Investing in Africa
About Investing in Africa
Investing in Africa provides information on investment procedures, incentives, and opportunities in sub-Saharan African states. It collects information from a wide range of mainly Internet based sources, and organises it in a standardised format which is convenient for printing.
In the last decade, many countries have changed their investment procedures in order to attract more private sector and foreign involvement in the economy. As a result, this study may be more relevant than older studies, as it was prepared between March and July 2001. Since the report may itself become out-of-date within a couple of years, I have also included references to the sources I used, and other reliable information available on the Internet. Investors may look at them in the future for more recent data. For a few of the countries the information dates back to the 1990s, and procedures have since been altered. You are advised to investigate the national website for further information (please see the "other studies" section below).
Sources
For member countries of the Common Market of Eastern and Southern Africa (COMESA), the large majority of factual information came from its website, http://www.comesa.int, itself referenced from a United Nations administered website (for the International Trade Centre, http://www.intracen.org/iatp/links.htm). The sub-Saharan member states are Angola, Burundi, Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe. The COMESA site takes some of its information from external sources, and I attempted to corroborate them where I could. Nevertheless, it is possible that some errors have slipped through, and the information in this website should not be used exclusively to form business decisions - preferably the embassies of the countries involved should be contacted.
The information for Tanzania comes from the UN administered site Trade Point Tanzania at http://www.tptanzania.co.tz, and the linked site for the Tanzania Investment Centre, http://www.cats-net.com/tic/index.htm.
The statistics for Mozambique were taken from the Mozambican trade and export websites http://www.ipexport.org, http://www.mozambique.mz, http://www.mozbusiness.gov.mz, http://www.tropical.co.mz/~parafric/, and http://www.ine.gov.mz. They are all linked to one another, and the original link to the ipexport site was made from the United Nations administered site http://www.intracen.org/iatp/links.htm.
I found data on Somalia from various United Nations websites, namely the World Development Indicators database, http://devdata.worldbank.org/data-query/, and the World Banks "Somalia at a glance", http://www.worldbank.org/data/countrydata/aag/som_aag.pdf. I used a variety of sources for background information, including the World Bank site http://www.worldbank.org/afr/so2.htm, the Arab Net site http://www.arab.net/somalia/somalia_contents.html, and the Mbendi site http://www.mbendi.co.za/land/af/so/p0005.htm.
The Lesotho information came from the Lesotho Government site http://www.lesotho.gov.ls, and the linked source for the Lesotho National Development Corporation http://www.lndc.org.ls. Unfortunately, I have not been able to confirm that these two sites are authentic, by a link from the United Nations site or another similarly well known. However, I attempted to verify the content against information of Ernst and Young, and Werksmans Attorneys, available on the Mbendi website http://www.mbendi.co.za/land/af/le/p0005.htm. Where there is overlap, mainly on the investment incentives section, the three sources agree. I also used the World Bank review of Lesotho http://www.worldbank.org/afr/ls.htm, and the linked review from the Southern African Development Community, http://www.sadc-online.com/countrys/lesotho/, for background.
For the background to Botswana report, I used information from the World Bank review at http://www.worldbank.org/afr/bw.htm, and the linked review from the Southern African Development Community at http://www.sadc-online.com/countrys/botswana/. The information on incentives, taxation, and so on came from the Botswana Government site www.gov.bw. I could not confirm the authenticity of this site by a link from a well known site like the United Nations, so I reconciled the data in it to information produced by Ernst and Young, and Werksmans Attorneys, available on the Mbendi website http://www.mbendi.co.za/land/af/bo/p0005.htm. The data agree, despite some difference in the subjects covered. The site contains some recent, unverified, information on incentives and business forms not included here.
Most of the South African information came from the site Trade and Investment South Africa at http://www.isa.org.za. This site is linked from the World Bank administered site IPAnet, http://www.ipanet.net/ilink. Additional background information came from the World Bank site itself at http://www.worldbank.org/afr/za.htm, and from the Southern African Development Community review at http://www.sadc-online.com/countrys/safrica/. The latter was used mainly for description of the physical environment.
The data for Congo came from the Investir en Zone Franc site http://www.izf.net/izf/Guide/Congo/Default.htm, and the linked site Agence pour la Creation d'Enterprises http://www.apce.com/monde/congo.html. Investir en Zone Franc is linked from the West African Development Bank at http://www.boad.org/liens/institues.htm, itself mentioned on the United Nations / International Trade Centre address, http://www.intracen.org/iatp/links.htm. Additional background information came from the World Bank report at http://www.worldbank.org/afr/cg.htm.
The information for Equatorial Guinea is also from the Investir en Zone Franc site http://www.izf.net/izf/Guide/GuineEquatoriale/Default.htm, with background from the World Bank report at http://www.worldbank.org/afr/gq.htm.
Information for Gabon was from the Investir en Zone Franc site http://www.izf.net/izf/Guide/Gabon/Default.htm, and Agence pour la Creation d'Enterprises http://www.apce.com/monde/gabon.html. The World Bank site http://www.worldbank.org/afr/ga.htm provided further background. The information for Cameroon came from the same sources: Investir en Zone Franc at http://www.izf.net/izf/Guide/Cameroun/Default.htm, Agence pour la Creation d'Enterprises http://www.apce.com/monde/cameroun.html, and the World Bank http://www.worldbank.org/afr/cm.htm. The Central African Republic, Chad, Niger, Burkina Faso, Mali, Senegal, Benin, Guinea Bissau, Togo, and Ivory Coast data came from the World Bank site http://www.worldbank.org/afr and from Investir en Zone Franc http://www.izf.net. For Niger and Togo, the Agence pour la Creation d'Enterprises site for Benin http://www.apce.com/monde/benin.html was also used, for information on the business forms in use in member states of OHADA, the Organisation for Business Law Harmonisation in Africa.
The data for Nigeria came from the Nigerian Federal Government site http://www.nigeria-government.com. I was unable to verify its authenticity by a link from a multinational institution like the United Nations. However, it is listed as the official site on the African section of the British Broadcasting Corporation website http://news.bbc.co.uk/hi/english/world/africa/country_profiles/newsid_1064000/1064557.stm. The World Bank site http://www.worldbank.org/afr provided additional background statistics.
Ghana information was from the Ghana Ministry of Trade and Industry website at http://www.ghanaclassifieds.com/moti/index.html, linked from the Ghana Export Promotion website http://www.exportghana.org, which is itself linked from the United Nations International Trade Centre site. More background information came from the World Bank site for Africa.
Information for Liberia came from the World Bank African site, and from the website for the Economic Community of West African States (ECOWAS) at http://www.ecowas.int. The address for ECOWAS listed on the Intracen site, http://www.cedeao.org/, does not seem to work (CEDEAO is the French acronym of ECOWAS). The same site address also appears on using one of the major search engines to find "ECOWAS", with the advice underneath saying that it has moved to www.ecowas.int, which does work.
For Sierra Leone, I used the Sierra Leonean Government site at http://www.sierra-leone.gov.sl/index.htm, which is linked from the ECOWAS pages. I also used information from the Sierra Leone Chamber of Commerce, Industry, and Agriculture at http://www.cocsl.bizhosting.com, which is linked from the Government site.
The information for Guinea was from the Guinean Government site http://www.guinee.gov.gn. I was not able to find a link to it from a multinational institution like the World Bank or ECOWAS, although the site is mentioned on the African section of the British Broadcasting Corporation World Service website. Background information came from the World Bank site for Africa.
The Gambia data was taken from the Gambian Government website at http://www.gambia.com/invest/invest.html and http://www.gambia.com/gambia.html, linked from the ECOWAS website, as well as the British Broadcasting Service. The links are to http://www.gambia.com, but at the time of writing (July 2001), this page appears to have been attacked by hackers. The subpages are still working, however. They were found using a major Internet search engine. I am not sure of their current accuracy.
The Mauritania data came from the Mauritanian Government website at http://www.mauritania.mr, and the investment section of the linked site for the Ministry of Economic Affairs and Development at http://www.economie.gov.mr. I could not find the former address on a multinational organisation site like the United Nations, but it is mentioned on the African Section of the British Broadcasting Corporation World Service website.
The Sao Tome and Principe data came from the World Bank website for Africa.
The Cape Verde information came from the Cape Verde Centre of Promotion of Tourism, Investment, and Exports at http://www.promex.org (in Portuguese). This is linked from the Government site at http://www.governo.cv/links.html, via the national privatisation site at http://www.cvprivatization.org/links/index.htm, the Bank of Cape Verde http://www.bcv.cv/links/entrada_nacionais.htm, and the Ministry of Finance site http://www.gov.cv/minfin. I could not find the Government site linked from a multinational organisation site, but there is a link on the British Broadcasting Corporation World Service website. Additional information came from the World Bank site for Africa.
For the statistics at the head of each country account, I used the World Development Report 1999/2000, published by the World Bank, and available on http://www.worldbank.org/wdr/2000/.
The data was extracted over period March-July 2001.
For the commentaries and organisation of the data, the work is entirely my own.
Other studies
Mbendi http://www.mbendi.co.za/land/af/p0005.htm is a South African business information website is particularly detailed on investment procedure and practise in the Southern part of the continent.
The United States Government site http://www.usatrade.gov/website/CCG.nsf covers similar material to this study, and also has some practical information, for example about business travel.
Transparency International http://www.transparency.org looks at economic corruption, mainly by surveying senior business people in the countries concerned. I was not able to find a link for the Internet address from the United Nations or similar multinational website.
