Transparency of the Regulatory System
Angola’s regulatory system is complex, at times vague, and inconsistently enforced. In many sectors, no effective regulatory system exists due to a lack of institutional and human capacity. The banking system is slowly beginning to adhere to International Financial Reporting Standards (IFRS). SOEs are still far from practicing IFRS. The public does not regularly participate in draft bills or regulations formulation, although the National Assembly offers an online option for citizen input that can be directed to one of the ten parliamentary committees. Angola does not yet have an ESG disclosure framework, but in January 2023 the Council of Financial System supervisors announced a strategic plan to develop ESG policies and a best practice guide that would include compliance and disclosure information. The Angolan Communications Institute (INACOM) is the regulatory authority for the telecommunications sector and regulates prices for telecommunications services such as mobile telephone, internet, and TV services, particularly in sectors without much competition. Revised energy-sector licensing regulations have permitted some purchase power agreements (PPA) participation. The National Bank of Angola (BNA) oversees the banking and non-banking financial institutions and delivers sanctions for violations of banking regulations.
Regulatory reviews are based on scientific, or data driven assessments or baseline surveys. Evaluations are based on data, but not made available for public comment. All regulation is made at the national level.
The state reserves the right to have the final say in all regulatory matters and relies on sectorial regulatory bodies for supervision of institutional regulatory matters concerning investment. The Economic Commission of the Council of Ministers oversees investment regulations that affect the country’s economy including the ministries in charge. Other major regulatory bodies responsible for completing deals include:
- The National Petroleum, Gas and Biofuels Agency (ANPG) is the government regulatory and oversight body responsible for regulating oil exploration and production activities. On February 6, 2019, the parastatal oil company Sonangol – which previously held regulatory authority – spun off that function to create ANPG through Presidential decree 49/19. The ANPG is the national concessionaire of hydrocarbons in Angola, authorized to conduct, execute, and ensure oil, gas, and biofuel operations run smoothly. The ANPG must also ensure adherence to international standards and establish relationships with other international agencies and sector relevant organizations.
- The Regulatory Institute of Electricity and Water Services (IRSEA) is the regulatory authority for renewable energies and enforcing powers of the electricity regulatory authority. Revised energy-sector licensing regulations have improved legal protection for investors to attract more private investment in electrical infrastructure, such as dams and hydro distribution stations.
- The Angolan Communications Institute (INACOM) is the regulatory authority for the telecommunications sector including for prices for telecommunications services.
- As of October 1, 2019, a 14 percent VAT regime came into force, replacing the existing 10 percent Consumption Tax. The General Tax Administration (AGT) oversees tax operations and ensures taxpayer compliance. The new VAT tax regime aimed to boost domestic production and consumption and reduce the incidence of compound tax for businesses unable to recover the consumption tax. The government introduced a temporary reduction of the VAT in October 2021 for key items in the basic basket of goods to 7 percent. The temporary measure remained in place through early 2023. Corporate taxpayers can be reimbursed for the VAT on the purchase of good and services, including imports.
There are no informal regulatory processes managed by nongovernmental organizations or private sector associations, and the government does not allow the public to engage in the formulation of legislation or to comment on draft bills. Procurement laws and regulations are little publicized and not consistently enforced. The Inspector General is charged with providing oversight of public ministries and agencies through inspections, audits, and other supervisory mechanisms and will occasionally detain public employees when accused of misappropriation of state resources. However, oversight mechanisms are generally weak, and no audits are required to ensure internal controls are in place or administrative procedures are followed. Inefficient bureaucracy and possible corruption frequently lead to payment delays for goods delivered, resulting in an increase in the price the government must pay.
No regulatory reform enforcement mechanisms have been implemented since the last ICS report. The Diário da República (the national gazette) publishes official regulatory action but is not publicly available and not free of charge, though some decrees and regulatory actions are posted on ministerial websites.
The Ministry of Finance’s Debt Management Unit publishes quarterly public debt reports, debt strategy, annual debt plan, bond reports, and other publications in Portuguese and in English though it does not have regularly report on contingent liabilities.
