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Albania

Executive Summary

Albania is an upper middle-income country with a gross domestic product (GDP) of USD 16.77 billion (2021 IMF estimate) and a population of approximately 2.9 million people.

In 2020, the economy contracted by 4 percent in the height of COVID-19 and in 2021 re-bounded with a growth rate of 8.7 percent. The increase was fueled by construction, easing of pandemic related restrictions, recovery of tourism sector, increase in the real estate sector, record domestic electricity production, and continued budgetary, monetary, and fiscal policy support, including IMF and EU pandemic and earthquake related support. The initial growth projection for 2022 was 4.1 percent, despite uncertainties related to the pandemic, elevated fiscal deficits and public debt, and external and internal inflationary pressures. However, uncertainties due to Russia’s 2022 invasion of Ukraine, surging energy prices, and inflationary pressures, coupled with limited room for fiscal maneuvering due to high public debt that exceeded 80 percent at the end of 2021, present challenges to the Albanian economy.

Albania joined NATO in 2009 and has been a member of WTO since 2000. The country signed the Stabilization and Association Agreement with the European Union in 2006, received the status of the EU candidate country in 2014, and began accession negotiations with the EU in July 2022.

Albania’s legal framework is in line with international standards in protecting and encouraging foreign investments and does not discriminate against foreign investors. The Law on Foreign Investments of 1993 outlines specific protections for foreign investors and allows 100 percent foreign ownership of companies in all but a few sectors. The U.S.-Albanian Bilateral Investment Treaty, which entered into force in 1998, ensures that U.S. investors receive national treatment and most-favored-nation treatment. Albania and the United States signed a Memorandum of Economic Cooperation in October 2020 with an aim of increasing trade and investment between the two countries. Since the signing multiple U.S. companies have signed agreements for major projects in the country.

As a developing country, Albania offers large untapped potential for foreign investments across many sectors including energy, tourism, healthcare, agriculture, oil and mining, and information and communications technology (ICT). In the last decade, Albania has been able to attract greater levels of foreign direct investment (FDI). According to the UNCTAD data, during 2010-2020, the flow of FDI has averaged USD 1.1 billion and stock FDI at the end of 2020 reached USD 10 billion or triple the amount of 2010. According to preliminary data of the Bank of Albania the FDI flow in 2021 is expected to reach USD 1 billion. Investments are concentrated in extractive industries and processing, real estate, the energy sector, banking and insurance, and information and communication technology. Switzerland, the Netherlands, Canada, Italy, Turkey, Austria, Bulgaria, and France are the largest sources of FDI. The stock FDI from United States accounts for a small, but rapidly growing share. At the end of Q3 2021, the United States stock FDI in Albania reached USD168 million, up from USD 99 million at the end of 2020, nearly a 70 percent increase.

Despite a sound legal framework, foreign investors perceive Albania as a difficult place to do business. They cite endemic corruption, including in the judiciary and public procurements, unfair competition, informal economy, frequent changes of the fiscal legislation, and poor enforcement of contracts as continuing challenges for investment and business in Albania. Reports of corruption in government procurement are commonplace. The continued use of public private partnership (PPP) contracts has reduced opportunities for competition, including by foreign investors, in infrastructure and other sectors. Poor cost-benefit analyses and a lack of technical expertise in drafting and monitoring PPP contracts are ongoing concerns. U.S. investors are challenged by corruption and the perpetuation of informal business practices. Several U.S. investors have faced contentious commercial disputes with both public and private entities, including some that went to international arbitration. In 2019 and 2020, a U.S. company’s attempted investment was allegedly thwarted by several judicial decisions and questionable actions of stakeholders involved in a dispute over the investment. The case is now in international arbitration.

Property rights continue to be a challenge in Albania because clear title is difficult to obtain. There have been instances of individuals allegedly manipulating the court system to obtain illegal land titles. Overlapping property titles is a serious and common issue. The compensation process for land confiscated by the former communist regime continues to be cumbersome, inefficient, and inadequate. Nevertheless, parliament passed a law on registering property claims on April 16, 2020, which will provide some relief for title holders.

In an attempt to limit opportunities for corruption, the GoA embarked on a comprehensive reform to digitalize all public services. As of March 2021, 1,200 services or 95 percent of all public services to citizens and businesses were available online through the E-Albania Portal . However, Albania continues to score poorly on the Transparency International’s Corruption Perceptions Index. In 2021, Albania declined to 110th out of 180 countries, a fall of six places from 2020. Albania continues to rank low in the Global Innovation Index, ranking 84 out of 132 countries.

To address endemic corruption, the GOA passed sweeping constitutional amendments to reform the country’s judicial system and improve the rule of law in 2016. The implementation of judicial reform is underway, heavily supported by the United States and the EU, including the vetting of judges and prosecutors for unexplained wealth. More than half the judges and prosecutors who have undergone vetting have been dismissed for unexplained wealth or ties to organized crime. The EU expects Albania to show progress on prosecuting judges and prosecutors whose vetting revealed possible criminal conduct. The implementation of judicial reform is ongoing, and its completion is expected to improve the investment climate in the country. The Albanian parliament voted overwhelmingly and unopposed to extend this vetting mandate in February 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 110 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 84 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $35 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $ 5,210 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

State-owned enterprises (SOEs) are defined as legal entities that are entirely state-owned or state-controlled and operate as commercial companies in compliance with the Law on Entrepreneurs and Commercial Companies. SOEs operate mostly in the generation, distribution, and transmission of electricity, oil and gas, railways, postal services, ports, and water supply. There is no published list of SOEs.

The law does not discriminate between public and private companies operating in the same sector. The government requires SOEs to submit annual reports and undergo independent audits. SOEs are subject to the same tax levels and procedures and the same domestic accounting and international financial reporting standards as other commercial companies. The High State Audit audits SOE activities. SOEs are also subject to public procurement law.

Albania is yet to become party to the Government Procurement Agreement (GPA) of the WTO but has obtained observer status and is negotiating full accession (see  https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm  ).  Private companies can compete openly and under the same terms and conditions with respect to market share, products and services, and incentives.

SOE operation in Albania is regulated by the Law on Entrepreneurs and Commercial Companies, the Law on State Owned Enterprises, and the Law on the Transformation of State-Owned Enterprises into Commercial Companies. The Ministry of Economy and Finance and other relevant ministries, depending on the sector, represent the state as the owner of the SOEs. SOEs are not obligated by law to adhere to Organization for Economic Cooperation and Development (OECD) guidelines explicitly. However, basic principles of corporate governance are stipulated in the relevant laws and generally accord with OECD guidelines. The corporate governance structure of SOEs includes the supervisory board and the general director (administrator) in the case of joint stock companies. The supervisory board comprises three to nine members, who are not employed by the SOE. Two-thirds of board members are appointed by the representative of the Ministry of Economy and Finance, and one-third by the line ministry, local government unit, or institution to which the company reports. The Supervisory Board is the highest decision-making authority and appoints and dismisses the administrator of the SOE through a two-thirds vote.

8. Responsible Business Conduct

Public awareness of corporate social responsibility (CSR) and Responsible Business Conduct (RBC) in Albania is low, and CSR and RBC remains new concepts for much of the business community. The small level of CSR and RBC engagement in Albania comes primarily from international corporations operating in the energy, telecommunications, heavy industry, and banking sectors, and tends to focus on philanthropy and environmental issues. International organizations have recently improved efforts to promote CSR. Thanks to efforts by the international community and large international companies, the first Albanian CSR network was founded in March 2013 as a business-led, non-profit organization. The American Chamber of Commerce in Albania also formed a subcommittee in 2015 to promote CSR among its members.