The British Broadcasting Corporation World Service website http://www.bbc.co.uk/worldservice/africa/index.shtml contains many links to national Government websites, via its "country profiles".
Investing in Africa can be e-mailed by clicking here.
The countries
Angola
Benin
Botswana
Burkina Faso
Burundi
Cameroon
Cape Verde
Central African Republic
Chad
Comoros
Congo
Democratic Republic of the Congo
Djibouti
Equatorial Guinea
Eritrea
Ethiopia
Gabon
Gambia
Ghana
Guinea Bissau
Guinea
Ivory Coast
Kenya
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mauritius
Mozambique
Namibia
Niger
Nigeria
Rwanda
Sao Tome and Principe
Senegal
Seychelles
Sierra Leone
Somalia
South Africa
Sudan
Swaziland
Tanzania
Togo
Uganda
Zambia
Zimbabwe
Angola
Background
1998 Population (M): 12
1998 GNP (USD B): 4.1
1997/98 Annual GNP growth rate: 7.9
1998 GNP per capita (USD): 340
1990-98 % annual growth GDP: -0.4
1990-98 % inflation: 921.1
1998 Labour force (M): 6
1998 Female % of labour force: 46
1997 Adult illiteracy rate as % of people 15 and above (male): N/A
1997 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 5
1990-98 % annual growth of gross domestic investment: 12.6
1997 Private investment as % of gross domestic fixed investment: 88
1997 Foreign direct investment (USD M): 350
1998 Merchandise exports (USD M): 4222
1997 Present value of external debt as % of GDP: 206
1998 Value added as % of GDP Agriculture: 14
1998 Value added as % of GDP Industry: 54
1998 Value added as % of GDP Services: 32
It is a measure of the resilience of the Angolan economy that the country, after 25 years of civil war, still maintains a degree of normal trade and activity. Indeed, the considerable natural resources, whether in the form of oil, minerals, or agricultural land, may have perversely have sustained a civil war which has prevented Angola becoming one of the richest states south of the Sahara, as both the Government and the UNITA rebels have been accused of using those resources to fund their armies.
In talking about the economy, the oil industry is one of the first topics to arise, as it generates 40% of GDP, and 90% of exports, mostly to the United States. The oil sector grew throughout the 1980s, unlike other industries, and exploration of more sites continues to this day, beyond those already known in the main part of Angola and the Cabinda enclave. Foreign investors have been present in the oil industry for decades, and currently they control the industry in partnership with a parastatal oil firm. There have also been plans discussed for exploring the natural gas and hydroelectric power potential. Angola is responsible for coordinating the energy policy of the Southern Africa Development Coordination Conference (SADCC).
Nominally Marxist, the government held a barrage of controls on the economy in its early period, but adopted a pragmatic policy which eased foreign involvement in industry throughout the 1980s, and by the late 1990s had eased price controls, removed its own monopoly on mineral rights, and encouraged foreign investors to enter into various sectors, either by outright purchase of assets or in partnership with Angolans. Privatisation has progressed steadily for the last decade, with foreign investors buying large coffee plantations, and Angolan investors taking over smaller ones. The government has targeted disposal of non-strategic, non-monopoly parastatals, sometimes following division into smaller units, and restructuring or liquidation of those assets which remain in its hands. Monopolies will be subject to a maximum of 49% private ownership. Foreign investment legislation is under review, and the World Bank is helping in the review of some of its banking legislation. Other efforts are being made in the tax collection system, import and export procedures, and rescheduling of the substantial foreign debt.
With two thirds of the population living in rural area, the agricultural sector is crucial; for the economy, and the land is reported to be one of the richest potentials in Africa, allowing for tropical and subtropical crop growth. Before the outbreak of the civil war, the country was self sufficient in food, and was the worlds 4th largest coffee producer, with potential for production of sugar, coffee, sisal, and other crops. Only 3% of arable land is presently cultivated, giving rise to a demand for food aid for up to 1/5 of the population, depending on the state of the civil war - production expands and contracts quickly. The United Nations has provided some relief, as well as directly promoting agricultural development. The European Union has been active too, sending seeds, machinery and human resources.
The government has made efforts to improve supplies and services to the agricultural sector, but any attempts must confront the problem of a badly damaged transportation system. With roads, rail, and ports affected by the war, the UN has approved a number of loans to repair the infrastructure, starting with handful of key roads. The government is also attempting to modernise its telecommunications sector, with capital drawn from a number of sources.
Prior to the conflict, the manufacturing industry was quite active, with 4,000 enterprises. There have been recent efforts to restore some of the past capacity, with a number of projects proposed. Recent projects have been in pharmaceuticals, steel, television assembly, and brewing. The steel works may utilise Angolas iron ore reserves. The country has a number of other mineral deposits, notably diamonds, which made it historically one of the worlds largest producers of the gems, although (official) production has dropped substantially with the outbreak of fighting.
As for future prospects, the USA has imposed sanctions on arms provision to the UNITA rebel movement, which may help hasten the end of the war, although there have been other false starts in this respect. The damaged infrastructure could then be repaired, and normal development process set in action. Peace would also allow the development of the tourist industry, inevitably limited by the conflict. There is also the prospect of peace in the Democratic Republic of Congo, where Angolan troops have been active, although they may withdraw unilaterally in any case.
Regulations governing foreign investment
The following are classified as foreign investments:
1) transfer of funds from abroad
2) payment of cash assets into foreign currency bank accounts set up in Angola by non-residents
3) import of equipment, accessories, and materials
4) incorporating credits and other cash assets in Angola, which could be transferred abroad in terms of the foreign exchange legislation.
5) incorporation of technologies
Investments less than $250,000 are not considered foreign investment operations, but are subject to foreign exchange and commercial legislation.
Foreign exchange operations are subject to the supervision of the Angolan National Bank. After-tax profits and dividends may be remitted abroad, except in the case where they are so large that they may aggravate balance of payments difficulties, when the Minister of Economy and Finance may regulate them.
Legal forms
Branch
Branches have no legal entity. Obligations entered into by branch therefore apply to the foreign company, and there is unlimited liability on the parent company.
All mandatory regulations (e.g. labour and tax laws) apply to branch activities, and foreign investment regulations are valid.
Subsidiary
A subsidiary has its own legal entity, independently of the shareholder(s). It may take any of the normal forms for business in Angola.
Limited liability partnership (Sociedade por quotas - Lda)
These forms offer the owners limited liability. They have to be formed by notarial deed, and subsequently registered in the Commercial Registry. They are subject to a minimum capital requirement of Kwanza 50,000, although this number is not used for foreign investors. Instead, and approximate amount of $3,000 is used.
Share companies (Sociedades Anonimas - SARL)
The information I have about share companies is that they are similar to Limited liability partnerships.
Procedures for investment
For investments between $250,000 and $5,000,000
To establish a new company, the first stage is to get documentary confirmation from a competent agent that the proposed name for the company is original.
The investment proposal is then submitted by filling out the relevant form available at the Foreign Investment Office. It must be accompanied, all in duplicate, by the following documents:
the confirmation of the names originality,
a certified copy of the legal documents stating the usual residence of the proposer (for people), or the documents registering the incorporation of the proposer (for companies and legal entities),
draft incorporation papers,
draft contract of association.
If the investment is by purchasing part of an existing enterprise, then the investor should instead include a certified copy of incorporation papers and commercial registration for the company to be purchased.
If the investment involves new capital transfers into an existing company, then a certified copy of the proposed transfer should be included, authorised by the party sending the funds.
Where national investors also participate, the proposer of the investment should also include certified copies of the legal documents stating the identity and usual residence of the national partner (for people), or the documents registering the incorporation of the partner (for companies and legal entities).
Proposals must then be submitted to the Foreign Investment Office, which immediately issues a signed and dated receipt, or a notification that the proposal is insufficient or deficient. This notification should arrive within five days, and must state in writing the grounds for the rejection.
If the proposal is not rejected then the Foreign Investment Office issues within 60 days a declaration of acceptance. The proposer may then progress with the proposal.
For investments between $5,000,000 and $50,000,000
All the procedures for investments below $5,000,000 must be followed, plus a study of the investments technical, economic, and financial feasibility. All documents must be sent in triplicate. Rejection or approval time is 120 days.
For investments above $50,000,000 or affecting areas reserved by the government, or of special interest to the national economy
All the procedures for investments below $50,000,000 must be followed. The Foreign Investment Office responds within 30 days with its evaluation, and then forwards the proposal to appropriate authorities who will rejection it, or initiate negotiations between the investor and a committee representing the State.
Labour considerations
All foreign workers must obtain visas, and if they are employed by a local company they should also obtain work permits. Work permits are allocated with consideration of the type and remuneration of the work, and the availability of workers and accommodation. Foreign employees are treated as Angolan nationals in calculating income tax, and in particular are subject to social security payments. This contribution may be waived if they can show that they are covered by an overseas scheme.
Taxes
Companies are liable to Industrial Tax (Income Tax) on all profits derived from Angolan activities. This includes the permanent Angolan establishments of foreign companies and those companies providing a service in the country for more than 90 days in the year, if made in the presence of hired personnel. The basic rate is 40%, up to Kwanza Reajustados 400M, then 50% on income in excess of this. There is a special regimes for contracting, subcontracting, and rendering of services, which operates on a contract-by-contract basis, but it does not apply to companies with a permanent establishment in the country. Companies may carry forward losses for 3 years. They may not carry back.