International Regulatory Considerations
Angola is a member of SADC and ECCAS, though it is not a member of SADC’s Free Trade Area or of the Economic and Monetary Community of Central Africa (CEMAC) the customs union associated with ECCAS. New regulations are generally developed in line with regulatory provisions set by AfCTA , SADC , and ECCAS .
Angola is a WTO member but does not notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT). Technical Barriers to Trade (TBT) regimes are not coordinated and often trade regulations are passed and implemented without the due oversight of the WTO.
Legal System and Judicial Independence
Angola’s legal system follows civil law tradition and is heavily influenced by Portuguese law, though customary law often prevails in rural areas. Legislation is the primary source of law. Precedent is accepted but not binding as it is in common-law countries. The Angolan Constitution is at the top of the hierarchy of legislation and establishes the general principle of separation of powers between the judicial, executive, and legislative power. Primary judicial authority in Angola is vested in its courts, which have institutional weaknesses that include lack of independence from political influence in the decision-making process at times.
The Angolan justice system is slow, arduous, and often partial. Legal fees are high, and most businesses avoid taking commercial disputes to court in the country.
Angola has commercial legislation that governs all contracts and commercial activities but long lacked a specialized court. On August 5, 2020, the Economic Council of Ministers approved the opening of the Court for Litigation on Commerce, Intellectual Property, and Industrial Property Matters, at the Luanda Court of First Instance. With the introduction of this commercial court, the GRA hopes the business environment and trust in public institutions will improve. Prior to this arrangement, trade disputes were resolved by judges in the Courts of Common Pleas. The commercial legislation provides that before going to court, investors can challenge the decision under the terms of the administrative procedural rules, either through a complaint (to the entity responsible for the decision) or through an appeal (to the next level above the entity responsible for the decision). In the new system, investors will be able, in general, to appeal to civil and administrative courts. Investors exercising their right to appeal, however, should expect decisions to take months, or even years, in the case of court decisions.
Angola enacted a new Criminal Code and a new Criminal Procedure Code which entered into force on February 9, 2021, to better align the legal framework with internationally accepted principles and standards, with an emphasis on white-collar crimes and corruption. The legal reforms extend criminal liability for corruption offenses and other crimes to legal entities; provide for private sector corruption offenses to face similar fines and imprisonment to the punishments applicable to the public sector and modernize and broaden the list of criminal offenses against the financial system. The legal system lacks resources and independence, limiting the effectiveness of the reforms.
There is a general right of appeal to the Court of First Instance against decisions from the primary courts. To enforce judgments/orders, a party must commence executive proceedings with the civil court. The main methods of enforcing judgments are:
- Execution orders (to pay a sum of money by selling the debtor’s assets),
- Seizure of assets from the party, and
- Provision of information on the whereabouts of assets.
The Civil Procedure Code also provides for ordinary and extraordinary appeals. Ordinary appeals consist of first appeals, review appeals, interlocutory appeals, and full court appeals, while extraordinary appeals consist of further appeals and third-party interventions. Generally, an appeal does not operate as a stay of the decision of the lower court unless expressly provided for as much in the Civil Procedure Code.
Laws and Regulations on Foreign Direct Investment
Angola’s legal system is becoming more favorable to FDI and has generally not allowed FDI in specific sectors such as military and security, activities of the Central Bank, and key infrastructure port and airport infrastructure. Under the privatization program (PROPRIV) the government has encouraged FDI in ports, airports, and free trade areas through management and operation tenders. Investment values exceeding $10 million require an investment contract that needs to be authorized by the Council of Ministers and signed by the President.
AIPEX, Angola’s investment and export promotion agency, maintains the Janela Única do Investimento (Single Investment Window), which serves as Angola’s one-stop-shop for investment.
Competition and Antitrust Laws
Mergers and acquisitions, including those which take place through the sale of state-owned assets, are reviewed by the Institute of Asset Management and State Holdings (IGAPE) and competition related concerns receive oversight by the Competition Regulatory Authority (the “CRA”) which is also responsible for prosecuting offenses. Competition is also regulated by the Competition Act of 2018, which prohibits cartels and monopolistic behavior. A leniency regime was added in September 2020 to reduce fines for the first party to come forward under specific conditions.
