Angola - Selling to the Public Sector

Selling to the Public Sector

Last published date: 2024-02-01

Selling to the Government

Public Procurement was governed by the Angolan Government Law on Public Contracting Law amended in June 2016 under Law No. 9/16. In December 2020, a new law revoking Law 9/16 was approved and entered into force on January 22, 2021. The new law, Law 41/20 allows for two main methods of awarding contracts: direct contracts and tenders. There are three categories of public tenders: by invitation for pre-qualified entities, restricted, and open. The contracting authority selects the type of award according to contract amount and activity (acquisition of goods and services or civil works). These are the most important changes to the scope of the law:

The scope of the law was expanded to cover the following:

i) Administrative concession contracts, including concessions for public works, public services and operation of the public domain, and the formation of contracts whose implementation is carried out through a public-private partnership.

ii) Commercial contracts arising from financing.

Expansion of the subjective scope of the Public Contracting Law to cover contracts entered by:

i) State companies and companies in the public domain that benefit from operational subsidies, or any operations carried out with funds from the General State Budget, whose estimated value is Akz (AOA) 500 million or more.

ii) Bodies governed by public law (private or state legal entities pursuing the public interest without an industrial or commercial character, controlled, or financed by the State from the General State Budget).

Due to local currency fluctuations, the Angolan public tender law was amended by Presidential Decree Nº 282/18, November 2018 to adjust the values public officials are authorized to approve.

Authorizing values are as follows:

- No limit: The President of the Republic of Angola

- 2.5 million kwanzas: Cabinet Minister

- 2 million kwanzas: Ministers/Governors:

- 1 million kwanzas: Public Companies, Institutes, Funds and Local/regional Governments

Direct contracting is permitted (per Annex III) if the total contract is equal to or more than 182 million kwanzas. Tender values are authorized by specified senior government officials as follows: President of the Republic (with no value limit), the Vice-President (up to 364 million kwanzas), Cabinet Ministers (up to 182 million kwanzas), Ministers, Provincial Governors, public institutes, public companies, autonomous funds, and managers of budgeting units of the central government and local/regional administration (up to 72 million kwanzas).

To be considered, an Angolan company must be registered in the centralized Angolan Government Databank (per Article XIII of the law). A minimum of three entities must be invited to participate in tender (per Articles 138 – 142).

Restricted tenders and open tenders are required when the estimated value of the contract is equal to or exceeds 182 million kwanzas. Bidders must be pre-qualified to be able to participate in restricted tenders (per Articles 117 – 135 of the law).

In the case of open tenders (per Articles 69 – 116) the tender announcement must be published in the “Diário da República” (Daily Gazette) and the “Jornal de Angola” (government national daily newspaper). Cabinet Ministers can authorize open tenders for up to 2.5 billion kwanzas. For open tenders above that value, the responsible Ministry must work through the Presidency’s Procurement Office.

The Public Contracting Law (per Article 53 and Annex V), determines that foreign companies are only allowed to compete directly on tenders with values greater than 182 million kwanzas for goods and services, and greater than 500 million kwanzas for public works. The current benchmark values are higher than the previous public procurement law in which foreign companies were allowed to bid directly only on tenders valued at or above 73 million kwanzas. Below these values, foreign companies can only participate in government procurements as a supplier or subcontractor to an Angolan company fulfilling a government contract.

Presidential Decree nº 196/16 dated 23 September 2016, which approves the Regulation on the price of selling of bidding documents.

Presidential Decree nº 198/16 dated 23 September 2016, which approves the Regulation on registration and certification of State suppliers.
Presidential Decree nº 199/16 dated 23 September 2016, which approves the Regulation on procedure for and execution of framework contracts.
Presidential Decree nº 201/16 dated 27 September 2016, which approves the standard contract forms for works, goods and services.

Reform and modernization of Angola’s Public Procurement law of 2016 was a condition of the African Development Bank (AfDB) loan to support electric power sector reform in Angola. The Public Procurement Law aims at modernizing and simplifying the public contract procedures; however, the African Development Bank (AfDB) has identified areas of this law that require strengthening to improve transparency. Angola is not party to the WTO Procurement Agreement.
Foreign companies can compete for Angolan Government business, but to qualify must have a legal presence in Angola or have a legally designated Angolan representative.

Government institutions cannot pay vendors unless the relevant expenditure was authorized in the national budget; therefore, companies should conduct careful due diligence to ensure that an expenditure has been budgeted before pursuing. Due to Angola’s growing international debt, and the requirement for companies to transact business through the local banking system, the Angolan government has pushed for contracts to be exclusively in local currency. International companies need to consider this factor very carefully in structuring their business to participate in government contracts with local agents or partners.

Oil production companies operate in joint ventures with the national oil company, Sonangol, and are required to formally announce their procurement tenders through the national daily newspaper Journal de Angola and list these business opportunities on their corporate website.

Currently, most projects depend heavily on external financing. In the case of a bilateral export credit agency, financing procurements would adhere to the specific country’s sourcing requirements. Procurements using financing from regional and international organizations, such as the World Bank or AfDB, are subject to the international tender rules of those organizations.

Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information.

U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with the network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.

