory body overseeing their sector of activity. For example, construction companies need to register with the National Construction Industry Council . Businesses are also supposed to obtain business licenses from the city assembly, register the workplace with Ministry of Labor, and allow health officials to carry out an inspection of the company premises ( HYPERLINK “https://mitc.mw/invest/index.php” https://mitc.mw/invest/index.php ).

Outward Investment

Domestic investors are not restricted to invest abroad except in the case of the Pension Act of 2010 and accompanying regulations which do not allow for the investment of pension funds or umbrella funds abroad.

Mauritania

Executive Summary

Mauritania’s previously bright economic outlook was dampened by uncertainty over the long-term economic impact of COVID-19 in 2020. Business closures, curfews and high levels of government spending on recovery projects have deteriorated the country’s meager financial reserves and shrunk GDP growth to just two percent compared to the six percent growth forecast before the pandemic. On March 9, 2021 the government concluded its Corruption Investigation File and detained 29 public officials, including ex-president Aziz. The state prosecutor formally charged 13 of these officials of bribery, money laundering, embezzlement, and obstruction of justice charges. The energy sector (hydrocarbons and renewable energy) continues to offer opportunities for U.S. direct investment. Mauritania is in the advanced stage of exploration of its hydrocarbon sector. After the U.S. company Kosmos Energy found a large deposit of natural gas off the coast of Mauritania and Senegal, four other major oil & gas firms (including Exxon Mobil) subsequently decided to start exploration ventures in Mauritania. Kosmos’ find – now led mostly by BP – is set to begin producing in 2023.

U.S. investment in Mauritania is primarily in the hydrocarbons and mining sectors. However, other sectors (i.e., tourism, agriculture, telecommunication and infrastructure projects and electricity) provide opportunities for U.S. investment. Mauritania is currently the United States’ 172nd largest goods trading partner with USD 189 million in total (two-way) goods trade. The total U.S. exports to Mauritania in 2019 were USD 127 million, and imports from Mauritania were USD 61 million, resulting in a U.S. trade surplus with Mauritania of USD 66 million.

The economic outlook was highly uncertain in 2020 due to the pandemic. In 2020, the government responded swiftly to mitigate the impact of the pandemic while international partners provided grants, loans, and debt service suspension. International financial support coupled with higher-than-expected prices for commodity exports (iron ore and gold) led to an unexpected fiscal surplus in 2020, which could help support Mauritania’s economic recovery in 2021 and 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 134 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 152 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 96 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 1190 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Mauritania desires more foreign direct investment (FDI) and is trying to promote its strategic geographical location and natural resources to attract new investors. It is rich in minerals, has enormous energy potential and has some of the continent’s richest fishing grounds. Mauritania is making progress in improving its business climate. In the 2020 World Bank Doing Business Report, Mauritania was ranked 152nd out of 190 economies. According to the report, Mauritania improved access to credit information and made enforcing contracts easier. Among the factors hindering FDI, there is political influence, corruption, a weak judicial system, and a poorly diversified and highly informal economy.

There is no law prohibiting or limiting foreign investment in any sector of the economy. There are no laws or regulations specifically authorizing private firms to adopt articles of incorporation or association, which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to restrict foreign investment. The government continues to prioritize foreign investment in all sectors of the economy and is working closely with the International Monetary Fund (IMF), the World Bank, and the international donor community to improve basic infrastructure and to update laws and regulations.

In 2012, the government adopted a revised Investment Code and created the Office of Promotion of the Private Sector (OPPS) to promote and monitor investment. Currently, prospective investors are required to obtain an Investment Certificate by presenting their proposal and all required documents to the OPPS. The government maintains an ongoing dialogue with investors through formal business conferences and meetings.

Limits on Foreign Control and Right to Private Ownership and Establishment

Both domestic and foreign entities can engage in all forms of remunerative activities, except activities involving selling pork meat or alcohol. There are no limits of transfer of profit or repatriation of capital, royalties, or service fees, provided the investments were authorized and made through official channels. The government performs mandatory screening of foreign investments. These screening mechanisms are routine and non-discriminatory. The “Guichet Unique” (a single location to take care of all administrative needs related to registering a company) provides the review for all sectors, except the petroleum and mining sectors, which require approval from a cabinet meeting led by the president.

Other Investment Policy Reviews

The latest investment policy review occurred in February 2008. The United Nations Conference on Trade and Development (UNCTAD) review is available online, in French, at: http://unctad.org/en/Docs/iteipc20085_fr.pdf. The report recommended that Mauritania diversify its economy, improve its investment potential through increasing revenue generated by the exploitation of natural resources, accelerate required reforms, and enhance the business and investment climate.

In 2011, Mauritania underwent a World Trade Organization (WTO) trade policy review. The report is available online at http://www.wto.org/english/tratop_e/tpr_e/tp350_e.htm. The report states that, since 2002, the government had undertaken few reforms in the areas of customs, trade, or investment regulations. The report also highlighted a lack of transparency as a deficiency. These policy reviews led to the release of the revised Investment Code in June 2012 to improve transparency in the government procurement process.

Business Facilitation

The government continues to amend its laws and regulations to facilitate business registration. The first cabinet reshuffle of the new government in August 2019 divided the former Ministry of Economy and Finance into two separate ministries: The Ministry of Economy and the Ministry of Finance. On February 20, 2020, the government created an inter-ministerial committee consisting of the Prime Minister, Minister of Commerce, Minister of Economy, Minister of Finance, and the Private Sector Association. The committee is charged with improving the business climate and driving investment and is chaired by the Prime Minister. In March 2021, the government created an Investment Promotion Agency within the Ministry of Economy. This new agency, once fully operational, will facilitate the administrative work of foreign investors. The agency will help investors navigate the process to obtain permits and other various administrative requirements.

The normal business registration process takes up to five business days. The Nouadhibou Free Trade Zone Authority (http://www.ndbfreezone.mr/) and “Guichet Unique” facilitate business registration and encourage FDI.

Outward Investment

Government incentives toward promoting outward investment remain limited. Mauritania’s major exports are iron ore (46 percent), non-fillet frozen fish (16 percent), and gold (11 percent). China, France, Spain, Japan, and the United Arab Emirates are the main trading partners. There are no investment restrictions on domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Mauritania has bilateral investment agreements with the Arab Maghreb Union (Algeria, Libya, Morocco, and Tunisia) as well as with Saudi Arabia, France, Belgium, and Romania. Agreements also exist with Burkina Faso, Cameroon, The Gambia, Ghana, Mauritius, Italy, Lebanon, Qatar, Yemen, Korea, and Egypt.

Mauritania is a signatory to the Cotonou Agreement between the European Union (EU) and the group of African, Caribbean and Pacific (ACP) countries, and thus enjoys free access to the EU market. Due to its least-developed country status, Mauritania also benefits from duty-free access to the European market under the Everything-But-Arms initiative.

Mauritania does not have a bilateral investment agreement or bilateral taxation treaty with the United States.

Mauritania is not eligible for benefits under the U.S. African Growth and Opportunity Act (AGOA) due to insufficient progress toward combating forced labor. However, Mauritania remains eligible for the Generalized System of Preferences (GSP), which allows marketable goods produced in Mauritania to enter the U.S. market duty-free.

In 2018, Mauritania was among the first countries to sign and ratify the African Continental Free Trade Area agreement. In 2019, Mauritania implemented the Commune Tariffs Agreement ECOWAS countries. Mauritania has been a member of the World Trade Organization (WTO) since May 31, 1995. The country, however, is in a transitional stage regarding its commitments, and it is currently engaging the WTO to ensure it makes progress towards complete compliance with required commitments.

Mauritius

Executive Summary

Mauritius is an island nation with a population of 1.3 million people.  The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers, but its undisputed EEZ amounts to approximately 1.3 million square kilometers, in addition to jointly managing about 388,000 square kilometers of continental shelf with Seychelles.  Mauritius has maintained a stable and competitive economy.  Real GDP grew at an average of 4.7 percent from 1968 to 2017, enabling the country to achieve middle-income status in less than 50 years.  In 2019, Mauritius’ GDP was 14 billion USD and its gross national income per capita surpassed 12,900 USD.  In July 2020, the World Bank classified Mauritius as a high-income country based on 2019 data, but most analysts forecasted that Mauritius would likely revert below high-income status in 2021 due to the effects of the Covid-19 pandemic. 

The pandemic severely damaged the economy.  While the government was relatively successful in mitigating the health impact – only 10 people died from the virus in 2020 – tourism, which contributed around 20 percent to the economy, disappeared.  Export demand, specifically textile manufacturing, also declined.  The IMF estimated that GDP growth contracted 14.2 percent in 2020, the country’s worst economic performance in four decades.  Statistics Mauritius estimated significant contractions in the 2020 growth rate in sectors such as accommodation and food services (-67.4 percent), construction (-25.4 percent), manufacturing (-20.1 percent), and commerce (-12 percent).  The IMF forecasted that the country’s economy would rebound with a 9.9 percent growth in 2021, but a second lockdown that began in March 2021 could change that estimate.

According to the World Bank’s Ease of Doing Business Index 2020, Mauritius ranked first in Africa and 13th worldwide out of 190 countries.  Unemployment was estimated at 6.7 percent at the end of 2019, while inflation forecasted for 2020 was 2.8 percent.

One of the poorest countries in Africa at independence in 1968, Mauritius has become one of the continent’s wealthiest.  It successfully diversified its economy away from sugarcane monoculture to a manufacturing and services-based economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate, and education/training.  Before Covid-19, authorities planned to stimulate economic growth in five areas:  Serving as a gateway for investment into Africa, increasing the use of renewable energy, developing smart cities, growing the blue economy, and modernizing infrastructure, especially public transportation, the port, and the airport.  In 2020, however, officials focused on keeping sectors afloat whose customers disappeared due to the pandemic.

Government policy in Mauritius is pro-trade and investment.  The GoM has signed Double Taxation Avoidance Agreements with 46 countries and maintains a legal and regulatory framework that keeps Mauritius highly ranked on “Ease of Doing Business” and good governance indices.  In recent years, Mauritius has been especially intent on attracting foreign direct investment from China and India, as well as courting more traditional markets like the United Kingdom, France, and the United States.  The China-Mauritius free-trade agreement went into effect on January 1, 2021.  Mauritius also signed a preferential trade agreement with India in February 2021, and it took effect in April 2021.  The Mauritian government promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy.  Corruption in Mauritius is low by regional standards, but recent political and economic corruption scandals illustrated there was room for improvement in terms of transparency and accountability.  A commercial dispute between a foreign investor and a parastatal partner that has turned into a criminal investigation, for instance, has raised questions of governmental impartiality.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 52 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 13 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 52 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $7,760 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita (USD) 2019 $12,900 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Mauritius actively seeks foreign investment.  According to several surveys and metrics, Mauritius is among the freest and most business-friendly countries in Africa.  For the 12th consecutive year, the World Bank’s 2020 Doing Business report ranked Mauritius first among African economies, and 13th worldwide, in terms of overall ease of doing business.  It also outperforms all other African countries on the Human Development Index where, in 2020, it ranked 67 out of 189 countries.  The 2021 Index of Economic Freedom, published by the Heritage Foundation, ranked Mauritius first among 47 countries in the Sub-Saharan Africa region and 13th globally, compared to being 21st in 2020.  However, the index said that the government would need to reverse its negative trend in government integrity, which registered at a level typical of countries that were ranked lower in economic freedom.

The Economic Development Board (EDB), formerly the Board of Investment, is the single gateway government agency responsible for promoting investment in Mauritius, and for helping guide investors through the country’s legal and regulatory requirements.

In terms of investor retention policy, the EDB provided aftercare services that considered future business environment requirements for survival and/or expansion.  The EDB has a customer service unit that took investor suggestions and complaints.  EDB also organized workshops and roundtable sessions to inform investors about changes in investment policies.

Limits on Foreign Control and Right to Private Ownership and Establishment

A non-citizen can hold, purchase, or acquire real property under the Non-Citizens (Property Restriction) Act (NCPRA), subject to government approval.  A foreigner can acquire residential property and apartments under the government-regulated Property Development Scheme (PDS).  The NCPRA was amended in December 2016 to allow foreigners to purchase certain types of properties, as long as the amount paid is over 6 million Mauritian rupees (approximately 172,000 USD).  A non-citizen is eligible for a residence permit upon the purchase of a house under the PDS if the investment made is more than 500,000 USD.  More information is available at http://dha.pmo.govmu.org/English/Mandate/Pages/Non-Citizens-Property-Restriction.aspx.

No government approval is required in certain situations provided under the NCPRA, namely: (i) holding of immoveable property for commercial purposes under a lease agreement not exceeding 20 years; (ii) holding of shares in companies that do not own immoveable property; (iii) holding of immoveable property by inheritance or effect of marriage to a citizen under the “régime legal de communauté;” (iv) holding of shares in companies listed on the Stock Exchange of Mauritius; and (v) through a unit trust scheme or any collective investment vehicle as defined in the Securities Act.  More information is available at www.dha.govmu.org.

Regarding business activities, the GoM generally does not discriminate between local and foreign investment.  There are, however, some business activities where foreign involvement is restricted.  These include television broadcasting, sugar production, newspaper or magazine publishing, and certain operations in the tourism sector.

In 2019, the Independent Broadcasting Authority (IBA) Act was amended to increase the allowable equity participation of a foreign company investing in broadcasting to 49.9 percent from 20 percent.  Similarly, control by foreign nationals in broadcasting was limited to 49.9 percent. Furthermore, a foreign investor cannot hold 20 percent or more of a company that owns or controls any newspaper or magazine, or any printing press publishing such publications.  The IBA Act can be accessed via http://www.iba.mu/legal.htm. 

In the sugar sector, no foreign investor is allowed to make an investment that would result in 15 percent or more of the voting capital of a Mauritian sugar company being held by foreign investors.  However, foreign investors may be exempt from this rule subject to authorization by the Financial Services Commission.

In the tourism sector, there are conditions on investment by non-citizens in the following activities: (i) guesthouse/tourist accommodation; (ii) pleasure craft; (iii) diving; and (iv) tour operators.  Generally, the conditions include a minimum investment amount, number of rooms, or a maximum equity participation, depending on the business activity.

In the construction sector, foreign consultants or contractors are required to register with the Construction Industry Development Board (CIDB).  Details on registration procedures are available on   http://cidb.govmu.org/English/Consultants-Contractors/Pages/default.aspx.

The Investment Office of the EDB screens foreign investment proposals and provides a range of services to potential investors.  The EDB is a useful resource for investors exploring business opportunities in Mauritius and provides assistance with occupation permits, licenses, and clearances by coordinating with relevant local authorities.  In 2020, the U.S. Embassy in Port Louis did not receive negative comments from U.S. businesses regarding the fairness of the government’s investment screening mechanisms.

The Investment Office of the EDB reviews proposals for economic benefit, environmental impact, and national security concerns.  EDB then advises the potential investor on specific permits or licenses required, depending on the nature of the business.  Foreign investors can also apply through the EDB for necessary permits.  In the event an investment fails review, the prospective investor may appeal the decision within the EDB or to the relevant government ministry.

In response to the Covid-19 crisis, the GoM relaxed investment terms and conditions for foreign investors in 2020.  For instance, the minimum investment amount for obtaining an occupation permit was halved to 50,000 USD.  The minimum turnover and minimum amount invested for the Innovator Occupation Permit was removed.  Professionals with an occupation permit and foreign retirees with a residence permit were able to invest in other ventures without any shareholding restrictions.  The permanent residence permit validity was doubled to 20 years.  Non-citizens who had a residence permit under the various real estate schemes were no longer required to hold an occupation or work permit to invest and work in Mauritius.

The conditions relating to the acquisition of property developed under the Property Development Scheme (PDS) and Smart City Scheme (SCS) were also loosened.  The minimum price of a property that buyers could use to then apply for a residence permit dropped to 375,000 USD from 500,000 USD.

In 2020, the Non-Citizens (Employment Restriction) Act was amended to enable the following categories of individuals to engage in any occupation without the need for a permit: (a) the holder of an occupation permit issued under the Immigration Act; (b) the holder of a residence permit issued under the Immigration Act; (c) a non-citizen who has been granted a permanent resident permit under the Immigration Act; and (d) a member of the Mauritian diaspora under the Mauritian Diaspora Scheme.

Other Investment Policy Reviews

In 2018, the United Nations Conference on Trade and Development (UNCTAD) published its 2017 Report on the Implementation of the Investment Policy Review (IPR) for Mauritius. The GoM also requested UNCTAD’s assistance to craft a strategic investment plan.

UNCTAD worked with the GoM on the Industrial Policy Strategic Plan, launched in December 2020, found here:  https://unctad.org/system/files/official-document/gdsinf2020d5_en.pdf.

Mauritius’ other most recent third-party investment policy reviews through multilateral organizations were completed in 2014.  In June 2014, the Mauritius Government conducted an investment policy review with the Organization for Economic Cooperation and Development (OECD).  The review concluded that, while policies and legislation in Mauritius support private sector development, incentive schemes tend to bias investment towards real estate and property development.  In October 2014, the Mauritius Government also conducted a trade policy review with the World Trade Organization (WTO).  A new trade policy review was expected to start in May 2020.

In February 2020, the Financial Action Task Force (FATF) placed Mauritius on the list of jurisdictions under increased monitoring concerning anti-money laundering/combating the financing of terrorism (AML/CFT).  The European Union also concluded that Mauritius had strategic deficiencies in its AML/CFT regime under Article 9 of its 4th Anti-Money Laundering Directive and in October 2020 added Mauritius to its list of high-risk countries.

Business Facilitation

The Mauritian government recognizes the importance of a good business environment to attract investment and achieve a higher growth rate.  In 2019, the Business Facilitation (Miscellaneous Provisions) Act entered into force.  The main reforms brought about by this legislation were expediting trade fee payments, reviewing procedures for construction permits, reviewing fire safety compliance requirements, streamlining of business licenses, and implementing numerous trade facilitation measures.

The incorporation of companies and registration of business activities falls under the provisions of the Companies Act of 2001 and the Business Registration Act of 2002.   All businesses must register with the Registrar of Companies. In 2020, the Business Registration Act was amended to highlight that the Registrar of Companies shall be the Central Repository of business licenses and information. Accordingly, every public sector agency shall electronically forward a copy of any permit, license, authorization or clearance to the Registrar for publication in the Companies and Businesses Registration Integrated System (“CBRIS”). As a general rule, a company incorporated in Mauritius can be 100 percent foreign owned with no minimum capital.  According to the World Bank 2020 Doing Business report, while the procedure for registering a company takes one day, actually starting a business takes 4.5 days.

After the Registrar of Companies issues a certificate of incorporation, foreign-owned companies must register their business activities with the EDB.  The company can then apply for occupation permits (work and residence permits) and incentives offered to investors.  EDB’s investment facilitation services are available to all investors, domestic and foreign.

In partnership with the Corporate and Business Registration Department (a division of the Ministry of Finance and Economic Development), the Mauritius Network Services (MNS) has implemented the Companies and Business Registration Integrated System, a web-based portal that allows electronic submission for incorporation of companies and application for the Business Registration Number, file statutory returns, pay yearly fees, register businesses, and search for business information.

In March 2019, the National Electronic Licensing System (NELS), which is co-financed by the European Union, was officially launched.  NELS is a single point of entry for the processing of permits and licenses needed to start and operate a business. The submission of business licensing (including Building and Land Use Permit, Occupation Certificate, etc.) can now be done electronically with the implementation of the National Electronic Licensing System.

In 2020, the Economic Development Board Act was amended to allow companies to log any obstacles relating to obtaining licenses, permits, authorizations, or other clearances; to enquire about any issue and make recommendations to government agencies; and to report and publish any actions taken.

Mauritius also implemented the e-Registry System, where a national register of real estate properties and statistics on land dispute resolutions were publicly available.  A mechanism for filing of complaints was also implemented.  The e-Registry System featured an electronic dashboard for registry searches, submission of documents, online payment of registration fees, and electronic copies of registered documents.

Outward Investment

The Mauritian government imposes no restrictions on capital outflows.  Due to the small size of the Mauritian economy, the government encourages Mauritian entrepreneurs to invest overseas, particularly in Africa, to expand and grow their businesses.  As part of its Africa Strategy, the government has established the Mauritius Africa Fund, a public company with $13.8 million capitalization to support Mauritian investment in Africa.  Through the Fund, the government participates as an equity partner up to 10 percent of the seed capital invested by Mauritian investors in projects targeted towards Africa.  The government has signed agreements with Senegal, Madagascar, and Ghana establishing and managing Special Economic Zones (SEZ) in these countries and has invited local and international firms to set up operations in the SEZs.  As per the 2018 Finance Act, Mauritian companies collaborating with the Mauritius-Africa Fund for development of infrastructure in the SEZs benefit from a five-year tax holiday.  To further facilitate investment, Mauritius has also signed Investment Promotion and Protection Agreements and Double Taxation Avoidance Agreements with African states.

Since 2012, the Board of Investment (now restructured as the Investment Office of the EDB) has been operating an Africa Center of Excellence, a special office dedicated to facilitating investment from Mauritius into Africa.  It acts as a repository of business information for Mauritian entrepreneurs about investment opportunities in different sectors in Africa.

In 2019, the most recent figures available from the Bank of Mauritius, gross direct investment flows abroad (excluding the offshore sector) amounted to 96 million USD.  The top three sectors for outward investment were financial and insurance activities (24 percent), accommodation and food service activities (18 percent), and real estate activities (8 percent).  Investment abroad was focused mainly on developing countries, particularly in Africa, which received 32 million USD.  Seychelles was the top recipient country, receiving 15 million USD.

