Since the end of the civil war in 2002, Angola has developed one of the strongest economies in southern Africa, but it remains one of the few countries in the region without its own stock market. In order to boost investment in the country, the government decided to restructure its financial sector and launch an Angolan Stock Exchange.
With the approval of Decree 51/04, a number of energy-related projects can no longer be licensed without environmental clearance. During this year, a number of ongoing energy projects may also have to measure their impact on the environment.
December 6 2004 saw the entry into force of the new Law on Industrial Activities. The legislation sets out the general norms and principles applicable to all industrial activities, as well as the rules for the avoidance of risks to security, public health and the environment inherent to such activities.
The new Water and Sanitation Sector Development Strategy envisages private sector participation in urban water supply and sanitation. However, this area is typically unattractive to private sector investors, due to the financial, regulatory and political risks involved. Future legislation will thus have to deal in depth with numerous issues in order to attract foreign investment.
Angola is undergoing major economic development, and with the enactment of the new Company Law foreign investors have gained a number of benefits relating to the flexibility of structuring joint venture companies. The new law appears to have provided a suitable response to several issues which are usually raised during the process of setting up a company.
Decree 3/2004 has approved new price regulations for public telecommunications services. The decree sets out a pricing policy to be adopted by public sector operators for the provision of telecommunications services, and the prices to be charged between public operators for the interconnection of public telecommunications networks.
The new Company Law which entered into force earlier this year is a milestone in the ongoing reform of the Angolan legal system. It modernizes the legal framework for corporate structures and ensures a high degree of stability and credibility, expected to be an important factor in attracting private investment.
A new Ministry of Petroleum order sets out requirements on the procurement of goods and hiring of services by oil companies operating in Angola. As a result, foreign oil companies wishing to do business in Angola will increasingly opt to structure their businesses through joint ventures with local partners, and the price of goods and services prices may also rise.
A recently enacted law approving the statutory regime applicable to agency and commercial concession agreements fills a regulatory gap which has been keenly felt for several years. Parties that decide to structure their transactions on the basis of its provisions will benefit from increased legal certainty, which is expected to translate into an increase in business.
Tight new regulations on diamond mining will be beneficial to Angola, as they should go a long way towards reducing illegal practices and boosting government revenues. However, it appears that some of the principles established may be over-protective of Angolan companies, thus creating disincentives to foreign investment.
A new law creates greater legal certainty by setting out the rules applicable to three typical business cooperation agreements between companies: the partnership, the consortium and the corporate group. This should provide new incentives for investors to get involved in the Angolan economy and to favour associations with companies already established in Angola.
In February 2003 the National Bank of Angola, the country's foreign exchange authority, issued a new order setting forth the foreign exchange rules applicable to the mining sector. The new regime imposes important restrictions on foreign exchange operations and may have an impact on the acquired rights of existing diamond mining companies.
The Angolan National Assembly has approved a new law which provides for the automatic winding-up of companies which have lost at least half of their share capital. This new provision may prove particularly problematic for companies whose share capital is indexed to a foreign currency.