Angola enjoys a reputation as one of Africa’s hottest investment opportunities. Since the end of its 27-year civil war in 2002, the country has enjoyed some of the fastest GDP growth in the world – an average of 11% between 2001 and 2010.

According to the International Monetary Fund, Angola’s GDP will grow by 6.3% in 2013, and by 7.3% in 2014. Pedro Pinto Coelho, chief executive of Standard Bank, the first non-Portuguese foreign bank to get a foothold in the Angolan market, says that Angola has all the “right ingredients” for investors.

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“It is already one of the largest economies in Africa, it has a rapidly growing and urbanised middle class, and more than 50% of its population is under 18," he says.

Barriers to entry

Angola, like many resource-rich countries, suffers from 'Dutch disease' and it has an under-developed domestic economy controlled by a small circle of elite interests. Despite its fertile land and good water supplies, it remains a net importer of food, poor electricity supplies mean that manufacturing is expensive, and human capital is weak as several generations have missed out of on an education because of the civil war.

Things are changing though. Oil-backed loans from China have seen billions of dollars poured into road building, and the rehabilitation of the country’s three colonial-era railway lines is nearly complete, meaning that soon there will be connections between Zambia, Democratic Republic of Congo, central and northern Angola and the country's Atlantic ports of Luanda, Lobito and Namibe.

Opportunities aside, it remains notoriously difficult to operate in Angola. The country is ranked 172th out of 185 by the World Bank's 2013 Doing Business survey due to its high levels of red tape, poor regulatory frameworks, corruption levels, poor electricity supplies and high prices. It takes eight procedures and 68 days to start a business in Angola (twice the average time it takes in the rest of sub-Saharan Africa) and 184 days to register a property (three times the regional average).

Edward George, head of commodities research and an Angolan specialist at Ecobank, says: “The barriers to investing in Angola are very high. You have political risk, reputational risk and performance risk, and there other issues too such as the high-cost environment, the red tape, the different language and the need for the right local partner.

“The returns are very good, but you could spend a year, or longer, just getting your paperwork in place, and that would be at very high cost to yourself.”

Numbers speak volumes

Angola knows it needs to boost its reputation, and staff from the Agência Nacional Para o Investimento Privado (ANIP, a national private investment agency) travel widely to promote the country, its opportunities and its open-door policy. There are tax breaks for investing in target areas, such as agriculture and manufacturing, in order to create jobs  – one in four people in Angola is unemployed – as well as other incentives to locate business outside of the capital Luanda into less developed provinces.

State media frequently carries stories about new projects and investments across a variety of sectors and involving big brands such as Sony, Siemens and Barloworld. Earlier this month, Luanda hosted its annual trade fair, Filda, with state media reporting the attendance of more than 1000 companies from Portugal, China, Turkey, Brazil, Germany and beyond.

For all the bullish talk, however, the country’s actual FDI statistics remain opaque. In July, ANIP’s director, Maria Luisa Abrantes, told local media that non-oil FDI in 2012 was $2.9bn. The United Nations Conference on Trade and Development's statistics show that Angola recorded negative FDI inflows of -$6.89bn in 2012 while listing Angola's greenfield flows that year as $3bn, placing the country fifth in sub-Saharan Africa behind SA, Nigeria, Mozambique and Zimbabwe.

Angola's central bank, the Banco Nacional de Angola, says that this was caused by cyclical investments from the oil sector, where money is invested up front for exploration and then extracted later when production begins. Despite a number of e-mails and phone calls, the ANIP was unable to clarify Angola’s FDI flows and both of the agency’s websites, in Angola and the US, were offline.

“The kind of investors that are going into Angola are people with really long-term game plans, big companies and major brands that are prepared to go for several years without making much profit," says Ecobank’s Mr George. “But in all honesty, if you look across Africa, you have 20 other countries with growth of more than 5% and there are many other places you could invest in that are less difficult than Angola.”