Market Intelligence
Franchising Angola

Angola Franchising


Market Overview

Angola is rich in mineral resources such as oil, natural gas, diamonds, phosphates, bituminous substances, iron, copper, magnesium, gold, and ornamental rocks.  Angola’s economy is heavily dependent on its oil and gas industry, accounting for most of its exports and national budget.  As a result, Angola is highly susceptible to oil price shocks in the global economy, which could severely affect national currency reserves and the budget for new development projects.  To this end, the government of Angola has been working towards economic diversification to develop new industries and sources of income.  The government has also been working to improve its business environment to attract foreign investment and support the creation of new jobs for its young population.  Franchising is one of the key ways that tangibly meets the Angolan government’s need to create new jobs, while also creating new opportunities for U.S. companies in dynamic, untapped markets, with a demand for access to more U.S. products and services.

Market Opportunities for U.S. franchises in Angola – Factors to consider

Market Demand – It is important to note that while there are significant inequalities and challenging living conditions with a considerable portion of the population living on less than 1 USD per day, there is also an affluent business class and an emerging middle class with disposable income to travel and live outside of Angola.  Increasingly, as they come back from trips and pursuing education and jobs overseas, there is more demand for the U.S. goods, services, and products that they find in other markets.  Also, there is a considerable expatriate population due to the many international companies operating in Angola who would like to have access to the products they are used to having back home.

Market Size and Growth – Angola represents a huge market for U.S. franchises to consider. Angola has a population of over 36 million and a GDP of US$ 106 billion. It is the fifth largest economy in sub-Saharan Africa, so it is a logical next market for U.S. companies active in other countries (like South Africa) in the region.  

Purchasing Power – Currency devaluation is an important factor to consider in Angola.  For most Angolans, prices of goods and services are steadily increasing and can considerably affect their purchasing power.  The Angolan kwanzaa is steadily depreciating in value, and inflation in Angola is high.  Although there is still disposable income available within family budgets, there is less of it available for purchasing luxury goods, entertainment, etc.  

Cultural Distance – Angola represents a different cultural environment; however, there are U.S. fast food chains already in operation such as KFC and Pizza Hut who appeal to changing customer tastes and tendencies for American products.  Usually, if the U.S. franchise currently operates in Brazil or Portugal, it would be easy to apply similar model and requirements to the Angolan market.

Geographic Distance – As the geographic distance between the foreign market and the company’s headquarters increases, the higher the monitoring and logistical costs are.  The U.S. Commercial Service in Angola can help U.S. franchises connect to expert local partners in logistics who can open several branches at the same time.  Opening several branches will create a local supply chain, making it easier to obtain inputs for the U.S. franchise.  

Market Opportunities for U.S. franchises in Angola – Franchising Types

Quick-Service Restaurants (QSR): Investing in food products in Angola offers significant growth potential, especially with greater propensity for consumers seeking new types of culinary experiences.  Angola, particularly in large cities such as Luanda, Benguela, Lubango, and Huambo, is experiencing evolving consumer preferences and demographic trends.  U.S. franchises like KFC and Pizza Hut have already found success in Angola since 2012 and currently have nine restaurants, eight of which are in Luanda and one in the province of Benguela. Represented by Ibersol group in Angola, KFC is responsible for daily operations, including supply chain management, staffing, and marketing.

Coffee Shops and Cafés:  Angola has a rich coffee culture rooted in its history as a significant coffee producer. The café culture is growing, particularly in urban areas like Luanda, with an increasing number of coffee shops offering a variety of coffee drinks and snacks. Angola primarily produces robusta coffee, known for its strong flavor and high caffeine. Nestle Café and Portuguese coffee Delta is well known in Angola for its range of instant coffee products. U.S chains can cater to the increasing demand for casual dining and coffee culture that are increasingly growing to like U.S. brands and the unique customer experience.

Retail:  Retail stores can tap into the growing interest in international fashion and American brands known for style and good quality. Shopping mall chains such as Avenida, Belas, and Fortaleza can provide convenient shopping options that expatriates and Angolans alike can enjoy. Clothing brands such as Tommy Hilfiger, Puma, and Levi’s are visible in Luanda in shopping malls. Nike products are available in Angola through sports and fashion retailers like Sport Zone. The retail landscape is gradually evolving, creating more opportunities for U.S companies to enter the market.

Beauty Shops: The presence of U.S. beauty and cosmetic chains in Angola is limited, some international chains like MAC cosmetics and Estée Lauder have retail outlets in Luanda (Angola’s capital city). There are local pharmacy chains in Angola that carry American beauty products and could be the main point of entry for U.S. beauty companies, products, and services. These pharmacy distributors import products and make them available in the market.

Education: There is a high demand for English Language Programs in Angola. International companies operating in Angola often require English proficiency for several reasons such as global communication, documentation and reporting, client interaction, and competitiveness.  U.S. English-language franchise chains are strongly encouraged to come and visit Angola as English is the language of business in Angola. 

Tourism: Angola has more than enough natural attractions to win over nature-loving travelers from all over the world. The Angolan Government has defined tourism as one of its priorities for the diversification of the country’s economy. International hotel brands can offer high-standard accommodations, catering to both business and leisure travelers. International tour operators are also welcomed to streamline tourist operations and partner with local companies. 
Angolan Market Challenges in Franchising Sector

Franchising in Angola holds substantial potential, particularly for businesses willing to invest in understanding the local market and adapt their offerings to meet the needs of both international and domestic consumers. The following are considered some challenges for Angola market entry:

  • Regulatory Environment: There have been changes in recent years, aimed at attracting foreign investment and improving the ease of doing business. The 2018 Private Investment Law simplified the process for foreign investors registering a business in Angola.
     
  • Value Added Tax (VAT): Angola introduced VAT in 2019 at a standard rate of 14 percent, replacing the former consumption tax.  The VAT often increases the cost of goods and services considerably.
     
  • Foreign Exchange Controls and Repatriation: Angola has strict foreign exchange controls, which can affect the repatriation of profits and other financial transactions. However, the government has been gradually liberalizing these controls to facilitate the ease of doing business.
     
  • Infrastructure: The establishment of shopping malls in the Angolan large cities such as Luanda and Benguela is widely seen as a sign of the country’s economic consumer growth. While improving, infrastructure, roads, and the lack of reliable transportation in some regions may pose logistical challenges.

Next Steps 
For more information about the opportunities in the Franchising sector and to design your market-entry strategy for Angola contact Commercial Assistant & Budget Analyst Tandeo Peshi at Tandeo.Peshi@trade.gov.

 

 

 

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