Angola Investment - Angola Privatisation

Public enterprise reform and privatization

The Angolan government has already started to encourage the development of the private sector, reduce the scope of the public sector and enhance the autonomy and financial responsibility of enterprises remaining under state ownership.

The Government has launched a program for the restructuring and privatisation of public enterprises. This includes the sale of all small public enterprises and some non-strategic public enterprises, the rehabilitation and restructuring of viable strategic public enterprises, and the liquidation of unviable companies.

To co-ordinate this program, the government has set up a technical secretariat and more recently an interministerial body. These bodies drafted a strategy, carried out an inventory of firms, classifying the firms and prepared the legal framework for rest ructuring and privatization. This was followed up by a pilot program for 60 companies and the privatisation of small companies.

The government has enacted two laws (law 10/88 on economic activities and law 9/91 on state enterprises) involving the privatization of hundreds of companies and determined the limits of public ownership, defined the modus operandi of public enterprises and has set out principles and procedures for privatisation. These laws have since been complemented by a series of more detailed decrees.

All non-strategic non-monopoly parastatals are to be privatized and many small companies have already been sold off. For non-strategic companies that are not yet facing competitive conditions in their respective markets, privatisation will be partial, with a 49% ceiling on private share holdings.

In many cases companies are being broken up in order to avoid the replacement of state monopolies by private monopolies or to enable Angolan entrepreneurs with limited financial resources to buy them. In effect, this is reversing the process of consolida tion, confiscation and nationalisation that took place in the 1970's.

Major constraints in the reform of public enterprises and the privatiation process are the unfavorable business environment, the lack of experience of domestic entrepreneurs and the indebtedness of most parastatals. As a result, the privatization process will be a gradual process, spread over several years. Nonetheless, considerable progress has already been made.

More than 275 state companies classified as small-scale, had been broken up into 850 smaller firms and were privatised. In the trade sector large number of retail shops, bars and restaurants had been sold. In the construction sector and fisheries a number of companies have been privatized. In the transport sector, some firms had been liquidated and their assets sold. In agriculture state owned plantations were broken into hundreds of smaller units and some privatized.

This program, which has already led to the sale of many small enterprises, is moving on to the privatization of several large companies. The government has also reviewed its legislation on foreign investment in order to institute simplified procedures and improve incentives.

Last Updated on Saturday 12th December 2009