Luanda – Angola’s Strategic Food Reserve (REA) should be made up of nationally produced goods, as from next year, in order to promote the increase in domestic production and food security, the Minister of State for Economic Coordination José de Lima Massano announced Friday in Luanda.
José de Lima Massano, who presented the government strategies for easing the ongoing economic situation, defined in four axes - the increase in national production, financial support for production, tax simplification and improvement of the business environment.
With regard to increasing national production, one of the decisions taken has to do with the operation of the REA, which should become a boosting of national production.
However, he said that he will also include imported goods that stimulate domestic production, such as fertilizers and seeds.
He explained that at the beginning of each agricultural campaign, the REA will announce which products they will have to purchase on the domestic market, the due specifications and the guaranteed minimum price. “We intend to start this exercise with the 2023/2024 agricultural campaign”, he said.
Still regarding the protection of national production, José de Lima Massano said that the Executive will move forward with a quota regime for those products in which the country has installed capacity, but has not yet reached its potential.
The test should be carried out with sugar, where production capacity meets 40% of the need for consumption, but the potential foresees that 60% can be reached in the short term, but imports have been preventing this increase.
With regard to sustainability from a financial point of view, in addition to the contributions that it has already benefited from in the scope of the execution of the OGE, the Government will direct 50% of the fees applied on the importation of foodstuffs to the enhancement of national production.
The Minister of State highlighted that “the charges paid for the importation of food items upon entry will be channeled into a fund to boost national production, which will be managed by the REA”.
For other sectors of the economy, from January 2024, it will become an obligation to incorporate nationally produced goods, such as those related to furniture for teaching, health and public administration, in all public works contracts and any capital projects of public initiative.
José de Lima Massano explained that expenses related to some items and services, such as doors, windows, floors, desks and uniforms for security bodies, should incorporate local production, resorting abroad only when there is no internal capacity”,
Financial support
With regard to financial support, José de Lima Massano said that an alignment of all tools that the State has for intervention in the economy has been defined, such as the Angolan Development Bank (BDA), the Angolan Active Capital Risk Fund (FACRA) and the Credit Guarantee Fund (FGC), to boost domestic production, with an emphasis on food security.
With this, he specified, the BDA should be restructured in order to justify its creation, in line with the objective of diversifying the economy.
The same will happen with the Credit Guarantee Fund, which will deserve a capital reinforcement to allow more guarantees to be provided to companies, so that they can mobilize resources from the financial system to carry out their activity.
As for the Fundo Activo de Capital de Risco Angolano (FACRA), it will be recapitalized with the aim of supporting companies linked to the transport, storage and conservation of agricultural products.
The Minister of State announced that the Government will also put in place financial resources to support and promote the establishment of industries in agricultural production areas.
He also stated that a dialogue was already underway with the insurance company ENSA, which should lead a co-insurance process for agribusiness.
Financial support measures also involve the financial enhancement of community funds that work with agricultural cooperatives and to operationalize the securities guarantee center, made available by the government to the financial system a couple of years ago, but still inactive until now.
Tax Relief
As for simplification and tax relief, the Executive will, as of January next year, reduce the Value Added Tax (VAT) from 14 to 7% for all food products.
The tax relief also foresees that the VAT applied on the importation of means to support national production and industrial equipment paid in 12 monthly installments, the beneficiaries will have 12 months to pay the VAT, instead of doing it in one single payment as has been happening.
The Minister of State also announced exemption from Property Tax on transfers of property valued at AOA 40 million, while those valued at AOA 40 to 100 million will have a 50% exemption, in order to make housing credit more accessible to citizens who wish to be home owners.
The stamp duty on real estate development will also be eliminated, as well as the stamp duty on the registration of share capital of companies.
According to the minister, the Government will allow the monetary and accounting updating of investments in fixed assets at fair value without any tax implications, that is, “we will have a kind of year zero for companies to update their balance sheets”.
José de Lima Massano stressed that there are many companies with assets that are registered at initial cost, but over the years there has been inflation and depreciation, and these assets have not been updated because they imply tax incidence.
“So we are going to allow this correction and we will also have the truth in terms of the writing of our companies and they will be able, in their relationship with investors and creditors, to have their accounts more true, reflecting what they are actually worth”, he explained.
Improvement of the business environment
In this set of measures, according to José de Lima Massano, also fit the improvement of the business environment, with the creation of a Single Counter to Support Exporters.
Regarding imports, the Minister of State called back that there is a fluid system that works, but for exports it is not like that, there are several entities that intervene in the process, not always with the desirable coordination and space is being lost in the placement of national products on the market, conditioning the path of diversifying the economy and generating foreign exchange resources.
On the other hand, he made it known that the Single Window for the Conception of Land Rights will be implemented in the municipalities, which will facilitate access to land and the respective registration.
As for commercial activity, he said that prior authorization will no longer be necessary for those activities that do not require the presentation of a commercial license. In this case, communication to the municipal authority will suffice.
Another measure involves the exemption of business and tourist visas, up to 30 days, for citizens of the G20 countries and the Community of Portuguese Speaking Countries (CPLP).
