Value for you UK - Angola Investment Forum

Value for youUK - Angola Investment Forum

www.pwc.com/ao

PwC

Contents

1. Background information

2. Pre investment phase

3. Restricted sectors

4. Investing

5. Critical success factors

6. Conclusion

2UK Angola Investment Forum May 2012

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Background information

Some relevant data

13

UK Angola Investment Forum May 2012

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Background information Some relevant data

Angola

•Area 1,246,700 Km2

•War 1961 - 2002

•Still poor infrastructure and education

• Annual expenses on infraestructure: USD 4.300 Millions

• Economy still based on oil sector (63% Angolan Budget revenues)


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Background information Some relevant data

5UK Angola Investment Forum

2007 2008 2009 2010 2011

GDP (USD million) 60.500 84.000 75.600 82.500 99.000Population (thousand) 17.600 18.000 18.500 19.100 19.700GDP/capita (USD) 3.443 4.671 4.086 4.319 5.025

Inflation (%) 11,8% 13,2% 14,0% 15,3% 11,4%USD = AKZ 75,0 75,0 88,0 93,0 93,0

May 2012

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Pre investment phase

26


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Pre investment phase Knowing the marketplace


Scarce information about the market

Meet local key-players

• Central bank (BNA)

• Investment agency (ANIP)

• Relevant Ministry/ies

• Commercial banks

• Potential clients and partners

May 2012

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Pre investment phase Acknowledging high cost environment


•4 bedroom house lease USD 10 to 15,000

•Office space lease/m2 from USD 70 /month

• Flights to Europe (Econ) USD 1,300

• Expatriates … …… but

• 1 liter of petrol USD 0.60

• PwC fees due to strong Pound

May 2012

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Pre investment phase Partnering with Angolans?


• For regulatory reasons?

• For commercial reasons?

May 2012

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Restricted sectors

310


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Restricted sectors

Fully restricted

• War material

• Central bank

• Property rights over ports and airports

• Property over primary telecommunications infrastructure

• Postal services


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Restricted sectors (cont)

Concessions may be granted

• Basic sanitation

• Production, transport and distribution of electricity

• Treatment and distribution of water

• Exploration of ports and airport services

• Railways

• Regular domestic air transportation

• Urban collective transportation

• Complementary telecommunication and postal services

• Telecommunication infrastructures

• Oil & gas and diamonds (in association with private entities)


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Investing

413


Investing•Profit margins

•Commercial regulations

•ForEx regime

•Accounting & statutory audit

•Taxes

•Immigration and ‘Angolanisation’

•Investment regulationssiess Vehicle•The process

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Investing Profit Margins

•Producers & wholesalers

25% * (Product cost + 20% overheads)

• Retailers

25% * (Acquisition to producer + transport + 14% overheads)


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Investing Commercial regulations

• Commercial Code & Company Law (Portuguese)

• Typical business vehicles

- SA (joint stock company) USD 20,000

- Lda (private company) USD 1,000

- Branch

• Rep Office

- If no commercial activity in loco)16


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Investing ForEx regime

•Angolan ForEx residents cannot remit funds overseas

Exceptions, cleared by BNA

- To pay for importations

- Approved contracts (loans included)

- No prior approval for

• Up to USD 300,000/yr/beneficiary

• Local disclosed salary for expatriates (approved investments)

•Profits/dividends/proceeds of sale and gains

Only for approved investments17


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Investing Accounting & statutory audit

•Angolan Chart of Accounts (PGC) must be complied with

- Accounts numbering and coding predefined

- In Kwanza (AKZ)

- In Portuguese

- Predefined financial statements

• Accounting packages allow accounts conversion

• Statutory audit required by law…

… but the tax authorities have not been enforcing


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Investing Taxes

Exemptions for private investors

• Profits

• Dividends

• Import duties and Excise

• Real estate transfer tax


Profits 35%

Dividends 10%

Royalties 10%

PAY up to 17%

Stamp duty 1%

Interest 15%

Withholding tax 5.25% or 3.5%

Soc Security 3% e 8%

May 2012

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Investing Immigration and ‘Angolanisation’

Expatriates

Work visa

• Employment contract

• Visa applied for and obtained overseas

• Special, facilitated regime for oil & gas service companies

• Usually takes 1 to 3 months

‘Angolanisation’

• Quota of maximum of 30% expatriates

• Training programs to be strictly followed


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Investing Investment regulations

Objectives of the investment law

• Grow the economy in all provinces

• Increase national productive capacity and efficiency

• Promote partnerships with Angolans

• Increase employment and capacity of Angolans

• Increase exports and reduce imports

• Rehabilitate, expand and modernise infrastructures


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Investing Investment regulations

Sectors entitled to incentives

• Agriculture and “Animal husbundry”

• Transforming industry

• Fishing industry

• Building construction

• Health and education

• Infrastructures

• Turism22

UK Angola Investment Forum

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Investing The process


Steps to incorporate a company in Angola

Step Action Entity

1 Apply for name approval Ministry of justice 1 12 Complete investment application Investor 30 313 File investment project with ANIP ANIP 1 324 Get investment certificate (negociations included) ANIP 45 775 Apply for BNA's permit to import funds BNA 10 876 Open bank account Bank 1 887 Transfer share capital to Angola Investor 5 938 Notarial deed to incorporate company Public notary 3 969 Publication of articles in gazette Official gazette 1 97

10 Tax registration Tax authorities 1 9811 Commercial registration Commercial registrar 1 9912 Statistical registration INE 1 10013 Social Security registration INSS 1 10114 Operating licence Varies with sector 60 161

working days

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Critical Success Factors

524


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Critical Success Factors

Cultural aspects

Preference to Angolan executives

If not, should be senior, flexible and able to understand differences and its causes; must inspire confidence

• International experience = great value

Time and patience

Not less than 4 to 6 months to start a business

… shortcuts can, and will, be very expensive


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Critical Success Factors Strict compliance

• Investment project must be realistic

• Programs to train Angolans must be carried out

• Expatriates do require work visas (some flexibility)

• Strict adherence to Angolan GAAP (issue in Oil & Gas)

• Taxes should be paid on time (in addition to endangering incentives investment license, fines and interest are very severe)


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Investing Conclusions

UK Angola Investment Forum27

May 2012

Investing in Angola takes time and money

Short term investment is a myth

Local (appropriate) partners may be very valuable or even key

Investment incentives may be very attractive

Complying with obligations allows

• Attractive return on investment

• Risks tend to reduce

Get appropriate professional advice

Angola is moving forward… … Do not loose the opportunity …

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employe<es and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2012 PricewaterhouseCoopers (Angola), Limitada. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers (Angola), Limitada, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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Value for you UK - Angola Investment Forum