Both Angola and Cabo Verde have recently announced important privatisation programmes involving companies active in key sectors in the two countries’ economies.
In Angola, the programme involves 195 companies and assets and was originally planned to be concluded in 2022. Several tenders have already been launched or implemented and 14 companies/assets have already been privatised. The goal was to privatise 51 companies by the end of 2020 but because of Covid-19 the process was suspended. However, the process is now resuming slowly. Consequently, there will be investment opportunities from now on.
In some instances, the undergoing processes are stalled, while in a few cases, there has been some progress, but not to a significant extent.
The Angolan privatisation program focuses on several areas of the economy, namely the natural resources and oil sector, IT and telecoms, the financial sector, transportation, tourism and hospitality and also some manufacturing industries.
Angola is a country full of opportunities in sectors from oil, mining, transportation, agroindustry, fisheries, manufacturing, health, and tourism.
Investing in Angola means being present in a country with more than 1,650 kilometres of coastline and more than three million hectares of agricultural land. It is also one of the African countries with the biggest potential in mineral and natural resources such as oil, natural gas, diamonds, iron and gold. In addition, Angola’s river basin represents 12% of African water tables.
It is also a very large market with more than 25 million consumers that can be an entry point to southern Africa. Angola provides sea and land borders with four countries and has a young and increasingly educated population.
Angola has in place attractive incentive packages for private investors and has a tax and customs framework that is increasingly aligned with international best practices.
In Cabo Verde, there is a Privatisations and Concessions plan that is to be concluded by 2021. That plan envisages the privatisation or concession of 23 state-owned companies. The only process concluded to date has been the privatisation of the TACV – Transportes Aéreos de Cabo Verde airline that, after being controlled by Loftleidir Icelandic which is part of the Icelandair Group, changed its name to Cabo Verde Airlines. The concession of inter-island maritime transport is also concluded. However, there are still a significant number of privatisations in key sectors in Cabo Verde to come.
Some of the privatisation processes have been suspended since March 2020. It is anticipated that those processes will resume before the end of 2020 so that the privatisations can take place in 2021. So, there will be investment opportunities in some key economic sectors from now on.
In Cabo Verde there is an active spectrum of areas involved. It includes companies in the airport and air safety sector, handling, ports, shipyards, electricity or water supply companies, fuel distribution, post mail, telecoms, pharmaceutical production and distribution, fisheries, and the stock market, among others.
The economic environment in both countries is favourable regarding foreign investment. Naturally both countries are experiencing a downturn because of the Covid-19 pandemic, but both governments are adopting the necessary measures to deal with the situation and to reduce Covid-19’s effect both on the labour market and on industry.
There is a strong bet on ‘digital’ – digital transformation and administration modernisation programmes have been implemented with the goal of creating a better economic environment in this ‘new normal’. Heavy investment in the health sector is also anticipated to improve safety and create a trustworthy environment for sectors such as tourism, hospitality and transportation. Utilities will also be under the spotlight.
There are also some intrinsic factors that make Cabo Verde a safe investment destination. First, there is its geographic location between America, Africa and Europe and the fact it serves as an entry point for several markets such as the Economic Community of West African States (ECOWAS). Cabo Verde has a skilled workforce – it is the third-ranked country in Africa in terms of human development and quality of life and the fourth-ranked country in Africa in terms of IT. It is also a mature democracy.
Another important fact that must be highlighted is the achievement that recently occurred on 1 January 2021: Cabo Verde belongs to the world’s largest free trade area, the African Continental Free Trade Area (AfCFTA). The AfCFTA promises a circle of greater market opportunities, triggering more trade and investment, and allowing greater value addition and productivity growth. The AfCFTA will work towards a continental customs union, elimination of tariffs on 90% of intra-African goods, inclusion in the movement of capital and people between countries, facilitation of external investment and reduction of non-tariff barriers. AfCFTA was signed by 54 out of the 55 African Union member states (Eritrea being the exception). So far more than 30 countries have ratified the Agreement, which aims to connect 55 countries, creating a market of 1.3 billion people. There are a lot of opportunities, particularly in relation to manufacturing, agriculture, services and e-commerce.
Regarding the investment environment the parity between the local currency – the CV Escudo – and the Euro is to be highlighted, as is the non-existence of any restrictions regarding investors’ nationality. There are no limitations on holding foreign currency bank accounts and the country has an attractive benefits and tax incentives package for investors.
Considering the legal framework and local practices both in Angola and Cabo Verde, we believe interested investors cannot avoid conducting thorough legal and financial due diligence. An in-depth knowledge of the legal framework is necessary to have a precise understanding of the privatisation process and timeline.
For more information, please contact:
Joana Andrade Correia, partner
Ana Cláudia Rangel, managing associate
Raposo Bernardo & Associados – Sociedade de Advogados
Av. Fontes Pereira de Melo
Edifício Aviz, 35, 18.º
T: +351 21 312 13 30