Dividends are subject to a capital income tax of 10%. Companies generally pay tax on the gross amount of dividends received, although it is exempt if the company paying the dividend is subject to Industrial Tax, and the recipient has held at least 25% of the companys shares for two years or since the recipients incorporation.
Personal income tax varies progressively from 0% to 15%. There is an additional 2% charge for employees, and 5% for employers, as a social security contribution.
Customs duties and Consumption Tax are levied on imports. The latter is payable at rates from 5% to 50%. Imports to oil companies are usually exempt from both, although Training Levy is payable by companies collaborating on a permanent basis with oil companies operating in Angola. It is calculated as a percentage of gross income.
Investment incentives
The Minister of Finance may grant exemption or reduction of tax liability to companies. This is done on a case-by-case basis for companies investing in fundamental areas of the economy. New enterprises may also qualify for a tax exemption for 3 to 5 years, or for Capital Income Tax to be waived.
The Foreign Investment Law permits exemptions from customs duties, again subject to Ministerial approval.
Contact addresses
I could not find information on this subject.
Benin
Background
1998 Population (M): 6
1998 GNP (USD B): 2.3
1997/98 % annual GNP growth rate: 4.5
1998 GNP per capita (USD): 380
1990-98 % annual growth of GDP: 4.6
1990-98 % inflation: 10.1
1998 Labour force (M): 3
1998 Female % of labour force: 48
1997 Adult illiteracy rate as % of people 15 and above (male): 52
1994 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 6
1990-98 % annual growth of gross domestic investment: 4.6
1997 Private investment as % of gross domestic fixed investment: 59.5
1998 Merchandise exports (USD M): 195
1997 Foreign direct investment (USD M): 3
1997 Present value of external debt as % of GDP: 46
1998 Value added as % of GDP Agriculture: 39
1998 Value added as % of GDP Industry: 14
1998 Value added as % of GDP Services: 47
Benin has a large agricultural sector, with 70% of the population living in rural areas, many in subsistence production. The countrys income per person is low, despite steady growth of GDP over the last decade: 4.4% per year in 1990-4, then 5% per year since 1995. The expansion was associated with market liberalisation during the period, with World Bank and other foreign institutions encouraging the process, and providing financial support. Production of cotton in particular has increased, and it has become the main cash crop accounting for almost half of exports in 1999. A cotton fibre production industry has expanded along with the crop. The country still has to import significant amounts of food, however.
The services sector also accounts for a large proportion of GDP, with goods passing through to the landlocked Niger to the North, and to a lesser extent, the sizable market of Nigeria. As within agriculture, liberalising measures have been taken, and the World Bank is pressing for further opening of the economy, and anti-corruption measures. In view of the administration associated with large amounts of transit goods, this may encourage much more trade, if the domestic, Nigerien, and Nigerian demand exists for the increased supply. As may be expected, transport is a large subsector, at 6% of GDP, with road and rail both able to take goods from the main port of Cotonou to the north of the country and on to Niger. The connections to the East and West are more limited, which has hindered trade with Togo in particular, although the road network is being improved. There are 300,000 square metres of storage facilities at Cotonou, and other warehouse facilities. Competition has been introduced into the port management, and there are an abundance of funds for further development, arising from short and medium term deposits made by traders.
It is industry that remains the smallest sector, at 14% of GDP in 1998, and manufacturing was just 8%, the same as in 1980, with capital goods accounting for 32% of all imports. Chemicals, cement, fabric, palm oil, beers, carbonated drinks, and cigarettes are all produced in small volumes. Recent extensive privatisation of parastatals may help development, as may quite high primary school enrolment, to reduce the 61% illiteracy rate among adults older than 15. Energy shortages formed a restraint on industry in the first half of 1998. Domestic petroleum extraction has been falling sharply due to wells drying up, and Benin has to import a large amount of its fuel, and Benin is attempting to address its difficulties by investments in its own generation facilities. At the moment, hydropower is the principal source of electricity, although much of the population relies on wood based energy.
Benin is a member of the West African Economic and Monetary Union, and uses the CFA Franc. The Francs devaluation in 1994 preceded a jump in inflation, but since then inflation has been controlled, along with other macroeconomic indicators like fiscal deficit, and public sector debt owed to non-Beninese.
Regulations governing foreign investment
Foreign investors are entitled to the same treatment as national investors.
There are no restrictions on capital transfer.
There is commercial and management freedom.
Investors are protected against expropriation or nationalisation of their property. It may not be taken away unless it is in the public interest, and fair compensation is paid.
Legal forms
Société à Responsabilité Limitée (SARL)
The SARL form has the following characteristics:
- the capital is divided into shares,
- limited liability for members up to their specified share,
- members may be people or legal forms,
- there may be just one member (or more),
- there may be just one manager,
- capital must be at least 1 million CFA Francs, and
- the nominal values of each share must be equal, and at least 5,000 CFA Francs.
Société Anonyme (SA)
The characteristics of a Société Anonyme are:
- its capital is divided into equity shares,
- limited liability for members up to their equity holding,
- there may be just one member, or more,
- capital is at least 10 million CFA Francs,
- the nominal value of each equity share must be at least 10,000 CFA Francs,
- the capital must be fully subscribed before the statutes are signed, or a constituting general assembly is held.
Société en Nom Collectif (SNC)
All the members of this form must be retailers, who have joint and several liability. The capital must be divided into parts each of the same nominal value (I am not sure whether this implies that profits and ownership must be shared equally between members). There may be just one manager, or more.
Société en Commandite Simple (SCS)
In an SCS there are two types of members. The first, called associes commandites, are jointly and severally liable for the common debts of the company, while the second type, called "associes commanditaires" or "associes en commandite" are liable only for their specified share. There must be at least one of each type of member.
Groupement d’Interêt Economique (GIE)
A Groupement exists to facilitate or develop the economic activity of its members over a determined period. It may have no capital, and does not specify the means of sharing benefits.
Procedures for investment
To set up a company
The first stage is to prepare the Statutes by private signature or notarial act. The expected address of the companys office should be included, and the members and shareholders of the company must sign them.
The Statutes should then be taken to the Centre of Enterprise Formalities (CFE) at Cotonou, which is part of the Benin Chamber of Commerce and Industry. This is a one-stop-shop, and all further formalities may be completed there. It is estimated to take about eight days to form a company.
Labour considerations
All employers and employees must be registered at the Social Security by completing the relevant forms when employees are hired.
Expatriates and their families may enter, leave, and move about in Benin as they wish.
Taxes
Tax on industrial and commercial profits is 38%. Single Professional Tax is similar to this, but is levied on companies with turnover below a fixed threshold. One source reports its value at 26%, another at 13%.
Businesses must pay various taxes in respect of their employees. The rate varies from 2% to 6%. There are also Social Security contributions varying from 16.4% to 19.4%.
Dividend income is taxed at 18%.
Value Added Tax is 18%.
There are no customs duties between the states of the West African Economic and Monetary Union: Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo. The countries share common taxes on imports from outside the Union, forming a set of customs charges. These are:
- customs duties,
- the statistical charge,
- the community levy (PCS),
- the conditional import tax (TCI), and
- the reducing protection tax (TDP).
The last two are temporary taxes which are intended to be reduced or removed over time.
Customs duties vary by the type of good:
- medicines, condoms, health education materials, books, and magazines are exempt from duty,
- raw materials, equipment goods, and specific production inputs are subject to a 5% charge on import cost (I am not sure whether this is a Free on Board value, or another classification),
- intermediate inputs and products are subject to duty at 10%, and
- consumer goods and all other products pay 20%.
Statistical charge is 1% on import cost.
Community Levy is 0.5%.
TCI is designed to slow the effect of international price fluctuations on West African Economic and Monetary Union production of important goods like rice and sugar. As a result, it depends on market conditions, and is set at a Union level.
TDP is levied on industries that the Union wants to protect, for example, cigarette production. It is levied at two rates, depending on the industry, 10% or 20%. In the first case, the protection reduces by 2.5% per year, while in the second it falls at 5% per year.
The Union may decide on other measures for protection.
There is a double taxation agreement with France.
Investment incentives
There are four incentive regimes in the Investment Code, depending on the size of the company:
- the Special Regime, for very small enterprises and those working in health, education, or public works,
- Regime A, for small and medium sized enterprises,
- Regime B, for large businesses, and
- Regime C, or "fiscal stabilisation", for very large companies.
The Special Regime, for very small enterprises and those working in health, education, or public works
To qualify for the Special Regime, the enterprise must either be working in the health, education, or public works sectors with investment of at least 20 million CFA Francs, or otherwise invest between 5 million and 20 million CFA Francs.
It must also meet the following conditions:
- it must be registered in the Register of Commerce,
- it must meet national accounting standards, and
- it must provide the following information:
-- a description of the manufacturing or transformation process used,
-- a list of materials and equipment required to set up the business,
-- the nature, amount, and origin of the raw materials required, and
-- the number of permanent jobs created.
While the company is being set up, it is entitled to a 75% reduction in the purchase taxes on materials, tools, and machines required for production. There is also a 75% reduction on taxes on spare parts required for imported equipment, subject to the value of the parts being less than 15% of the Cost, Insurance, and Freight value of the equipment. The statistical tax and the transport tax ("taxe de viorie") are not included in the exemption.
Further tax exemptions may be granted during the period of operation.