2. Bilateral Investment Agreements and Taxation Treaties

In 2006, Mauritius and the United States signed a Trade and Investment Framework Agreement (TIFA) aimed at strengthening and expanding trade and investment ties between the two countries.  The United States has not signed a bilateral investment treaty or a free trade agreement with Mauritius.  Mauritius benefits from duty free and quota free access to the United States on approximately 6,500 tariff lines through the African Growth and Opportunity Act (AGOA).  This trade preference is valid until 2025 unless Mauritius graduates out of AGOA before then by moving up to high-income country status as defined by the World Bank.  In 2020, even though the World Bank upgraded Mauritius to high-income status, the U.S. government did not put Mauritius on track to graduate from AGOA.

Mauritius has been a member of the World Trade Organization since 1995 and has signed trade agreements with several regional blocs and countries.  These include the Common Market for Southern and Eastern Africa Free Trade Area (COMESA), the Indian Ocean Commission (IOC – only Madagascar offers trade preferences under the IOC), the interim Economic Partnership Agreement with the European Union (EU), the Southern African Development Community Free Trade Area (SADC), a free trade agreement with Turkey, and a preferential trade agreement with Pakistan.

In January 2021, the free-trade agreement between China and Mauritius, the first free-trade agreement between China and an African country, took effect.  Also in January 2021, the African Continental Free Trade Area Agreement (AfCFTA) took effect.  India and Mauritius signed their Comprehensive Economic Cooperation Partnership Agreement (CECPA) in February 2021, and it took effect in April 2021.

The UK-ESA EPA also entered into force in January 2021 after the Brexit transitional period ended on the last day of 2020.  This EPA, which Mauritius, Seychelles, and Zimbabwe signed in January 2019, was a continuity agreement based on the EU-ESA interim Economic Partnership Agreement (iEPA).

Mauritius has signed Investment Promotion and Protection Agreements (IPPA) with 45 countries.  The following 30 IPPAs have been ratified and are in force:  Barbados, Belgium/Luxemburg Economic Union, Burundi, China, Czech Republic, Egypt, Finland, France, Germany, Indonesia, Kuwait, Madagascar, Mozambique, Pakistan, Portugal, Cabo Verde, Republic of Congo, Romania, Senegal, Singapore, South Africa, South Korea, Sweden, Switzerland, Tanzania, Turkey, United Arab Emirates, United Kingdom, and Zambia.  The following 15 IPPAs have been signed but await ratification:  Benin, Cameroon, Chad, Comoros, Cote d’Ivoire, Gabon, Ghana, Guinea, Kenya, Mauritania, Nepal, Rwanda, Eswatini, Sao Tome and Principe, and Zimbabwe.

In 2013, Mauritius signed a Tax Information Exchange Agreement (TIEA) and an Inter-Governmental Agreement (IGA) with the United States to implement the Foreign Account Tax Compliance Act (FATCA).

Mauritius has also signed TIEAs with Australia, Austria, Denmark, Faroe Island, Finland, Greenland, States of Guernsey, Iceland, South Korea, and Norway.  TIEAs with Argentina, Greece, and Isle of Man await signature. Updated information on TIEAs can be accessed via the following link:  https://www.mra.mu/index.php/taxes-duties/international-taxation/double-taxation-agreements.

Mauritius has concluded 46 Double Taxation Avoidance Agreements (DTAAs) and is party to a series of treaties under negotiation. The treaties currently in force are:  Australia (Partial), Belgium, Botswana, Cape Verde, Congo, Croatia, Cyprus, Egypt, France, Germany, Ghana, Guernsey, India, Italy, Jersey, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Malta, Monaco, Mozambique, Namibia, Nepal, Oman, Pakistan, Bangladesh, China, Rwanda, Seychelles, Singapore, Sri Lanka, South Africa, Qatar, Eswatini, Sweden, Thailand, Tunisia, Uganda, United Arab Emirates, United Kingdom, and Zambia.  Six treaties await ratification: Gabon, Comoros, Kenya, Morocco, Nigeria, and Russia.  Six treaties await signature:  Cote d’Ivoire, Estonia, Gibraltar, Malawi, the Gambia and Angola.   Another 21 treaties were being negotiated: Algeria, Burkina Faso, Canada, Czech Republic, Greece, Hong Kong, Lesotho, Montenegro, Sudan, Portugal, Iran, Saudi Arabia, Senegal, Spain, St. Kitts & Nevis, Tanzania, Vietnam, Yemen, Zambia, Mali, and Turkey.

Mauritius has adopted the OECD’s Standard for Automatic Exchange of Financial Account Information (Common Reporting Standard – CRS), which sets a global benchmark that participating countries will adhere to in a proactive fiscal-information world.  The first reporting under this standard was undertaken in September 2018.

Morocco

Executive Summary

Morocco enjoys political stability, a geographically strategic location, and robust infrastructure, which have contributed to its emergence as a regional manufacturing and export base for international companies. Morocco actively encourages and facilitates foreign investment, particularly in export sectors like manufacturing, through positive macro-economic policies, trade liberalization, investment incentives, and structural reforms. Morocco’s overarching economic development plan seeks to transform the country into a regional business hub by leveraging its unique status as a multilingual, cosmopolitan nation situated at the tri-regional focal point of Sub-Saharan Africa, the Middle East, and Europe. The Government of Morocco implements strategies aimed at boosting employment, attracting foreign investment, and raising performance and output in key revenue-earning sectors, such as the automotive and aerospace industries. Morocco continues to make major investments in renewable energy, boasting a 4 GW current capacity, 5 GW under construction, and an additional 6 GW in the planning phase.

According to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2020 , Morocco attracted the eighth most foreign direct investment (FDI) in Africa. Following a record year in 2018 where Morocco attracted $3.6 billion in FDI, inbound FDI dropped by 55 percent to $1.6 billion in 2019. Despite the global COVID-19 pandemic, FDI inflows to Morocco remained largely stable totaling $1.7 billion in 2020, according to the Moroccan Foreign Exchange Office, a slight increase of one percent from the previous year. France, the UAE, and Spain hold a majority of FDI stocks. Manufacturing has the highest share of FDI stocks, followed by real estate, trade, tourism, and transportation. Morocco continues to orient itself as the “gateway to Africa” for international investors following Morocco’s return to the African Union in January 2017 and the launch of the African Continental Free Trade Area (CFTA) in March 2018, which entered into force in 2021. In June 2019, Morocco opened an extension of the Tangier-Med commercial shipping port, making it the largest in the Mediterranean and the largest in Africa. Tangier is connected to Morocco’s political capital in Rabat and commercial hub in Casablanca by Africa’s first high-speed train service. Morocco continues to climb in the World Bank’s Doing Business index, rising to 53rd place in 2020, rising on the list by 75 places over the last decade. Despite the significant improvements in its business environment and infrastructure, high rates of unemployment, weak intellectual property rights protections, inefficient government bureaucracy, and the slow pace of regulatory reform remain challenges.

Morocco has ratified 72 investment treaties for the promotion and protection of investments and 62 economic agreements – including with the United States and most EU nations – that aim to eliminate the double taxation of income or gains. Morocco is the only country on the African continent with a Free Trade Agreement (FTA) with the United States, eliminating tariffs on more than 95 percent of qualifying consumer and industrial goods. The Government of Morocco plans to phase out tariffs for some products through 2030. The FTA supports Morocco’s goals to develop as a regional financial and trade hub, providing opportunities for the localization of services and the finishing and re-export of goods to markets in Africa, Europe, and the Middle East. Since the U.S.-Morocco FTA came into effect bilateral trade in goods has grown nearly five-fold. The U.S. and Moroccan governments work closely to increase trade and investment through high-level consultations, bilateral dialogue, and other forums to inform U.S. businesses of investment opportunities and strengthen business-to-business ties.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 86 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 53 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 75 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $406 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 $3,190 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Morocco actively encourages foreign investment through macro-economic policies, trade liberalization, structural reforms, infrastructure improvements, and incentives for investors. Law 18-95 of October 1995, constituting the Investment Charter , is the foundational Moroccan text governing investment and applies to both domestic and foreign investment (direct and portfolio). The Ministry of Industry recently announced the second Industrial Acceleration Plan (PAI) to run from 2021-2025, which aims to build on the progress made in the previous 2014-2020 PAI and expand industrial development throughout all Moroccan regions. The PAI is based on establishing “ecosystems” that integrate value chains and supplier relationships between large companies and small- and medium-sized enterprises. Moroccan legislation governing FDI applies equally to Moroccan and foreign legal entities, with the exception of certain protected sectors.

Morocco’s Investment and Export Development Agency (AMDIE) is the national agency responsible for the development and promotion of investments and exports. Following the reform to the law  governing the country’s Regional Investment Centers (CRIs) in 2019, each of the 12 regions is empowered to lead their own investment promotion efforts. The CRI websites  aggregate relevant information for interested investors and include investment maps, procedures for creating a business, production costs, applicable laws and regulations, and general business climate information, among other investment services. The websites vary by region, with some functioning better than others. AMDIE and the 12 CRIs work together throughout the phases of investment at the national and regional level. For example, AMDIE and the CRIs coordinate contact between investors and partners. Regional investment commissions examine investment applications and send recommendations to AMDIE. The inter-ministerial investment committee, for which AMDIE acts as the secretariat, approves any investment agreement or contract which requires financial contribution from the government. AMDIE also provides an “after care” service to support investments and assist in resolving issues that may arise.

Further information about Morocco’s investment laws and procedures is available on AMDIE’s newly launched website  or through the individual websites of each of the CRIs. For information on agricultural investments, visit the Agricultural Development Agency website  or the National Agency for the Development of Aquaculture website .

When Morocco acceded to the OECD Declaration on International Investment and Multinational Enterprises in November 2009, Morocco guaranteed national treatment of foreign investors. The only exception to this national treatment of foreign investors is in those sectors closed to foreign investment (noted below), which Morocco delineated upon accession to the Declaration. The National Contact Point for Responsible Business Conduct ( NCP ), whose presidency and secretariat are held by AMDIE, is the lead agency responsible for the adherence to this declaration.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities may establish and own business enterprises, barring certain restrictions by sector. While the U.S. Mission is unaware of any economy-wide limits on foreign ownership, Morocco places a 49 percent cap on foreign investment in air and maritime transport companies and maritime fisheries. Morocco currently prohibits foreigners from owning agricultural land, though they can lease it for up to 99 years; however, new regulation to open agricultural land to foreign ownership is forthcoming. The Moroccan government holds a monopoly on phosphate extraction through the 95 percent state-owned Office Cherifien des Phosphates (OCP). The Moroccan state also has a discretionary right to limit all foreign majority stakes in the capital of large national banks but apparently has never exercised that right. The Moroccan Central Bank (Bank Al-Maghrib) may use regulatory discretion in issuing authorizations for the establishment of domestic and foreign-owned banks. In the oil and gas sector, the National Agency for Hydrocarbons and Mines (ONHYM) retains a compulsory share of 25 percent of any exploration license or development permit. As established in the 1995 Investment Charter, there is no requirement for prior approval of FDI, and formalities related to investing in Morocco do not pose a meaningful barrier to investment. The U.S. Mission is not aware of instances in which the Moroccan government refused foreign investors for national security, economic, or other national policy reasons, nor is it aware of any U.S. investors disadvantaged or singled out by ownership or control mechanisms, sector restrictions, or investment screening mechanisms, relative to other foreign investors.

Other Investment Policy Reviews

The last third-party investment policy review of Morocco was the World Trade Organization (WTO) 2016 Trade Policy Review  (TPR), which found that the trade reforms implemented since the prior TPR in 2009 contributed to the economy’s continued growth by stimulating competition in domestic markets, encouraging innovation, creating new jobs, and contributing to growth diversification.

Business Facilitation

In the World Bank’s 2020 Doing Business Report , Morocco ranks 53 out of 190 economies, rising seven places since the 2019 report. Since 2012, Morocco has implemented reforms that facilitate business registration, such as eliminating the need to file a declaration of business incorporation with the Ministry of Labor, reducing company registration fees, and eliminating minimum capital requirements for limited liability companies. Morocco maintains a business registration website that is accessible through the various Regional Investment Centers (CRI ).

Foreign companies may utilize the online business registration mechanism. Foreign companies, with the exception of French companies, are required to provide an apostilled Arabic translated copy of their articles of association and an extract of the registry of commerce in its country of origin. Moreover, foreign companies must report the incorporation of the subsidiary a posteriori to the Foreign Exchange Office (Office de Changes) to facilitate repatriation of funds abroad such as profits and dividends. According to the World Bank, the process of registering a business in Morocco takes an average of nine days, significantly less than the Middle East and North Africa regional average of 20 days. Morocco does not require that the business owner deposit any paid-in minimum capital.

In January 2019, the electronic creation of businesses law 18-17 was published, but as of April 2021 the new process is not yet operational. The new system will allow for the creation of businesses online via an electronic platform managed by the Moroccan Office of Industrial and Commercial Property (OMPIC). All procedures related to the creation, registration, and publication of company data will be carried out via this platform, which is expected to launch by the end of 2021. A new national commission will monitor the implementation of the procedures. The Simplification of Administrative Procedures Law 55-19, passed in 2020, aims to streamline administrative processes by identifying and standardizing document requirements, eliminating unnecessary steps, and making the process fully digital via the National Administration Portal, which is expected to launch in Spring 2021.

The business facilitation mechanisms provide for equitable treatment of women and underrepresented minorities in the economy. Notably, according to the World Bank, the procedure, length of time, and cost to register a new business is equal for men and women in Morocco. The U.S. Mission is unaware of any official assistance provided to women and underrepresented minorities through the business registration mechanisms. In cooperation with the Moroccan government, civil society, and the private sector, there have been several initiatives aimed at improving gender quality in the workplace and access to the workplace for foreign migrants, particularly those from sub-Saharan Africa.

Outward Investment

The Government of Morocco prioritizes investment in Africa. The African Development Bank ranks Morocco as the second biggest African investor in Sub-Saharan Africa, after South Africa, and the largest African investor in West Africa. According to the Department of Studies and Financial Forecasts, under the Ministry of Economy, Finance, and Administration Reform, $640 million, or 47 percent of Morocco’s total outward FDI, was invested in the African continent in 2019. The U.S. Mission is not aware of a standalone outward investment promotion agency, although AMDIE’s mission includes supporting Moroccans seeking to invest outside of the country for the purpose of boosting Moroccan exports. Nor is the U.S. Mission aware of any restrictions for domestic investors attempting to invest abroad. However, under the Moroccan investment code, repatriation of funds is limited to “convertible” Moroccan Dirham accounts. Morocco’s Foreign Exchange Office (“Office des Changes,” OC) implemented several changes for 2020 that slightly liberalize the country’s foreign exchange regulations. Moroccans going abroad for tourism can now exchange up to $4,700 in foreign currency per year, with the possibility to attain further allowances indexed to their income tax filings. Business travelers can also obtain larger amounts of foreign currency, provided their company has properly filed and paid corporate income taxes. Another new provision permits banks to use foreign currency accounts to finance investments in Morocco’s Industrial Acceleration Zones.

Mozambique

Executive Summary

Mozambique’s vast natural resources, lengthy coastline with deep water ports, favorable climate, rich soil, and premiere geographic location as the gateway to landlocked countries in southern Africa make it an attractive investment target. While the country welcomes foreign investment, investors must factor in corruption, an underdeveloped financial system, poor infrastructure, frequent natural disasters, and significant operating costs.  Transportation inside the country is unreliable and expensive, while bureaucracy, port inefficiencies, and corruption complicate imports.  Local labor laws remain an impediment to hiring foreign workers, even when domestic labor lacks the requisite skills.  In the last year, the COVID-19 pandemic impacted investment amid an economic downturn. A surging terrorist movement in the same northern province that is home to Mozambique’s nascent natural gas industry has also delayed expected investment.

In April 2021, Total, the lead operator for the USD 20 billion Mozambique LNG project in northern Mozambique, withdrew its staff from the project site, putting construction on hold until the government can guarantee the security necessary for the project to continue. While no formal announcements have been made yet, the move likely delays the project and any future government revenues. Earlier, in April 2020, ExxonMobil announced it would delay the long-awaited final investment decision in its separate USD 25 billion LNG project mostly because of the poor market conditions. A smaller floating LNG platform remains on track to produce first gas in 2023. However, with both major projects on pause, Mozambique’s hopes for a gas bonanza have been delayed.

The COVID-19 pandemic hit Mozambique’s formal economy built around the extractive industries and tourism, but other sectors have seen unexpected benefits. For example, Mozambique’s ports have seen increased volume despite the global slowdown because they remained open while competing ports in South Africa closed. The Mozambican government also launched a new rural development program, Sustenta, supported by a USD 500 million World Bank Loan. Sustenta aims to integrate small holder farmers into robust supply chains to create up to 200,000 jobs and boost annual growth in the critical agricultural sector from 2.3 percent to 5 percent.

Despite the pandemic and terrorism, Mozambique has a decent mid-term outlook. Following four years of reforms since the hidden debt scandal, Mozambique has made progress in the fight against corruption. Thanks in part to these efforts, the IMF and Mozambique entered into discussions to re-launch a new lending program, potentially the first non-emergency budgetary assistance to the government in five years.  If Mozambique continues on this path of reform, it will be better placed to manage its eventual resource income and attract other foreign investments.

U.S. businesses are poised to play a key role in this country’s transformation.  In June 2019, Mozambique signed a commercial Memorandum of Understanding with the Department of Commerce, outlining six key areas for investment including energy, infrastructure, financial services, agri-business, tourism, and fisheries, opening the door to increased cooperation and U.S. investment.  In December 2020, the U.S. government’s Millennium Challenge Corporation also announced it would focus on rural transport and agriculture for its second compact.  While still under development, this compact will make a significant investment in key sectors and help create the enabling environment for additional investments.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 149 of 175 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 138 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 124 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $491M USD https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 $490 USD http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of the Republic of Mozambique (GRM) welcomes foreign investment and sees it as a key driver of economic growth and job creation.  With the exception of a few sectors related to national security, all business sectors are open to foreign investment.  Mozambique’s 1993 Law on Investment, No. 3/93, and its related regulations, govern foreign investment.  In 2009, Decree No. 43/2009 replaced earlier amendments from 1993 and 1995, providing new regulations to the Investment Law.

In general, large investors receive more support from the government than small and medium-sized investors.  Government authorities must approve all foreign and domestic investment requiring guarantees and incentives.  Regulations for the 2009 Code of Fiscal Benefits, Law No. 4/2009, were established in 2009 under Decree No. 56/2009.

The Agency for Promotion of Investments and Exports (APIEX, Agencia para a Promocao de Investimentos e Exportacoes) is the primary investor contact within the GRM, operating under the Ministry of Industry and Commerce.  Its objective is to promote and facilitate private and public investment.  It also oversees the promotion of national exports.  APIEX can assist with administrative, financial, and property issues.  Through APIEX, investors can receive exemptions from some customs and value-added tax (VAT) duties when importing “Class K” equipment, which includes capital investments.

Contact information for APIEX is:

Agency for Promotion of Investments and Exports
http://www.apiex.gov.mz/ 
Rua da Imprensa, 332 (ground floor)
Tel: (+258) 21313310
Ahmed Sekou Toure Ave., 2539
Telephone: (+258) 21 321291
Mobile: (+258 ) 823056432

Government dialogue with the private sector is primarily coordinated by Mozambique’s Ministry of Industry and Commerce. Most businesses in Mozambique interact with the government via the country’s largest business association, the Confederation of Economic Associations (CTA, Confederação das Associações Económicas de Moçambique). CTA was formed in 1996 and continues to be the dominant and most influential business association in Mozambique.

Limits on Foreign Control and Right to Private Ownership and Establishment

Mozambique investment law and its regulations generally do not distinguish between investor origin or limit foreign ownership or control of companies.  With the exception of security, safety, media, entertainment, and certain game hunting concessions, there were no legal requirements that Mozambican citizens own shares of foreign investments until 2011, when the government adopted Law No. 15/2011, otherwise known as the “Mega-Projects Law.” This law governs public-private partnerships, large scale ventures, and major business concessions and states that Mozambican persons must hold between 5 percent to 20 percent of the equity capital of the project company.  Implementing regulations were approved by the Council of Ministers in 2012.

Article 4.1 of Law 14/2014, often referred to as the “Petroleum Law,” states that the GRM regulates the exploration, research, production, transportation, trade, refinery, and transformation of liquid hydrocarbons and their by-products, including petrochemical activities.  Article 4.6 established the state-owned oil company, the National Hydrocarbon Company (ENH, Empresa National das Hidorcorbonetos) as the government’s exclusive representative for investment and participation in oil and gas projects.  ENH typically owns up to 15 percent of shares in oil and gas projects in the country.

Depending on the size of the investment, the government approves both domestic and foreign investments at the provincial or national level, but there is no other formal investment screening process.

Other Investment Policy Reviews

Mozambique has not undergone a third-party investment policy review in the last three years.

Business Facilitation

Starting a business in Mozambique is a lengthy and bureaucratically complex process which has led to Mozambique’s relatively low score on the World Bank’s 2020 Doing Business Report. In the 2020 report, Mozambique ranked 176 out of 190 economies worldwide in terms of starting a new business, scoring well below the regional average for sub-Saharan Africa, in particular due to the relatively high cost of registering a business and number of procedures required to complete the process.

Registering a business typically involves reserving a name, signing an incorporation contract, payment of registration fees, publishing the company’s name and statutes in the national gazette, registering with the tax authority, and then notifying relevant agencies of the start of activity including the municipality’s one-stop-shop, the municipality’s labor office, national tax authority, and social security institute. According to the World Bank’s estimates, this process takes approximately 17 days. There is no single business registration website.

In May 2020, the Maputo City “one stop shop” known as the balcão de atendimento unico (BAU) introduced reforms that effectively reduced the number of procedures required to set up a new company from 11 to four by consolidating several steps required to register a new business.