Legislation governing CSR, labor, and employment rights, consumer protection, and environmental protection is robust, but enforcement and implementation are inconsistent. The Law on Commercial Companies and Entrepreneurs outlines generic corporate governance and accounting standards. According to that law and the Law on the National Business Registration Center, companies must disclose publicly when they change administrators and shareholders and to disclose financial statements. The Corporate Governance Code for unlisted joint stock companies incorporates the OECD definitions and principles on corporate governance but is not legally binding. The code provides guidance for Albanian companies and aims to provide best-practices while assisting Albanian companies to develop a governance framework.

Albania has been a member of the Extractive Industries Transparency Initiative (EITI) since 2013.

9. Corruption

Endemic corruption continues to undermine the rule of law and jeopardize economic development. Foreign investors cite corruption including in the judiciary, a lack of transparency in public procurement, lack of transparency and competition, informal economy, and poor enforcement of contracts as some of the biggest problems in Albania. Despite some improvement in Albania’s score from 2013 to 2016, progress in tackling corruption has been slow and unsteady. In 2021, Albania’s Corruption Perceptions Index (CPI) score was 35 and its ranking fell by six slots from 104 to 110, a significant decline from the 2016 score and rank of respectively 39 and 83. Albania is still one of the most corrupt countries in Europe, according to the CPI and other observers.

The country has a sound legal framework to prevent conflict of interest and to fight corruption of public officials and politicians, including their family members. However, law enforcement is jeopardized by a heavily corrupt judicial system.

The passage of constitutional amendments in July 2016 to reform the judicial system was a major step forward, and reform, once fully implemented, is expected to position the country as a more attractive destination for international investors. Judicial reform has been described as the most significant development in Albania since the end of communism, and nearly one-third of the constitution was rewritten as part of the effort. The reform also entails the passage of laws to ensure implementation of the constitutional amendments. Judicial reform’s vetting process will ensure that prosecutors and judges with unexplained wealth or insufficient training, or those who have issued questionable verdicts, are removed from the system. As of publication, more than half of the judges and prosecutors who have faced vetting have either failed or resigned. The establishment of the Special Prosecution Office Against Corruption (SPAK) and Organized Crime and of the National Investigation Bureau, two new judicial bodies, will step up the fight against corruption and organized crime. Once fully implemented, judicial reform will discourage corruption, promote foreign and domestic investment, and allow Albania to compete more successfully in the global economy.

The government has ratified several corruption-related international treaties and conventions and is a member of major international organizations and programs dealing with corruption and organized crime. Albania has ratified the Civil Law Convention on Corruption (Council of Europe), the Criminal Law Convention on Corruption (Council of Europe), the Additional Protocol to Criminal Law Convention on Corruption (Council of Europe), and the United Nations Convention against Corruption (UNCAC). Albania has also ratified several key conventions in the broader field of economic crime, including the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (2001) and the Convention on Cybercrime (2002). Albania has been a member of the Group of States against Corruption (GRECO) since the ratification of the Criminal Law Convention on Corruption in 2001 and is a member of the Stability Pact Anti-Corruption Initiative (SPAI). Albania is not a member of the OECD Anti-Bribery Convention. Albania has adopted legislation for the protection of whistleblowers.

To curb corruption, the government announced a new online platform in 2017, “  Shqiperia qe Duam  ” (“The Albania We Want”), which invites citizens to submit complaints and allegations of corruption and misuse of office by government officials. The platform has a dedicated link for businesses. The Integrated Services Delivery Agency (ADISA), a government entity, provides a second online portal to report corruption. Effectiveness of the portal is minimal.

In February 2020, GoA approved the establishment of the Special Anticorruption and Anti-Evasion Unit which operates under the Council of Ministers. The mission of the unit is the coordination between the main public institutions, agencies, and state-owned companies in order to discover, investigate and punish corruption and abusive practices. During 2021, the National Network of Anti-Corruption Coordinators, a structure that is under the Minister of Justice, who also serves as the National Coordinator against corruption, became functional. The coordinators are placed in seventeen institutions that have the highest public perception of corruption. The coordinators collect, process, and analyze complaints filed by the citizens and businesses and report to the law enforcement authorities if necessary.

Despite progress, corruption remains pervasive. Albania has yet to build a solid track record of investigations, prosecution, conviction, and confiscation of criminal assets resulting from corruption-related offences.

10. Political and Security Environment

Political violence is rare, the more recent instances being an attempt led by a former Albanian leader designated by the USG for corruption to breach a party headquarters in January 2022 that required police intervention and political protests in 2019 that included instances of civil disobedience, low-level violence and damage to property, and the use of tear gas by police. Albania’s April 2021 elections and transition to a new government were peaceful, as were its June 2019 local elections. On January 21, 2011, security forces shot and killed four protesters during a violent political demonstration. In its external relations, Albania has usually encouraged stability in the region and maintains generally friendly relations with neighboring countries.

11. Labor Policies and Practices

Albania’s labor force numbers around 1.2 million people, according to official data. After peaking at 18.2 percent in the first quarter of 2014, the official estimated unemployment rate has significantly decreased in recent years. In December 2021, unemployment reached 11.4 percent compared to 11.8 percent at the end of 2020 marking an improvement following the economic disruption due to the COVID-19 pandemic. Unemployment among people aged 15-29 remains high, at 20.6 percent. Around 40 percent of the population is self-employed in the agriculture sector. According to the International Labor Organization (ILO), share of informal employment in the employed population was almost 57 percent in 2019, the highest in the region.

The institutions that oversee the labor market include the Ministry of Finance, Economy and Labor, the Ministry of Health and Social Protection, the National Employment Service, the State Labor Inspectorate, and private entities such as employment agencies and vocational training centers.  Albania has adopted a wide variety of regulations to monitor labor abuses, but enforcement is weak.

Outward labor migration remains an ongoing problem affecting the Albanian labor market especially in the IT and health sector. There is a growing concern about labor shortage for both skilled and unskilled workforces.  In recent years, media outlets have reported that a significant number of doctors and nurses have emigrated to the European Union, especially Germany. According to the World Bank, Albania has the lowest number of doctors per capita in the region with just 1.647 doctors per 1,000 inhabitants in 2019. In December 2021, the average public administration salary was approximately 70,531 lek (approximately USD 650) per month. The GoA has announced it will increase the minimum wage by 6.5 percent to 32,000 lek per month (approximately USD 300) in April 2022, which remains the lowest in the region.

In March 2019, parliament approved a new law on employment promotion, which defined public policies on employment and support programs. Albania has a tradition of a strong secondary educational system, while vocational schools are viewed as less prestigious and attract fewer students.  However, the government has more recently focused attention on vocational education. In the 2020-2021 academic year, about 19,000, or 18.5 percent, of high school pupils were enrolled in vocational schools.

The Law on Foreigners 79/2021 that was approved in July 2021 and various decisions of the Council of Ministers regulate the employment regime in Albania.  Employment can also be regulated through special laws in the case of specific projects, or to attract foreign investment.  The Law on TEDA’s provides financial and tax incentives for investments in the zone. Law on Foreigners extends the same employment and self-employment rights of Albanian citizens to citizens of the five Western Balkan countries and provides the same benefits that the original law provided to the citizens of EU and Schengen countries.