CRA decisions are subject to appeal, though Angola does not have special courts of jurisdiction to deal with competition matters.
Angola’s Competition Act creates a formal merger control regime. Mergers are subject to prior notification to the CRA, and they must meet certain specified requirements. The thresholds requiring prior notification are the following:
- the creation, acquisition, or reinforcement of a market share which is equal to or higher than 50 percent in the domestic market or a substantial part of it; or
- the parties involved in the concentration exceeded a combined turnover in Angola of 3.5 billion Kwanzas in the preceding financial year; or
- the creation, acquisition, or reinforcement of a market share which is equal to or higher than 30 percent, but less than 50 percent in the relevant domestic market or a substantial part of it, if two or more of the undertakings achieved more than 450 million Kwanzas individual turnover in the preceding financial year.
Mergers must not hamper competition and must be consistent with public interest considerations such as:
- a particular economic sector or region.
- the relevant employment levels.
- the ability of small or historically disadvantaged enterprises to become competitive; or
- the capability of the industry in Angola to compete internationally.
Expropriation and Compensation
Under the revised Law of Expropriations by Public Utility (LEUP), which came into force in October 2021, real property and any associated rights can be expropriated for specific public purposes listed in the LEUP in exchange for fair and prompt compensation to be calculated pursuant to the act. Only property strictly indispensable to achieve the relevant public purpose can be expropriated. The LEUP does not apply to compulsory eviction, nationalization, confiscation, easements, re-homing, civil requisition, expropriation for private purpose, temporary occupation of buildings, destruction for public purpose and revocation of concessions. Save for the urgent expropriation instances specifically set forth in the act, the LEUP enshrines the primacy of acquisition through private-law mechanisms, providing for a negotiation process between the expropriating entity – national or local government – and the relevant citizen or private-law entity.
Despite the reforms, expropriation without compensation reportedly remains a common practice with idle or underdeveloped areas frequently reverting to the state with little or no compensation to the claimants who paid for the land, who in most cases allege unfair treatment and at times lack of due process. About 50 families were relocated from their homes in May 2022 to make space for infrastructure close to the new Luanda International Airport. All were reportedly moved at least 15 miles away and given land that was about 43 square feet, but also were not given advance warning; their homes were eventually demolished to enable construction.
ICSID Convention and New York Convention
Angola’s National Assembly agreed to ratify the ICSID Convention on September 1, 2021. Angola signed the convention on July 14, 2022 and deposited its instrument of accession to the ICSID convention on September 21, 2022. The convention entered into force on October 21, 2022. Angola ratified the New York convention of 1958 on March 6, 2017. There is no specific legislation related to enforcement of either the 1958 New York Convention or the ICSID Convention.
Investor-State Dispute Settlement
Angola is a member of the Multilateral Investment Guarantee Agency which can provide dispute settlement assistance as part of its political risk insurance products. Angola does not have BIT or FTA chapter with the United States but signed a Trade and Investment Framework Agreement with Angola in 2009.
U.S. Embassy Luanda is aware of one ongoing formal investment dispute involving an American company since 2017. To date, the U.S. investor’s complaints against the GRA remain unsettled.
International Commercial Arbitration and Foreign Courts
Alternative dispute resolution mechanisms are not commonly used in commercial disputes. Under the revised Public Procurement Law of December 2020, in disputes related to the termination of a public works contract, the law mandates an extrajudicial conciliation process be attempted before the case goes to court. Angola recognizes and enforces arbitration rulings against its government. Extra-judicial cases against foreign investors are rare.
Angola’s Law on Corporate Restructuring and Insolvency went into force on May 10, 2021, representing the first amendment to bankruptcy legislation since 1961. The law regulates the legal regime of extrajudicial and judicial recovery of the assets of natural and legal persons in economic distress or imminent insolvency, provided recovery is viable and the legal regime of insolvency proceedings of natural and legal persons. The law permits the conservation of national and foreign investment since investors know they have a legal remedy that has as its purpose the preservation of the company.