Outward Investment

The government does not promote or incentivize outward investment.  It also does not restrict domestic investors from investing abroad.  However, Mozambique does require domestic investors to remit investment income from overseas, except for amounts required to pay debts, taxes, or other expenses abroad.

Namibia

Executive Summary

Namibia welcomes foreign investment and provides a strong foundation of stable, democratic governance and good infrastructure on which to build businesses. The Namibian government prioritizes attracting more domestic and foreign investment to stimulate economic growth, combat unemployment, and diversify the economy. The Ministry of Industrialization and Trade (MIT) is the governmental authority primarily responsible for carrying out the provisions of the Foreign Investment Act of 1990 (FIA). In August 2016, Namibia promulgated and gazetted the Namibia Investment Promotion Act (NIPA). However, the country has not yet enforced this Act due to substantive legal concerns raised by the private sector. Therefore, the FIA remains the guiding legislation on investment in Namibia.

The FIA calls for equal treatment of foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits, and access to foreign exchange. The government emphasizes the need for investors to partner with Namibian-owned companies and/or have a majority of local employees in order to operate in the country. Namibia’s judiciary is widely regarded as independent.

There are large Chinese foreign investments in Namibia, particularly in the uranium mining sector. South Africa has considerable investments in the diamond mining and banking sectors, while Canada has investment in gold, zinc and lithium. Spain and Russia have investments in the fishing industry. Foreign investors from the United Kingdom, the Netherlands, the United States, and other countries have expressed interest in oil exploration off the Namibian coast. Logistics, manufacturing, and mining for energy minerals also attract FDI.

The investment climate in Namibia is generally positive. Despite global economic disruptions caused by the COVID-19 pandemic, Namibia has maintained political stability and continues to offer key advantages for inward Foreign Direct Investment (FDI): an independent judicial system, protection of property and contractual rights, good quality physical and ICT infrastructure, and easy access to South Africa. Namibia is upgrading its transportation infrastructure to facilitate investment and position itself as a regional logistics hub. An expansion at Walvis Bay Port concluded in 2019, renovations at Hosea Kutako International Airport are ongoing, and there are plans to extend and rehabilitate the national rail line, including to neighboring countries from the port. Namibia has the best roads on the African continent, according to the World Economic Forum. Namibia also has access to the Southern African Customs Union (SACU), the Southern African Development Community’s (SADC) Free Trade Area, and markets in Europe and China. Challenges to FDI in Namibia are a relatively small domestic market, high transport costs, relatively high energy prices, and a limited skilled labor pool. A recent corruption scandal in the fishing sector that resulted in the arrests of ministers and business leaders that tarnished the reputation of the ruling political party and cost Namibia billions has strained public trust and negatively impacted the environment for FDI.

As a post-apartheid country with one of the highest rates of inequality in the world, Namibia continues to look for ways to address historic economic imbalances. Proposed legislation, the New Equitable Economic Empowerment Bill (NEEEB), which the government has been working on for more than a decade, will look to create economic and business opportunities for disadvantaged groups including in areas of ownership, management, human resource development, and value addition. Parliament may pass the bill in 2021, but further delays are possible. Also, the NIPA, although it is not yet in force, includes in Section 14 (c) a provision that investment must be for “…the net benefit to Namibia, taking into account the contribution of the investment to the implementation of programs and policies aimed at redressing social and economic imbalances in Namibia.”

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 57 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 104 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 104 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2017 USD -78 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 5,060 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Namibian government welcomes increased foreign investment to help develop the national economy and benefit its population. The Foreign Investment Act of 1993 (FIA) currently governs FDI in Namibia and guarantees equal treatment for foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits, and access to foreign exchange. Investment and tax incentives are also available for the manufacturing sector. The government prioritizes investment retention and maintains ongoing dialogue with investors including through investment conferences. The government is cognizant that some of its bureaucratic processes (such as the time it takes to get a business visa) impede the ease of doing business and is working to address outstanding challenges. The Namibian Investment Promotion Act has been under review since 2016 to replace the FIA.

The new Namibia Investment Promotion and Development Board (NIPDB) housed in the Office of the President, serves as Namibia’s official investment promotion and facilitation office. The NIPDB is headed by a highly regarded chartered accountant, and analysts are optimistic that this new entity will better facilitate investment in Namibia. The NIPDB is the first point of contact for potential investors, and it offers comprehensive services from the initial inquiry stage through to operational stages. NIPDB Facebook page: https://www.facebook.com/NIPDB; NIPDB Contact: andreas.andjene@nipdb.com . The NIPDB also provides general information packages, coordinates trade delegations, and assists with advice on investment opportunities, incentives, and procedures. The NIPDB is tasked with assisting investors in minimizing bureaucratic red tape, including obtaining work visas for foreign investors, by coordinating with government ministries as well as regulatory bodies.

Limits on Foreign Control and Right to Private Ownership and Establishment

Under the Foreign Investment Act (FIA), foreign and domestic entities may establish and own business enterprises and engage in all forms of remunerative activities. The Ministry of Home Affairs, Immigration, Safety, and Security grants renewable and non-renewable temporary employment permits for a period of up to 12 months for skills not locally or readily available. However, work permits and long-term residence permits are subject to bureaucratic hurdles and are hard to obtain for jobs that could be performed by a Namibian. Complaints about delays in renewing visas and work permits are common.

Foreigners must pay a 10 percent non-resident shareholder tax on dividends. There are no capital gains or marketable securities taxes, although certain capital gains are taxed as normal income. As a member of the Common Monetary Area, the Namibian dollar (NAD) is pegged at parity with the South African rand.

There are no general mandatory limits on foreign ownership, but some sectors have a mandatory joint ownership between a local firm and foreign firm, such as in the natural resources sector. Government procurements usually also require a variable percentage of local ownership.

Other Investment Policy Reviews

Namibia has not undergone any third party investment policy reviews in the last three years by the OECD, WTO, or UNCTAD. The Southern Africa Customs Union (SACU), of which Namibia is a member, was last reviewed by the WTO in 2015.

Business Facilitation

Foreign and domestic investors may conduct business in the form of a public or private company, branch of a foreign company, closed corporation, partnership, joint venture, or sole trader. Companies are regulated under the 2004 Companies Act, which covers both domestic companies and those incorporated outside Namibia but traded through local branches. To operate in Namibia, businesses must also register with the relevant local authorities, the Workmen’s Compensation Commission, and the Social Security Commission.

Most investors find it helpful to have a local presence or a local partner in order to do business in Namibia, although this is not currently a legal requirement, except in sectors that require a joint venture partner. Companies usually establish business relationships before tender opportunities are announced. The World Bank’s Doing Business 2020 report notes that it takes ten steps and an average of 54 days to start a business in Namibia. Some accounting and law firms provide business registration services.

The Business and Intellectual Property Authority (BIPA) is the primary institution which serves the business community and ensures effective administration of business and intellectual property rights (IPRs) registration. BIPA serves as a one-stop-center for all business and IPR registrations and related matters. It also provides general advisory services and information on business registration and IPRs. Website: http://www.bipa.gov.na/. 

Outward Investment

Namibia provides incentives for outward investment mainly aimed at stimulating manufacturing, attracting foreign investment to Namibia, and promoting exports. To take advantage of the incentives, companies must be registered with MIT and the Ministry of Finance. Tax and non-tax incentives are accessible to both existing and new manufacturers. Here is the list of the investment incentives: https://www.namibweb.com/tin.htm. Namibia is in the process of creating Special Economic Zones, which will replace the old Export Processing Zone regime, to offer favorable conditions for companies wishing to manufacture and export products.

Niger

Executive Summary

Niger is eager to attract foreign investment and has taken slow but deliberate steps to improve its business climate, including making reforms to liberalize the economy, encourage privatizations, appeal to foreign investors, and increase imports and exports.

In April 2021, President Bazoum Mohamed was inaugurated in Niger’s historic first democratic transfer of executive power.  Bazoum intends to build upon the advancement of his predecessors to continue to develop the nation’s mineral and petroleum wealth, while seeking to develop agricultural businesses that can take advantage of the African Free Continental Free Trade Agreement.  Pre-COVID economic growth averaged roughly six percent per year.  The Government of Niger (GoN) continues to seek foreign investment – U.S. or otherwise.  During official visits to New York, Paris, Beijing and elsewhere, former President Issoufou regularly reiterated the need for FDI.  In 2017, the GoN created the High Council for Investment, which is an organization tasked with supporting and promoting foreign direct investments in Niger, and is furthering appeals for foreign investment with the development of the Guichet Exterior, a single internet portal for information for foreign trade and investment.

U.S. investment in the country is very small; there is currently only one U.S. firm operating in Niger outside of U.S. Government-related projects.  Many U.S. firms see risk due to the country’s limited transport and energy infrastructure, terrorist threats, the perception of political instability, lack of educated and experience workers, and a climate that is dry and very hot.  Foreign investment dominates key sectors: the uranium sector is dominated by French firms, Morocco is making inroads with telecommunications and real estate development, while Chinese and Turkish investment is paramount and expanding in the oil and construction sectors. Much of the country’s retail stores, particularly those related to food, dry goods and clothing are operated by Lebanese and Moroccan entrepreneurs. GoN focus areas for investment include the mining sector, infrastructure and construction, transportation, and agribusiness.  The GoN also hopes to draw investment into petroleum exploration into proven reserves with the 2023 target completion of a crude oil export pipeline.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 123 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 132 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 128 of 129 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 600 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Niger is committed to attracting FDI and has repeatedly pledged to take whatever steps necessary to encourage the development of private sector and increase trade. The country offers numerous investment opportunities, particularly in agriculture, livestock, energy, telecommunication, industry, infrastructure, hydrocarbons, services and mining. In the past several years, new investor codes have been implemented (the most recent being in 2014), Public-Private Partnership law was adopted in 2018 and implemented since then, transparency has improved, and customs and taxation procedures have been simplified. There are no laws that specifically discriminate against foreign and/or U.S. investors. The government of Niger has demonstrated a willingness to negotiate with prospective foreign investors on matters of taxation and customs.

The Investment Code adopted in 2014 guarantees the reception and protection of foreign direct investment, as well as tax advantages available for investment projects. The Investment Code allows tax exemptions for a certain period and according to the location and amount of the projects to be negotiated on a case-by-case basis with the Ministry of Commerce. The code guarantees fair treatment of investors regardless of their origin. The code also offers tax incentives for sectors that the government deems to be priorities and strategic, including energy production, agriculture, fishing, social housing, health, education, crafts, hotels, transportation and the agro-food industry. The code allows free transfer of profits and free convertibility of currencies.

The Public-Private Partnership law adopted in 2018 and implemented since then gives projects of the public private partnership type for their operations in the design and /or implementation phase, total exemption from duties and taxes collected by the State, including Value Added Tax (VAT), on the provision of services, works and services directly contributing to the realization of the project. However, parts and spare parts, raw materials intended for projects do not benefit from a duty exemption and customs taxes only when not available at Niger. In the design and /or production phase, private public partnership type benefit from free registration agreements and all acts entered into by the contracting authority and the contracting partner within the framework of the project.

There are no laws or practices that discriminate against foreign investors including U.S. investors.

The High Council for Investment of Niger (HCIN), created in 2017, reports directly to the President of the Republic. HCIN is the platform of public-private dialogue with a view to increasing Foreign Direct Investments, improving Niger’s business environment, and defining private sector priorities to possible investors.

In 2018, Niger’s government reviewed the HCIN’s mission as related to international best practices on attracting FDI. Accordingly, the GoN added by Presidential Decree a Nigerien Agency for the Promotion of Private Investment and Strategic Projects (ANPIPS). This new agency reports to the HCIN and implements the lead agencies policy initiatives.

The government put in place an Institutional Framework for Improving Business Climate Indicators office (Dispositif Institutionnel d’Amélioration et de Suivi du Climat des Affaires), within the Ministry of Commerce, focused on improving business climate indicators. Its goal is to create a framework that permits the implementation of sustainable reforms.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises. Energy, mineral resources, and national security related sectors restrict foreign ownership and control; otherwise, there are no limitations on ownership or control. In the extractive industries, any company to which the GoN grants a mining permit must give the GoN a minimum 10 percent share of the company. This law applies to both foreign and domestic operations.

The GoN also reserves the right to require companies exploiting mineral resources to give the GoN up to a 33 percent stake in their Nigerien operations. Although Ministry of Planning authorization is required, foreign ownership of land is permitted. In 2015, under the auspices of the Ministry of Commerce, the GoN validated a new Competition and Consumer Protection Law, replacing a 1992 law that was never operational. Niger adheres to the Community Competition Law of the West African Economic and Monetary Union (WAEMU) and directives of the Economic Community of West African States (ECOWAS) as well as those offered to investors by the Multilateral Investment Guarantee Agency (MIGA) all of which provide benefits and guarantees to private companies.

Foreign and domestic private entities have the right to establish and own business enterprises. A legal Investment Code governs most activities except accounting, which the Organization for the Harmonization of Business Law in Africa (OHADA) governs. The Mining Code governs the mining sector and the Petroleum Code governs the petroleum sector, with regulations enforced through their respective ministries. The investment code guarantees equal treatment of investors regardless of nationality. Companies are protected against nationalization, expropriation or requisitioning throughout the national territory, except for reasons of public utility.

The state remains the owner of water resources through the Niger Water Infrastructure Corporation (SPEN), created in 2001 and is responsible for the management of the state’s hydraulic infrastructure in urban and semi-urban areas, of its development, and project management. Concessions for the use of water and for the exploitation of works and hydraulic installations may be granted to legal persons governed by private law, generally by presidential decree.

An investment screening mechanism does not exist under the Investment Code.

Other Investment Policy Reviews

In the past three years, the government has not undergone any third-party investment policy reviews through a multi-lateral organization. Neither the United Nations Conference on Trade and Development (UNCTAD), nor the Organization for Economic Cooperation and Development (OECD) has carried out a policy review for Niger.

Business Facilitation

Niger’s one-stop shop, the Maison de l’Entreprise (Enterprise House) is mandated to enhance business facilitation by mainstreaming and simplifying the procedures required to start a business within a single window registration process.

From 2016 to 2019, the cost and time needed to register businesses dropped from 100,000 CFA (about USD190) to 17,500 CFA (about USD33), the time to get permit construction for the business drop, the cost of getting access to the water and electricity network drop also. Further reforms have included the creation of an e-regulations website ( https://niger.eregulations.org/procedure/2/1?l=fr ), which allows for a clear and complete registration process. Foreign companies may use this website. The website lists government agencies, with which a business must register. The business registration process is about 3 days, down from over 14 days in 2016.

( https://niger.eregulations.org/procedure/2/1?l=fr ), which allows for a clear and complete registration process. Foreign companies may use this website. The website lists government agencies, with which a business must register. The business registration process is about 3 days, down from over 14 days in 2016.

Company registration can be done at the Centre de Formalités des Entreprises (CFE), at the Maison de l’Entreprise, which is designed as a one-stop-shop for registration. Applicants must file the documents with the Commercial Registry (Registre du Commerce et du Crédit Mobilier – RCCM), which has a representative at the one-stop shop.

At the same location, a company can register for taxes, obtain a tax identification number (Numéro d’Identification Fiscale – NIF), register with social security (Caisse nationale de Sécurité Sociale – CNSS), and with the employment agency (Agence Nationale pour la Promotion de l’Emploi – ANPE). Employees can be registered with social security at the same location.

At the moment of company registration, the applicant may also request for the publication of a notice of company incorporation on the Maison de l’Entreprise website: http://mde.ne/spip.php?rubrique10 . The notice of company incorporation can alternatively be published in an official newspaper (journal d’annonces légales).

Outward Investment

The government does not promote outward investment. The government’s policy objectives, as specified in the second Nigerien Renaissance Program (section 1.2), is the development of international markets, especially that of ECOWAS, for Nigerien exports rather than investment.

The GON does not restrict domestic investors from investing abroad.

Nigeria

Executive Summary

Nigeria’s economy – Africa’s largest – experienced a recession in 2020, largely due to the COVID-19 pandemic and depressed global oil prices. The economy exited recession in the fourth quarter, but gross domestic product contracted 1.9% in 2020. The IMF forecasts a return to low-to-moderate growth rates in 2021 and 2022. President Muhammadu Buhari’s administration has prioritized diversification of Nigeria’s economy beyond oil and gas, with the stated goals of building a competitive manufacturing sector, expanding agricultural output, and capitalizing on Nigeria’s technological and innovative advantages. With the largest population in Africa, Nigeria is an attractive consumer market for investors and traders, offering abundant natural resources and a low-cost labor pool.

The government has undertaken reforms to help improve the business environment, including by facilitating faster business start-up by allowing electronic stamping of registration documents and making it easier to obtain construction permits, register property, obtain credit, and pay taxes. Reforms undertaken since 2017 have helped boost Nigeria’s ranking on the World Bank’s annual Doing Business rankings to 131 out of 190. Foreign direct investment (FDI) inflows have nevertheless remained stagnant, with new FDI totaling $1 billion in 2020 as a number of persistent challenges remain.

Corruption is a serious obstacle to Nigeria’s economic growth and is often cited by domestic and foreign investors as a significant barrier to doing business. Nigeria ranked 149 out of 175 countries in Transparency International’s 2020 Corruption Perception Index. Businesses report that corruption by customs and port officials often leads to extended delays in port clearance processes and to other issues importing goods.

Nigeria’s trade regime is protectionist in key areas. High tariffs, restricted forex availability for 44 categories of imports, and prohibitions on many other import items have the aim of spurring domestic agricultural and manufacturing sector growth. The economic downturn in 2020 put pressure on Nigeria’s foreign reserves. Domestic and foreign businesses frequently cite lack of access to foreign currency as a significant impediment to doing business.

Nigeria’s underdeveloped power sector is a bottleneck to broad-based economic development and forced most businesses to generate a significant portion of their own electricity. The World Bank currently ranks Nigeria 169 out of 190 countries for ease of obtaining electricity for business. Reform of Nigeria’s power sector is ongoing, but investor confidence continues to be weakened by tariff and regulatory uncertainty.

Security remains a concern to investors in Nigeria due to violent crime, kidnappings for ransom, and terrorism in certain parts of the country. The ongoing Boko Haram and Islamic State in West Africa (ISIS-WA) insurgencies have included attacks against civilian and military targets in the northeast of the country. Nigeria has experienced a rise in kidnappings for ransom and attacks on villages by armed gangs in several parts of the country. Militant attacks on oil and gas infrastructure in the Niger Delta region restricted oil production and export in 2016, but a restored amnesty program and more federal government engagement in the Delta region have stabilized the frequency and number of attacks on pipelines and allowed restoration of oil and gas production.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 149 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 131 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 117 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 5,469 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 2,030 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Nigerian Investment Promotion Commission (NIPC) Act of 1995, amended in 2004, dismantled controls and limits on FDI, allowing for 100% foreign ownership in all sectors, except those prohibited by law for both local and foreign entities. These include arms and ammunitions, narcotics, and military apparel. In practice, however, some regulators include a domestic equity requirement before granting foreign firms an operational license. Nevertheless, foreign investors receive largely the same treatment as domestic investors in Nigeria, including tax incentives. The Act also created the NIPC with a mandate to encourage and assist investment in Nigeria. The NIPC features a One-Stop Investment Center (OSIC) that includes participation by 27 governmental and parastatal agencies to consolidate and streamline administrative procedures for new businesses and investments. The NIPC is empowered to negotiate special incentives for substantial and/or strategic investments. The Act also provides guarantees against nationalization and expropriation. The NIPC occasionally convenes meetings between investors and relevant government agencies with the objective of resolving specific investor complaints. The NIPC’s role and effectiveness is limited to that of convenor and moderator in these sessions as it has no authority over other Government agencies to enforce compliance. The NIPC’s ability to attract new investment has been limited because of the unresolved challenges to investment and business.

The Nigerian government continues to promote import substitution policies such as trade restrictions, foreign exchange restrictions, and local content requirements in a bid to attract investment that develops domestic production capacity. The import bans and high tariffs used to advance Nigeria’s import substitution goals have been undermined by smuggling of targeted products through the country’s porous borders, and by corruption in the import quota systems developed by the government to incentivize domestic investment. The government opened land borders in December 2020, which were progressively closed to commercial trade starting in August 2019 with the aim of curbing smuggling and bolstering domestic production.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are currently no limits on foreign control of investments; however, Nigerian regulatory bodies may insist on domestic equity as a prerequisite to doing business. The NIPC Act of 1995, amended in 2004, liberalized the ownership structure of business in Nigeria, allowing foreign investors to own and control 100% of the shares in any company. One hundred percent ownership is allowed in the oil and gas sector. However, the dominant models for oil extraction are joint venture and production sharing agreements between oil companies (both foreign and local) and the federal government. Foreign investors must register with the NIPC after incorporation under the Companies and Allied Matters Act reviewed in 2020. A foreign company may apply for exemption from incorporating a subsidiary if it meets certain conditions including working on a specialized project specifically for the government, and/or funded by a multilateral or bilateral donor or a foreign state-owned enterprise. The NIPC Act prohibits the nationalization or expropriation of foreign enterprises except in cases of national interest and stipulates modalities for “fair and adequate” compensation should that occur.

Other Investment Policy Reviews

The World Bank published an Investment Policy and Regulatory Review of Nigeria in 2019. It provides an overview of Nigeria’s legal and regulatory framework as it affects FDI, foreign investors, and businesses at large and is available at https://openknowledge.worldbank.org/handle/10986/33596 . The WTO published a trade policy review of Nigeria in 2017, which also includes a brief overview and assessment of Nigeria’s investment climate. That review is available at https://www.wto.org/english/tratop_e/tpr_e/tp456_e.htm .