The Labor Code includes rules regarding contract termination procedures that distinguish layoffs from terminations.  Employment contracts can be limited or unlimited in duration, but typically cover an unlimited period if not specified in the contract. Employees can collect up to 12 months of salary in the event of an unexpected interruption of the contract. Unemployment compensation is approximately 50 percent of the minimum wage.

Pursuant to the Labor Code and the recently amended “Law on the Status of the Civil Employee,” both individual and collective employment contracts regulate labor relations between employees and management.  While there are no official data recording the number of collective bargaining agreements used throughout the economy, they are widely used in the public sector, including by SOEs. Albania has a labor dispute resolution mechanism as specified in the Labor Code, article 170, but the mechanism is considered inefficient. Strikes are rare in Albania, mostly due to the limited power of the trade unions and they have not posed a significant risk to investments.

Albania has been a member of the International Labor Organization since 1991 and has ratified 54 out of 189 ILO conventions, including the eight Fundamental Conventions, the four Governance Conventions, and 42 Technical Conventions. The implementation of labor relations and standards continues to be a challenge, according to the ILO.

See the U.S. Department of State Human Rights Report: https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/; and the U.S. Department of Labor Child Labor Report: http://www.dol.gov/ilab/reports/child-labor  .

14. Contact for More Information

U.S. Embassy Tirana, Albania
Rruga Stavro Vinjau, Nr. 14
Tirana, Albania
+355 4 224 7285
USALBusiness@state.gov  

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 launched a series of political reforms, which led to the adoption of a new constitution in December 2020 and the election of a new parliament in June 2021. Tebboune has declared his intention to focus on economic issues in 2022 and beyond.

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 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 encourages major international oil companies to sign memorandums of understanding with the national hydrocarbons company, Sonatrach.  Though the 43 regulatory texts enacting the legislation have not been formally finalized, the government is using the new law as the basis for negotiating new contracts with international oil companies. In recent years, 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. The government is in the process of drafting and finalizing a new investment law. Algeria has established ambitious renewable energy adoption targets to reduce carbon emissions and reduce domestic consumption of natural gas.

Algeria’s economy is driven by hydrocarbons production, which historically accounts for 95 percent of export revenues and approximately 40 percent of government income. Following the significant drop in oil prices at the onset of the COVID-19 pandemic in March 2020, the government cut budgeted expenditures by 50 percent and significantly reduced investment in the energy sector. The implementation of broad-based import reductions coupled with a recovery in hydrocarbon prices in 2021 led to Algeria’s first trade surplus since 2014. Though successive government budgets have boosted state spending, Algeria continues to run a persistent budget deficit, which is projected to reach 20 percent of GDP in 2022. Despite a significant reduction in revenues, the historically debt-averse government continues 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 a limited selection for consumer goods. The government depreciated the Algerian dinar approximately 5% in 2021 after a 10% depreciation in 2020 to conserve its foreign exchange reserves, contributing to 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.  Though the government has lifted domestic COVID_19 related confinement measures, continued restrictions on international flight volumes complicate travel to Algeria for international investors.

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 the People’s Republic of China, France, and Turkey. International firms operating 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 and put a chill on bureaucratic decision making. 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 2021 117 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 120 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 20xx USD Amount https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $3,570 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

State-owned enterprises (SOEs) comprise more than half of the formal Algerian economy. SOEs are amalgamated into a single line of the state budget and are listed in the official business registry. To be defined as an SOE, a company must be at least 51 percent owned by the state.

Algerian SOEs are bureaucratic and may be subject to political influence. There are competing lines of authority at the mid-levels, and contacts report mid- and upper-level managers are reluctant to make decisions because internal accusations of favoritism or corruption are often used to settle political and personal scores. Senior management teams at SOEs report to their relevant ministry; CEOs of the larger companies such as national hydrocarbons company Sonatrach, national electric utility Sonelgaz, and airline Air Algerie report directly to ministers. Boards of directors are appointed by the state, and the allocation of these seats is considered political. SOEs are not known to adhere to the OECD Guidelines on Corporate Governance.

Legally, public and private companies compete under the same terms with respect to market share, products and services, and incentives. In reality, private enterprises assert that public companies sometimes receive more favorable treatment. Private enterprises have the same access to financing as SOEs, but they work with private banks, and they are less bureaucratic than their public counterparts. Public companies generally refrain from doing business with private banks and a 2008 government directive ordered public companies to work only with public banks. The directive was later officially rescinded, but public companies continued the practice. However, the heads of Algeria’s two largest state enterprises, Sonatrach and Sonelgaz, both indicated in 2020 that given current budget pressures they are investigating recourse to foreign financing, including from private banks. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors, but business contacts report that the government favors SOEs over private sector companies in terms of access to land.

SOEs are subject to budget constraints. Audits of public companies can be conducted by the Court of Auditors, a financially autonomous institution. The constitution explicitly charges it with “ex post inspection of the finances of the state, collectivities, public services, and commercial capital of the state,” as well as preparing and submitting an annual report to the President, heads of both chambers of Parliament, and Prime Minister. The Court makes its audits public on its website, for free, but with a time delay, which does not conform to international norms.

The Court conducts audits simultaneously but independently from the Ministry of Finance’s year-end reports. The Court makes its reports available online once finalized and delivered to the Parliament, whereas the Ministry withholds publishing year-end reports until after the Parliament and President have approved them. The Court’s audit reports cover the entire implemented national budget by fiscal year and examine each annual planning budget that is passed by Parliament.

The General Inspectorate of Finance (IGF), the public auditing body under the supervision of the Ministry of Finance, can conduct “no-notice” audits of public companies. The results of these audits are sent directly to the Minister of Finance, and the offices of the President and Prime Minister. They are not made available publicly. The Court of Auditors and IGF previously had joint responsibility for auditing certain accounts, but they are in the process of eliminating this redundancy. Further legislation clarifying whether the delineation of responsibility for particular accounts which could rest with the Court of Auditors or the Ministry of Finance’s General Inspection of Finance (IGF) unit has yet to be issued.

8. Responsible Business Conduct

Multinational, and particularly U.S. firms operating in Algeria, are spreading the concept of responsible business conduct (RBC), which has traditionally been less common among domestic firms. Companies such as Occidental, Cisco, Microsoft, Boeing, Dow, Halliburton, Pfizer, and Berlitz have supported programs aimed at youth employment, education, and entrepreneurship. RBC activities are gaining acceptance as a way for companies to contribute to local communities while often addressing business needs, such as a better-educated workforce. The national oil and gas company, Sonatrach, funds some social services for its employees and supports desert communities near production sites. Still, many Algerian companies view social programs as the government’s responsibility. While state entities welcome foreign companies’ RBC activities, the government does not factor them into procurement decisions, nor does it require companies to disclose their RBC activities. Algerian laws for consumer and environmental protections exist but are weakly enforced.

Algeria does not adhere to the OECD or UN Guiding Principles and does not participate in the Extractive Industries Transparency Initiative. Algeria ranks 73 out of 89 countries for resource governance and does not comply with rules set for disclosing environmental impact assessments and mitigation management plans, according to the most recent report by National Resource Governance Index published in 2017.