Regime A, for small and medium sized enterprises
Regime A has the following entry conditions:
- the enterprise must be registered in the Register of Commerce, or conform to the regulation governing the setting up of cooperatives, as relevant,
- it must meet national accounting standards,
- it must have an investment program of between 20 million CFA Francs and 500 million CFA Francs, and
- at least five permanent Beninese jobs must be created.
While the company is being set up, the benefits are:
- A 75% reduction in the purchase taxes on materials, tools, and machines required for production, as stated in the investment programme. The statistical tax is not included in the exemption.
- A 75% reduction in the taxes on spare parts required for imported equipment, subject to the value of the parts being less than 15% of the Cost, Insurance, and Freight value of the equipment. The statistical tax is not included in the exemption.
While the company is operating, the incentives are:
- exemption from tax on industrial and commercial profits, and
- exemption from sales taxes on goods manufactured, prepared, or exported by the enterprise.
The durations of the exemptions are:
- five years in Cotonou and a 25 km area around it,
- seven years in the urban areas of Porto Novo, Parakou, Abomey, and Bohicon, and
- nine years elsewhere.
Regime B, for large businesses
The following requirements are made for Regime B:
- the enterprise must be registered in the Register of Commerce,
- it must meet national accounting standards,
- it must have an investment program of between 500 million CFA Francs and 3,000 million CFA Francs, and
- at least twenty permanent Beninese jobs must be created.
At present, the benefits and their duration are identical to those under Regime A. The agreed programme for exemptions may differ.
Regime C, or "fiscal stabilisation", for very large companies
To qualify for Regime C, the conditions are:
- the enterprise must be registered in the Register of Commerce,
- it must meet national accounting standards,
- it must have an investment program of at least 3,000 million CFA Francs, and
- at least twenty permanent Beninese jobs must be created.
All the advantages of regime B are granted. An additional incentive is flexibility in the method of calculation of the tax on industrial and commercial profits - I do not know how this would affect the exemption.
Contact addresses
Chambre de Commerce et d’Industrie du Bénin (CCIB)
Avenue du Général de Gaulle
BP 31 Cotonou
Tel: (229) 31.20.81 or (229) 31.22.93 or (229) 31.32.99
Fax: (229) 31.32.99
Chambre d’agriculture du Bénin
(Benin Chamber of Agriculture)
BP 04-0759 Cotonou
Tel: (229) 31.45.66
Centre Béninois du Commerce Extérieur
(Beninese Centre of Foreign Trade)
BP 1254 Place du Souvenir
Cotonou
Tel: (229) 30.13.20 or (229) 30.13.97
Fax: (229) 30.04.36
Direction des Douanes et Droits Indirects (DDDI)
(Department of Customs and Indirect Taxes)
BP 400 Cotonou
Tel: (229) 31.50.54 or (229) 31.50.55 or (229) 31.56.54
Cellule des Opérations de Dénationalisation
(Office of Denationalisation Operations - it gives information on privatisation offers.)
BP 140 Cotonou
Tel. (229) 31.59.18
Fax (229) 31.23.15
Website: http://planben.intnet.bj
Port Autonome de Cotonou (PAC)
(Autonomous Port of Cotonou)
BP 927 Cotonou
Tel.(229) 31.52.80 or (229) 31.28.90
Fax (229) 31.28.91
Centre de Perfectionnement et d’Assistance en Gestion
(Centre of Management Training and Assistance)
BP 1468 Cotonou
Tel: (229) 31.42.80
Fonds de Solidarité Nationale pour l’Emploi (FSNE)
(National Solidarity Funds for Employment - it helps with employment creation.)
Tel: (229) 31.31.12 or (229) 31.26.18
Organisation Nationale des Employeurs du Bénin (ONEB)
BP 41 Cotonou
Tel: (229) 33.13.00 or (229) 33.16.61
Fax: (229) 31.59.50
Projet d’Assistance aux Entreprises (PAE)
(Assistance Project to Enterprises - it assists newly established enterprises.)
BP 8140 Cotonou
Tel: (229) 31.33.58
Projet d’Appui aux PME (PAPME)
(Support Project for Small and Medium Sized Enterprises)
BP 08-1155 Cotonou
Tel: (229) 30.28.08
Fax: (229) 30.28.09
Centre de Promotion pour l’Emploi, la Petite et moyenne Entreprise (CEPEPE)
(Centre of Promotion for Employment and Small and Medium Sized Companies)
BP 2093 Cotonou
Tel: (229) 31.44.47 or (229) 31.22.61
Fax: (229) 31.59.50
Projet d’appui au Développement de Micro-Entreprises (PADME)
(Support Project for Development of Micro-Enterprises)
BP 08-07112 Cotonou
Tel: (229) 31.05.45
Fax (229) 31.06.85
Botswana
Background
1998 Population (M): 2
1998 GNP (USD B): 5.6
1997/98 % annual GNP growth rate: 5.5
1998 GNP per capita (USD): 3,600
1990-98 % annual growth of GDP: 4.8
1990-98 % inflation: 10.3
1998 Labour force (M): 1
1998 Female % of labour force: 46
1997 Adult illiteracy rate as % of people 15 and above (male): 28
1994 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 56
1990-98 % annual growth of gross domestic investment: 2.0
1997 Private investment as % of gross domestic fixed investment: 44.6
1998 Merchandise exports (USD M): 2,261
1997 Foreign direct investment (USD M): 100
1997 Present value of external debt as % of GDP: 9
1998 Value added as % of GDP Agriculture: 4
1998 Value added as % of GDP Industry: 46
1998 Value added as % of GDP Services: 51
Botswana is a lower middle income country whose economy has grown at 7.3% per year over the period 1970-1995. Its economic success is due in part to good fortune, as it has considerable mineral wealth, in the form of diamonds, copper, and nickel. It is the worlds largest producer of the precious stone, which accounts for the majority of its exports. Botswanas environmental circumstances do not seem favourable, with most of the country desert or prone to drought, and large-scale food imports necessary despite a quarter of the population working in agriculture. The economy in general and the mining sector in particular was undeveloped when the colonial period ended in 1966. But mineral discoveries have allowed rapid growth, together with an independent economic and foreign policy which has kept the country free of war, and with a limited debt burden.
The mining sector has grown so large that other sectors, notably manufacturing industry, are small by comparison. Their proportions of GDP in 1998 were 35% and 4.8%, respectively. This has lead to calls for increased diversification in the economy, and recent years have seen a growth in finance and other services, supported by a rising level of literacy. Illiteracy remains to a moderate degree, however, and the high level of HIV may well damage education efforts. Primary school enrolment is nearly universal.
Manufacturing growth is constrained by the limited size of the domestic market, and the ready availability of South African exports. Capital goods are among the largest classes of imports. Attempting to promote expansion whilst avoiding protectionist measures may be one of the major challenges to the economy. An example of the importance of sales to Botswanas large neighbour is in tourism, where South Africans form the largest proportion of visitors in an increasingly important sector.
The infrastructure is quite well developed and may support further business development, with a moderate density of telephone lines, and both a railway and road network. Botswana imports the majority of its electricity, with a large amount being used in mineral extraction.
Regulations governing foreign investment
I could not find information on this subject.
Legal forms
I could not find information on this subject.
Procedures for investment
I could not find information on this subject.
Labour considerations
Expatriate workers may be employed when skills are not available locally. In granting expatriate work permits, consideration is given to whether locals will be trained to replace the non-Botswana citizen.
The length of the period of work is specified. For five day working week, the length of the day is limited at 9 hours, with at least one hour of rest during that time. The maximum overtime is 14 hours a week, charged at 1.5 times the basic rate for normal days of work, or 2 times for rest days and public holidays.
Employees are entitled to 15 working days of paid leave every year. There are also entitlements to sick leave and maternity leave.
Statutory minimum hourly rates of pay are:
- night-watchmen, Pula 1.50,
- employees (including casual and part time workers) in wholesale trade, Pula 1.65
- employees (including casual and part time workers) in retail trade, Pula 1.55, and
- employees (including casual and part time workers) in other industries, Pula 1.75.
An employer or employee may terminate the contract of employment by giving notice. The minimum notice period is the same as the period over which wages are paid. Alternatively, immediate notice may be given if the wages are paid straight away which would be paid over the notice period. An additional severance payment is due to employees who have worked continuously for at least 60 months.
Workers Compensation Insurance is mandatory.
Taxes
Company tax is payable at 25%. Allowances may be made for expenditures on capital, plant and machinery, buildings, and training.
Dividends are liable to a 15% withholding tax. Interest is also subject to a 15% charge on payments to non-residents, but is subject to income tax for residents. Other charges like royalties are generally subject to a 15% charge when made to non-residents.
For construction contracts worth more than 5,000 Botswana Pula, there is a 25% withholding tax on payments to non-residents.
Personal income tax for residents varies progressively between 0% and 25%. For non-residents, the rate is between 0% and 30%.
Capital Gains Tax is progressive from 0% to 30%. Capital gains on shares listed on the Botswana Stock Exchange are exempt, as are those on one principal private property.
There are common customs tariffs in force within the Common Custom Area comprising of Botswana, South Africa, Namibia, Lesotho, and Swaziland. These include Ad Valorem Customs Duty, Excise Duty, and Surcharges.
Sales tax is 10% on most consumer goods. Different rates apply to alcoholic drinks.
Double taxation agreements exist with South Africa, the United Kingdom, and Sweden.