Financing of Projects

Given the constraints on government revenues and spending, project financing for government projects increasingly depends on external sources, such as international commercial or export credit agencies. Domestic credit for private sector projects is extremely limited. Several government supported local currency credit lines managed through commercial banks for priority sectors exist, though Angolan companies complain of long review processes and difficulty securing such financing. Angolan commercial banks are generally not willing to provide guarantees for foreign currency loans due to the foreign exchange risk. Angolan government sovereign guarantees that were available in the past for high profile projects have become non-existent, due to the Angolan government’s significant debt load. That said, in April 2019, the U.S. Export-Import Bank signed a Memorandum of Understanding with the Angolan Ministry of Finance to support U.S. exports to Angola.

The U.S. International Development Finance Corporation (DFC) was established in 2019 through the passage of the Better Utilization of Investments Leading to Development (BUILD) Act, which strengthened and modernized American development finance. The BUILD Act combined the capabilities of the Overseas Private Investment Corporation (OPIC) and the Development Credit Authority, which had previously been housed in the U.S. Agency for International Development (USAID). Subject to various criteria for impact and additionality, DFC can provide debt, loan guaranties, equity, or political risk insurance for experienced project sponsors that are majority-owned by private sector entities and have annual revenues greater than $1 million. See the “Guide to Partnering with U.S. International DFC” for more information on DFC: https://www.dfc.gov/sites/default/files/media/documents/DFC_Partner_Guide.pdf

The U.S. Trade and Development Agency (USTDA) connects the U.S. private sector to infrastructure projects in emerging markets. USTDA achieves its mission by funding feasibility studies, technical assistance and pilot projects that integrate the innovation and expertise of American companies. USTDA also connect overseas project sponsors with U.S. partners through our reverse trade missions, industry conferences and expert workshops. USTDA’s programming primarily focuses on the energy, information and communication technology (ICT), transportation, healthcare, and agribusiness sectors. In Angola, USTDA has provided feasibility study grants to support project development in the transportation, electricity, and port sectors. USTDA has also brought Angolan delegates to the United States through reverse trade missions focused on the agribusiness sector.

Multilateral Development Banks

The AfDB and World Bank provide project financing liquidity in several key areas of business and economic development in Angola that present solid opportunities for U.S. companies to participate in internationally competed tenders with secure international financing.

As of February 1st, 2017, the AfDB had an active portfolio of ten loans for a total net commitment of US$ 653 million. The portfolio sector breakdown shows a predominance of finance (52 percent) followed by water and sanitation (20 percent), social (15 percent), multi-sector (5 percent), agriculture (4 percent), environment (3 percent) and transport (1 percent). The Bank’s strategy in Angola seeks to assist the country in accelerating its economic diversification. Achieving this strategy requires a focus on 2 main pillars, which are inclusive growth through agricultural transformation and support to sustainable infrastructure development. Specific projects generating interest from U.S. companies include those in the energy, fisheries, and railway infrastructure areas.

The World Bank provides project financing liquidity in several key areas of business and economic development in Angola that present solid opportunities for U.S. companies to participate in internationally competed tenders with secure international financing.

In Angola, the World Bank Group portfolio includes major efforts in the water, energy, and agriculture sectors as outlined in detail under the “Best Prospect,” section of this report. The energy project of US$ 250 million was recently approved and awaits effectiveness to begin implementation. The World Bank Water Sector Institutional Development Project (2008-2016), with a total project cost of US$ 130 million, was extended until 2024 with an additional World Bank loan of US$ 545 million. It concentrates primarily (75 percent) on water projects in urban and peri-urban areas, with the balance of the project related to wastewater/sanitation. A World Bank Guarantee of US$ 500 million, representing the first guarantee in support of the Water sector, was also approved on 16th of July 2019, and the GoA and the WB signed the Guarantee in June 2021. The World Bank portfolio in Angola also includes statistics, health, social protection, and education programs.

In agriculture, a second World Bank “Smallholder Agricultural Development and Commercialization” Project loan was signed in July 2016 for US$ 70 million, to help increase smallholder agriculture productivity, production, and marketing for selected crops in the project areas.

Other major interventions in the agriculture sector include the “Commercial Agriculture Development Project”, of US$ 230 million approved in 2018. The project development objective is to promote commercial agriculture development, increasing production and employment within selected value chains in targeted areas in Angola. The project target completion date is May 2024. A regional project, “Agricultural Productivity Program for Southern Africa, Angola & Lesotho, for US$ 25 million, was also approved in 2018”.

Angola is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), which provides insurance to foreign investors against such risks as expropriation, non-convertibility, and war or civil disturbance. MIGA also provides investment dispute resolution on a case-by-case basis.

U.S. Commercial Service Liaison Offices at the Multilateral Development Banks (African Development Bank, World Bank)

The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the African Development Bank and the World Bank. These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the African Development Bank (https://www.trade.gov/afdb) and the World Bank (https://www.trade.gov/world-bank).

Danica R. Starks

Senior U.S. Commercial Liaison to the World Bank &

Head of DOC Multilateral Development Bank Group

DOC Email: Danica.Starks@trade.gov

DOC Phone: 202-573-0099

https://www.trade.gov/advocacy-liaisons-multilateral-development-banks

U.S. Department of Commerce

International Trade Administration

Office of the U.S. Executive Director

1818 H Street NW • Suite MC 13-525 • Washington DC 20433 • USA

Janelle Santerre Weyek

Senior Commercial Officer - EBRD