Business Facilitation

The government established the Presidential Enabling Business Environment Council (PEBEC) in 2016 with the objective of removing constraints to starting and running a business in Nigeria. Nigeria’s ranking has since jumped from 169 to 131 on the World Bank’s 2020 Doing Business Report and has ranked in the top ten most improved economies in two out of the last three years. Nigeria recorded improvements in eight of the 10 categories with “obtaining construction permits” witnessing the highest increase. The other two categories, “getting credit” and “protecting minority investments” remained static. Despite these improvements, Nigeria remains a difficult place to do business, ranking 179 out of 190 countries in the “trading across borders” category and scoring below its sub-Saharan counterparts in all trading subcategories. Particularly egregious were time to import (border compliance) and cost to import (documentary compliance) which, at 242 hours and $564, respectively, are double the sub-Saharan African average. PEBEC’s focal areas are improving trade, starting a business, registering property, obtaining building permits and electricity, and obtaining credit.

The OSIC co-locates relevant government agencies to provide more efficient and transparent services to investors, although much of its functions have yet to be moved online. The OSIC assists with visas for investors, company incorporation, business permits and registration, tax registration, immigration, and customs issues. Investors may pick up documents and approvals that are statutorily required to establish an investment project in Nigeria.

All businesses, both foreign and local, are required to register with the Corporate Affairs Commission (CAC) before commencing operations. CAC began online registration as part of PEBEC reforms. Online registration is straightforward and consists of three major steps: name search, reservation of business name, and registration. A registration guideline is available on the website as is a post-registration portal for enacting changes to company details. The CAC online registration website is https://pre.cac.gov.ng/home . The registration requires the signature of a Legal Practitioner and attestation by a Notary Public or Commissioner for Oaths. Business registration can be completed online but the certificate of incorporation is usually collected at a CAC office upon presentation of the original application and supporting documents. Online registration can be completed in as little as three days if there are no issues with the application. On average, a limited liability company (LLC) in Nigeria can be established in seven days. This average is significantly faster than the 22-day average for Sub-Saharan Africa. It is also faster than the OECD average of nine days. Timing may vary in different parts of the country.

Businesses must also register with the Federal Inland Revenue Service (FIRS) for tax payments purposes. If the business operates in a state other than the Federal Capital Territory, it must also register with the relevant state tax authority. CAC issues a Tax Identification Number (TIN) to all businesses on completion of registration which must be validated on the FIRS website https://apps.firs.gov.ng/tinverification/  and subsequently used to register to pay taxes. The FIRS will then assign the nearest tax office with which the business will engage for tax payments purposes. Some taxes may also be filed and paid online on the FIRS website. Foreign companies are also required to register with NIPC which maintains a database of all foreign companies operating in Nigeria. Companies which import capital must do so through an authorized dealer, typically a bank, after which they are issued a Certificate of Capital Importation. This certificate entitles the foreign investor to open a bank account in foreign currency and provides access to foreign exchange for repatriation, imports, and other purposes. A company engaging in international trade must get an import-export license from the Nigerian Customs Service (NCS). Businesses may also be required to register with other regulatory agencies which supervise the sector within which they operate.

Outward Investment

Nigeria does not promote outward direct investments. Instead, it focuses on promoting exports especially as a means of reducing its reliance on oil exports and diversifying its foreign exchange earnings. The Nigerian Export Promotion Council (NEPC) administered a revised Export Expansion Grant (EEG) in 2018 when the federal government set aside 5.1 billion naira ($13 million) in the 2019 budget for the EEG scheme. The Nigerian Export-Import (NEXIM) Bank provides commercial bank guarantees and direct lending to facilitate export sector growth, although these services are underused. NEXIM’s Foreign Input Facility provides normal commercial terms of three to five years (or longer) for the importation of machinery and raw materials used for generating exports.

Agencies created to promote industrial exports remain burdened by uneven management, vaguely defined policy guidelines, and corruption. Nigeria’s inadequate power supply and lack of infrastructure, coupled with the associated high production costs, leave Nigerian exporters at a significant disadvantage. Many Nigerian businesses fail to export because they find meeting international packaging and safety standards is too difficult or expensive. Similarly, firms often are unable to meet consumer demand for a consistent supply of high-quality goods in sufficient quantities to support exports and meet domestic demand. Most Nigerian manufacturers remain unable to or uninterested in competing in the international market, given the size of Nigeria’s domestic market.

Domestic firms are not restricted from investing abroad. However, the Central Bank of Nigeria (CBN) mandates that export earnings be repatriated to Nigeria, and controls access to the foreign exchange required for such investments. Noncompliance with the directive carries sanctions including expulsion from accessing financial services and the foreign exchange market.

Nigeria’s Securities and Exchange Commission (SEC) in April 2020 prohibited investment and trading platforms from facilitating Nigerians’ purchase of foreign securities listed on other stock exchanges. SEC cites Nigeria’s Investment and Securities Act of 2007, which mandates that only foreign securities listed on a Nigerian exchange should be sold to the Nigerian investing public.

2. Bilateral Investment Agreements and Taxation Treaties

Nigeria belongs to the Economic Community of West African States (ECOWAS), a free trade area comprising 15 countries located in West Africa. Nigeria signed the African Continental Free Trade Agreement (AfCFTA) – a free trade agreement consisting of 54 African countries, which became operational on January 1, 2021 – but its legislature has yet to ratify it. Nigeria has bilateral investment agreements with: Algeria, Austria, Bulgaria, Canada, China, Egypt, Ethiopia, France, Finland, Germany, Italy, Jamaica, the Republic of Korea, Kuwait, Morocco, the Netherlands, Romania, Russia, Serbia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Turkey, Uganda, and the United Kingdom. Fifteen of these treaties (those with China, France, Finland, Germany, Italy, the Republic of Korea, the Netherlands, Romania, Serbia, South Africa, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom) have been ratified by both parties.

The government signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2000. U.S. and Nigerian officials held their latest round of TIFA talks in 2016. In 2017, Nigeria and the United States signed a memorandum of understanding to formally establish the U.S.–Nigeria Commercial and Investment Dialogue (CID). The ministerial-level meeting with private sector representatives was last held in February 2020. The CID coordinates bilateral private sector-to-private sector, government-to-government, and private sector-to-government discussions on policy and regulatory reforms to promote increased, diverse, and sustained trade and investment between the United States and Nigeria, with an initial focus on infrastructure, agriculture, digital economy, investment, and regulatory reform.

Nigeria has 14 ratified double taxation agreements, including: Belgium, Canada, China, Czech Republic, France, Italy, the Netherlands, Pakistan, Philippines, Romania, Singapore, Slovakia, South Africa, and the United Kingdom. Nigeria does not have such an agreement with the United States. Nigeria introduced a new tax law, colloquially known as the “digital tax,” in 2020 which subjects non-resident companies with significant economic presence to corporate and sales taxes. Most of the affected companies are digital firms, many with U.S. headquarters. The local U.S. Chamber of Commerce affiliate has raised concerns about the lack of clarity on profit attribution, scope of the taxes, double taxation, and potential detrimental impact on company profits. The legislature expects to pass the Petroleum Industry Bill in the first half of 2021, which will revise taxes in the oil and gas sector.

Republic of the Congo

Executive Summary

The outbreak of the novel coronavirus will negatively impact the Republic of Congo’s (ROC) economy and investment climate for the rest of 2021. The International Monetary Fund (IMF), the Bank of Central African States (BEAC), and the ROC government project a decline of 0.8 percent of the gross domestic product (GDP) in 2021, a recovery from a seven percent GDP decline in 2020.

Even before the outbreak of COVID-19, the country had not fully recovered from a sustained economic crisis caused by the 2014 drop in oil prices. Poor governance and a lack of economic diversification pushed the ROC government to near insolvency, reduced its creditworthiness, and forced the central bank to expend significant foreign currency reserves.

Oil represents the largest sector of the economy and contributes upwards of 60 percent of the government’s annual declared revenue. The non-oil sector consists primarily of the logging industry, but significant economic activity also occurs in the telecommunications, banking, construction, and agricultural sectors. ROC is poised for economic diversification, with vast swaths of arable land, some of the largest iron ore and potash deposits in the world, a heavily forested land mass, and a deep-water International Ship and Port Facility Security Code-certified port. ROC has been eligible for U.S. African Growth and Opportunity Act trade preferences since October 2000, providing incentive for export-related investment. ROC participates in the Central African Economic and Monetary Community (CEMAC).

ROC has made significant investments in recent years to develop its infrastructure, including the completion of paved roads linking Brazzaville to the commercial capital of Pointe-Noire and other departments (regions). Significant challenges remain, in particular ROC’s nascent internet and inconsistent supplies of electricity and water, which present both hurdles to and opportunities for foreign direct investment. Significant sections of the country’s road system remain in need of maintenance or paving. The limited railroad network competes with truck and bus traffic for commercial cargo. However, major infrastructure projects still reach major cities, and the government reports spending significant amounts on infrastructure improvements.

Investors report that the commercial environment in ROC has not improved substantially in recent years. The World Bank’s 2020 Ease of Doing Business report ranked ROC at 180 out of 190 countries, and ROC ranked 165 out of 180 countries in Transparency International’s 2019 Corruption Perceptions Index. American businesses operating in ROC and those considering establishing a presence regularly report obstacles linked to corruption, lack of transparency, and host government inefficiency in matters such as registering businesses, obtaining land titles, paying taxes, and negotiating natural resource contracts.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 165 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 180 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 N/A https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 1,720 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The ROC government welcomes FDI in most sectors and particularly in the oil sector, which accounts for 90 percent of FDI inflows. The government has stated an urgent need to attract investment outside of the petroleum sector. In conjunction with an International Monetary Fund extended credit facility awarded in July 2019, ROC pledged to undertake legislative, regulatory, and institutional reforms to improve the investment climate.

The United States and ROC signed an investment agreement in 1994. No known laws or practices discriminate against foreign investors, including U.S. investors, by prohibiting, limiting or conditioning foreign investment in a sector of the economy.

ROC’s Agency for the Promotion of Investments (API), established in 2013, promotes economic diversification by seeking to expand the pool of external investors. API provides French-language advisory services to potential investors and maintains a database of government projects seeking private investor partners.

The government has made no significant efforts to retain foreign investments or to maintain dialogue with investors. The High Committee for Public-Private Dialogue, Le Haut Comité du Dialogue Public-Privé, established in 2012, convened one meeting in 2020.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

ROC has no known limits on foreign ownership or control.

Foreign business entities investing in the petroleum sector must pursue a joint venture with the Congolese National Petroleum Company (SNPC). An ROC executive order of November 15, 2019 requires foreign companies in the hydrocarbons sector to employ Congolese in 80 percent of management positions and 90 percent of all employee positions.

All forestry companies, both foreign- and locally-owned, are required by law to process 85 percent of their timber domestically and export it as furniture or otherwise transformed wood. The law allows timber companies to export up to 15 percent of their wood product as natural timber. In practice, however, the economy exports as much timber as natural timber.

ROC has no formal investment screening mechanism for inbound foreign investment.

Other Investment Policy Reviews

The government has not undertaken any third-party investment policy reviews in recent years.

Business Facilitation

The ROC Agency for Business Creation, or Agence Congolaise Pour la Création des Entreprises (ACPCE), serves as a “one-stop shop” for establishing a business. ACPCE has offices in Brazzaville, Pointe-Noire, N’kayi, Ouesso, and Dolisie.

To establish a business in ROC, investors must provide ACPCE with two copies of the company by-laws, two copies of capitalization documents (e.g. a bank letter or an affidavit), a copy of the company’s investment strategy, company-approved financial statements (if available), and ownership documents or lease agreements for the company’s offices in ROC.

The ACPCE has a website, http://www.acpce.cg/, which serves as an information-only website. Business registration cannot be completed through the website.

Outward Investment

The ROC government does not promote or incentivize outward investment.

The ROC government does not restrict domestic investors from investing abroad.

Rwanda

Executive Summary

Rwanda has a history of strong economic growth, high rankings in the World Bank’s Ease of Doing Business Index, and a reputation for low corruption. Rwandan GDP grew 9.5 percent in 2019 before declining 3.4 percent in 2020 due to the global COVID-19 pandemic, the first recession since 1994. In late 2020 and early 2021, the Government of Rwanda (GOR) took significant policy reforms intended to return the economy to growth, improve Rwanda’s competitiveness in selected strategic growth sectors, increase foreign direct investment (FDI), and attract foreign companies to operate in the newly-created Kigali International Financial Centre. In February 2021, the GOR amended the Law on Investment Promotion and Facilitation (Investment Code), the Law on Anti-Money Laundering and Counter-Terrorism Financing, and the Company Act. The GOR passed a new law governing partnerships and a law governing mutual legal assistance in criminal matters. The Rwanda Financial Intelligence Centre (FIC) was also created to curb money laundering and terrorism finance. The country presents a number of foreign direct investment (FDI) opportunities in sectors including: manufacturing; infrastructure; energy distribution and transmission; off-grid energy; agriculture and agro-processing; affordable housing; tourism; services; and information and communications technology (ICT). The new Investment Code includes equal treatment for both foreigners and nationals in certain operations, free transfer of funds, and compensation against expropriation; the 2008 U.S.-Rwanda Bilateral Investment Treaty (BIT) reinforces this treatment.

According to the National Institute of Statistics for Rwanda (NISR), Rwanda attracted $462 million in FDI inflows in 2018, representing five percent of GDP. Rwanda had a total of $3.2 billion of FDI stock in 2018, the latest year data is available. In 2020, the Rwanda Development Board (RDB) reported registering $1.3 billion in new investment commitments (a 48 percent decline from 2019, and an 89 percent decline from 2018, due to COVID-19), mainly in manufacturing, construction, and real estate. FDI accounted for 51 percent of registered projects. With $324.7 million committed in seven projects, the United States topped origination countries with 13.2 percent of the total investment commitments to Rwanda.

Due to the economic impacts of COVID-19, Standard and Poor’s downgraded the Rwandan economic outlook from “Stable” to “Negative,” citing higher public debt and deteriorating exports, tourism revenues, and diaspora remittances. Moody’s changed Rwanda’s outlook from stable to negative due to potential lowering of returns on past GOR’s investments in transportation and tourism that would “raise credit risks associated with Rwanda’s relatively high debt burden, which had been rising before the coronavirus shock and is being exacerbated by it.”

Government debt has rapidly increased over the past few years to more than 70 percent of GDP in 2021, but most of these loans are on highly concessionary terms. The result is that the GOR holds cheaper debt than the average low-income country while maintaining a higher debt-carrying capacity. Development institutions such as the World Bank, African Development Bank, International Monetary Fund, and others have offered to lessen or suspend debt repayment terms for less developed countries such as Rwanda because of COVID-19. However, as of March 2021, Rwandan authorities had not requested debt service suspension from official bilateral creditors as envisaged under the Debt Service Suspension Initiative (DSSI) supported by the G-20 and the Paris Club. As of March 2021, Rwanda had neither incurred external payment arrears nor accumulated domestic arrears.

Many companies report that although it is easy to start a business in Rwanda, it can be difficult to operate a profitable or sustainable business due to a variety of hurdles and constraints. These include the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, and payment delays with government contracts. Government interventions designed to support overall economic growth can significantly impact investors, with some expressing frustration that they were not consulted prior to the abrupt implementation of government policies and regulations that affected their businesses.

While electricity and water supply have improved, businesses may continue to experience intermittent outages (especially during peak times) due to distribution challenges. The GOR is planning to meet more than 100 percent of the country’s power generation needs through various power projects in development. Some investors report difficulties in obtaining foreign exchange from time to time, which could be attributed to Rwanda running a persistent trade deficit.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 49 of 180 https://www.transparency.org/en/cpi/2020/index/rwa 
World Bank’s Doing Business Report 2020 38 of 190 https://www.doingbusiness.org/en/
reports/global-reports/doing-business-2020 
Global Innovation Index 2020 91 of 131 https://www.globalinnovationindex.org/analysis-economy 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 N/A https://apps.bea.gov/international/factsheet//
World Bank GNI per capita 2019 $830 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Note:  According to NISR, stock of U.S. FDI in the country stood at $182.67 million in 2018 (most recent data available)

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Over the past decade, the GOR has undertaken a series of policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, and increase FDI levels. Rwanda enjoyed strong economic growth until the start of the COVID-19 pandemic in March 2020, averaging over seven percent annual GPD growth over the prior decade. Rwanda also enjoys high rankings in the World Bank’s Doing Business report (38 out of 190 economies in 2020 worldwide, and second best in Africa) and a reputation for low corruption. In 2020, Rwanda experienced a 3.4 percent GDP contraction, marking its first recession since the 1994 genocide.

The RDB ( https://rdb.rw ) was established in 2006 to fast-track investment projects by integrating all government agencies responsible for the entire investor experience under one roof. This includes key agencies responsible for business registration, investment promotion, environmental compliance clearances, export promotion, and other necessary approvals. New investors can register online at the RDB’s website (https://rdb.rw/e-services) and receive a certificate in as few as six hours, and the agency’s “one-stop shop” helps investors secure required approvals, certificates, and work permits. RDB states its investment priorities are: 1) export; 2) manufacturing including -textiles and apparel, electronics, information communication and technology equipment, large scale agricultural operations excluding coffee and tea, pharmaceuticals, processing in wood, glass and ceramics, processing and value addition in mining, agricultural equipment and other related industries that fall in these categories; 3) energy generation, transmission and distribution; 4) information and communication technologies, business process outsourcing and financial services; 5) mining activities relating to mineral exploration; 6) transport, logistics and electric mobility; 7) construction or operations of specialized innovation parks or specialized industrial parks; 8) affordable housing; 9) tourism, which includes hotels, adventure tourism and agro-tourism; 10) horticulture and cultivation of other high-value plants; 11) creative arts in the subsector of the film industry; 12) skills development in areas where the country has limited skills and capacity.

In February 2021, Rwanda made significant changes to the Investment Code to address previous investor complaints and included new incentives to attract investments in strategic growth sectors. The GOR created the Rwanda Financial Intelligence Centre (FIC), passed a law on Anti-Money Laundering and Counter-Terrorism Financing, and passed a law on Mutual Legal Assistance in Criminal Matters to fully criminalize money laundering and terrorism financing and align the country with OECD rules. The GOR amended the Company Act and passed a law on partnerships to allow professional service providers to register as partners rather than limited liability companies.

In 2020, The World Bank Ease of Doing Business report indicated that Rwanda made doing business easier by exempting newly formed small and medium businesses from paying for a trading license during their first two years of operation. In addition, the GOR reduced the time needed to obtain water and sewage connections to facilitate construction permits. It also began requiring construction professionals to obtain liability insurance. The country also upgraded its power grid infrastructure and improved its regulations on weekly rest, working hours, severance pay, and reemployment priority rules.

Several investors have said a top concern affecting their operations in Rwanda is that tax incentives included in deals negotiated or signed by the RDB are not fully honored by the Rwanda Revenue Authority (RRA). Investors further cite the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. For example, a few investors have said that customs officials have attempted to charge them duties based on their perception of the value of an import regardless of the actual purchase price.

Under Rwandan law, foreign firms should receive equal treatment regarding taxes and equal access to licenses, approvals, and procurement. Foreign firms should receive value added tax (VAT) rebates within 15 days of receipt by the RRA, but firms complain that the process for reimbursement can take months and occasionally years. Refunds can be further held up pending the results of RRA audits. A few investors cited punitive retroactive fines following audits that were concluded after many years. RRA aggressively enforces tax requirements and imposes penalties for errors – deliberate or not – in tax payments. Investors cited lack of coordination among ministries, agencies, and local government (districts) leading to inconsistencies in implementation of promised incentives. Others pointed to a lack of clarity on who the regulator is on certain matters. The U.S. Treasury Department’s Office of Technical Assistance (OTA) provided tax consultants to RRA to review auditing practices in Rwanda. The OTA program concluded in 2020 and produced a standardized tax audit handbook for RRA’s auditors to use. RRA has also instituted improvements to its systems that will automate certain processes and make many more processes digitized. Per RRA, it is now able to handle VAT claims in real time due to these changes.

Limits on Foreign Control and Right to Private Ownership and Establishment

Rwanda has neither statutory limits on foreign ownership or control nor any official economic or industrial strategy that discriminates against foreign investors. Local and foreign investors have the right to own and establish business enterprises in all forms of remunerative activity.

Foreign nationals may hold shares in locally incorporated companies. The GOR has continued to privatize state holdings with the government, ruling party, and military continuing to play a dominant role in Rwanda’s private sector. Foreign investors can acquire real estate but with a general limit on land ownership according to the 2013 land law. While local investors can acquire land through leasehold agreements that extend to a maximum of 99 years, foreign investors can be restricted to leases of 49 to 99 years with the possibility of renewal. Freehold is granted only to Rwandan citizens for properties of at least five hectares but may also be granted to foreigners for properties in designated Special Economic Zones, on a reciprocal basis, or for land co-owned with Rwandan citizens (if Rwandan citizens own at least 51 percent). However, according to an October 2020 draft law, freehold tenure would continue for Rwandan citizens on lands of at least two hectares and freehold tenure for foreigners could be approved by a Presidential Order for exceptional circumstances of strategic national interests. Long-term leases (emphyteutic leases) in residential and commercial areas for both citizens and foreigners acquiring land through private means would be increased to 99 years compared to the current 20 and 30 years, respectively. As of April 2021, this draft law had not yet been finalized. The Investment Code includes equal treatment for foreigners and nationals regarding certain operations, free transfer of funds, and compensation against expropriation. In April 2018, Rwanda introduced new laws to curb capital flight. Management, loyalty, and technical fees a local subsidiary can remit to its related non-residential companies (parent company) are capped at two percent of turnover. Companies resolving to go beyond the cap are subject to a 30 percent corporate tax on turnover in addition to a 15 percent withholding tax and an 18 percent reserve charge.