Investment incentives
The Financial Assistance Policy
The Financial Assistance Policy helps enterprises which produce or process goods for import substitution or export. It covers activities including:
- manufacturing,
- tourism,
- agriculture, except cattle rearing,
- small and medium sized mining, and
- activities providing a marketing, collection, or repair facility for the other activities.
Large-scale mining, cattle rearing, and brewing and distilling are not eligible.
Projects with fixed capital investment of less than Pula 75,000 may qualify for grants. Only Botswana citizens are eligible, and the amount is determined by considering the location of the project, whether it is owned by women, and how many jobs will be created.
Projects with amounts of fixed capital investment above Pula 75,000 could receive a range of grants. For capital between Pula 75,000 and Pula 2 million, the scheme is administered by the Department of Industrial Affairs in the Ministry of Commerce and Industry. When the capital is above Pula 2 million, the responsibility is with the Ministry of Finance and Development Planning.
These tax-free, non-refundable grants to larger companies are awarded to expanding and new businesses with a minimum economic rate of return of 6%. Preference is given to those projects that create employment. There are three types of grant:
- the Capital Grant,
- the Unskilled Labour Grant, and
- the Training Grant.
Capital Grant
The Capital Grant provides funds for the purchase of fixed assets, depending on the number of jobs created. Pula 1,000 is awarded per job created in projects which are at least partially foreign owned, and Pula 1,500 per job for projects owned entirely by Botswana citizens.
Unskilled Labour Grant
This grant reimburses the wages of Botswana citizens earning close to the statutory minimum. 80% of the wages are reimbursed in the first two years, 60% in year 3, 40% in year 4, and 20% in year 5. The reimbursements are made at 3 monthly intervals.
Training Grant
The Training Grant meets 50% of the off-the-job training costs for Botswana citizens for the first five years of the project. Tuition, board and lodging, travel, materials, and wages are included.
Contact addresses
Department of Customs and Excise
Private Bag 0041
Gabarone
Tel: (+267) 312455
Fax: (+267) 312455
Botswana Development Corporation
Private Bag 160
Gaborone
Botswana
Tel: (267) 35 1811/7
Fax: (267) 37 3539
Ministry of Commerce and Industry
P/Bag 004
Gaborone
Tel. 267-3601200
Telex. 267-2674
Fax. 267-3715349
Ministry of Finance and Development Planning
P/Bag 008
Gaborone
Tel. 267-350100
Ministry of Labour and Home Affairs
P/Bag 002
Gaborone
Tel. 267-3601000
Telex. 267-2994 BD
Fax. 267-313584
Burkina Faso
Background
1998 Population (M): 11
1998 GNP (USD B): 2.6
1997/98 % annual GNP growth rate: 6.3
1998 GNP per capita (USD): 240
1990-98 % annual growth of GDP: 3.5
1990-98 % inflation: 6.6
1998 Labour force (M): 5
1998 Female % of labour force: 47
1997 Adult illiteracy rate as % of people 15 and above (male): 70
1994 % share of income or consumption (highest 10% of population / lowest 10%): 18.0
1997 Telephone main lines per 1000 people: 3
1990-98 % annual growth of gross domestic investment: 4.1
1997 Private investment as % of gross domestic fixed investment: 52.4
1998 Merchandise exports (USD M): 327
1997 Foreign direct investment (USD M): 0
1997 Present value of external debt as % of GDP: 30
1998 Value added as % of GDP Agriculture: 32
1998 Value added as % of GDP Industry: 28
1998 Value added as % of GDP Services: 40
The environment is perhaps the most important influence at present on the Burkinabe economy. Located in the Sahel, it has low levels of rainfall, and undergoes strong fluctuations in its weather. These make its export earnings volatile from cash crops which include cotton, green beans, and groundnuts. The inhospitable climate makes livestock rearing comparatively attractive, and meat accounts for 17% of export earnings in 1999, second to cotton at 53%.
Burkina Faso has been through a period of economic structural adjustment since 1991, including trade liberalisation, very widespread privatisation of State owned shareholdings, and fiscal and budgetary reform. It has seen its GDP grow at a rate of 3.5% over the years 1990 - 1998. The IMF and World Bank have supported the scheme, and foreign funds finance much Government expenditure.
A number of multinational companies have invested in the industrial sector, notably Holderbank of Switzerland (cement and other building materials), Interstart of Canada (manganese mining), and Boliden of Sweden (zinc mining). There is scope for further development, perhaps on an import substitution basis, as there has been a persistent current account deficit, and manufactures and capital goods accounted for half of all imports in 1999. Manufacturing production is concentrated among a few companies, with ten companies accounting for 80% of total subsector turnover. It is also concentrated geographically around the railway from the capital Ouagadougou to Abidjan, the largest city of the Ivory Coast, providing an important access route to the sea. The road network is an increasingly viable alternative to the railway, as investments have been made recently in its infrastructure and management.
A restraint to development is the low level of human capital. There is an 80% adult illiteracy rate, and this seems likely to persist for some time in view of the 40% primary school enrolment. There is reportedly a shortage of workforce and managerial skills.
Unlike its neighbours to the North and South, Burkina Faso is not an oil producer, and its chief domestic energy source is wood. Deforestation is a national problem, worsening the quality of the soil available for agriculture. The Government is attempting to promote gas usage and electricity production in its place, which may also provide a basis for extending modernisation into other sectors. Links have been set up for electricity exchange with the surrounding countries.
The political situation has been stable for the last decade, during which time the country has undergone a transition to democracy.
Regulations governing foreign investment
Foreign investors may use their assets and organise their enterprise as they wish. Commercial freedom is guaranteed by law.
There are no restrictions on hiring, employment conditions, or redundancies.
There is free choice of suppliers and services.
There is free access to raw materials (presumably, this means there are no Government restrictions on purchases by non-nationals). They may be moved freely within Burkina Faso, along with expendable materials, finished and semi-finished products, and spare parts.
Legal forms
The major forms in Burkina Faso are:
- Société à Responsabilite Limitee (SARL),
- Société Anonyme (SA),
- Société en Nom Collectif (SNC),
- Société en Commandite Simple (SCS),
- Groupement d’Interêt Economique (GIE), and
- individuals.
Some sources differ in the characteristics they report for these forms. For the Sociétés and the Groupement, I use the forms as they apply to member states of the Organisation for Business Law Harmonisation in Africa (OHADA). It is reported that the individual form is no longer valid under OHADA regulations, although it may persist in businesses established before the OHADA treaties are ratified. Under this form, the individual has unlimited liability, and is subject to income tax on profits at a rate which varies according to the type of business, and the size of turnover.
Société à Responsabilite Limitee (SARL)
The SARL form has the following characteristics:
- the capital is divided into shares,
- limited liability for members up to their specified share,
- members may be people or legal forms,
- there may be just one member (or more),
- there may be just one manager,
- capital must be at least 1 million CFA Francs, and
- the nominal values of each share must be equal, and at least 5,000 CFA Francs.
Société Anonyme (SA)
The characteristics of a Société Anonyme are:
- its capital is divided into equity shares,
- limited liability for members up to their equity holding,
- there may be just one member, or more,
- capital is at least 10 million CFA Francs,
- the nominal value of each equity share must be at least 10,000 CFA Francs,
- the capital must be fully subscribed before the statutes are signed, or a constituting general assembly is held.
Société en Nom Collectif (SNC)
All the members of this form must be retailers, who have joint and several liability. The capital must be divided into parts each of the same nominal value (I am not sure whether this implies that profits and ownership must be shared equally between members). There may be just one manager, or more.
Société en Commandite Simple (SCS)
In an SCS there are two types of members. The first, called associes commandites, are jointly and severally liable for the common debts of the company, while the second type, called "associes commanditaires" or "associes en commandite" are liable only for their specified share. There must be at least one of each type of member.
Groupement d’Interêt Economique (GIE)
A Groupement exists to facilitate or develop the economic activity of its members over a determined period. It may have no capital, and does not specify the means of sharing benefits.
Procedures for investment
Setting up a company
The sequence to follow in setting up a company is:
- organising a constitutive assembly,
- transferring the necessary capital,
- employing a notary to prepare a declaration of the capital subscribed, and the financial condition of the members,
- preparation of the Statutes of the company by a solicitor,
- obtaining approval for the Statutes from the Department of Internal Trade and Competition,
- registering the Statutes and the minutes of the constitutive assembly at the Department of Company Property,
- registration at the fiscal division of the Department of Taxation,
- registration in the Register of Commerce at the Office of the Clerk of the Primary Court,
- inclusion in the journal of legal announcements,
- registering in the register of companies at the Department of Company Property,
- confirmation of the nature of the business at the Chamber of Commerce, Industry, and Crafts,
- getting a retailers card from the Department of Internal Trade and Competition,
- declaration at the Department of Work and Social Law,
- declaration at the ONPE (I do not know what this is), and
- registration of the employer and employees at the Department of National Social Security Fund Collection.
Documents and fees must be provided at some of these stages. These are detailed below.
Obtaining approval for the Statutes from the Department of Internal Trade and Competition
Together with the draft Statutes, the request must be stamped to the value of 200 CFA Francs.
Registering the Statutes and the minutes of the constitutive assembly at the Department of Company Property
This stage should be performed within a month of forming the company. At least five copies should be provided of the Statutes and the minutes of the constitutive assembly. There are several fees:
- 3% of all the start-up capital apart from property,
- 6% of the value of all property,
- a 4,000 CFA Francs fixed charge, and
- 400 CFA Francs per page of document deposited.