Department of State

Department of the Treasury

Department of Labor

9. Corruption

The current anti-corruption law dates to 2006. In 2013, the Algerian government created the Central Office for the Suppression of Corruption (OCRC) to investigate and prosecute any form of bribery in Algeria. The number of cases currently being investigated by the OCRC is not available. In 2010, the government created the National Organization for the Prevention and Fight Against Corruption (ONPLC) as stipulated in the 2006 anti-corruption law. The Chairman and members of this commission are appointed by a presidential decree. The commission studies financial holdings of public officials, though not their relatives, and carries out studies. Since 2013, the Financial Intelligence Unit has been strengthened by new regulations that have given the unit more authority to address illegal monetary transactions and terrorism funding. In 2016, the government updated its anti-money laundering and counter-terrorist finance legislation to bolster the authority of the financial intelligence unit to monitor suspicious financial transactions and refer violations of the law to prosecutorial magistrates. Algeria signed the UN Convention Against Corruption in 2003.

The new Algerian constitution, which the President approved in December 2020, includes provisions that strengthen the role and capacity of anti-corruption bodies, particularly through the creation of the High Authority for Transparency, Prevention, and Fight against Corruption. This body is tasked with developing and enabling the implementation of a national strategy for transparency and preventing and combatting corruption.

The Algerian government does not require private companies to establish internal codes of conduct that prohibit bribery of public officials. The use of internal controls against bribery of government officials varies by company, with some upholding those standards and others rumored to offer bribes. Algeria is not a participant in regional or international anti-corruption initiatives. Algeria does not provide protections to NGOs involved in investigating corruption. While whistleblower protections for Algerian citizens who report corruption exist, members of Algeria’s anti-corruption bodies believe they need to be strengthened to be effective.

International and Algerian economic operators have identified corruption as a challenge for FDI. They indicate that foreign companies with strict compliance standards cannot effectively compete against companies which can offer special incentives to those making decisions about contract awards. Economic operators have also indicated that complex bureaucratic procedures are sometimes manipulated by political actors to ensure economic benefits accrue to favored individuals in a non-transparent way. Anti-corruption efforts have so far focused more on prosecuting previous acts of corruption rather than on institutional reforms to reduce the incentives and opportunities for corruption. In October 2019, the government adopted legislation which allowed police to launch anti-corruption investigations without first receiving a formal complaint against the entity in question. Proponents argued the measure is necessary given Algeria’s weak whistle blower protections.

Currently the government is working with international partners to update legal mechanisms to deal with corruption issues. The government also created a new institution to target and deter the practice of overbilling on invoices, which has been used to unlawfully transfer foreign currency out of the country.

The government imprisoned numerous prominent economic and political figures in 2019 and 2020 as part of an anti-corruption campaign. Some operators report that fear of being accused of corruption has made some officials less willing to make decisions, delaying some investment approvals. Corruption cases that have reached trial deal largely with state investment in the automotive, telecommunications, public works, and hydrocarbons sectors, though other cases are reportedly under investigation.

10. Political and Security Environment

Following nearly two months of massive protests, known as the hirak, former President Abdelaziz Bouteflika resigned on April 2, 2019, after 20 years in power. His resignation launched an eight-month transition, resulting in the election of Abdelmadjid Tebboune as president in December 2019. Voter turnout was approximately 40 percent and the new administration continues to focus on restoring government authority and legitimacy. Following historically low turnout of 24 percent in the November 2020 constitutional referendum and President Tebboune’s lengthy medical absences in late 2020 and early 2021, hirak protests resumed in February 2021 before government security services brought them to a halt in May 2021. Demonstrations have taken place in Algeria’s major wilayas (states) and have focused largely on political reform, as protestors continue to call for an overhaul of the Algerian government. President Tebboune dissolved parliament in February 2021 and Algeria held parliamentary elections in June 2021 and local elections in November 2021.

Prior to the hirak, which began in 2019, demonstrations in Algeria tended to concern housing and other social programs and were generally smaller than a few hundred participants. While most protests were peaceful, there were occasional outbreaks of violence that resulted in injuries, sometimes resulting from efforts of security forces to disperse the protests. Hirak protests were relatively peaceful, though security forces occasionally use heavy-handed tactics to suppress protesters. In 2021, the government adopted laws that give authorities more leeway to arrest political opponents.

In 2013, a terrorist group now known as al-Murabitoun claimed responsibility for the attack against the Tiguentourine gas facility near In Amenas, in southeastern Algeria.  More than 800 people were taken hostage during the four-day siege, resulting in the deaths of 39 civilians, including 3 U.S. citizens, and resulting in damage to the facilities.  Seven other U.S. citizens escaped.  Since the attack, the Algerian government has increased security personnel and preventative security procedures in Algeria’s oil and gas producing regions.

Government reactions to public unrest typically include tighter security control on movement between and within cities to prevent further clashes, significant security presence in anticipated protest zones, temporary detention of protestors, and promises of either greater public expenditures on local infrastructure or increased local hiring for state-owned companies. During the first few months of 2015, there were a series of protests in several cities in southern Algeria against the government’s program to drill test wells for shale gas. These protests were largely peaceful but sometimes resulted in clashes, injury, and rarely, property damage. Government pronouncements in 2017 that shale gas exploration would recommence did not generate protests.

On April 27, 2020, an Algerian court sentenced an expatriate manager and an Algerian employee of a large hotel to six months in prison on charges of “undermining the integrity of the national territory” for allegedly sharing publicly available security information with corporate headquarters outside of Algeria.

The Algerian government requires all foreign employees of foreign companies or organizations based in Algeria to contact the Foreigners Office of the Ministry of the Interior before traveling in the country’s interior so that the government can evaluate security conditions. The Algerian government also requires U.S. Embassy employees to coordinate travel with the government on any trip outside of the Algiers wilaya (state). The Algerian government continues to limit the weekly number of authorized international flights in response to the COVID-19 outbreak, and they remain at less than 40 percent of pre-COVID levels two years after the onset of the pandemic.

In February 2020, ISIS claimed responsibility for a suicide bomber who attacked a military barrack in southern Algeria, killing a soldier. This was met with a swift response by Algerian security services against the militants responsible for the attacks, and the Algerian army continues to carry out counterterrorism operations throughout the country.

According to official Defense Ministry announcements, Algerian security forces “neutralized” 37 terrorists (21 killed, 9 arrested, and 7 surrendered) and arrested an additional 108 “supporters” of terrorism in 2020.  Army detachments also destroyed 251 terrorist hideouts and seized a large quantity of ammunition and explosives during the year. In 2021, the government broadened the definition of terrorism to include any act – peaceful or otherwise – that undermines Algeria’s national unity, prompting a slew of terrorism arrests for acts not necessarily in line with the internationally recognized definition of terrorism.

U.S. citizens living or traveling in Algeria are encouraged to enroll in the Smart Traveler Enrollment Program (STEP) via the State Department’s travel registration website, https://step.state.gov/step, to receive security messages and make it easier to be located in an emergency.

11. Labor Policies and Practices

There is a shortage of skilled labor in Algeria in all sectors. Business contacts report difficulty in finding sufficiently skilled plumbers, electricians, carpenters, and other construction/vocational related areas. Oil companies report they have difficultly retaining trained Algerian engineers and field workers because these workers often leave Algeria for higher wages in the Gulf. Some white-collar employers also report a lack of skilled project managers, supply chain engineers, and sufficient numbers of office workers with requisite computer and soft skills.