Other Investment Policy Reviews

In February 2019, The World Trade Organization (WTO) published a Trade Policy Review for the East African Community (EAC) covering Burundi, Kenya, Rwanda, Tanzania and Uganda. The report is available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(@Symbol=%20wt/tpr/s/*)%20and%20((%20@Title=%20rwanda%20)%20or%20(@CountryConcerned=%20rwanda))&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true# 

The Rwanda annex to the report is available at: https://docs.wto.org/dol2fe/Pages/FE_Search/ExportFile.aspx?Id=251521&filename=q/WT/TPR/S384-04.pdf

https://docs.wto.org/dol2fe/Pages/FE_Search/ExportFile.aspx?Id=251521&filename=q/WT/TPR/S384-04.pdf

Business Facilitation

RDB offers one of the fastest business registration processes in Africa. New investors can register online at RDB’s website ( http://org.rdb.rw/busregonline ) or register in person at RDB offices in Kigali. Once RDB generates a certificate of registration, company tax identification and employer social security contribution numbers are automatically created. The RDB “One Stop Center” assists firms in acquiring visas and work permits, connections to electricity and water, and support in conducting required environmental impact assessments.

RDB is prioritizing additional reforms to improve the investment climate. In October 2020, RDB launched electronic auctioning to reduce fraud by increasing transparency. The new system reduces the time needed to enforce judgments, reducing court fees and allowing payments electronically. RDB hopes to amend the land policy to merge issuance of freehold titles and occupancy permits; introduce online notarization of property transfers; implement small claims procedure to allow self-representation in court and reduce attorney costs; and establish a commercial division at the Court of Appeal to fast-track commercial dispute resolution.

Rwanda promotes gender equality and has pioneered several projects to promote women entrepreneurs, including the creation of the Chamber of Women Entrepreneurs within the Rwanda Private Sector Federation (PSF). Both men and women have equal access to investment facilitation and protections.

Outward Investment

The Investment Code provides incentives for internationalization. A small and medium registered investor or emerging investor with an investment project involved in export is entitled to a 150 percent tax deduction of all qualifying expenditures relating to internationalization including: 1) overseas marketing and public relations activities including launch of in-store promotions, road shows, overseas business or trade conferences; 2) participation in overseas trade fairs not supported by another existing initiative; 3) overseas business development costs; 4) market entry and research costs such as costs of establishing a legal entity in a foreign market, salary costs of employees stationed in foreign market, and cost of analysis of market opportunities, supply chain and entry requirements. The Commissioner General of RRA approves qualifying expenditures in consultation with the CEO of RDB. Eligible registered investors receive pre-approval of qualifying expenditures through a joint review process administered by the RRA, RDB and the Ministry of Trade and Industry (MINICOM). An eligible registered investor may claim the tax deduction on a maximum of USD 100,000 of qualifying expenditures in each year. There are no restrictions in place limiting domestic firms seeking to invest abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Rwanda is a member of the WTO, the East African Community (EAC), Economic Community of the Great Lakes, the Economic Community of Central African States, and the Common Market for Eastern and Southern Africa (COMESA). Rwanda ratified the African Continental Free Trade Area agreement in March 2018, and the agreement entered into force in 2019, but its implications for the region remain unclear.

The United States and Rwanda signed a Trade and Investment Framework Agreement (TIFA) in 2006 and a bilateral investment treaty (BIT) in 2008. Rwanda has active BITs with Germany (1969), the Belgium-Luxemburg Economic Union (1985), and the Republic of Korea (2013). Rwanda signed BITs with Mauritius (2001), South Africa (2000), Turkey (2016), Morocco (2016), the United Arab Emirates (2016), and Qatar (2018), but these treaties have yet to enter into force. Rwanda signed the Economic Partnership Agreement between the EAC and the European Union; this agreement has not yet entered into force.

Rwanda does not have a bilateral taxation treaty with the United States. Rwanda has double taxation agreements with Barbados, Mauritius, the Belgium-Luxembourg Economic Union, the Bailiwick of Jersey, Singapore, South Africa, Morocco, Turkey, United Arab Emirates, and Qatar.

After Rwanda implemented higher tariffs on imports of secondhand clothing and footwear in 2016, the U.S. government partially suspended African Growth and Opportunities Act (AGOA) benefits for apparel products from Rwanda, effective May 2018. Many other Rwandan exports to the United States are still eligible for trade preferences under the Generalized System of Preferences and AGOA. In 2020, Rwanda enjoyed a trade surplus of $24 million with the United States due in large part to AGOA-qualified exports of coffee, tea, and tree nuts.

Seychelles

Executive Summary

Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean with a population of 98,462. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial hub. Although the World Bank designated Seychelles as a “high income” country in 2015, its wealth is not evenly distributed. According to the United Nations Development Program’s (UNDP) Human Development Report for 2020, the share of income held by the richest 10 percent in Seychelles amounts to 40 percent.

Seychelles experienced a socialist takeover in 1977, which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debt contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a $230 million bond in 2008, the Government of Seychelles turned to the International Monetary Fund (IMF) for support. To meet the IMF’s conditions for a stand-by loan, the government implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR), and eliminating all foreign exchange controls. As a result, the country experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt, and increased international reserves, until the COVID-19 global pandemic in 2020.

Drivers of economic growth include fisheries, tourism, and construction. Heavy reliance on the tourism industry, which directly and indirectly contributed to over 60 percent of GDP in 2019, made the overall economy vulnerable to external shocks, such as the COVID-19 global pandemic. In January 2021, the Central Bank of Seychelles (CBS) announced that January – November 2020 tourism revenues decreased by 78 percent. According to the CBS, the economy is estimated to have contracted by 11.3 percent in 2020 compared to 3.0 percent growth in 2019. The IMF forecasts that real GDP will increase by 4.2 percent in 2021. In 2019, the government was on track to reduce the debt-to-GDP ratio to 50 percent by the end of 2021; however, by the end of 2020, the debt-to-GDP ratio had spiked to 99.4 percent, according to the Ministry of Finance. By the end of 2021, the Ministry of Finance expected public debt to increase to 108.4 percent of GDP, prompting the government to re-engage with the IMF on reform negotiations. Despite the government’s attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which spans 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small but growing offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.

Seychelles welcomes foreign investment though the Seychelles Investment Act, and related regulations restrict foreign investment in a number of sectors where local businesses are active, including artisanal fishing, small boat charters, taxi driving, and scuba diving instruction. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social, or industrial benefits will not compromise the country’s international reputation for environmental stewardship.

Politically, Seychelles’ first multiparty presidential election was held in 1993, after the adoption of a new constitution. In October 2020 elections deemed peaceful, orderly, and transparent by international election observers, opposition coalition party Linyon Demokratik Seselwa (LDS) won both the presidential and legislative elections. LDS holds 25 of the 35 assembly seats and includes four main parties: the Seychelles National Party (SNP); Lalyans Seselwa (Seychellois Alliance); the Seychelles Party for Social Justice and Democracy (SPSD) and; the Seychelles United Party (SUP). For the first time since the return of multiparty elections in 1993, United Seychelles Party (USP) is not the ruling party and currently holds 10 seats in the National Assembly. Prior to 1993, the United Seychelles Party (formerly the People’s Party/Parti Lepep) was the sole legal party in Seychelles. The next presidential and legislative elections will be held in 2025.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 27 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 100 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 NA https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 325 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 $16,900 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Seychelles has a favorable attitude toward most foreign direct investment, though the government reserves certain types of business activities for domestic investors only. The Reserved Economic Activity Policy April 2020 provides a detailed list of the types of business in which only Seychellois may invest and is available here:  https://www.investinseychelles.com/component/edocman/reserved-economic-activities-policy,-april-2020/download . The Seychelles Investment (Economic Activities) Regulations also provide details on the limitations on foreign equity for certain types of businesses and a list of economic activities in which need-based investment may be allowed by a foreigner: https://www.wto.org/english/thewto_e/acc_e/syc_e/WTACCSYC61_LEG_4.pdf . In June 2015, Seychelles implemented a moratorium on the construction of large hotels of 25 rooms and above on the country’s inner islands, which includes the three most-populated islands of Mahé, Praslin, and La Digue.

The Seychelles Investment Board (SIB) is the national single gateway agency for the promotion and facilitation of investment in Seychelles. The government’s objective is to promote economic and commercial relationships to diversify the economy, as well as to sustain its tourism and fishing industries, which are currently the main drivers of economic growth. The SIB organizes sector specific meetings with investors periodically and hosts a National Business Forum every two years to engage with the private sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Seychelles Investment Act of 2010 and Seychelles Investment (Economic Activities) Regulations 2014 govern foreign direct investment (FDI) in Seychelles and are available at:   https://www.investinseychelles.com/investors-guide/investor-resources/policies-guidelines-acts . Since the financial crisis of 2008 and the implementation of subsequent IMF reforms, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows in 2020 amounted to $149 million, representing a decrease of $105 million compared to 2019. This decrease is principally due to investments that were put on hold because of the pandemic. The SIB advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.

The Seychelles Investment (Economic Activities) Regulations of 2014 and the Reserved Economic Activity Policy of 2020 lists the economic activities in which only Seychellois can invest. This regulation is currently being reviewed to convert the list into a list of foreign activities in which foreigners can invest to allow for increased transparency and better governance. In the 2021 budget speech, the Minister of Finance highlighted that the current government aims to protect Seychellois business persons and plans to review the business categories in which Seychellois only can invest. Seychelles also places financial limits on foreign equity in certain types of resident companies – these limits are detailed in the Seychelles Investment (Economic Activities) Regulations 2014. The Regulations also provide a list of economic activities in which need-based foreign investment may be allowed. While the SIB and the government encourage foreign investors to collaborate with a local partner, there is no formal requirement.

The SIB also assists in screening potential investment projects in cooperation with other government agencies. For a business to operate, investors must apply for a license from the Seychelles Licensing Authority. The government established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge the government’s decisions regarding investments or proposed investments in Seychelles. More information is available in the Seychelles Investment Act 2010:  https://www.investinseychelles.com/component/edocman/seychelles-investment-act-2010/download?Itemid=0 .

Other Investment Policy Reviews

To date, Seychelles has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO). Seychelles became the 161st WTO member in April 2015. The investment policy review of Seychelles by UNCTAD was published in November 2020: https://investmentpolicy.unctad.org/publications/1238/investment-policy-review-of-seychelles .

Business Facilitation

The Seychellois government committed to improving the business environment through measures such as using public-private partnerships (PPP) to upgrade the country’s infrastructure. The government announced a draft PPP law in 2018. As of March 2021, the National Assembly had not yet voted on the measure. In March 2021, the Cabinet of Ministers approved the migration from the 2017 version Harmonized System of classification to the 2022 version. It is anticipated that this change will come into effect in February 2022. The government is also currently reviewing the Companies Act of 1972.

Seychelles is ranked 100th in the World Bank’s 2020 Ease of Doing Business Report. On average, it takes eight days to obtain a certificate of incorporation and 14 days to obtain a business license. Details on starting a business in Seychelles are available on the World Bank website: https://www.doingbusiness.org/en/data/exploreeconomies/seychelles# .

Information on registering a business in Seychelles can be obtained on the SIB website: https://www.investinseychelles.com/investors-guide/start-your-business . Companies, including those foreign-owned, can register business names online through the business registration portal:  http://www.sqa.sc/BizRegistration/WebBusinessRegsitration.aspx . However, part of the registration process, such as payment of fees, still must be completed in-person.

The Enterprise Seychelles Agency (ESA) is responsible for providing business development services to improve the performance of micro, small, and medium enterprises in Seychelles. Services provided by ESA include business planning, training, marketing expertise, and identification of business opportunities for SMEs.

Outward Investment

The GOS does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.

Sierra Leone

Executive Summary

Sierra Leone, with an estimated population of over 7.9 million people (World Population Review), is located on the coast of West Africa between the Republic of Guinea in the north and northeast, the Republic of Liberia in the south and southeast, and the Atlantic Ocean on the west, with a land area of 71,740 square kilometers. Since the civil war ended in 2002, the country has been politically stable with extraordinary religious tolerance among its people. Sierra Leone presents potential opportunities for investment and engagement. The March 2018 democratic transition in the presidency concluded with a runoff that recorded 81 percent registered voter participation. President Julius Maada Bio, who ruled briefly as head of a military regime in 1996, replaced President Ernest Bai Koroma on May 12, 2018. His “New Direction” doctrine promised a comprehensive reform agenda to revamp the economy and overturn the persistent imbalances on the current account, currency depreciation, high inflationary pressure, untenable debt distress, and high unemployment.

Sierra Leone’s economy remains heavily dependent on mineral resources, including significant deposits of iron ore, rutile, bauxite, and diamonds. Real gross domestic product (GDP) growth hit 20.1 percent in 2013, but the economy came to an abrupt halt in 2014, with the largest Ebola outbreak in history. This outbreak coincided with a slump in global commodities prices, which contracted the economy by 21.1 percent in 2015. The end of the outbreak allowed a modest recovery of 6.3 percent in 2016 with massive budgetary disparity caused by high public expenditure over revenue. This deficit compelled the government to implement austerity measures that slashed spending across the board and temporarily froze disbursements on most government projects. However, the measures failed to increase revenue collections or accumulate the expected savings, as economic growth slowed to 3.5 percent and inflation up at 18.3 percent in 2017. As the country continued to seek significant budget support from foreign donors, the International Monetary Fund (IMF), in June 2017, approved a three-year Extended Credit Facility (ECF) to help address the macroeconomic weaknesses but was suspended in December 2017. Consequently, development partners withheld their budgetary support to the government.

The economic landscape was challenging when the new administration took up governance in March 2018. Nonetheless, to achieve fiscal sustainability and medium-term growth objectives, the new government took up the challenges of revenue mobilization and expenditure control and initiated a re-activation of the suspended ECF with the IMF, to overcome emerging challenges and improve the prospects for growth projected to rebound to 4.8 percent in 2019. In February 2019, the government launched a medium-term National Development Plan (MTNDP) to span 2019 – 2023. The government hopes the plan, built on human capital development, economic diversification, and increased competitiveness in agriculture, fisheries, and tourism, will facilitate the transformation of the country from a fragile state to a stable and prosperous democracy that achieves middle-income status by 2039.

Foreign Direct Investment (FDI) plummeted in 2014/15 following the Ebola outbreak and the fall in commodity prices. After the outbreak, the flows sprouted to reach USD 599 million from its lowest level of USD 129 million in 2017 and with volatile inflows attributable to mining multinationals. According to UNCTAD’s 2020 World Investment Report, the stock increased to USD 2 billion by end of 2018 as the country was seeking to attract investment in agriculture, fisheries, tourism, natural resources, and through public-private partnerships for projects in energy, water, telecommunications, and other infrastructures. Sierra Leone, endowed with substantial natural resources, had long relied on its mineral industry, dominated by countless miners, as minerals account for more than 80 percent of exports and contribute 2.7 percent to GDP. The current President is reviewing mining contracts and considering changes to the law that would ensure the country benefits from its natural resources, a promise he made during his campaign. In 2019, the government canceled the mining licenses of the two major iron ore companies – the Chinese’s Shandong Iron & Steel Company and the U.S.-owned Gerald Group’s Sierra Leone Mining Company. The GoSL claimed that the companies were not paying all royalties. In 2020, Gerald Group subsequently brought a lawsuit against the government in an international tribunal. The government refused to recognize international arbitral rulings against it and was not complying with legal determinations, until in May 2021, when Gerald Group reached a settlement with the government. Mining operations are expected to resume in mid-2021.

While these issues do not necessarily reflect any discriminatory treatment of U.S. interests, they do underscore the challenges of all foreign businesses operating in Sierra Leone. Despite these issues, Sierra Leone offers great investment opportunities, and the government is looking for investment in all sectors of the economy and hopes for economic growth and development to be led by the private sector. To achieve this, the government continues to focus on improving the business environment to attract new foreign direct investments. Opportunities exist for investors as the country benefits from duty-free access to the Mano River Union market of more than 30 million, the African Continental Free Trade Agreement of about fifty-four African countries with a combined population of more than one billion, the European Union’s Everything But Arms initiative and the United States’ African Growth and Opportunity Act (AGOA) treaty. Achieving sustained economic growth will depend on Sierra Leone’s ability to diversify its economy, tap into under-utilized sectors like agriculture, tourism, and fisheries, and exploiting the country’s considerable natural resources in a manner to improve the lives of all citizens.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 119 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 163 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country (stock positions) 2018 $13 million USD https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2018 $490 USD http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies toward Foreign Direct Investment

Sierra Leone presents a favorable attitude toward FDI, which is critical to spurring the country’s economic growth and development. The Sierra Leone Investment and Export Promotion Agency (SLIEPA), supervised by the Ministry of Trade and Industry, is the government’s lead agency established to oversee trade policies, improve the investment climate, and stimulate investments. SLIEPA also provides information on business registration and assists investors in securing the relevant incentives and licenses.

In the World Bank ease of doing business report, Sierra Leone ranked 163 among 190 countries in 2020 and 2019, down from 160 in 2018, though the overall score (48.74) increased by +0.15 . For 2020, the World Bank highlighted challenges in access to credit, resolving insolvency, access to electricity, and construction permits but noted improved performance in payment of taxes and cross-border trade, with significantly improved performance in starting a business. The business registration process has been simplified into a one-stop-shop, the customs clearance procedure has been further simplified to improve on the country’s trade facilitation infrastructure, and the major seaport extended to accommodate more vessels.

The shortage in skilled labor, the lack of infrastructure, the slow legal system, the high level of corruption, political violence, and serious social disorder due to socio-economic disparities are major obstacles to FDI. Although the legal system is just and fair with foreign investors, the judiciary is often subject to financial and political influences as the enforcement of the law is a challenge. The government is constructing major roads leading to district headquarter towns and rehabilitating feeder roads linking agricultural suppliers to urban markets. In tackling corruption, the country progressed 10 places up in the Transparency International Corruption ranking from 129 out of 180 in 2018 to 119 out of 180 in 2019 and further up 2 places (117out of 180) in 2020. The country passed the Millennium Challenge Corporation’s indicator on the control of corruption scoring 71 percent in 2019, 79 percent in 2020, and 81 percent in 2021, though it failed in 2018 (49 percent).

The current administration continues to assure investors that the country is open to foreign investment and is make some efforts to address corrupt practices in procurements, land rights, customs, law enforcement, judicial proceedings, and other governance and economic sectors. Sierra Leone now focuses on investments through public-private partnerships to undertake major infrastructural projects in power, water, roads, ports, and telecommunications. The government launched the Medium-Term National Development Plan (2019-2023) in which it sets out a growth agenda and is developing a national Trade and Investment Strategy to support economic diversification, competitiveness, and continental integration geared towards promoting and developing a competitive private sector to increase participation in global trade.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activities. Foreigners are free to establish, acquire, and dispose of interests in business enterprises. However, foreign investors cannot invest in arms and ammunition, cement block manufacturing, granite and sandstone excavation, manufacturing of certain consumer durable goods, and military, police, and prison guards’ apparel and accouterments. Furthermore, there are limits to land ownership by foreign entities and individuals; the limitations vary depending on the location of the land being used and are discussed below in the “Real Property” section.

Sierra Leone has few specific restrictions, controls, fees, or taxes on foreign ownership of companies that can outrightly own Sierra Leonean companies subject to certain registration formalities. However, investment in mining of less than $500,000 is an exception as this requires a 25 percent Sierra Leonean holding. Foreign technical and unskilled labor can be used but approval must be sought from the Corporate Affairs Commission for the transfer of shares.

Business Facilitation

Sierra Leone has made progress in recent years in simplifying its business registration process. The Corporate Affairs Commission (CAC) now manages the registration of limited liability companies and provides a “one-stop-shop” including an online business registration system. The entire process involves five steps and takes on average ten days. Additional information is available from the CAC’s website at http://www.cac.gov.sl/.   SLIEPA also provides useful guidance on starting a business, sector-specific business licenses, mining licensing and certification fees, and marine resources and fisheries at http://sliepa.org/starting-a-business/ .

Outward Investment

Sierra Leone has no program to promote or incentivize outward investment but also places no restrictions on such activity.

2. Bilateral Investment Agreements and Taxation Treaties

Sierra Leone has three bilateral investment treaties with Germany, in force since 1966, the United Kingdom in 1981 and revised in 2001, and with China, signed in 2001 but not yet entered into force. These treaties are meant to protect investors with guarantees of fair and equitable treatment with protection against unlawful expropriation. This was however being violated by the GoSL when they did not comply with the rulings of the International Chamber of Commerce in a mining dispute with a U.S./UK registered firm. However, in May 2021 this matter was resolved. Though not yet in force since signing in 2001, China and Sierra Leone reaffirmed their commitment to deepening the relationship by a memorandum of understanding signed when President Bio visited China in 2018.

Sierra Leone also benefits from its membership of the Economic Community of West African States (ECOWAS) and the Trade and Investment Framework Agreement with the United States, signed in 2014 with no bilateral taxation treaty. Double bilateral taxation treaties exist with Norway, South Africa, and the UK, which is extended to Canada, Denmark, Ghana, New Zealand, Nigeria, and The Gambia. The Ministry of Finance is however reviewing all existing treaties and working on requested treaties from Kenya and Qatar.

Somalia

Executive Summary

Although the Federal Government of Somalia (FGS) welcomes foreign direct investment, Somalia remains a difficult place to do business.  The government’s collapse in 1991 led to a period of conflict and clan warfare.  Although there has been some progress since the 2012 establishment of the FGS, potential investors still face challenges such as the lack of a comprehensive legal framework, a civil judicial system incapable of solving disputes and enforcing contracts, and endemic corruption.  Investors also face the threat of al-Shabaab, which controls portions of the country and routinely extorts taxes from businesses.  Finally, businesses face challenges moving money into and out of Somalia, have no intellectual property protection, and must cope with expensive and unreliable electricity.

