How Angola scores on economic freedom
Own Correspondent
Published: 07-JUN-07

Business Freedom – 33,9%

Starting a business takes an average 124 days, compared to the world average of 48 days. This makes entrepreneurship far too difficult to enable a dynamic official economy. Obtaining a business license can be very difficult because of regulations, and closing a business is also very difficult. Inconsistently enforced, the regulatory system has been vague and complicated. The overall freedom to start, operate, and close a business is seriously limited by the national regulatory environment.

Trade Freedom – 68%

Angola’s weighted average tariff rate was 6 percent in 2005. While Angola has made solid progress in reforming its trade regime, non-tariff barriers still impose a cost on trade. Non-tariff barriers include subsidies, import controls, customs barriers, some prohibitive regulations and standards, and issues involving the enforcement and protection of intellectual property rights. Consequently, an additional 20 percent is deducted from Angola’s trade freedom score.

Fiscal Freedom – 90%

Angola has a low income tax rate but a high corporate tax rate. The top income tax rate is 15 percent, and the top corporate tax rate is 35 percent. Other taxes include a fuel tax and a consumption tax. In the most recent year, overall tax revenue as a percentage of GDP was 6,9 percent.

Freedom from Government – 38,4%

Total government expenditures, including consumption and transfer payments, are high. In the most recent year, government spending equaled 38,9 percent of GDP, and the government received 79 percent of its total revenues from state-owned enterprises and government ownership of property.

Monetary Freedom – 47,7%

Inflation in Angola is high and unstable, averaging 34,8 percent between 2003 and 2005. Relatively high and unstable prices explain most of the monetary freedom score. Government price controls are pervasive in many sectors of the economy, including fuel and electricity. Consequently, an additional 15 percent is deducted from Angola’s monetary freedom score to adjust for the high economic cost of these price control measures.

Investment Freedom - 20%

Angola’s Law on Private Investment provides equal treatment to foreign investors, simplifies investment regulations, and lowers the required investment. However, procedures to register a foreign investment remain burdensome. Capital and money market transactions, capital repatriation, real estate transactions, and personal capital movements are subject to strict controls. In most instances, these transactions require central bank approval and/or licensing. Foreign investment in defence, internal public order, state security, certain bank activities, and the administration of ports and airports is not explicitly prohibited but is somewhat off-limits.

Financial Freedom – 40%

Angola’s financial system is still small and underdeveloped but growing. The banking sector in 2003 consisted of seven commercial banks, of which three were foreign-owned. The two state-owned banks, which are slated for privatisation, control approximately 45 percent of banking assets. Angola has been liberalising the banking and insurance sectors in accordance with International Monetary Fund and World Bank advice, but financial governance remains poor. Valuable financial instruments are limited by the overall economic environment. . The state remains heavily involved in the insurance sector. The government has formally constituted Angola’s stock exchange with plans for it to be fully operational by the end of 2006.

Property Rights – 20%

The rule of law cannot be guaranteed through the local justice system, which suffers from political interference. Angola’s legal and judicial system is not efficient in handling commercial disputes. Legal fees are high, and most businesses avoid taking disputes to court.

Freedom from Corruption – 20%

Corruption is perceived as widespread and hinders all other economic freedoms. Angola ranks 151 out of 158 countries in Transparency International’s Corruption Perception Index for 2005.

Labour Freedom – 56,7%

The labour market operates under restrictive employment regulations that hinder employment and productivity growth. The non-salary cost of employing a worker is low, but dismissing a redundant employee is relatively costly. Angola has very rigid restrictions on increasing or contracting the number of working hours. -Business in Africa Online

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