Official unemployment figures are measured by the number of persons seeking work through the National Employment Agency (ANEM). According to the most recent official figures in 2019, Algeria had an unemployment rate of 11.4%.  Following the pandemic, the real unemployment rate is likely much higher with some sources estimating it to be above 30 percent in the youth population.  In January 2021, Minister of Employment, Labor, and Social Security El Hachemi Djaaboub said that new job offers in 2020 fell by 30% compared to 2019 (from 437,000 to 306,000).  Djaaboub also said recently that the closure of auto assembly and household appliance plants as a result of the halt in imports for the necessary assembly kits (semi-knock-down kits, or SKDs) since 2019 has resulted in the loss of 51,000 jobs. The 2022 Finance Law included a provision to establish an unemployment allowance, which applies to first-time job seekers between 19 and 40 years of age, paid monthly for six months, renewable only once, with baseline benefit levels of 13,000 dinars (USD 92) adjustable for geographical location. Approximately 300,000 Algerians qualified for the initial benefit, slated to go into effect on March 28. Additionally, the subsidy allotted to finance vocational integration (le dispositif d’insertion professionnelle) decreased from 135 billion dinars in 2013 to 32 billion in 2021.

The government has undertaken efforts to protect formal sector employment throughout the COVID-19 crisis, focusing particularly on unemployment benefits, as well as increasing relative wages by 14 to 16 percent in the 2022 Finance Law by reducing income taxes. In general, finding a job is regulated by the government and is bureaucratically complex. Prospective employees must register with the labor office, submit paper resumes door to door, attend career fairs, and comb online job offerings. According to the Office of National Statistics, 81 percent of university graduates say that they favor “family relationships” or “the family network” as the best way to look for a job.

The private sector accounts for 62.2 percent of total employment with 7.014 million people, with 37.8 percent in the public sector, employing 4.267 million people. Additionally, the International Labor Organization (ILO) estimates that more than one-third of all employment in Algeria takes place in the informal economy. The informal sector is estimated to comprise up to 50 percent of Algeria’s non-hydrocarbon economy. The Ministry of Vocational Training sponsors programs that offer training to at least 300,000 Algerians annually, including those who did not complete high school, in various professional programs.

Companies must submit extensive justification to hire foreign employees, and report pressure to hire more locals (even if jobs could be replaced through mechanization) under the implied risk that the government will not approve visas for expatriate staff. There are no special economic zones or foreign trade zones in Algeria.

The constitution provides workers with the right to join and form unions of their choice provided they are Algerian citizens. The country has ratified the ILO’s conventions on freedom of association and collective bargaining but failed to enact legislation needed to implement these principles fully. The General Union of Algerian Workers (UGTA) is the largest union in Algeria and represents a broad spectrum of employees in the public sectors. The UGTA, an affiliate of the International Trade Union Conference, is an official member of the Algerian “tripartite,” a council of labor, government, and business officials that meets annually to collaborate on economic and labor policy. The Algerian government liaises almost exclusively with the UGTA, however, unions in the education, health, and administration sectors do meet and negotiate with government counterparts, especially when there is a possibility of a strike. Collective bargaining is legally permitted but not mandatory.

Algerian law provides mechanisms for monitoring labor abuses and health and safety standards, and international labor rights are recognized under domestic law, but are only effectively regulated in the formal economy. Typical labor inspections were greatly reduced in 2020 due to COVID-19 restrictions, but largely resumed in 2021 at normal rates. The government has shown an increasing interest in understanding and monitoring the informal economy, evidenced by its 2018 partnerships with the ILO and current cooperation with the World Bank on several projects aimed at better quantifying the informal sector.

Sector-specific strikes occur often in Algeria, though general strikes are less common. The law provides for the right to strike, and workers exercise this right, subject to conditions. Striking requires a secret ballot of the whole workforce, and the decision to strike must be approved by a majority vote of the workers at a general meeting. The government may restrict strikes on several grounds, including economic crisis, obstruction of public services, or the possibility of subversive actions. Furthermore, all public demonstrations, including protests and strikes, must receive prior government authorization. By law, workers may strike only after 14 days of mandatory conciliation or mediation. The government occasionally offers to mediate disputes. The law states that decisions agreed to in mediation are binding on both parties. If mediation does not lead to an accord, workers may strike legally after they vote by secret ballot. The law requires that a minimum level of essential public services must be maintained, and the government has broad legal authority to requisition public employees. The list of essential services includes banking, radio, and television. Penalties for unlawful work stoppages range from eight days to two months imprisonment.

Since the beginning of the COVID-19 crisis, there have been periodic strikes affecting companies in various sectors as a result of the economic recession caused by the pandemic. Several strikes were initiated by workers in the northern regions, particularly in the industrial zones of Tizi-Ouzou, Béjaïa, and Bordj Bou Arreridj. In January 2021, employees of the electronics and household appliance group Condor demanded the firing of the director of the company appointed by the courts and back payment for salaries from December 2020.

Stringent labor-market regulations likely inhibit an increase in full-time, open-ended work. Regulations do not allow for flexibility in hiring and firing in times of economic downturn. For example, employers are generally required to pay severance when laying off or firing workers. Unemployment insurance eligibility requirements may discourage job seekers from collecting benefits due to them, and the level of support claimants receive is minimal. Employers must have contributed up to 80 percent of the final year salary into the unemployment insurance scheme in order for the employees to qualify for unemployment benefits.

The law contains occupational health and safety standards, but enforcement of these standards is uneven. There were no known reports of workers dismissed for removing themselves from hazardous working conditions. If workers face hazardous conditions, they may file a complaint with the Ministry of Labor, which is required to send out labor inspectors to investigate the claim. Nevertheless, the high demand for unemployment in Algeria gives an advantage to employers seeking to exploit employees.

Because Algerian law does not provide for temporary legal status for migrants, labor standards do not protect economic migrants from sub-Saharan Africa and elsewhere working in the country without legal immigration status. However, migrant children are protected by law from working.

The Ministry of Labor enforces labor standards, including compliance with the minimum wage regulation and safety standards. Companies that employ migrant workers or violate child labor laws are subject to fines and potentially prosecution.

The law prohibits participation by minors in dangerous, unhealthy, or harmful work or in work considered inappropriate because of social and religious considerations. The minimum legal age for employment is 16, but younger children may work as apprentices with permission from their parents or legal guardian. The law prohibits workers under age 19 from working at night. While there is currently no list of hazardous occupations prohibited to minors, the government reports it is drafting a list which will be issued by presidential decree. Although specific data was unavailable, children reportedly worked mostly in the informal sector, largely in sales, often in family businesses. They are also involved in begging and agricultural work. There were isolated reports that children were subjected to commercial sexual exploitation.

The Ministry of Labor is responsible for enforcing child labor laws. There is no single office charged with this task, but all labor inspectors are responsible for enforcing laws regarding child labor. In 2018, the Ministry of Labor focused one month specifically on investigating child labor violations, and in some cases prosecuted individuals for employing minors or breaking other child-related labor laws. While the government claims to monitor both the formal and informal sectors, contacts note that their efforts largely focus on the formal economy.

The National Authority of the Protection and Promotion of Children (ONPPE) is an inter-agency organization, created in 2016, which coordinates the protection and promotion of children’s rights. As a part of its efforts, ONPPE continues to hold educational sessions for officials from relevant ministries, civil society organizations, and journalists on issues related to children, including child labor and human trafficking.

