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.

Cameroon

Executive Summary

Efforts to combat COVID-19 and measures to cushion the impact of the pandemic on the economy were the focal point of 2020. The economy dipped into recession in 2020, but the International Monetary Fund (IMF) forecast a rebound in 2021, with growth forecast to reach 3.4 percent. Development projects, especially in road infrastructure, transport, energy, and health experienced severe and costly delays, but are on course to be completed. Cameroon also hosted the international African Nations Championship soccer tournament at the beginning of 2021, which likely resulted in a rise in COVID-19 cases and whose economic impact was dubious.

As a member of the Central African Economic and Monetary Community (CEMAC), Cameroon is committed to regional fiscal discipline, while complying with the monetary policies and regulations of the regional central bank. Cameroon serves as a key link between West and Central Africa and neighbor to Nigeria, Africa’s largest economy. With this strategic geographical position, the country could benefit from the African Continental Free Trade Area (AfCFTA). In 2020, Cameroon adopted a new national development strategy plan and a new budget, which attempted to control borrowing, modernize public finances, and maintain incentives to attract foreign investors. Although the mobilization of the national private sector and international investors is one of the pillars of the new national development strategy, the government has not outlined clear steps on how it will achieve these goals.

Cameroon has strong competitive advantages through its location as a gateway to the region. It offers immense investment potential in infrastructure, extractive industries, consumer market and modern communication technology (for example, internet broadband, fiber optic cable, and data centers). However, Cameroon’s telecommunication infrastructure is overutilized and in need of upgrades, which often results in network outages. Agricultural processing and transport infrastructure, such as seaports, airports, and rail, need investments, especially for modernization and maintenance. More investment opportunities exist in the financial sector as only 15 percent of Cameroonians have access to formal banking services. However, to draw benefits from these natural advantages and achieve its ambition to become an emerging economy by 2035, the country must improve governance and profoundly reform its inefficient civil service.