Registration at the fiscal division of the Department of Taxation
There is a form to complete.
Registration in the Register of Commerce at the Office of the Clerk of the Primary Court
There is a form to complete, and the following documents must be brought too:
- a copy of the Statutes registered at the Department of Company Property,
- a copy of the registered minutes of the constitutive assembly, and
- a declaration of company existence.
A fee of 30,000 CFA Francs is charged.
Inclusion in the journal of legal announcements
A charge of 40,000 CFA Francs is levied.
Registering in the register of companies at the Department of Company Property
The enterprise should be recorded within forty-five days of the constitutive assembly. The documents required are:
- a copy of the registered Statutes,
- a copy of the registered minutes of the constitutive assembly,
- a declaration of company existence, and
- a copy of the journal (of legal announcements, I think).
Companies with capital above 3,200,000 CFA Francs must make a down payment on income tax on dividends.
Confirmation of the nature of the business at the Chamber of Commerce, Industry, and Crafts
The investor must bring a copy of the receipt from registration in the Register of Commerce. There is a fee of 200 CFA Francs.
Getting a retailers card from the Department of Internal Trade and Competition
A form must be completed. Other requirements are:
- a photocopy of the financial statements,
- two fiscal stamps of 200 CFA Francs,
- a copy of the Statutes, and
- a form for a professional card (perhaps this is available from the Department).
The charge is 900 CFA Francs - I am not sure whether this includes the cost of stamps.
Declaration at the Department of Work and Social Law
Some forms must be completed, and there is a fee of 500 CFA Francs.
Declaration at the ONPE
There are some forms to complete, and a copy of the declaration at the Department of Work and Social Law must be provided.
Registration of the employer and employees at the Department of National Social Security Fund Collection
This step must be taken within eight days of hiring the first employee. A number of forms must be completed. Other documents required are:
- a copy of the declaration at the Department of Work and Social Law,
- a copy of the declaration at ONPE,
- birth certificates for the personnel, and
- the Register of Commerce number.
The Burkina Faso Chamber of Commerce, Industry, and Crafts estimates the total time required for all of the stages to be no more than 3-4 weeks.
Labour considerations
There is a minimum salary which varies by type of employment. It applies to all industries not otherwise regulated by collective agreements, or given special dispensation.
Overtime rates for work beyond forty hours per week are set by legislation. They are stated as percentage increases above the standard rate, excluding relocation expenses. In detail, they are:
- 15% increase for hours between the 41st and 48th hour on weekdays and Saturdays,
- 35% increase for hours beyond the 48th hour from Monday to Saturday,
- 50% increase for time worked during the night from Monday to Saturday,
- 60% increase for time worked on Sundays and public holidays, and
- 120% increase for time worked on nights of Sundays and public holidays.
The rates apply even when the employment contract specifies the job in terms of specific tasks rather than hours worked. As with the minimum salary, certain industries may be exempted from the overtime rates.
There are sixteen public holidays every year.
Domestic employees are subject to separate regulations.
Taxes
Companies are subject to tax on industrial and commercial profits. The rate varies from 10% to 40%.
Dividends and other income from shares are subject to 6% charge on gross income, deducted at source.
Companies are subject to apprenticeship tax on their gross salary bill. The rate is 4% on salaries paid to nationals, and 8% on those paid to foreign workers.
Personal income tax is progressive from 2% to 30%.
Value Added Tax is 18%.
There are various registration fees which are detailed above.
There are no customs duties between the states of the West African Economic and Monetary Union: Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo. The countries share common taxes on imports from outside the Union, forming a set of customs charges. These are:
- customs duties,
- the statistical charge,
- the community levy (PCS),
- the conditional import tax (TCI), and
- the reducing protection tax (TDP).
The last two are temporary taxes which are intended to be reduced or removed over time.
Customs duties vary by the type of good:
- medicines, condoms, health education materials, books, and magazines are exempt from duty,
- raw materials, equipment goods, and specific production inputs are subject to a 5% charge on import cost (I am not sure whether this is a Free on Board value, or another classification),
- intermediate inputs and products are subject to duty at 10%, and
- consumer goods and all other products pay 20%.
Statistical charge is 1% on import cost.
Community Levy is 0.5%.
TCI is designed to slow the effect of international price fluctuations on West African Economic and Monetary Union production of important goods like rice and sugar. As a result, it depends on market conditions, and is set at a Union level.
TDP is levied on industries that the Union wants to protect, for example, cigarette production. It is levied at two rates, depending on the industry, 10% or 20%. In the first case, the protection reduces by 2.5% per year, while in the second it falls at 5% per year.
The Union may decide on other measures for protection.
There is a double taxation agreement with France.
Investment incentives
The Investment Code defines six incentive regimes, as well as benefits for using local raw materials and investing outside of urban areas. The regimes are:
- regime A, for small investments in enterprises producing, transforming, or storing goods,
- regime B, for medium sized investments in enterprises producing, transforming, or storing goods,
- regime C, for large investments in enterprises producing, transforming, or storing goods,
- regime D, for medium sized investments in enterprises providing services,
- regime E, for large investments in enterprises providing services, and
- the regime for exporting enterprises.
All applications for the regimes must be made at the Ministry of Industry. A National Committee of Investments is responsible for assessing it.
If the application is successful, an approval decree will be sent with the following details:
- the type of regime and the incentives granted,
- the particular conditions relevant to the project,
- the list of the business activities for which the incentives are awarded,
- the list of the requirements on the enterprise, and
- the sanctions which would occur if the company defaults on its obligations.
The successful applicant must use the best possible factors of production. It must also use goods produced by local companies when these are available at the same price and quantity as imports. It should provide information to the authorities when requested, and conform to environmental, security, accounting, and other laws and standards.
The delay between granting incentives and setting up the business must be no more than three years. Beyond this, the incentives are lost, although a one year further extension may be given to an entrepreneur who shows that the project has been started by the end of the three years.
Regime A, for small investments in enterprises producing, transforming, or storing goods
This incentive scheme applies to businesses which invest less than 20 million CFA Francs, and create at least three permanent jobs.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes,
- exemption from taxes on equipment purchases, including the first lot of spare parts, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from the tax on industrial and commercial profits for five years,
- exemption from the minimum tax payable of industrial and commercial professions for five years,
- exemption from business rates for two years, and
- 50% reduction of business rates during the three years after the exemption ends.
The exemptions do not include taxes on services rendered, fuel, office equipment and air conditioning equipment, and hardware.
Regime B, for medium sized investments in enterprises producing, transforming, or storing goods
To qualify for regime B, an enterprise must invest at least 20 million CFA Francs, and create at least seven permanent jobs.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes,
- exemption from taxes on equipment purchases, including the first lot of spare parts, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from the tax on industrial and commercial profits for five years,
- exemption from the minimum tax payable of industrial and commercial professions for five years,
- exemption from income tax on dividends for five years,
- exemption from Employers' and Apprenticeship Tax for five years,
- exemption from tax on Mainmorte Goods for five years (this is tax on property revenues from groups of persons which are defined independently of the particular people who make it up), and
- 50% reduction of all the mentioned taxes for a further three years after the exemption ends.
The exemptions do not include taxes on services rendered, fuel, office equipment and air conditioning equipment, and hardware.
Regime C, for large investments in enterprises producing, transforming, or storing goods
To qualify for regime C, the investment must be above 500 CFA Francs, and at least fifty permanent jobs must be created.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes,
- exemption from taxes on equipment purchases, including the first lot of spare parts, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from the tax on industrial and commercial profits for six years,
- exemption from the minimum tax payable of industrial and commercial professions for six years,
- exemption from income tax on dividends for six years,
- exemption from Employers' and Apprenticeship Tax for six years,
- exemption from tax on Mainmorte Goods for six years, and
- 50% reduction of all the mentioned taxes for a further three years after the exemption ends.
The fiscal regime is guaranteed not to change during the period of approval.
The exemptions do not include taxes on services rendered, fuel, office equipment and air conditioning equipment, and hardware.
Regime D, for medium sized investments in enterprises providing services
An enterprise must invest 10 million CFA Francs or more, and create seven or more permanent jobs, to qualify for this regime.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes,
- exemption from taxes on equipment purchases, including the first lot of spare parts, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from the tax on industrial and commercial profits for five years,
- exemption from the minimum tax payable of industrial and commercial professions for five years,
- exemption from income tax on dividends for five years,
- exemption from Employers' and Apprenticeship Tax for five years, and
- exemption from tax on Mainmorte Goods for five years.
The exemptions do not include taxes on services rendered, fuel, office equipment and air conditioning equipment, and hardware.
Regime E, for large investments in enterprises providing services
The requirements for regime E are the investment of at least 500 CFA Francs, and the creation of thirty or more permanent jobs.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes,
- exemption from taxes on equipment purchases, including the first lot of spare parts, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from the tax on industrial and commercial profits for six years,
- exemption from the minimum tax payable of industrial and commercial professions for six years,
- exemption from income tax on dividends for six years,
- exemption from Employers' and Apprenticeship Tax for six years, and
- exemption from tax on Mainmorte Goods for six years.
The exemptions do not include taxes on services rendered, fuel, office equipment and air conditioning equipment, and hardware.
The regime for exporting enterprises
This regime is for new businesses which operate only in export markets.