14. Contact for More Information

U.S. Embassy Algiers
Political and Economic Section
5 Chemin Cheikh Bachir El-Ibrahimi, El Biar Algiers, Algeria (+213) 0770 082 153
(+213) 0770 082 153
Algiers_polecon@state.gov

Andorra

Executive Summary

Andorra is an independent principality with a population of about 79,000 and area of 181 square miles situated between France and Spain in the Pyrenees mountains. It uses the euro as its national currency. Andorra is a popular tourist destination visited by over 8 million people each year (pre-pandemic) who are drawn by outdoor activities like hiking and cycling in the summer and skiing and snowshoeing in the winter, as well as by its duty-free shopping of luxury products. Andorra’s economy is based on an interdependent network of trade, commerce, and tourism, which represent nearly 60% of the economy, followed by the financial sector. Andorra has also become a wealthy international commercial center because of its integrated banking sector and low taxes. As part of its effort to modernize its economy, Andorra has opened to foreign investment and engaged in other reforms, including advancing tax initiatives. Andorra is actively seeking to attract foreign investment and to become a center for entrepreneurs, talent, innovation, and knowledge.

The Andorran economy is undergoing a process of digitalization and diversification that accelerated due to the impact pandemic-related border closures had on its dominant tourist sector.  In 2006, the Government began sweeping economic reforms. The Parliament approved three main regulations to complement the first phase of economic openness:  the law of Companies (October 2007), the Law of Business Accounting (December 2007), and the Law of Foreign Investment (April 2008 and June 2012). From 2011 to 2017, the Parliament approved direct taxes in the form of a corporate tax, tax on economic activities, tax on income of non-residents, tax on capital gains, and personal income tax. Andorra joined the IMF in October 2020, providing it access to additional resources for managing its economy. Also, as part of the post-pandemic economic recovery plan, Andorra passed Horizon 23, a comprehensive roadmap backed by 80 million euros of public funds to accelerate economic diversification into sectors like fintech, sports tech, esports, and biotech. These regulations aim to establish a transparent, modern, and internationally comparable regulatory framework.

These reforms aim to attract investment and businesses that have the potential to boost Andorra’s economic development and diversification. Prior to 2008, Andorra limited foreign investment, worried that large foreign firms would have an oversized impact on its small economy.  For example, previous regulations allowed non-citizens with less than 20 years residence in Andorra to own no more than 33 percent of a company. While foreigners may now own 100 percent of a trading enterprise or a holding company, the Government must approve the establishment of any private enterprise. The approval can take up to one month, which can be rejected if the proposal is found to negatively impact the environment, the public order, or the general interests of the principality.

Andorra is a microstate that accounts for .001 percent of global emissions and has demonstrated its ambition to the fight against climate change by establishing a national strategy that commits to reducing greenhouse gas emissions (GHG) by a minimum of 37 percent by 2030 and pursuing carbon neutrality by 2050. In addition to implementing an energy transition law, Andorra approved the Green Fund and a hydrocarbon tax to promote climate change mitigation and adaptation initiatives.

Andorra’s per capita income is above the European average and above the level of its neighbors. The country has developed a sophisticated infrastructure including a one-of-a-kind micro-fiber-optic network for the entire country that provides universal access for all households and companies. Andorra’s retail tradition is well known around Europe, thanks to more than 1,400 shops, the quality of their products, and competitive prices. Products taken out of the Principality are tax-free up to certain limits; the purchaser must declare those that exceed the allowance.

Table 1: Key Metrics and Rankings

Data not available

1. Openness To, and Restrictions Upon, Foreign Investment

2. Bilateral Investment Agreements and Taxation Treaties

Andorra has bilateral agreements with France (2003), Spain (2003), and Portugal (2007). No bilateral investment treaty exists between Andorra and the United States.

Andorra has signed Tax Information Exchange agreements for the exchange of fiscal information with 24 countries. All those agreements have been ratified and are in force.

In 2014, Andorra became the 48th signatory to the OECD Declaration on Automatic Exchange of Information in Tax Matters, which commits countries to end bank secrecy for tax evasion purposes. Andorra is a member of the OECD’s Inclusive Framework base erosion profit shifting (BEPS). Additionally, Andorra ratified the Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which came into effect January 1, 2022. Andorra signed a Non-Double Taxation agreement with France, Spain, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, United Arab Emirates, San Marino, and Hungary and is currently negotiating other such agreements.

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

The constitution guarantees the right to private ownership for citizens and residents. Both domestic and foreign private entities now have the right to establish and own business enterprises.

6. Financial Sector

8. Responsible Business Conduct

Andorra has taken steps to promote responsible business conduct, including Law 35/2008, which establishes a protocol for non-discrimination and equal opportunities for men and women and a gender-equality law approved in April 2022 that among other requirements sets a 60% ceiling for gender representation on governing boards.

Over the years, the Andorran banking sector has been consolidating its voluntary responsible business conduct practices, mainly through their foundations. Rather than focus on a due diligence approach to lower risks, as promoted by international guidelines such as the OECD Guidelines for Multinational Enterprises or UN Guidance on Business and Human Rights, the banking sector establishes private initiatives to promote responsible business conduct in a variety of areas like culture, sports, solidarity, education, and the environment. There are no reported cases of human or labor rights concerns related to responsible business conduct.

9. Corruption

Andorra’s laws penalize corruption, money laundering, drug trafficking, hostage taking, sale of illegal arms, prostitution, terrorism, as well as the financing of terrorism. Additional amendments were added in 2008, 2014, 2015, and 2016 to the Criminal Code and the Criminal Procedure Code that modify and introduce money laundering and terrorism financing provisions.

In 1994, Andorra joined the Council of Europe, an institution that oversees the defense of democracy, the rule of law, and human rights. That same year, the Justice Ministers of the Member States decided to fight corruption at the European level after considering that the phenomenon posed a serious threat to the stability of democratic institutions.

In early 2005, Andorra joined the Council of Europe’s Group of States against Corruption (GRECO) in its fight against corruption. Andorra has gradually built its internal regulations and relevant legal instruments and has undertaken numerous initiatives to improve the State’s response to reprehensible acts and conduct committed internally and internationally.

Andorra created the Unit for the Prevention and the Fight against Corruption (UPLC) in 2008 to centralize and coordinate actions that might concern local administrations, national bodies, and entities with an international scope. UPLC is responsible for implementing the recommendations made by GRECO.

Andorra has not signed the UN Anticorruption Convention or the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

There are explicitly defined rules for the ethical behavior of all participating bodies within the Andorran financial system. The Andorran Financial Authority (AFA) has also established rules regarding ethical behavior in the financial system.

The Andorran government modified and implemented new laws to comply with international corruption standards. The Andorran Financial Intelligence Unit (UIFAND), created in 2000 is an independent body charged with mitigating money laundering and terrorist funding ( www.uifand.ad ).

Resources to Report Corruption:

Unitat de Prevencio i Lluita contra la Corrupcio
Ministeri de Justicia i Interior
Govern d’Andorra
Ctra.de l’Obac s/n
AD700 Escaldes-Engordany
Phone: +376 875 700
Email: uplc_govern@govern.ad 

10. Political and Security Environment

Andorra has not experienced any politically motivated damage to projects or installations, or destruction of private property. There are no nascent insurrections, belligerent neighbors, or other politically motivated activities. The likelihood of widespread civil disturbances is very low. Civil unrest is generally not a problem in Andorra. No anti-American sentiment is evident in the country.

11. Labor Policies and Practices

All employees wishing to work in Andorra must have work permits, issued by annual quotas established by the government. The tourism sector is the largest labor sector.

The Andorran constitution recognizes workers’ rights to form trade unions to defend their economic and social interests. Alternative dispute mechanisms such as mediation and arbitration do exist. Despite these rights, union membership is relatively low.

Andorra is not a member of the International Labor Organization (ILO).