The current government was elected in 2017 and has pursued a policy of economic reforms that broadened the government’s tax base and strengthened tax administration, leading to steady increases in domestic revenue for the first time in two decades.  These reforms also allowed Somalia to start re-engaging with international financial institutions, and in March 2020, the IMF and the World Bank approved Somalia’s eligibility for debt relief under the Heavily Indebted Poor Countries Initiative.  If Somalia takes the additional steps required to reach “Completion Point,” the final stage of debt relief, the country’s total external debt will be reduced from $5.2 billion to $557 million, or nine percent of GDP.  However, 2020 brought challenges associated with the COVID-19 pandemic, floods, drought, and locust infestations, which led to decreased tax revenue and an economic contraction.

Moving money into and out of Somalia remains difficult, and the financial sector is constrained by the lack of private sector correspondent banking relationships.  The main obstacles are weak “know your customer” (KYC) capabilities and concerns that al-Shabaab is using Somalia’s financial institutions to collect, store, and move money.  To address these concerns, the Financial Reporting Center (FRC), Somalia’s financial investigation body, hired its first investigators in 2019 and is slowly improving its capabilities to investigate illegal transactions.  Additionally, the Central Bank of Somalia (CBS) is becoming increasingly professional and asserting its jurisdiction over additional financial activities, such as mobile money.

Despite economic reforms, according to Transparency International’s Corruption Perceptions Index, Somalia again ranked as one of the most corrupt countries in the world in 2020, tied with South Sudan in last place.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 179 (tied) of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 190 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 1990 $130 USD http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The FGS and the Federal Member States (FMS) have a positive attitude towards foreign direct investment (FDI).  However, insecurity and uncertainty driven by terrorist groups, lack of transparency, failure to fully constitute governing bodies per the 2012 provisional constitution, and widespread corruption in government sectors present considerable barriers to FDI.

Parliament passed a foreign investment law in 2015 to promote and protect foreign investment.  The law also provides some incentives to foreign investors, such as tax advantages and guarantees against expropriation.

In September 2020, Somalia’s investment promotion authority, Sominvest, released a five-year National Investment Promotion Strategy, which aims to improve the investment climate and Somalia’s image abroad.  This strategy paints a rosy picture of doing business in Somalia and suggests the key areas with potential for foreign investment are agriculture, fishing, energy, and banking.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no laws that address private ownership rights or limit foreign control.

Other Investment Policy Reviews

There has not yet been a third-party investment review of Somalia.

The FGS is not a member of the World Trade Organization (WTO) or the Organization for Economic Cooperation and Development.  In 2017 Somalia submitted a notification of intent to join the WTO, and in May 2020, after working through the accession stages, Somalia submitted a Memorandum on the Foreign Trade Regime, a document that outlines its trade and economic policies and its trade agreements with other countries.  The WTO confirmed Somalia’s Working Party chairperson, Swedish Ambassador to the WTO Mikael Anzen, in October 2020 and is planning the first Working Party meeting for mid-2021.

The FGS rejoined the Common Market for Eastern and Southern Africa in July 2018.  As a member, Somalia is required to undertake several institutional, policy, and regulatory reforms to meet the organization’s free trade protocols.

The FGS has applied for East African Community (EAC) membership, which would allow Somalia to formalize trade with its neighbors and facilitate movement of Somali citizens to other EAC member states through acquisition of the common EAC passport.  However, at the February 2021 Heads of State Summit, the EAC found that Somalia’s application was not yet ready for a decision.

Somalia has also indicated its intent to participate in negotiations on the African Continent Free Trade Agreement.

Business Facilitation

In 2019 the FGS passed a company law formalizing the legal requirements to create and register a company.  Also in 2019, the Ministry of Commerce and Industry announced the launch of a “one-stop shop” business registration website, but it has not yet become operational.

The World Bank ranked Somalia 190 of 190 countries in its 2020 Ease of Doing Business Report.

Outward Investment

The Somali government does not have a policy that promotes or incentivizes outward investment.  Anecdotal evidence suggests that Somalis who accumulate wealth seek to move it overseas to avoid the uncertain domestic investment environment.

2. Bilateral Investment Agreements and Taxation Treaties

Somalia does not have a bilateral investment treaty with the United States.  It does have bilateral investment treaties with Egypt and Germany.  Somalia and Turkey signed a bilateral investment treaty in 2016, but it has not yet come into force.

Somalia does not have a bilateral taxation treaty with any country.

South Africa

Executive Summary

South Africa boasts the most advanced, broad-based economy on the African continent. The investment climate is fortified by stable institutions, an independent judiciary, and a robust legal sector committed to upholding the rule of law; a free press and investigative reporting; a mature financial and services sector; good infrastructure; and experienced local partners.

In dealing with the legacy of apartheid, South African laws, policies, and reforms seek economic transformation to accelerate the participation of and opportunities for historically disadvantaged South Africans. The government views its role as the primary driver of development and aims to promote greater industrialization, often employing tariffs and other trade measures that support domestic industry while negatively impacting foreign trade partners. President Ramaphosa’s October 2020 Economic Reconstruction and Recovery Plan unveiled the latest domestic support target: the substitution of 20% of imported goods in 42 categories with domestic production within 5 years. Other government initiatives to accelerate transformation include labor laws to achieve proportional racial, gender, and disability representation in workplaces and prescriptive government procurement requirements such as equity stakes and employment thresholds for historically disadvantaged South Africans.

South Africa continued to fight its way back from a “lost decade” in which economic growth stagnated, hovering at zero percent pre-COVID-19, largely due to corruption and economic mismanagement. South Africa suffered a four-quarter technical recession in 2019 and 2020 with economic growth registering only 0.2 percent growth for the entire year of 2019 and contracting 7 percent in 2020. As a result, Moody’s rating agency downgraded South Africa’s sovereign debt to sub-investment grade. S&P and Fitch ratings agencies made their initial sovereign debt downgrades to sub-investment grade earlier.

As the country continues to grapple with these challenges, it implemented one of the strictest economic and social lockdown regimes in the world at a significant cost to its economy. In a 2020 survey of over 2,000 South African businesses conducted by Statistics South Africa (StatsSA), over eight percent of respondents permanently ceased trading, while over 36 percent indicated short-term layoffs. South Africa had a -7 percent rate of GDP growth for the year and the official unemployment rate in the fourth quarter of 2020 was 32.5 percent. Other challenges include: creating policy certainty; reinforcing regulatory oversight; making state-owned enterprises (SOEs) profitable rather than recipients of government money; weeding out widespread corruption; reducing violent crime; tackling labor unrest; improving basic infrastructure and government service delivery; creating more jobs while reducing the size of the state; and increasing the supply of appropriately-skilled labor.

Despite structural challenges, South Africa remains a destination conducive to U.S. investment as a comparatively low-risk location in Africa, the fastest growing consumer market in the world. Google (US) invested approximately USD 140 million and PepsiCo invested over USD 1 billion in 2020. Ford announced a USD 1.6 billion investment, including the expansion of its Gauteng province manufacturing plant in January 2021.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 69 of 175 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2019 84 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 60 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $7.8 Billion https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 $6,040 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment (FDI)

The Government of South Africa is generally open to foreign investment to drive economic growth, improve international competitiveness, and access foreign markets. The Department of Trade and Industry and Competition’s (the DTIC) Trade and Investment South Africa (TISA) division assists foreign investors. It actively courts manufacturing in sectors where it believes South Africa has a competitive advantage. It favors sectors that are labor intensive and with the potential for local supply chain development. The DTIC publishes the “Investor’s Handbook” on its website: www.the DTIC.gov.za  and TISA provides investment support through One Stop Shops in Pretoria, Johannesburg, Cape Town, Durban, and online at http://www.investsa.gov.za/one-stop-shop/  (see Business Facilitation). The 2018 Competition Amendment Bill introduced a government review mechanism for FDI in certain sectors on national security grounds, including energy, mining, banking, insurance, and defense (see section on Laws and Regulations on Foreign Direct Investment). The private sector has expressed concern about the politicization of mergers and acquisitions.

Limits on Foreign Control and Right to Private Ownership and Establishment

Currently there is no limitation on foreign private ownership. South Africa’s efforts to re-integrate historically disadvantaged South Africans into the economy have led to policies that could disadvantage foreign and some locally owned companies. The Broad-Based Black Economic Empowerment Act of 2013 (B-BBEE), and associated codes of good practice, requires levels of company ownership and participation by black South Africans to obtain bidding preferences on government tenders and contracts. The DTIC created an alternative equity equivalence (EE) program for multinational or foreign owned companies to allow them to score on the ownership requirements under the law, but many view the terms as onerous and restrictive. Only eight multinationals, primarily in the technology sector, participate in the EE program. The government also is considering a new Equity Employment Bill that will set a numerical threshold, purportedly at the discretion of each Ministry, for employment based on race, gender and disability, over and above other B-BBEE criteria.

Other Investment Policy Reviews

The World Trade Organization published a Trade Policy Review for the Southern African Customs Union, which South Africa joined in 2015. OECD published an Economic Survey on South Africa, with investment-related information in 2020. UN Conference on Trade and Development (UNCTAD) has not conducted investment policy reviews for South Africa. https://www.oecd.org/economy/surveys/South-africa-2020-Overview_E.pdf

Business Facilitation

According to the World Bank’s Doing Business report, South Africa’s rank in ease of doing business in 2020 was 84 of 190, down from 82 in 2019. It ranks 139th for starting a business, 5 points lower than in 2019. In South Africa, it takes an average of 40 days to complete the process. South Africa ranks 145 of 190 countries on trading across borders.

The DTIC has established One Stop Shops (OSS) to simplify administrative procedures and guidelines for foreign companies wishing to invest in South Africa in Cape Town, Durban, and Johannesburg. OSS are supposed to have officials from government entities that handle regulation, permits and licensing, infrastructure, finance, and incentives, with a view to reducing lengthy bureaucratic procedures, reducing bottlenecks, and providing post-investment services. Some users of the OSS complain that some of the inter-governmental offices are not staffed, so finding a representative for certain transactions may be difficult. The virtual OSS web site is: http://www.investsa.gov.za/one-stop-shop/ .

The Companies and Intellectual Property Commission (CIPC) issues business registrations, and publishes a step-by-step guide and allows for online registration at ( http://www.cipc.co.za/index.php/register-your-business/companies/ ), through a self-service terminal, or through a collaborating private bank. New businesses must also request through the South African Revenue Service (SARS) an income tax reference number for turnover tax (small companies), corporate tax, employer contributions for PAYE (income tax), and skills development levy (applicable to most companies). The smallest informal companies may not be required to register with CIPC but must register with the tax authorities. Companies must also register with the Department of Labour (DoL) – www.labour.gov.za  – to contribute to the Unemployment Insurance Fund (UIF) and a compensation fund for occupational injuries. DoL registration may take up to 30 days but may be done concurrently with other registrations.

Outward Investment

South Africa does not incentivize outward investments. South Africa’s stock foreign direct investments in the United States in 2019 totaled USD 4.1 billion (latest figures available), a 5.1 percent increase from 2018. The largest outward direct investment of a South African company was a gas liquefaction plant in the State of Louisiana by Johannesburg Stock Exchange (JSE) and NASDAQ dual-listed petrochemical company SASOL. There are some restrictions on outward investment, such as a R1 billion (USD 83 million) limit per year on outward flows per company. Larger investments must be approved by the South African Reserve Bank and at least 10 percent of the foreign target entities’ voting rights must be obtained through the investment. https://www.resbank.co.za/RegulationAndSupervision/FinancialSurveillanceAndExchangeControl/FAQs/Pages/Corporates.aspx 

South Sudan

Executive Summary

Trade and investment conditions in South Sudan have slightly improved in the past year, but many challenges remain. The peace process has moved into the transition phase with the constitution of a new presidency structure and cabinet as components of a new Revitalized Transitional Government of National Unity in February and March 2020. The expanded cabinet included new ministries of investment and East African Community Affairs. In accordance with tenets of the 2018 peace deal, the new government included representatives from the incumbent government and opposition parties (signatories to the peace agreement). In May 2021 President Salva Kiir Mayardit reconstituted the Transitional National Legislative Assembly (TNLA). (Note: The TNLA has been expanded from 400 to 550 members comprising representatives from the parties signing the peace agreement. End Note.) While these steps are positive, implementation of the terms of the peace deal has been significantly behind schedule and remains incomplete. The country continues to be plagued by large-scale displacement, widespread food insecurity, severe human-rights abuses, restricted humanitarian access, and harassment of aid workers and journalists.

South Sudan is one of the most oil-dependent economies in the world and the sector is fraught with corruption. In March 2018, the United States Department of Commerce added the Ministry of Petroleum, the Ministry of Mining, and state-owned oil company Nilepet to the Entity List, barring export of certain U.S. goods or technologies to them due to their contribution to the conflict. Removal of these entities will require the implementation of transparency and accountability measures, consistent with aspects of Chapter IV of the peace deal.

Humanitarian and development aid is a major source of employment in South Sudan. Difficulties of changing regulations, multiple layers of taxation, and labor harassment faced in this sector may provide insight to difficulties private investors would face. Bureaucratic impediments faced by NGOs include recruitment interference, airport obstructions, and duplicate registration and permit issues by different levels of authority.

The government has made efforts to simplify and centralize taxation, with the creation of the National Revenue Authority. The Bank of South Sudan has launched a website where it posts key financial data. However, the legal system is ineffective, underfunded, overburdened, and subject to executive interference and corruption. High-level government and military officials are immune from prosecution and parties in contract disputes are sometimes arrested and imprisoned until the party agrees to pay a sum of money, often without going to court and sometimes without formal charges.

The then-South Sudan Investment Authority (SSIA) in 2018 and 2019 conducted investment roadshows, promoting South Sudan as an ideal location for investment. The SSIA which was upgraded to the Ministry of Investment in March 2020, compared its laws that govern investment practices in South Sudan with those in the region and determined themselves to be more favorable for investment than their neighbors; however, laws in South Sudan are not routinely enforced.

Other factors inhibiting investment in South Sudan include limited physical infrastructure and a lack of both skilled and unskilled labor. The World Bank’s 2020 Doing Business report ranked South Sudan 185 out of 190 economies on overall ease of doing business. The legal framework governing investment and private enterprises remained underdeveloped as of April 2020.

The U.S. Department of State maintains a Travel Advisory warning against travel to South Sudan due to critically high risks from crime, kidnapping, and armed conflict.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 179 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 185 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 N/A of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 N/A https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 N/A http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

In May 2021, South Sudan’s newly installed Minister of Investment presented to President Kiir plans to upgrade South Sudan’s investment policy and increase capacity for international investors to invest in South Sudan. As of the date of publication, the government has not taken any concrete steps to implement these proposals. Reported unfair practices have included effective expropriation of assets, inconsistent taxation policies, harassment by security services, extortion attempts, and a general perception that foreigners are not afforded fair results in court proceedings or labor disputes.

In the past the country makes few investment facilitation efforts. In March 2020 South Sudan upgraded the South Sudan Investment Authority (SSIA) to the Ministry of Investment, as recommended in Chapter I of the peace agreement. In theory the Ministry of Investment has a One Stop Shop Investment Center. However, both organizations are poorly resourced and neither maintains an active website. There is no business registration website. The ministries that handle company registration include the Ministry of Trade and Industry, Ministry of Investment, Ministry of Finance, and Ministry of Justice. There is no single window registration process, and an investor must visit all the above-mentioned agencies to complete the registration of a company. It is estimated that the registration process could take several months.

In January 2018, South Sudan joined the African Trade and Insurance Agency (ATI), which provides export insurance and other assistance to foreign investors and traders. Several local lawyers are willing to advise investors and guide them through the registration process, for a fee. There is a private-sector Chamber of Commerce, but it is a government run organization. There is no ombudsman.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity, as well as freely establish, acquire, and dispose of interests in business enterprises. Under the investment law, the government of South Sudan leases land to foreign investors for limited periods of time, generally not to exceed 30-60 years, with the possibility of renewal. In the case of leases for mining or quarrying, the lease shall not exceed the life of the mine or quarry. Under the 2009 Land Act, non-citizens are not allowed to own land in South Sudan. Years of conflict and internal displacement have left a complex land rights picture with many properties having been usurped by squatters or soldiers. There is no title insurance to speak of and no formal way to determine ownership outside of current possession. Particularly lucrative extractive or land-based ventures should assume claims on ownership, and therefore claims to royalties or rents, will abound.

For investors who wish to start a business in South Sudan, there is a local shareholder requirement, but the foreign investor can usually retain majority control. For foreign-based companies that wish to establish a subsidiary in South Sudan, the local shareholder requirement does not apply. South Sudanese businesses are given priority in several areas, including micro-enterprises, postal services, car hire and taxi operations, public relations, retail, security services, and the cooperative services. Exact details, and the extent of enforcement of these requirements, are sometimes unclear.

Subject to the Private Security Companies Rules and Regulations of 2013, registering and setting up a protection services security company in South Sudan requires a South Sudanese citizen to hold at least 51 percent of the company. Companies in the extractives sector must also have a South Sudanese national as part owner, but the exact percentage of ownership required is not always clear.

According to the Investment Act, foreign investors must apply for an investment certificate from the Ministry of Investment to ensure that the investment will be beneficial to the economy or of general benefit to South Sudan.

Other Investment Policy Reviews

In the past three years, the government has not undergone any third-party investment policy reviews.

Business Facilitation

The government’s fiscal and economic strategy sees government facilitating investment in economic priority sectors, particularly in agriculture, transport infrastructure, petroleum, mining, and energy, to unlock South Sudan’s economic potential and boost diversified growth. Investment incentives exist, but the exact procedures are somewhat opaque.

There is no business registration website. The process to register a business is lengthy and complex, and involves visiting multiple offices at the national, state, and local levels. The Chamber of Commerce recommends hiring a local lawyer to register a business. To register a new company, investors can get a check list with the steps and the name of ministries they need to visit to complete registration process from the Ministry of Trade and Industry.

Outward Investment

Tanzania

Executive Summary

The United Republic of Tanzania achieved lower-middle income country status in July 2020, which reflects two decades of sustained macroeconomic stability. The country’s rich natural endowments and strategic geographic position fostered a diverse economy resilient to external shocks. Tanzania’s economy fared better than many regional peers during the COVID-19 pandemic, but still suffered significant losses due to decline in tourism and related services. The pandemic also compounded preexisting financial sector issues, and private sector credit growth slowed while nonperforming loans continue to be high.

The Government of Tanzania welcomes foreign direct investment. However, over the past several years there was a marked deterioration in the business and investment climate. Tanzania ranked 141 out of 190 countries on the 2020 World Bank Ease of Doing Business Report, the lowest among its regional peers. According to the report, the biggest challenges lie in tax administration, opening and closing businesses, and trading across borders. In recent years, aggressive and arbitrary tax collection policies targeted foreign companies and individuals, and labor regulations make it difficult to hire foreign employees, even when the required skills are not available within the local labor force. Corruption, especially in government procurement, privatization, taxation, and customs clearance remains a concern for foreign investors, though the government has prioritized efforts to combat the practice.

On March 19, 2021, President Samia Suluhu Hassan became the sixth President of the United Republic of Tanzania, following the death of President John Pombe Magufuli. In her first months in office, President Hassan promised reforms to improve the business climate, and identified attracting foreign investment as a key priority. The Government of Tanzania has signaled that new Investment Policy and Investment Promotion legislation as well as changes to prevailing tax and labor regulations will be adopted in 2021. Hassan’s government is also engaging in dialogue with stakeholders including private sector organizations and development partners to identify measures to improve the business climate and win back investor confidence. There remain significant legislative obstacles to foreign investment such as the Natural Resources and Wealth Act, Permanent Sovereignty Act, Public Private Partnership Act, and the Mining Laws and Regulations.

Sectors traditionally attracting U.S. investment include infrastructure, transportation, energy, mining and extractive industries, tourism, agriculture, fishing, agro-processing and other manufacturing. Other opportunities exist in workforce development, microfinance solutions, technology, and consumer products and services.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 94 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 141 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 88 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country (historical stock positions) 2020 USD 1,510 Million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 1,080 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The United Republic of Tanzania welcomes foreign direct investment (FDI) as it pursues its industrialization and development agenda. On her inauguration in March 2021, President Samia Suluhu Hassan identified removing obstacles to inward foreign investment as a key priority, along with other measures to improve the overall business climate and rebuild trust between the private sector and government. This follows declining FDI and investor confidence over the past six years. The 2020 World Investment Report indicates that FDI flows to Tanzania increased from USD 1,056 billion in 2018 to USD 1.112 billion in 2019 (latest figures) but remain below 2015 levels. Investors and potential investors note the biggest challenges to investment include difficulty in hiring foreign workers, unfriendly and opaque tax policies, increased local content requirements, regulatory/policy instability, lack of trust between the GoT and the private sector, and mandatory initial public offerings (IPOs) in key industries. In 2020 and 2021, the GoT recognized many of these concerns’ impact on both foreign and domestic investment and created a number of task forces and working groups to engage the private sector to identify solutions. These efforts were renewed by President Hassan’s new government, and legislative and policy changes are anticipated in 2021.

The United Republic of Tanzania has framework agreements on investment and offers various incentives and the services of investment promotion agencies. Investment is mainly a non-Union matter, thus there are different laws, policies, and practices for the Mainland and Zanzibar. Zanzibar updated its investment policy in 2019, while the Mainland/Union policy dates from 1996. Efforts to update the Mainland Investment Policy and Investment Act are underway, but incomplete as of the date of this publication. International agreements on investment are covered as Union matters and therefore apply to both regions.