While the company is being set up, the following incentives apply:
- exemption from customs duties and taxes on equipment, raw materials, and spare parts, except for taxes on services rendered, and
- total exemption from tax on locally produced equipment.
When the enterprise starts operating, the benefits are:
- exemption from all taxes, duties, and charges linked to exporting and production for export that the enterprise is liable for, lasting seven accounting years, and
- 50% reduction from all these taxes, duties, and charges permanently after the first seven years.
Incentives for investing outside of urban areas
New investments at least 50 kilometres from certain urban centres are entitled to an extra two years of benefits from regimes A, B, C, D, or E, if they qualify for these. The urban areas are specified by decree - the Ministry of Industry should be able to list them.
Incentives for using local raw materials
These incentives are awarded to enterprises which are expanding its operations and for which 50% or more of the value or quantity of its raw materials are from Burkina Faso. The benefits are:
- permanent exemption from customs taxes and levies, and
- permanent exemption from taxes on production equipment and spare parts accompanying them.
Contact addresses
La Chambre de Commerce, d'Industrie et d'Artisanat du Burkina
(Burkina Faso Chamber of Commerce, Industry, and Crafts)
180/220, rue 3-119
B.P. 502 Ouagadougou
Tel: (226) 30.61.14 or (226) 30.61.15
Fax: 30.61.16
Telex: 5268 BF
E-mail: ccia-bf@cenatrin.bf
Bobo-Dioulasso Office
BP 148
Tel: 98.20.77
Fax: 98.20.74
Telex: 8234
Ouahigouya Office
BP 334
Tel: 55.07.83
Fax: 55.07.84
Koupèla Office
Tel: 70.02.19
Ministère de l’Industrie du Commerce et des Mines
(Ministry of Industry, Commerce, and Mines)
B.P.514 Ouagadougou
Tel: (226) 36.13.66
Fax: (226) 36.61.16
Bobo-Dioulasso Office
Tel: (226) 97.20.24
Direction Générale de la Promotion Economique
(Department of Economic Promotion - it promotes investment)
B.P. 258 Ouagadougou
Tel: (226) 30.73.07 or (226) 30.73.42
Fax: (226) 31.14.69
Office National du Commerce Extérieur (ONAC)
(National Office of Overseas Trade)
01 B.P. 389 Ouagadougou
Tel: (226) 30.62..23 or (226) 31.13.00
Fax: 31.14.69
Conseil National du Patronat Burkinabé (CNPB)
(National Council of Burkinabe Employers)
B.P. 660 Ouagadougou
Tel: (226) 33.29.24
Fax: (226) 30.25.21
Bureau d’Appui aux Micro-entreprises (BAME)
(Office of Support for Micro-enterprises - it helps to create them)
B.P. 148 Bobo-Dioulasso
Tel: (226) 97.16.28
Fax: (226) 91.01.66
Association Femmes Solidarité (AFS)
(Association of Women's Solidarity - it supports women looking for guarantee funds and advice)
B.P.1749 Ouagadougou
Tel: 30.01.50
Projet d’Appui à la Création de Petites et Moyennes Entreprises (PAPME)
(Project of Support for the Creation of Small and Medium-sized Enterprises)
B.P.1777 Ouagadougou
Tel: (226) 97.29.41
Burundi
Background
1998 Population (M): 7
1998 GNP (USD B): 0.9
1997/98 Annual GNP growth rate: 4.6
1998 GNP per capita (USD): 140
1990-98 % annual growth GDP: -3.2
1990-98 % inflation: 12.2
1998 Labour force (M): 4
1998 Female % of labour force: 49
1997 Adult illiteracy rate as % of people 15 and above (male): 46
1997 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 3
1990-98 % annual growth of gross domestic investment: -16.1
1997 Private investment as % of gross domestic fixed investment: 30.9
1997 Foreign direct investment (USD M): 1
1998 Merchandise exports (USD M): 86
1997 Present value of external debt as % of GDP: 58
1998 Value added as % of GDP Agriculture: 49
1998 Value added as % of GDP Industry: 19
1998 Value added as % of GDP Services: 32
The Burundi economy is heavily dependent on the agricultural sector, which accounts for half of GDP, with 90% of the population living by subsistence farming. Even within agriculture, activity is quite concentrated; 80% of foreign exchange earnings arise from coffee exports, making the country vulnerable to price fluctuations in international markets.
There is an emerging mining industry, which could take advantage of the countrys mineral wealth. Nickel deposits in particular show promise for future extraction. The Burundi Mining Company, a public private partnership, possesses the rights to most of the countrys gold deposits. There are no known oil, gas, or coal deposits, which gives oil importation national significance, accounting for a quarter of all imports. They are supervised by the Ministry of Industry and Trade, which controls the petroleum sector generally.
Bringing oil into the country itself causes difficulties, as sections of the road network are in disrepair. To help preserve them, the World Bank has recommended that tanker trucks transporting fuel limit their load to 30,000 litres, a reduction from the 60,000 litres previously allowed. This has caused a shortage of fuel in the country. Burundi has no rail network, and the other main distribution system consists of barges for transportation across Lake Tanganyika.
Electricity is mostly thermally generated, and concentrated in the region around the capital, Bujumbura, with a little hydroelectric power generated in rural areas. Burundi cooperates with Rwanda and Congo in electricity provision.
Ethnic violence has been a problem in Burundi for several decades, and continues to this day. Since 1993, deaths have reached 100,000 and a million people have been displaced. The economic effects have been substantial too, with a 25% contraction in GDP in the second half of the decade. Combatants recently came close to the Bujumbura, and ongoing tensions in the Democratic Republic of Congo provide a constant destabilising force. Civil war has historically meant that sanctions were applied by Uganda and Tanzania, its two large neighbours to the North and East.
Violence has also hindered the economic reform program launched in 1991. The program had World Bank support, attempting to diversify agricultural earnings, modernise the state sector, and attract foreign investment. The reforms have extended to privatisation of parastatals, with the national telecommunications operator reportedly soon to be sold. This may bring private funds to develop the sparse telephone network, where the French company Alcatel has already invested this year. More spectacularly, a foreign investor has recently established the first casino in Bujumbura, with a local partner. The World Bank and other donors have provided a number of large development loans recently.
Internet information on investing in Burundi is hard to find, so the sections on investment procedures are not included here.
Regulations governing foreign investment
I could not find information on this subject.
Legal forms
I could not find information on this subject.
Procedures for investment
I could not find information on this subject.
Labour considerations
I could not find information on this subject.
Taxes
I could not find information on this subject.
Investment incentives
I could not find information on this subject.
Contact addresses
Ministère des Finances
BP 1830, Bujumbura
Tél: 257 223988; Téléx: 5135; Fax: 257 223827
Ministre: M. Salvator Toyi
Banque de la République du Burundi (BRB)
BP 705, Bujumbura
Tél: 257 225142; Télex: 5071/5072 ; Fax: 257 223128; Addresse télégraphique: burundibanque
Gouverneur: M. Mathias Sinamenye
Chambre de commerce et D'Industrie du Burundi
Avenue du 18 Septembre
B.P. 313 Bujumbura
Tel: (257) 222280
Tlx: 5145 CCI BDI
Cameroon
Background
1998 Population (M): 14
1998 GNP (USD B): 8.7
1997/98 % annual GNP growth rate: 6.7
1998 GNP per capita (USD): 610
1990-98 % annual growth of GDP: 0.6
1990-98 % inflation: 6.1
1998 Labour force (M): 6
1998 Female % of labour force: 38
1997 Adult illiteracy rate as % of people 15 and above (male): 21
1994 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 5
1990-98 % annual growth of gross domestic investment: -1.6
1997 Private investment as % of gross domestic fixed investment: 93.7
1998 Merchandise exports (USD M): 1,860
1997 Foreign direct investment (USD M): 45
1997 Present value of external debt as % of GDP: 93
1998 Value added as % of GDP Agriculture: 42
1998 Value added as % of GDP Industry: 22
1998 Value added as % of GDP Services: 36
The Cameroon economy has recently been growing at just under 5% per year, a little above the average GDP growth rate of 4% since 1970. It has low inflation at 0.8% in 1999/2000, and is registering improvements in certain export sectors. The countrys economic history has been more volatile than may appear at first glance, with very rapid expansions and contractions of the economy over the last twenty-five years.
The oil industry is an important sector, particularly for export performance, as it generates about 40% of foreign exchange in the form of crude petroleum and the products of a small refining industry. Several multinational oil companies are active in the country, including Esso, Petronas, and Chevron. Nevertheless the sector accounts for only 6% of the entire GDP of the country, and has been declining in recent years. The domestic market has also been affected by competition from Nigerian imports.
60% of the labour force works in agriculture, where 40% of GDP arises. The principal cash crops are cocoa, coffee, tobacco, cotton, bananas, palm oil, and natural rubber. They are vulnerable to both unfavourable weather conditions, and fluctuations in world prices. Manufacturing is of moderate size, producing aluminium, transport equipment, electrical equipment, beer, and cigarettes. 6% of exports are in the form of aluminium. Major parts of the service sector are transport and communication, which between them equal a third of the proportion of GDP due to services.
Cameroon uses the CFA Franc, and its fluctuations in value affect the competitiveness of Cameroons exports. The recent period of growth followed the devaluation of 1994. The country is also a member of the Central African Economic and Monetary Community, and it has 50% of the total GDP of the trading bloc. While some trade does occur with the other members - for example, oil is sold to Chad and Equatorial Guinea - most is with partners beyond the region, with France accounting for 27%, and Germany, Nigeria, and Belgium next, all below 10%. Timber sales, a major source of overseas revenue, were adversely affected by the Asian crisis.