There were a total of 42,931 employed workers in Andorra in December 2021. As a result of the COVID-19 pandemic, the unemployment rate increased from 1.8 percent in 2019 to 3 percent in 2020 but improved to 2.2 percent as of the fourth quarter of 2021. The government of Andorra approved a 3.3 percent increase in the minimum wage that went into effect January 1, 2022, bringing it to 6.68 euros (roughly USD 7.40) per hour and 1,158 euros (roughly USD 1,283) per month.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

14. Contact for More Information

ECON Officer, Omar Medina, medinao@state.gov 
POL/ECON Specialist, Eulalia d’Ortado; OrtadoE@state.gov 
United States Consulate General Barcelona
tel. (34) 93 280 22 27

Angola

Executive Summary

The Angolan economy emerged from five straight years of recession with slight GDP growth of 0.7 percent in 2021, thanks primarily to growth in the non-oil sector. The government forecasts more substantial growth of 2.4 percent in 2022. The oil and gas sector remains the key source of government revenue despite declining oil production and the government should benefit from higher than budgeted oil prices in 2022. The growth in non-oil sectors such as manufacturing, agriculture, transportation will be bolstered by increased demand from the lifting of COVID restrictions in late 2021 and early 2022.

The Angolan government has maintained a reform agenda since the 2017 election of President Joao Lourenço. His administration has adopted measures to improve the business environment and make Angola more attractive for investment. Angola completed the IMF’s Extended Fund Facility in December 2021, demonstrating an ability to commit to and carry out difficult fiscal and macroeconomic reforms, despite the COVID-19 pandemic. The government received three credit rating upgrades between September 2021 and early 2022.

In addition to the Privatization Program (PROPRIV), revision of the Private Investment Law, and updated Public Procurement law, the government has taken steps to recover misappropriated state assets – the Attorney General’s Office claims just under $13 billion since 2018 – and to uproot corruption. Through the Private Investment and Export Promotion Agency (AIPEX), Angola seeks to connect foreign investors with opportunities across the private sector, with PROPRIV, and a wide range of available state-owned enterprises and other assets. The public procurement process has also become more transparent. Angola plans to present its candidacy to join the Extractive Industries Transparency Initiative in 2022 to increase transparency in the oil, gas, and mineral resource sectors.

Despite the government’s efforts to address corruption, its prevalence remains a key issue of concern for investors. Angola’s infrastructure requires substantial improvement; which the government is seeking to address by attracting investment public-private partnerships to improve and manage of ports, railroads, and key energy infrastructure. The justice system and other administrative processes remains bureaucratic and time-consuming. Unemployment (32.9 percent in the fourth quarter of 2021) and inflation (which reached 27 percent in 2021) remain high. There is limited technical training, English-speaking skills are generally low. Skilled labor levels are also low, though the government has attempted to address the issue through training and apprenticeship programs.

Overall FDI increased by $2.59 billion in 2020, the last full year of reporting, from 2019.

The government has committed to reaching 70 percent installed renewable energy by 2025 and has recognized the risks of climate change for Angola. To reach its renewable energy goal, the government has signed deals with U.S. companies on the installation of solar and hydro capacity worth hundreds of millions of dollars.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 136 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 132 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $-578 million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $2140 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

There are currently 81 public enterprises listed on the State Institute of Asset and Shares Management website; 70 are wholly owned by the state, 8 with majority-ownership for the state and 3 with minority stakes for the government. A list of all of Angola’s SOEs can be found at the following link: https://igape.minfin.gov.ao/PortalIGAPE/#!/sector-empresarial-publico/universo-do-sep . Based on the IMF definition of government owning at least 50 percent equity and revenue being greater than 1 percent of GDP, SONANGOL, the state oil company, and Sodiam, the state diamond company qualify as SOEs.

There is no law mandating preferential treatment to SOEs, but in practice they have access to inside information and credit. Currently, SOEs are not subject to budgetary constraints and quite often exceed their capital limits. All SOEs in Angola are required to have boards of directors, and most board members are affiliated with the government.

Other public enterprises operate in the agribusiness, oil and gas, financial services, and construction sectors as well as others.

The GRA considers SOE debt as indirect public debt, and only accounts in its state budget for direct government debt, thus effectively not reflecting some substantial obligations in fact owed by the government. President Lourenço has launched various reforms to improve financial sector transparency, enhance efficiency in the country’s SOEs as part of the National Development plan 2018-2022 and Macroeconomic Stability Plan

Angola is not a party to the WTO’s Government Procurement Agreement (GPA). Angola does not adhere to the OECD guidelines on corporate governance for SOEs.

8. Responsible Business Conduct

There is a general awareness of expectations of or standards for responsible business conduct (RBC) or obligation to conduct due diligence to ensure no harm with regards to environment, social and governance issues. Projects that could have an impact on the environment are subject to an environmental impact assessment (EIA) depending on their nature, size or location, on a case-by-case basis. Presidential Decree No 117/20 of April 22, 2021 establishes the:

  • Rules and procedures for EIAs for public and private projects.
  • Environmental licensing procedure for activities that are likely to cause significant environmental and social impacts.
  • Applicable fees.
  • Fines for non-compliance.

The government has few initiatives to promote responsible business conduct. In March 2019, the UNDP launched the National Network of Corporate Social Responsibility, “RARSE,” to create a platform to reconcile responsible business conduct with the needs of the population. The government, through the Ministry of Education, also held a campaign under the theme, “Countries that have a good education, that enforce laws, condemn corruption, privilege and practice citizenship, have as a consequence successful social and economic development” in 2020.

The government has enacted laws to prevent labor by children under 14 and forced labor, although resource limitations hinder adequate enforcement. In June 2018, the government passed a National Action Plan for the Eradication of Child Labor (PANETI) (2018-2022) to eradicate the worst forms of child labor. This plan was updated on March 17, 2022 and is implemented by the Multisectoral Commission for the Prevention and Eradication of Child Labor. The National Plan aims to eliminate child labor in Angola, by creating strategies, prevention policies, a favorable environment for the harmonious development of children, and creating institutional capacity to solve the problem of worst forms of child labor in the country.

With limitations, the laws protect the rights to form unions, collectively bargain, and strike. Government interference in some strikes has been reported. The Ministry of Public Administration, Employment, and Social Security has a hotline for workers who believe their rights have been infringed. Angola’s Chamber of Commerce and Industry established the Principles of Ethical Business in Angola.

The GRA does not fully meet the minimum standards for the elimination of trafficking in persons but is made significant efforts to do so, especially considering the impact of the COVID-19 pandemic on its anti-trafficking capacity. Those efforts led to Angola remain on Tier 2 in 2021. Some of the efforts taken by Angolan authorities include convicting multiple traffickers, including five complicit officials, and sentencing all to imprisonment; offering long-term protective services that incentivized victims to participate in trials against their traffickers; dedicating funds specifically for anti-trafficking efforts, including for implementation of the national action plan; and conducting public awareness campaigns against trafficking.

In 2015, Angola organized an interagency technical working group to explore Angola’s possible membership in the Voluntary Principles on Security and Human Rights (VPs) and the Extractive Industries Transparency Initiative (EITI). Angola formally announced its intention to join the EITI in September 2020 and in November 2021 announced its intention to formally present its candidacy in March 2022. Angola has been a member of the Kimberley Process (KP) since 2003 and chaired the KP in 2015. Angola is not a party to the WTO’s GPA and does not adhere to the OECD guidelines on corporate for SOEs.