The Tanzania Investment Center (TIC) is intended to be a one-stop center for investors, providing services such as permits, licenses, visas, and land. The Zanzibar Investment Promotion Authority (ZIPA) provides the same function in Zanzibar.

The Government of Tanzania has an ongoing dialogue with the private sector via the Tanzania National Business Council (TNBC). TNBC meetings are chaired by the President of the United Republic of Tanzania and co-chaired by the head of the Tanzania Private Sector Foundation (TPSF). President Samia Suhulu Hassan reinvigorated this formal mechanism during her first months in office. There is also a Zanzibar Business Council (ZBC), as well as Regional Business Councils (RBCs), and District Business Councils (DBCs).

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors generally receive treatment equivalent to domestic investors, but limits still persist in a number of sectors. There are no geographical restrictions on private establishments with foreign participation or ownership, no limitations on number of foreign entities that can operate in a given sector, and no sectors in which approval is required for foreign investment greenfield FDI but not for domestic investment.

However, Tanzania discourages foreign investment in several sectors through limitations on foreign equity ownership or other activities, including aerospace, agribusiness (fishing), construction and heavy equipment, travel and tourism, energy and environmental industries, information and communication, and publishing, media, and entertainment. In 2020, Tanzania relaxed but did not eliminate the foreign ownership limitations in the mining sector.

Specific examples include the following:

  • The Tourism Act of 2008 bars foreign companies from engaging in mountain guiding activities, and states that only Tanzanian citizens can operate travel agencies, car rental services, or engage in tour guide activities (with limited exceptions).
  • Per the Merchant Shipping Act of 2003, only citizen-owned ships are authorized to engage in local trade, a requirement that can be waived at the Minister’s discretion. Furthermore, the Tanzania Shipping Agencies Act of November 2017 gives exclusive monopoly power to the Tanzania Shipping Agency Corporation (TASAC) to conduct business as shipping agents, shipping regulator, and licensor of other private shipping agencies. The Act also gives TASAC an exclusive mandate to provide clearing and forwarding functions relating to imports and exports of minerals, mineral concentrates, machinery and equipment for the mining and petroleum sector, products and/or extracts related to minerals and petroleum arms and ammunition, live animals, government trophies and any other goods that the Minister responsible for maritime transport may specify. A 2019 amendment extended this exclusive mandate to additional imports, including fertilizers, sugar (both industrial and domestic), cooking oil, wheat, oil products, liquefied gas and chemicals related to the products. As of May 2021, the extended mandate has yet to go into effect following extensive objections for private sector stakeholders.
  • A 2009 amendment to the Fisheries Regulations imposes onerous conditions for foreign citizens to engage in commercial fishing and the export of fishery products, sets separate licensing costs for foreign citizens and Tanzanians, and limits the types of fishery products that foreign citizens may work with.
  • Foreign construction contractors can only obtain temporary licenses, per the Contractors Registration Act of 1997, and contractors must commit in writing to leave Tanzania upon completion of the set project. 2004 amendments to the Contractors Registration By-Laws limit foreign contractor participation to specified, more complex classes of work.
  • Foreign capital participation in the telecommunications sector is limited to a maximum of 75 percent.
  • All insurers require one-third controlling interest by Tanzania citizens, per the Insurance Act.
  • The Electronic and Postal Communications (Licensing) Regulations 2011 limits foreign ownership of Tanzanian TV stations to 49 percent and prohibits foreign capital participation in national newspapers.
  • Mining projects must be at least partially owned by the GoT and “indigenous” companies, and hire, or at least favor, local suppliers, service providers, and employees. (See Chapter 4: Laws and Regulations on FDI for details.). Gemstone mining is limited to Tanzanian citizens with waivers of the limitation at ministerial discretion. In February 2019, responding to low growth and investment in the sector, the government revised the 2018 Mining Regulations to reduce local ownership requirements from 51 percent to 20 percent.

Currently, foreigners can invest in stock traded on the Dar es Salaam Stock Exchange (DSE), but only East African residents can invest in government bonds. East Africans, excluding Tanzanian residents, however, are not allowed to sell government bonds bought in the primary market for at least one year following purchase.

Other Investment Policy Reviews

There have not been any third-party investment policy reviews (IPRs) on Tanzania in the past three years, the most recent OECD report is for 2013. The World Trade Organization (WTO) published a Trade Policy Review in 2019 on all the East African Community states, including Tanzania.

  • WTO – Trade Policy Review: East African Community (2019)
  • UNCTAD– Tanzania Investment Policy Review (2002)
  • WTO – Secretariat Report of Tanzania https://www.wto.org/english/tratop_e/tpr_e/s384-04_e.pdf
  • UNCTAD – Trade and Gender Implications (2018) –

Business Facilitation

The World Bank’s Doing Business 2020 Indicators rank Tanzania 141 out of 190 overall for ease of doing business, and 162nd for ease of starting a business. There are ten procedures to open a business, higher than the sub-Saharan Africa average of 7.4. The Business Registration and Licensing Agency (BRELA) issues certificates of compliance for foreign companies, certificates of incorporation for private and public companies, and business name registration for sole proprietor and corporate bodies. After registering with BRELA, the company must: obtain a taxpayer identification number (TIN) certificate, apply for a business license, apply for a VAT certificate, register for workmen’s compensation insurance, register with the Occupational Safety and Health Authority (OSHA), receive inspection from the Occupational Safety and Health Authority (OSHA), and obtain a Social Security registration number.

The Tanzania Investment Center (TIC) now sits under the Prime Minister’s Office (PMO), after being moved around several times in recent years. The TIC is a one-stop shop which provides simultaneous registration with BRELA, TRA, and social security ( http://tiw.tic.co.tz/  ) for enterprises whose minimum capital investment is not less than USD 500,000 if foreign-owned or USD 100,000 if locally owned.

The government has been slow to implement its May 2018 Blueprint for Regulatory Reforms to improve the business environment and attract more investors. The reforms seek to improve the country’s ease of doing business through regulatory reforms and to increase efficiency in dealing with the government and its regulatory authorities. The official implementation of the Business Environment Improvement Blueprint started on July 1, 2019, though there have been little tangible changes or advancements. President Hassan’s new government identified implementation of the Blueprint as a priority for her term.

Outward Investment

Tanzania does not promote or incentivize outward investment. There are restrictions on Tanzanian residents’ participation in foreign capital markets and ability to purchase foreign securities. Under the Foreign Exchange (Amendment) Regulations 2014 (FEAR), however, there are circumstances where Tanzanian residents may trade securities within the East African Community (EAC). In addition, FEAR provides some opportunities for residents to engage in foreign direct investment and acquire real assets outside of the EAC.

2. Bilateral Investment Agreements and Taxation Treaties

Tanzania has bilateral investment treaties with 18 countries, and seven investment agreements with regional economic blocs. The country is also a signatory to global investment instruments such as the International Centre for Settlement of Investment Disputes (ICSID) Convention, the New York Convention, and the UN Guiding Principles on Business and Human Rights.

The U.S. and Tanzania do not have bilateral investment or taxation agreements. Tanzania is a member of the EAC, which signed a 2008 Trade and Investment Framework Agreement (TIFA) and a 2012 Trade and Investment Partnership (TIP) with the United States. Under the U.S.-EAC TIP, the U.S. and EAC are seeking to expand trade, investment, and dialogue with the private sector.

Togo

Executive Summary

Togo was unable to replicate the strong economic growth of 2019 due to the COVID-19 pandemic. Real GDP, which grew by 5% in 2018 and 5.5% in 2019, increased by only 0.4% in 2020, the result of a fall in foreign direct investment, financial investment, private funds, and the slowdown in world trade. Nonetheless, Togo continued to pursue reforms in 2020 aimed at encouraging economic development and a better business environment. Specifically, the Government of Togo launched a new roadmap for 2020-2025 to engage better with the donor community and private sector in support of the National Development Plan (PND). Togo also took steps towards greater industrialization with the June 2021 opening of the Industrial Platform of Adetikope (PIA), an industrial zone focused on textile production, agro-processing, and logistics.

Since 2018, Togo rose by almost 60 places in the World Bank’s Doing Business report and now ranks 97th, the highest ranking in West Africa. Agriculture remains one of the engines of economic growth in Togo. In 2019, Togo became the top exporter of organic products to Europe in the Economic Community of West African States (ECOWAS) and the second in Africa after Egypt. The export volume of these organic products (mainly soybeans and pineapples) more than doubled, from 22,000 tons in 2018 to 45,000 tons in 2019.

The government of Togo implemented various business reforms and completed several large infrastructure projects over the last five years to attract investment. In 2018, the government launched its five-year PND with three major axes. The plan’s first goal is to leverage the country’s geographic position by transforming Lome into a regional trading center and transport hub. Togo has already completed hundreds of kilometers of refurbished roadways, expanded and modernized the Port of Lome, and inaugurated in 2016 the new Lome international airport that conforms to international standards. The second goal is to increase agricultural production through agricultural centers (Agropoles) and increase manufacturing. The third goal is improving social development, including electrification of the country. The government is searching for private sector investment to fulfill these PND goals.

In January 2021, Prime Minister Victoire Tomégah-Dogbe presented a detailed developmental roadmap to supplement and focus the goals of the PND for the remainder of the presidential term, which ends in 2025.  Dogbe presented the roadmap to the private sector and donor partners to mobilize resources for implementation of the government’s five-year vision.  The plan focuses on 42 specific projects and reforms in the economic and social sectors.  These projects include the provision of identity documents for all, the construction of 20,000 social housing units; health coverage; creation of a digital bank; increased access to drinking water and sanitation; electrification for all; construction of an industrial park around the port of Lome; increased access to education; the extension of the road network and the upgrading of the Lomé-Cinkasse highway.  According to the Prime Minister, between 2008 and 2019, the contribution of donor partners increased from $243.37 million to $511.95 million.  For 2020-2025, the Prime Minister expressed the wish to see this partnership grow even further.  After a decade of sustained 5% GDP growth, Togo aspires to 7.5% GDP growth by 2025.

In September 2017, the government established the Business Climate Unit (CCA). The CCA coordinated economic reforms and played a key role in improving the business climate for the private sector. Since November 2020, the new Ministry of Investment Promotion is the main government interface for investors. The Ministry aims to improve the business climate and identify together with the private sector key sectors and strategic projects for the country.

Nevertheless, Togo must face a number of challenges to maintain this momentum. Challenges include a weak and opaque legal system, lack of clear land titles, and government interference in various sectors. Corruption remains a common problem in Togo, especially for businesses. Often “donations” or “gratuities” result in shorter delays for obtaining registrations, permits, and licenses, thus resulting in an unfair advantage for companies that engage in such practices. Although Togo has government bodies charged with combatting corruption, corruption-related charges are rarely brought or prosecuted. The government has made efforts to professionalize key institutions such as the Public Procurement Regulatory Authority (ARMP), the Chamber of Commerce (CCIT), and the National Employment Agency (ANPE) including with new anti-corruption, ethics and transparency measures.

The 2019 Investment Code provided a legal framework to attract more investment and promote the economic and social development policy of Togo. With an improving investment climate and modern transportation infrastructure, Togo’s steadily improving economic outlook offers opportunities for U.S. firms interested in doing business locally and in the sub-region.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 134 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 97 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 125 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 N/A https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 690 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Attracting foreign direct investment (FDI) is a priority for Togo. The new Ministry of Investment Promotion created in November 2020 serves as an interface for potential investors, allowing them to target investment sectors and provide priority projects. Although the government was unable to host high-profile international events to showcase its economic reforms and infrastructure investments as in previous years due to COVID-19, government officials have made many trips abroad (including to Germany, France, and Russia) to promote Togo as a place to invest. Notably, Dangote Industries  signed an agreement in November 2019 for a $2 billion phosphate fertilizer project. The government hopes that its strategic focus on improving the business environment will facilitate an increase in FDI in the coming years. Investment opportunities are available in transportation, logistics, agribusiness, energy, banking, and mining.

Togo does not have laws or practices that discriminate against foreign investors. The Investment Code, adopted in June 2019, prescribes equal treatment for Togolese and foreign businesses and investors; free management and circulation of capital for foreign investors; respect of private property; protection of private investment against expropriation; and investment dispute resolution regulation. The code meets West African Economic and Monetary Union (WAEMU) standards.

As an Investment Holding Company, Togo Invest Corporation focuses on investments involving the government through Public-Private-Partnerships. Although Togo prioritizes investment retention, the government does not maintain a formal dialogue channel with investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

There is a right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activities. The foreign investor can also create a wholly owned subsidiary. It has no obligation to associate itself with a local investor. This right is contained in the Investment Code “le Code des Investissements,” adopted June 17, 2019, and there are no general limits on foreign ownership or control. Section 3 of the Investment Code states that any company established in the Togolese Republic freely determines its production and marketing policy, in compliance with the laws and regulations in force in the Togolese Republic. Additionally, there are no formal investment approval mechanisms in place for inbound foreign investment nor rules, restrictions, limitations, or requirements applied to private investments.

Other Investment Policy Reviews

Togo conducted a trade policy review through the World Trade Organization (WTO) in October 2017. A link to the report can be found at: https://www.wto.org/english/tratop_e/tpr_e/tp366_e.htm 

Business Facilitation

Over the last decade, Togo has significantly reduced the costs and procedures required to establish a business. In 2013, Togo established a center for starting new businesses – the “Centre de Formalité des Entreprises” that manages new business registration with an online business registration process. It only takes seven hours to register a company: https://www.cfetogo.org/eentreprise . In 2014, Togo made starting a business easier by permitting the Centre de Formalité des Entreprises to publish notices of incorporation, as well as eliminating the requirement to obtain an economic operator card. The World Bank Doing Business Report 2020 places Togo at 15 of 190 for the “Starting a Business” indicator, in comparison to 74 of 190 in 2019. The World Bank announced it will publish the Doing Business Report 2021 in mid-2021, incorporating data corrections for several previous reports (the World Bank announcement noted that Togo’s previous reports are unaffected).

Togo has enacted reforms to improve the process for obtaining construction permits. First, Togo removed a cumbersome and costly bureaucratic hurdle by eliminating the requirement of providing a certificate of registration from the National Association of Architects as a condition precedent to receiving a construction permit. Second, Togo has streamlined the entire procedure by establishing a “One-Stop Shop” for property transactions (called the Guichet Unique Foncier) at the Togolese Revenue Office (OTR). This “One-Stop Shop” within the OTR allows applicants to drop off their applications and retrieve their permits in one place, thus eliminating the need to visit multiple administrative offices to process paperwork.

The government created a Business Climate Unit in the Presidency in late 2017. The unit is committed to improving operating conditions for business, especially young entrepreneurs and women.

The creation of two commercial courts in Lomé and Kara favors private investors as these legal authorities allow for greater transparency in the treatment of commercial disputes.

Outward Investment

Togo does not promote outward investment, nor does it restrict domestic investors from investing abroad.

Tunisia

Executive Summary

In 2020, Tunisia’s economy was heavily impacted by the COVID-19 pandemic. Containment measures affected most business sectors and resulted in an unprecedented GDP contraction of 8.8 percent in 2020. The country still faces high unemployment, high inflation, and rising levels of public debt.

Parliament approved an initial government led by Prime Minister Fakhfakh in February 2020; however, Fakhfakh resigned in July 2020.  Parliament subsequently approved a government led by current Prime Minister Hichem Mechichi in September 2020.

Before the pandemic, successive governments had advanced some much-needed structural reforms to improve Tunisia’s business climate, including an improved bankruptcy law, investment code, an initial “negative list,” a law enabling public-private partnerships, and a supplemental law designed to improve the investment climate. The Government of Tunisia (GOT) encouraged entrepreneurship through the passage of the Start-Up Act. The GOT passed a new budget law that ensures greater budgetary transparency and makes the public aware of government investment projects over a three-year period. These reforms are intended to help Tunisia attract both foreign and domestic investment.

Tunisia’s strengths include its proximity to Europe, sub-Saharan Africa, and the Middle East; free-trade agreements with the EU and much of Africa; an educated workforce; and a strong interest in attracting foreign direct investment (FDI). Sectors such as agribusiness, aerospace, infrastructure, renewable energy, telecommunication technologies, and services are increasingly promising. The decline in the value of the dinar over recent years has strengthened investment and export activity in the electronic component manufacturing and textile sectors.

Nevertheless, substantial bureaucratic barriers to investment remain and additional economic reforms have yet to be achieved. State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment. The informal sector, estimated at 40 to 60 percent of the overall economy, remains problematic, as legitimate businesses are forced to compete with smuggled goods.

Since 2011, the United States has provided more than USD 500 million in economic growth-related assistance, in addition to loan guarantees in 2012, 2014, and 2016 that enabled the GOT to borrow nearly USD 1.5 billion at low interest.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 69 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2020 78 of 190 http://www.doingbusiness.org/en/rankings 
Global Innovation Index 2020 65 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 320 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 3,370 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GOT is working to improve the business climate and attract FDI. The GOT prioritizes attracting and retaining investment, particularly in the underdeveloped interior regions, and reducing unemployment. More than 3,650 foreign companies currently operate in Tunisia, and the government has historically encouraged export-oriented FDI in key sectors such as call centers, electronics, aerospace and aeronautics, automotive parts, textile and apparel, leather and shoes, agro-food, and other light manufacturing. In 2020, the sectors that attracted the most FDI were energy (33.8 percent), the electrical and electronic industry (22.4 percent), agro-food products (10.6 percent), services (9.2 percent), and the mechanical industry (9 percent). Inadequate infrastructure in the interior regions results in the concentration of foreign investment in the capital city of Tunis and its suburbs (46 percent), the northern coastal region (23 percent), the northwest region (14.4 percent), and the eastern coastal region (12 percent). Internal western and southern regions attracted only 4.6 percent of foreign investment despite special tax incentives for those regions.

The Tunisian Parliament passed an Investment Law (#2016-71) in September 2016 that went into effect April 1, 2017 to encourage the responsible regulation of investments. The law provided for the creation of three major institutions:

  • The High Investment Council, whose mission is to implement legislative reforms set out in the investment law and decide on incentives for projects of national importance (defined as investment projects of more than 50 million dinars and 500 jobs).
  • The Tunisian Investment Authority, whose mission is to manage investment projects of more than 15 million dinars and up to 50 million dinars. Investment projects of less than 15 million dinars are managed by the Agency for Promotion of Industry and Innovation (APII).
  • The Tunisian Investment Fund, which funds foreign investment incentive packages.

These institutions were all launched in 2017. However, the Foreign Investment Promotion Agency (FIPA) continues to be Tunisia’s principal agency to promote foreign investment. FIPA is a one-stop shop for foreign investors. It provides information on investment opportunities, advice on the appropriate conditions for success, assistance and support during the creation and implementation of the project, and contact facilitation and advocacy with other government authorities.

Under the 2016 Investment Law (article 7), foreign investors have the same rights and obligations as Tunisian investors. Tunisia encourages dialogue with investors through FIPA offices throughout the country.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment is classified into two categories: “Offshore” investment is defined as commercial entities in which foreign capital accounts for at least 66 percent of equity, and at least 70 percent of the production is destined for the export market. However, investments in some sectors can be classified as “offshore” with lower foreign equity shares. Foreign equity in the agricultural sector, for example, cannot exceed 66 percent and foreign investors cannot directly own agricultural land, but agricultural investments can still be classified as “offshore” if they meet the export threshold.

  • “Offshore” investment is defined as commercial entities in which foreign capital accounts for at least 66 percent of equity, and at least 70 percent of the production is destined for the export market. However, investments in some sectors can be classified as “offshore” with lower foreign equity shares. Foreign equity in the agricultural sector, for example, cannot exceed 66 percent and foreign investors cannot directly own agricultural land, but agricultural investments can still be classified as “offshore” if they meet the export threshold.
  • “Onshore” investment caps foreign equity participation at a maximum of 49 percent in most non-industrial projects. “Onshore” industrial investment may have 100 percent foreign equity, subject to government approval.

Pursuant to the 2016 Investment Law (article 4), a list of sectors outlining which investment categories are subject to government authorization (the “negative list”) was set by decree no. 417 of May 11, 2018. The sectors include natural resources; construction materials; land, sea and air transport; banking, finance, and insurance; hazardous and polluting industries; health; education; and telecommunications. The decree specified the deadline to respond to authorization requests for most government agencies and fixed a deadline of 60 days for all other government decision-making bodies not specifically mentioned in the decree.

The decree went into effect on July 1, 2018.

Other Investment Policy Reviews

The WTO completed a Trade Policy Review for Tunisia in July 2016. The report is available here: https://www.wto.org/english/tratop_e/tpr_e/tp441_e.htm .

The OECD completed an Investment Policy Review for Tunisia in November 2012. The report is available here: http://www.oecd.org/daf/inv/investment-policy/tunisia-investmentpolicyreview-oecd.htm .

Business Facilitation

In May 2019, the Tunisian Parliament adopted law 2019-47, a cross-cutting law that impacts legislation across all sectors. The law is designed to improve the country’s business climate and further improve its ranking in the World Bank’s Doing Business Report. The law simplified the process of creating a business, permitted new methods of finance, improved regulations for corporate governance, and provided the private sector the right to operate a project under the framework of a public-private partnership (PPP).

This legislation and previous investment laws are all referenced on the United Nations Conference on Trade and Development (UNCTAD) website: https://investmentpolicy.unctad.org/country-navigator/221/tunisia .

The World Bank Doing Business 2020 report ranks Tunisia 19 in terms of ease of starting a business. In the Middle East and North Africa, Tunisia ranked second after the UAE, and first in North Africa ahead of Morocco, Egypt, Algeria, and Libya: https://www.doingbusiness.org/en/data/exploreeconomies/tunisia#DB_sb .

