In a globalized world where every company has an edge to pursue new business, the new frontier is no longer across the street, but rather across the sea or, let’s say, across the world. While most areas in the African continent remain underdeveloped and others are still in conflict, there is one country that clearly arises as the new promise of the West. Being one of the fastest growing economies in Africa, Angola offers excellent business opportunities across-the-board for existing and future investors. However, the business environment is, at least, challenging. This is why in this post we talk about the tips to enter Angola.
Tips to enter Angola
This is Angola, this is your opportunity
Angola is the largest exporter of crude oil from Africa and is a country that has experienced high economic growth rates. Several international companies have joined the State-Owned Sonangol EP in Production Sharing Agreements to explore and develop oil and gas fields, while pumping, processing, refining and exporting hydrocarbons.
The enormous wealth of the Angolan sub-surface includes, apart from petroleum resources and mines of all or type, an immense territory that produces from coffee to sugar and from soybean to bio-diesel. The country holds a huge business potential that attracts investment from all over the world. Taking a walk around Luanda, its populated capital city, is enough to notice a vast community of expatriates serving different companies and non-for-profit organizations, including major oil and gas corporations, agricultural business, banks, education, health services, heavy industry, oilfield services and retailers. Locals blend with people from the five continents in a peaceful and diverse business environment. You will never feel a stranger while doing business there. Political and economic stability of the last decade has enabled social and human development at rates never experienced before by this fast-growing economy.
Angola has also carried out important investments in railway infrastructure and ports, as well as urban equipment and railroads. A highlight for these improvements was noted for the hosting of the African Football Championship in 2010, which entailed the construction of 4 new stadiums and hundreds of service facilities such as airports, hospitals and hotels.
This is Angola, this is the risk
To start a business in Angola, you are required to comply with a multiplicity of procedures and formalities that give rise to complex legislation, complying with multiple passages, tax payments, inscriptions, registrations and paperwork. Without fulfilling these regulations, any activity would be considered illegal and dully prosecuted. A local law firm should be able to guide you through the complex Portuguese-inherited and self-created complex governmental procedures. Another fact to have in mind is that companies who intend to invest in Angola have to consider several aspects such as high living costs, slow payment issues, lack of infrastructure in certain areas, ineffective communications network, language barriers and cultural norms and customs. Speaking Portuguese is highly recommended. Spanish is also well understood by local authorities and communities, but you would rather take a few lessons before attempting to land there. Regarding cultural barriers, it is important to identify as early as possible the key stakeholders and establish a relationship with good and reliable local partners. This has proved to be a substantial part of any effective landing strategy, as well as will enable you to develop an understanding of the way business are done in Angola. Finally, the country has been recently experiencing some macroeconomic constraints such as inflation, currency devaluation and foreign exchange restrictions. Financial advisory would be required to ensure you do not fall in a cash-trap.
9 tips to enter Angola
Before stepping foot in this land of opportunity, ensure you go across this checklist:
- Conduct a deep and extensive due diligence. A local law firm to support the field activities is recommended.
- Relocate to live in the country or visit regularly. Ensure you develop face-to-face relationships with local contacts (employees, business partners, authorities, banks and main customers).
- When analyzing other successful internationalization cases, it is remarkable that joint ventures is the most successful investment vehicle. Partner with a reputable, well-known local company to facilitate the process of establishing in Angola. You will bring the product and service knowledge and they will provide the local color and market approach.
- Cost of living and cost of producing: Prices follow a different pattern. Do not attempt to compare with your home country.
- Be patient and be resilient: market entry can take longer and cost more than in other countries.
- Expand your scope of business: Companies providing follow-up service such as maintenance, service, and training in conjunction with their products often have an advantage in the market.
- Portuguese: Learn the basics, prepare brochures and documents in Portuguese, and send your mails and notes in the local language. It is highly appreciated.
- Beware of the environment: Every company must submit an Environmental Impact Assessment for approval prior to consideration of any project that could impact the environment.
- Embrace local content: Companies are required purchase most of their services from companies that are wholly or partially Angolan-owned. In addition, the workforce regulation requires companies to hire Angolan nationals. 70/30 is the required split between locals and expats.
This is Angola, the land of risk and opportunities. Consider this African country as a convenient location to expand your business: here you have some data from the World Bank if you want to explore more in deep this country. As Mark Zuckeberg said, “In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
In this post we talked about tips to enter Angola. If you want to know more about other markets, go to our market and industries section in our blog