9. Corruption

Corruption remains a strong impediment to doing business in Angola and has had a corrosive impact on international market investment opportunities and on the broader business climate. The Lourenço administration has developed a comprehensive anti-corruption and anti-money laundering legal framework, but implementation remains a challenge. Angola has made several arrests of former officials and family members of the former president who were accused of embezzling state funds and has made a concerted effort to recover assets it accuses those individuals of stealing.

Some of the recent anti-corruption legislation includes:

  • The revised Criminal Law Code and Criminal Procedure Code, which both entered into force in February 2021: The updated laws include corporate criminal liability; harsh penalties for active and passive corruption by public officials, their family members, and political parties; criminalization of private sector corruption; and seizure of proceeds.
  • The updated Public Procurement Law, which entered into force on December 23, 2020, emphasizes the management of potential conflicts of interest in awarding public contracts, including the requirement for foreign investors to have a local partner, which historically made procurement ripe for bribery and kickbacks.
  • The Whistleblower Protection Law, which came into force on January 1, 2020, provides a protection system – including anonymity – for victims, witnesses, and the accused during judicial proceedings that involve corruption and/or money laundering allegations.

The government does not require the private sector to establish internal codes of conduct and does not provide a mechanism for reporting irregularities related to public officials.

U.S. firms in Angola are aware of cases of corruption in Angola despite efforts to combat the phenomenon and view it as a significant impediment to FDI. Corruption in Angola is pervasive in public institutions, government procurement customs and taxation. Foreign investors seeking to do business in Angola must remain mindful of the corruption risks and the extraterritorial reach of the U.S. FCPA.

10. Political and Security Environment

Angola maintains a stable political environment, though demonstrations and workers strikes occur with regularity, particularly in the last two years due to increased socio-economic difficulty. Politically motivated violence is not a high risk, and incidents are rare. The Front for the Liberation of the Enclave of Cabinda—Military Position (FLEC MP) based in the northern province of Cabinda threatened Chinese workers in Cabinda in 2015 and claimed in 2016 that they would return to active armed struggle against the Angolan government forces. No attacks have since ensued and the FLEC has remained relatively inactive to date.

Local elections were anticipated to take place in 2020 but have not yet occurred due to the COVID-19 pandemic and the lack of key legislation governing the elections. General elections are scheduled to occur in August 2022. Young people take to the streets occasionally to protest economic hardship and what they view as unrealized political pledges. Large pockets of the population live in poverty without adequate access to basic services. Crimes of opportunity such as muggings, robberies and car-jackings occur across the country.

11. Labor Policies and Practices

In the fourth quarter of 2021, the unemployment rate for economically active Angolans 15 years and older – who represent half of Angola’s 33 million people – was 32.9 percent. The labor market in Angola is largely characterized by high unemployment and a high level of informality. There is also a deficit of skilled and well-trained labor, especially in the industrial sector due to the low level of vocational training. The foreign/migrant labor force bridges the gap in specialized labor. The Angolan labor force also has limited technical skills, English language capabilities, and management training.

Companies in the construction and manufacturing sectors are significant sources of formal and informal mechanisms for workers to acquire skills and abilities particularly relevant to public and private construction works and manufacturing industry.

In the fourth quarter of 2021, the economically active population in Angola age 15 years and older was estimated to be approximately 16.2 million people (48.3 percent male and 51.7 female). Over 80 percent of the employed population in Angola was estimated to work in the informal sector as of the fourth quarter of 2021, equal to around 8.8 million people out of the 10.9 million people 15 years of age and older and employed in the same period. Informal employment was highest among Angolans aged 15-24 years and 65 years or older – reaching over 90 percent. The unemployment rate for women was also 90 percent for women and 71.5 percent for men.

There are gaps in compliance with international labor standards which may pose a reputational risk to investors. Children are sometimes employed in agriculture, construction, fishing, and coal industries. There have been reports of forced labor in agriculture, construction, artisanal diamond mining, and domestic work, each sometimes as a result of human trafficking. Additional information is available in the 2021 Trafficking in Persons Report, (https://www.state.gov/reports/2021-trafficking-in-persons-report/angola/), 2020 Country Report on Human Rights Practices (https://www.state.gov/reports/2021-country-reports-on-human-rights-practices/angola/), and 2020 Findings on the Worst Forms of Child Labor.

The General Labor Law 7 of September 15, 2015, governs all aspects of the employment relationship and provides guidelines on employment adjustments to respond to fluctuations in market or economic conditions. The law differentiates between layoffs and firing. However, there are unemployment insurance mechanisms in place or social safety net programs for workers laid off for economic reasons. All forms of termination must rely on Social Security contributions along the years of employment in due course as the benefits are not readily available at termination but only when the beneficiaries reach retirement age or become physically impaired to maintain employment status.

All employers and unions may enter into collective bargaining agreements under the Law on the Right to Collective Bargaining (20-A/92). Where there is no union representation, the employees may set up an ad hoc commission aimed at negotiating and concluding a collective bargaining agreement with the employer, subject to complex requirements. If more than one union represents an employer’s employees, the unions must set up a joint negotiation committee composed of representatives from each union in the same proportion as the employees are represented.

The negotiation process for a collective bargaining agreement must be finalized within 90 days of the employer receiving the union/employees’ initial proposal. If this process is unsuccessful, the Law on the Right to Collective Bargaining provides for alternative dispute resolution mechanisms to resolve collective labor conflicts – notably conciliation, mediation and arbitration. Unions/employees may call a strike if the negotiations are deadlocked when the deadline for reaching an agreement passes.

A collective bargaining agreement requires all the parties to maintain social peace while it is in force, rendering illegal any strike action or collective labor conflict during that period. Once the effective period has elapsed, the agreement shall continue to bind the parties until it is replaced by a new or amended collective bargaining agreement. Collective labor disputes are to be settled through compulsory arbitration by the Ministry of Labor, Public Administration and Social Security. The law does not prohibit employer retribution against strikers, but it does authorize the government to force workers back to work for “breaches of worker discipline” or participation in unauthorized strikes. The law prohibits anti-union discrimination and stipulates that worker complaints be adjudicated in the labor court. Under the law, employers are required to reinstate workers who have been dismissed for union activities.

14. Contact for More Information

Dorcas Makaya
Economic Specialist
United States Embassy Luanda
+244 222 641 000
MakayaDC@state.gov

Antigua and Barbuda

Executive Summary

Antigua and Barbuda is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). According to Eastern Caribbean Central Bank (ECCB) statistics, Antigua and Barbuda’s 2021 estimated gross domestic product (GDP) was $1.47 billion (3.97 billion Eastern Caribbean dollars). This represents an approximate 5.3 percent growth from 2020. The ECCB forecasts 2022 growth at 4.7 percent.

Unanticipated spending on pandemic response measures, coupled with sharp declines in government revenues, forced the government to increase borrowing in 2020. As of December 2021, Antigua and Barbuda reported total public sector debt of $1.3 billion representing 89 percent of GDP. Unlike other Eastern Caribbean (EC) countries, Antigua and Barbuda did not have the resources to significantly increase spending on social support payments to vulnerable populations. Following several years of operating losses, the government became the sole source of financing for regional airline Leeward Islands Air Transport (LIAT) in mid-2020. Based in Antigua and Barbuda, LIAT was heavily overstaffed and therefore a major employer, but is now under the supervision of a bankruptcy trustee.

Antigua and Barbuda ranks 113th out of 190 countries rated in the 2020 World Bank Doing Business Report. The scores remain relatively unchanged from the 2019 report, though