The Agency for Promotion of Industry and Innovation (APII) and the Tunisia Investment Authority (TIA) are the focal point for business registration. Online project declaration for industry or service sector projects for both domestic and foreign investment is available at: www.tunisieindustrie.nat.tn/en/doc.asp?mcat=16&mrub=122 .

The new online TIA platform allows potential investors to electronically declare the creation, extension, and renewal of all types of investment projects. The platform also allows investors to incorporate new businesses, request special permits, and apply for investment and tax incentives. https://www.tia.gov.tn/ .

APII has attempted to simplify the business registration process by creating a one-stop shop that offers registration of legal papers with the tax office, court clerk, official Tunisian gazette, and customs. This one-stop shop also houses consultants from the Investment Promotion Agency, Ministry of Employment, National Social Security Authority (CNSS), postal service, Ministry of Interior, and the Ministry of Trade and Export Development. Registration may face delays as some agencies may have longer internal processes. Prior to registration, a business must first initiate an online declaration of intent, to which APII provides a notification of receipt within 24 hours.

The World Bank’s Doing Business 2020 report indicates that business registration takes an average of nine days and costs about USD 90 (253 Tunisian dinars): http://www.doingbusiness.org/en/data/exploreeconomies/tunisia#DB_sb .

For agriculture and fisheries, business registration information can be found at: www.apia.com.tn .

In the tourism industry, companies must register with the National Office for Tourism at: http://www.tourisme.gov.tn/en/investing/administrative-services.html .

The central points of contact for established foreign investors and companies are the Tunisian Investment Authority (TIA): https://www.tia.gov.tn/en  and the Foreign Investment Promotion Agency (FIPA): http://www.investintunisia.tn .

Outward Investment

The GOT does not incentivize outward investment, and capital transfer abroad is tightly controlled by the Central Bank.

Uganda

Executive Summary

Uganda’s investment climate presents both important opportunities and major challenges for U.S. investors. With a market economy, ideal climate, ample arable land, a young and largely English-speaking population, and at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors. Due to effects of the COVID-19 pandemic, including the collapse of the tourism industry, Uganda’s gross domestic product (GDP) grew by only 2.9% in fiscal year (FY) 2019/2020, the lowest growth rate since 2000. Foreign direct investment (FDI) decreased by 18.6% from $1.42 billion in FY 2018/19 to $1.2 billion in FY 2019/2020. However, the International Monetary Fund (IMF) projects a return to a pre-pandemic level of 4.9% growth for calendar year 2021. Uganda maintains a liberal trade and foreign exchange regime. As the economy begins to recover, Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present attractive potential opportunities for U.S. business and investment.

President Yoweri Museveni and government officials vocally welcome foreign investment in Uganda. However, the government’s actions sometimes do not support its rhetoric. The closing of political and democratic space, poor economic management, endemic corruption, growing sovereign debt, weak rule of law, and the government’s failure to invest adequately in the health and education sectors all create risks for investors. U.S. firms often find themselves competing with third-country firms that cut costs and win contracts by disregarding environmental regulations and labor rights, dodging taxes, and bribing officials. Shortages of skilled labor and a complicated land tenure system also impede the growth of businesses and serve as disincentives to investment. The World Bank’s Ease of Doing Business Index 2020 ranks Uganda 135 out of 190 countries for ease of registration of property.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors. President Museveni was declared the winner in the widely disputed January 2021 general elections and will begin another five-year term after 35 years already in power. Domestic political tensions increased following election-related violence and threats to democratic institutions. Importantly, many of Uganda’s youth, a demographic that comprises 77% of the population, openly clamor for change. However, the 76-year-old President has not provided any indication of reforms to promote more inclusive, transparent, and representative governance.

On the legislative front, Uganda’s parliament passed in May 2020 the National Local Content Bill which would have imposed onerous local content requirements. U.S. firms noted its passage could have led to divestment from Uganda. In October 2020, President Museveni refused to sign the bill into law; the President noted that it contradicted regional integration protocols and international best practices. The bill is back before the finance committee of Parliament for review.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2020 142 of 180 https://www.transparency.org/cpi2020 
World Bank’s Doing Business Report 2020 116 of 190 https://www.doingbusiness.org/en/
data/exploreeconomies/uganda 
Global Innovation Index 2020 114 of 131 https://www.globalinnovationindex.org/
analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 42 million https://apps.bea.gov/international/
factsheet/factsheet.cfm?Area=446 
World Bank GNI per capita 2019 USD 780 https://data.worldbank.org/indicator/
NY.GNP.PCAP.CD?locations=UG
 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Ugandan government and authorities vocally welcome FDI, and advocate for its job creation benefits. Furthermore, the country’s free market economy, liberal financial system, and close to 45-million-person consumer market attract investors. However, rampant corruption, weak rule of law, threats to open and free internet access (including a five-day complete internet shutdown for political reasons in January 2021), and an increasingly aggressive tax collection regime by the Uganda Revenue Authority (URA) create a challenging business environment.

The 2019 Investment Code Act (ICA) established both benefits and challenges to FDI. The ICA abolished restrictions on technology transfer and repatriation of funds by foreign investors, and established new incentives (e.g., tax waivers) for investment. However, the ICA also set a minimum value of $250,000 for FDI and a yet-to-be-specified minimum value for portfolio investment. Additionally, the ICA authorized the Ugandan government to alter these thresholds at any time, thereby creating potential uncertainty for investors. Under the ICA, investment licenses carry specific performance conditions varying by sector, such as requiring investors to allow the Uganda Investment Authority (UIA) to monitor operations, or to employ or train Ugandan citizens, or use Ugandan goods and services to the greatest extent possible. Further, the ICA empowers the Ugandan government to revoke investment licenses of entities that “tarnish the good repute of Uganda as an attractive base for investment.” The government has yet to revoke any investor license on this ground.

In October 2019, the Ugandan government passed the Communications Licensing Framework (CLF), which requires telecommunication (telecom) companies to list 20% of their equity on the Uganda Securities Exchange (USE), with the aim of increasing local ownership and reducing the repatriation of profits. In 2020, MTN Uganda and Airtel Uganda, which together control about 70% of mobile telecom market share, renewed their operator licenses for $100 million and $75 million respectively. In two years, both companies will start the process of listing on the USE, in compliance with the CLF.

The Uganda Investment Authority (UIA) facilitates investment by granting licenses to foreign investors, as well as promoting, facilitating, and supervising investments. It provides a “one-stop” shop online where investors can apply for a license, pay fees, register businesses, apply for land titles, and apply for tax identification numbers. In practice, investors may also need to liaise with other authorities to complete legal requirements. The UIA also triages complaints from foreign investors. The UIA’s website ( www.ugandainvest.go.ug ), the International Trade Administration’s website ( https://www.trade.gov/country-commercial-guides/uganda-market-overview ), and BidNetwork’s website, the Business in Development Network Guide to Uganda ( www.bidnetwork.org ), provide information on the laws and reporting requirements for foreign investors. In practice, investors often ultimately bypass the UIA after experiencing bureaucratic delays and corruption. For larger investments, companies have reported that political support and relationship-building from high-ranking Ugandan officials is a prerequisite.

President Museveni hosts an annual investors’ roundtable to consult a select group of foreign and local investors on increasing investment, occasionally including U.S. investors.

Every Ugandan embassy has a trade and investment desk charged with advertising investment opportunities in the country.

Limits on Foreign Control and Right to Private Ownership and Establishment

Except for land, foreigners have the right to own property, establish businesses, and make investments. Ugandan law permits foreign investors to acquire domestic enterprises and to establish green field investments. The Companies Act of 2010 permits the registration of companies incorporated outside of Uganda.

Foreigners seeking to invest in the oil and gas sector must register with the Petroleum Authority of Uganda (PAU) to be added to its National Supplier Database. More information on this process is available on the Embassy’s website (select – Registering a U.S. Firm on the National Supplier Database): ( https://ug.usembassy.gov/business/commercial-opportunities/).

The Petroleum Exploration and Development Act and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act require companies in the oil sector to prioritize using local goods and labor when possible and give the Minister of Energy and Mineral Development (MEMD) the authority to determine the extent of local content requirements in the sector.

All investors must obtain an investment license from the UIA. The UIA evaluates investment proposals based on several criteria, including potential for generation of new earnings; savings of foreign exchange; the utilization of local materials, supplies, and services; the creation of employment opportunities in Uganda; the introduction of advanced technology or upgrading of indigenous technology; and the contribution to locally or regionally balanced socioeconomic development.

Other Investment Policy Reviews

The United Nations Commission on Trade and Development (UNCTAD) issued its World Investment Report, 2020, available at: https://unctad.org/system/files/official-document/wir2020_en.pdf

The IMF issued an Article IV Consultation and Review in 2020, and its concluding statement is available at: https://www.imf.org/en/News/Articles/2020/02/03/pr2031-uganda-imf-staff-concludes-visit 

The World Trade Organization (WTO) issued its Trade Policy Review in 2019; the report is available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=254764,251521,117054,95202,80262,80232,82036,106989&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True 

Business Facilitation

The UIA one-stop shop website assists in registering businesses and investments. In practice, investors and businesses may need to liaise with multiple authorities to set up shop, and the UIA lacks the capacity to play a robust business facilitation role. According to the 2020 World Bank Doing Business report, business registration takes an average of 25 days.

Prospective investors can also register online and apply for an investment license at https://www.ebiz.go.ug/ . The UIA also assists with the establishment of local subsidiaries of foreign firms by assisting in registration with the Uganda Registration Services Bureau ( http://ursb.go.ug/ ). New businesses are required to obtain a Tax Identification Number from the URA, by clicking the “My TIN” link at https://www.ura.go.ug/  or through the UIA. Businesses must also secure a trade license from the municipality or local government in the area in which they intend to operate. Investors in specialized sectors such as finance, telecoms, and petroleum often need an additional permit from the relevant ministry in coordination with the UIA.

Under the Uganda Free Zones Act of 2014, the government continues to establish free trade zones for foreign investors seeking to produce goods for export and domestic use. Such investors receive a range of benefits including tax rebates on imported inputs and exported products. An investor seeking a free zone license may submit an application to the Uganda Free Zones Authority ( https://freezones.go.ug/ ).

Outward Investment

The Ugandan government does not promote or incentivize outward investment nor does it restrict domestic investors from investing abroad.

Zambia

Executive Summary

Zambia is a landlocked country in southern Africa that shares a border with eight countries: Angola, Democratic Republic of the Congo, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, and Namibia. The country has an estimated population of 17.86 million and GDP per capita of USD 1,430, according to the World Bank.

Despite broad economic reforms in the early 2000s, Zambia has struggled to diversify its economy from mining and accelerate private-led growth to address the poverty of its people. Cumbersome administrative procedures and unpredictable legal and regulatory changes inhibit Zambia’s immense potential for private sector investment. This is compounded by insufficient transparency in government contracting, ongoing lack of reliable electricity, and the high cost of doing business due to poor infrastructure, the high cost of capital, and lack of skilled labor.

Zambia’s already struggling economy was deeply impacted by the COVID-19 global pandemic. The International Monetary Fund (IMF) estimates Zambia’s economy contracted by 3.5 percent in 2020, after previously slowing to 1.8 percent in 2019 in a marked decline from the 4.0 percent growth seen in 2018. Inflation rose from 9.2 percent in 2019 to 19.2 percent by December 2020, well above the Bank of Zambia’s target range of 6.0 to 8.0 percent for 2020. In 2018 and 2019, Zambia’s economy was hit by a severe nationwide drought that considerably lowered agricultural production and hydropower electricity generation; electricity rationing continued in 2020, which dampened activity in almost all economic sectors. Copper is the country’s largest export; copper production in 2020 increased in the face of rising global copper prices to 10.8 percent over 2019’s anemic levels. Production in 2019 suffered a 12.5 percent decline from 2018 levels due in part to an onerous mining tax regime and falling global demand.

Zambia’s external debt grew to USD 11.98 billion in 2020, up from USD 11.2 billion at the end of 2019. The fiscal deficit at the end of 2020 was 11 percent of GDP, well above the government’s 6.5 percent target. The Zambian kwacha depreciated against the dollar by 34.1 percent in 2020, increasing the cost of external debt service and reducing the purchase power of Zambian businesses and consumers. Investor appetite for domestic bonds continued to shrink, and short- and long-term domestic borrowing costs rose. In November 2020 Zambia defaulted on a USD 42.5 million payment on its Eurobond, and the country has defaulted on numerous other commercial loans with foreign creditors. Fiscal responsibility is key to ensuring that macroeconomic fundamentals do not deteriorate further. At the end of 2020, foreign exchange reserves stood at USD 1.18 billion (representing 2.4 months of import cover), compared to USD 1.45 billion as of year-end 2019.

Budget execution by the Government of the Republic of Zambia (GRZ) has historically been poor and is widely viewed as aspirational rather than accurate, with documented extra budgetary spending. The GRZ continues to negotiate a potential loan package from the International Monetary Fund (IMF) intended to put Zambia on a path of debt sustainability and improved fiscal governance.

The U.S. Embassy works closely with the American Chamber of Commerce of Zambia (AmCham) to support its 65+ American and Zambian members seeking to increase two-way trade. Agriculture and mining remain headlining sectors for the Zambian economy. U.S. firms are present or exploring new projects in tourism, power generation, agriculture, and services.

Note: The ongoing global COVID-19 pandemic brought not only health but additional economic challenges. The GRZ in collaboration with the United Nations Development Program (UNDP) conducted a business survey in May 2020 to provide data on measures to help businesses respond during and after the pandemic. The report indicates that the pandemic has adversely affected business operations, with 71 percent of respondents indicating they partially closed their businesses, while another 14 percent of respondents noted that they closed their businesses totally. The GRZ is currently seeking emergency funding, debt relief, and debt restructuring to mitigate the pandemic’s economic impact.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 117 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2019 85 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 85 of 190 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019      $42 https://apps.bea.gov/international/factsheet/factsheet.cfm
World Bank GNI per capita 2019      $1,430 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

In general, Zambian law does not restrict foreign investors in any sector of the economy, although there are a few regulations and practices limiting foreign control laid out below. Foreign Direct Investment (FDI) continues to play an important role in Zambia’s economy. The Zambia Development Agency (ZDA) is charged with attracting more FDI to Zambia, in addition to promoting trade and investment and coordinating the country’s private sector-led economic development strategy.

Zambia has undertaken certain institutional reforms aimed at improving its attractiveness to investors; these reforms include the Private Sector Development Reform Program (PSDRP), which addresses the cost of doing business through legislation and institutional reforms, and the Millennium Challenge Account (MCA), which addresses issues relating to transparency and good governance ( https://data.mcc.gov/evaluations/index.php/catalog/72/study-description ). However, frequent government policy changes have created uncertainty for foreign investors. Recent examples include a rapid transition from a value-added tax regime to a sales tax that was slated to take effect in July 2019, but ultimately scrapped in September 2019 after multiple last minute delays and stakeholder backlash; taxes and royalty increases in the mining sector that took effect in January 2019 and marked the tenth significant change to mining taxes and regulations in 16 years; a labor law update with insufficient public consultation that significantly increased hiring costs for formal businesses; and unpredictable changes to limits on various crop exports.

Limits on Foreign Control and Right to Private Ownership and Establishment

The ZDA does not discriminate against foreign investors, and all sectors are open to both local and foreign investors. Foreign and domestic private entities have a right to establish and own business enterprises and engage in all forms of remunerative activities, and no business ventures are reserved solely for the government. Although private entities may freely establish and dispose of interests in business enterprises, investment board approval is required to transfer an investment license for a given enterprise to a new owner.

Currently, all land in Zambia is considered state land and ownership is vested in the president. Land titles held are for renewable 99-year leases; ownership is not conferred. According to the government, the current land administration system leaves little room for the empowerment of citizens, especially the poor and vulnerable rural communities. The government began reviewing the current land policy in earnest in March 2017; though shorter terms continue to be suggested, no changes have been adopted to date.

Foreign investors in the telecom sector are required to disclose certain proprietary information to the ZDA as part of the regulatory approval process. Further information regarding information and communication regulation can be found at the website of the Zambia Information and Communication Technology Authority at http://www.zicta.zm 

The ZDA board screens all investment proposals and usually makes its decision within 30 days. The reviews appear to be routine and non-discriminatory and applicants have the right to appeal investment board decisions. Investment applications are screened, with effective due diligence to determine the extent to which the proposed investment will help to create employment; the development of human resources; the degree to which the project is export-oriented; the likely impact on the environment; the amount of technology transfer; and any other considerations the Board considers appropriate.

The following are the requirements for registering a foreign company in Zambia:

  1. At least one and not more than nine local directors must be appointed as directors of a majority foreign-owned company. At least one local director of the company must be resident in Zambia, and if the company has more than two local directors, more than half of them shall be residents of Zambia.
  2. There must be at least one documentary agent (a firm, corporate body registered in Zambia, or an individual who is a resident in Zambia).
  3. A certified copy of the Certificate of Incorporation from the country of origin must be attached to Form 46.
  4. The charter, statutes, regulations, memorandum and articles, or other instrument relating to a foreign company must be submitted.
  5. The Registration Fee of K5,448.50 (~ USD 250.00) must be paid.
  6. The issuance and sealing of the Certificate of Registration marks the end of the process for registration.

This information can also be found at the web address of the Patents and Companies Registration Agency (PACRA), http://www.pacra.org.zm 

Other Investment Policy Reviews

The GRZ conducted a trade policy review through the World Trade Organization (WTO) in June 2016. The report found that Zambia recorded relatively strong economic growth at an average rate of 6.6 percent per year up to 2015. The improvement was attributed to growing demand for copper (the main export product) and its spillover effects on some other sectors such as transport, communications, and wholesale and retail trade. Buoyant construction activity and higher agricultural production also helped.

The trade policy review report of 2016 reached the following conclusions: the government should continue to implement programs and initiatives directed at attaining inclusive growth and job creation and pay particular attention to macroeconomic stability, diversification of the economy, support to small and medium enterprises (SMEs), engagement with cooperating partners, and promotion of investment. Zambia also uses bilateral, regional, and multilateral frameworks to support economic growth and development.

Report found here: https://www.wto.org/english/tratop_e/tpr_e/tp440_e.htm 

Business Facilitation

The Zambian government, often with support from cooperating partners, has undertaken economic reforms to improve its business facilitation process and attract foreign investors, including steps to support more transparent policymaking and to encourage competition. The impact of these progressive policies, however, has been undermined by persistent fiscal deficits, struggling economy, high cost of doing business and widespread corruption. Business surveys, including TRACE International, generally indicate that corruption in Zambia is a major obstacle for conducting business in the country.

The Zambian Business Regulatory Review Agency (BRRA) manages Regulatory Services Centers (RSCs) that serve as a one-stop shop for investors. RSCs provide an efficient regulatory clearance system by streamlining business registration processes; providing a single licensing system; reducing the procedures and time it takes to complete the registration process; and increasing accessibility of business registration institutions by placing them under one roof.

The government established RSCs in Lusaka, Livingstone, Kitwe, and Chipata, and has plans to establish additional RSCs so that there is at least one in each of the country’s 10 provinces. Information about the RSCs can be found at the following links:

The Companies Act No. 10 of 2017 was operationalized through a statutory instrument (June 2018) and implementing regulations (February 2019) aimed at fostering accountability and transparency in the management of companies. Companies are required to maintain a register of beneficial owners, and persons holding shares on behalf of other persons or entities must now disclose those beneficial owners.

In order to facilitate improved access to credit, the Patents and Company Registration Office (PACRA) established the collateral registry system, a central database that records all registrations of charges or collaterals created by borrowers to secure credits provided by lenders. This service allows lenders to search for collateral offered by loan applicants to see if that collateral already has an existing claim registered against it. Creditors can also register security interests against the proposed collateral to protect their priority status in accordance with the Movable Property (Security Interest) Act No. 3 of 2016. Generally, the first registered security interest in the collateral has first priority over any subsequent registrations.

Parliament passed the Border Management and Trade Facilitation Act in December 2018. The Act, among other things, calls for coordinated border management and control to facilitate the efficient movement and clearance of goods; puts into effect provisions for one-stop border posts; and simplifies clearance of goods with neighboring countries. While one-stop border posts have existed for several years and agencies are co-located at some border crossings, the new law seeks to harmonize conflicting regulations and processes within the interagency.

Outward Investment

Through the Zambia Development Agency (ZDA), the government continues to undertake a number of activities to promote investment through provision of fiscal and non-fiscal incentives, establishment of Multi-Facility Economic Zones (MFEZs), the development of SMEs, as well as the promotion of skills development, productive investment, and increased trade. However, there is no incentive for outward investment nor is there any known government restriction on domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Zambia has signed Bilateral Investment Treaties (BITs) with fifteen countries (six in force and nine not yet in force). Six countries have BITs in force with Zambia: France, Germany, Italy, Mauritius, the Netherlands, and Switzerland. Zambia has signed bilateral reciprocal promotional and protection of investment protocols with most of the member states of both the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the African Continental Free Trade Area (AfCFTA).

In 2000, Zambia became a beneficiary of the African Growth and Opportunity Act (AGOA) market access treaty with the United States and was again found eligible for continuous benefits under AGOA in 2021. In 2001, COMESA, of which Zambia is a member, signed a Trade and Investment Framework Agreement with the United States. Zambia initiated market access through the Eastern and Southern Africa (ESA) interim Economic Partnership Agreement (IEPA) with the European Union on September 30, 2008. In completing these negotiations, the provisions of the trade in goods chapter and related annexes of the ESA IEPA now apply to Zambia. Zambia has signed protective agreements with Chinese, Nigerian, Libyan, and Indian investors.