An IMF sponsored economic reform package is being applied, aiming at improving governance and market performance. Previous efforts at increasing growth have relied on reductions in basic health and education spending. Private funds are currently increasing in telecommunications provision.
There is local Internet connection
Regulations governing foreign investment
Equal treatment of Cameroon citizens and foreign investors is guaranteed in the Investment Code.
There is protection against expropriation or nationalisation. If these are undertaken in the public interest, adequate compensation must be determined by an independent third party.
There is freedom when hiring workers, subject to the relevant labour law.
There are no restrictions on repatriation of dividends, interest, or other charges on capital.
Capital transfer and foreign exchange access is subject to the regulation of the CFA Franc Zone and the Bank of Central African States.
Legal forms
Société à Responsabilite Limitee (SARL)
The SARL form has the following characteristics:
- the capital is divided into shares,
- limited liability for members up to their specified share,
- members may be people or legal forms,
- there may be just one member (or more),
- there may be just one manager,
- capital must be at least 1 million CFA Francs, and
- the nominal values of each share must be equal, and at least 5,000 CFA Francs.
Société Anonyme (SA)
The characteristics of a Société Anonyme are:
- its capital is divided into equity shares,
- limited liability for members up to their equity holding,
- there may be just one member, or more,
- capital is at least 10 million CFA Francs,
- the nominal value of each equity share must be at least 10,000 CFA Francs,
- the capital must be fully subscribed before the statutes are signed, or a constituting general assembly is held.
Société en Nom Collectif (SNC)
All the members of this form must be retailers, who have joint and several liability. The capital must be divided into parts each of the same nominal value (I am not sure whether this implies that profits and ownership must be shared equally between members). There may be just one manager, or more.
Société en Commandite Simple (SCS)
In an SCS there are two types of members. The first, called associes commandites, are jointly and severally liable for the common debts of the company, while the second type, called "associes commanditaires" or "associes en commandite" are liable only for their specified share. There must be at least one of each type of member.
Groupement d’Interêt Economique (GIE)
A Groupement exists to facilitate or develop the economic activity of its members over a determined period. It may have no capital, and does not specify the means of sharing benefits.
Procedures for investment
To set up a new business
Any new company must be licensed with the tax authorities. They must submit a stamped, handwritten application for a license, explaining the objectives of the company, and the annual turnover, or its estimate. The investors should also send two photos of themselves. I am not sure who this has to be submitted to, but the regional tax centre should be able to help.
The company must then be included in the commercial register of the local Office of the Clerk of the Court. A photocopy of the license (from the tax authorities, I think) must be brought. Nationals must also bring a photocopy of their national identity card, although I am not sure what is required for non-citizens. There is a charge of 18,000 CFA Francs.
The investor should notify the CNPS (the National Social Security Fund) of the investment.
A Taxpayer's Card must be obtained, by submitting the following documents:
- the relevant form from divisional centre of taxes,
- a certified copy of the investor's national identity card, for people,
- a certificate from the commercial register, for business entities,
- a certificate of registration with the SCIFE (I do not know what this is), and
- a money order for 1,500 CFA Francs payable to the director of taxes (directeur des impôts).
Next, the company must apply for a professional retailer’s card. I do not have any details, although the Chamber of Commerce should be able to assist here.
The final step for registration is to file the following documents with the Chamber of Commerce:
- the original license and a photocopy,
- the original document from the register of commerce, and a photocopy,
- the original SCIFE, and a photocopy,
- stamp fees of 500 CFA Francs, and
- registration fees of 5,000 CFA Francs.
The total cost for all of the above stages was estimated in 1998 at 225,000 CFA Francs.
An extra stage is to notify the Foreign Exchange Office, so that money may be repatriated.
Exporters must follow additional procedures depending on the type of product exported, although they are only time-consuming in the case of animal products. For coffee or cocoa exporters, the following documents are required, and it seems that they must be sent the to the Government Ministry concerned:
- an application stamped to the value of 500 CFA Francs,
- a certified copy of the receipt of registration in the Commercial Register,
- a certified copy of the taxpayer's card,
- a certified copy of the taxpayer's license,
- a legal declaration of good faith, and
- information on current investments.
Manufacturers who want to export must obtain a certificate of origin from the Chamber of Commerce.
Labour considerations
Employment relations are governed by the Work Code of 1992.
In all non-agricultural enterprises, the length of the working week is restricted to 40 hours, while the maximum time that can by worked in a month is 174 hours.
Children and women may not work between 6 p.m. and 6 a.m.
Temporary contracts may not last longer than two years, and may only be renewed once with the same company. At the end of the contract, any extension on the same terms becomes a permanent contract.
A national minimum salary applies, though I do not have its current rate. Holiday periods are specified by law.
Taxes
Company tax on profits is 38.5% (another source reports 38%, with a minimum payment of 1% of turnover).
Companies must pay towards to the National Fund for Social Security. The rate is calculated as a proportion of the salary bill, and varies according to the regime the enterprise is put in: the general regime, the agricultural regime, the educational regime, or the household regime. In the general regime, the employer must pay 4.2% of salary to the Fund.
Employers are liable for an additional levy for protection against accidents at work.
There is a tax from income from transferable assets. In the case of equities, shareholdings, and similar assets, the rate is 16.5%.
Value Added Tax is 18.7%.
There is a charge payable on non-essential consumer goods. It is presently 25%.
Customs duties are the same throughout the CEMAC zone. There is a common exterior tariff of:
- 5% on products considered necessities,
- 10% on primary materials and equipment,
- 20% on intermediate and various other goods, and
- 30% on consumer goods.
Goods made and sold in CEMAC countries are liable a General Preferential Tariff of 20%, which I presume replaces the charge on consumer goods.
Additional taxes on services total to 2.48% of the Cost, Insurance, and Freight charge.
There is a double taxation agreement with France.
Investment incentives
There is a range of fiscal and monetary supports available for investors in Cameroon. The classifications include:
- the base fiscal regime,
- the regime for small and medium sized businesses,
- the regime for strategic enterprises,
- the regime for reinvestment,
- the Industrial Free Zone,
- Aid and Guarantee Funds for Small and Medium Sized Enterprises (FOGAPE), and
- the National Investment Company (SNI).
All applications for entry into a regime can be made through the one stop shop, the Unit for Investment Code Management.
The base fiscal regime
To qualify for the base regime, an enterprise must meet one of three criteria:
- it must create permanent local employment, of a least one job per 10 million CFA Francs investment, or
- it must export at least 25% of its pre-tax turnover, or
- at least 25% of its inputs, excluding energy resources, must be locally produced.
For the first three years, the benefits are:
- exemption from registration charges, except those arising from constituting the company,
- exemption from transfer charges, and
- 50% reduction in company tax.
For the next five years, the non-renewable benefits are:
- 50% reduction in company tax, tax on industrial and commercial profits, and tax from income from transferable assets,
- possibility of carrying forward for up to five years losses resulting from depreciations in the first three years,
- reduction in taxable income by 0.5% of the Free on Board value of manufactures (this may not be carried forward), and
- exemption from taxes on insurance contracts.
The regime for small and medium sized enterprises
The qualifying criteria here are:
- creating permanent local employment, of a least one job per 5 million CFA Francs investment, and
- investing at least 1,500 million CFA Francs, and
- having a Cameroonian shareholding of at least 35%.
For the first three years, the benefits are the same as for the base regime. For the next seven years, the company has the same incentives as for the base regime in years 4 to 8. It also has its taxable income reduced by 25% of the salary bill paid to Cameroon citizens in the accounting period.
The regime for strategic enterprises
To be classified as a strategic enterprise, a business must:
- be declared strategic in the plan of the Director of Industrialisation, and
- create permanent local employment, of a least one job per 20 million CFA Francs investment, and
- export at least 50% of its pre-tax turnover, or
- use at least 50% local inputs, excluding energy resources.
The advantages are the same as for small and medium sized enterprises, except that the second period of incentives lasts for twelve years, not seven.
The regime for reinvestment
The requirements for the reinvestment regime are:
- predicted production increases by at least 20% compared with the value at application, or
- a proposed level of service better than the current one.
The corresponding benefits last for three years, and are:
- reduction of company tax, or personal income tax, by 50% of accepted reinvestments,
- exemption from registration charges when increasing capital, and
- exemption from registration charges on leases for real estate when it is used solely for professional purposes linked to the investment.
The Industrial Free Zone
The Zone provides incentives to exporting companies, who must meet the following criteria:
- the company must produce goods aimed solely at the export market, and
- the goods must meet environmental and security standards.
Companies benefit from the following incentives:
- exemption from all taxes for the first ten years,
- a 15% tax on profits from the eleventh year on,
- permanent exemption from all customs duties,
- exemption from licensing or other limitation on imports and exports,
- freedom from price and profit margin controls,
- ability to open foreign currency accounts,
- freedom from foreign exchange controls and restrictions on profit repatriation, subject to 25% of profits being reinvested in Cameroon,
- freedom from having to set wages by salary scales,
- free negotiation for work contracts,
- automatic right to employ expatriate workers up to 75% of total salary (I am not sure whether this is by number of workers, or total wage bill), and
- ability to use a private electricity and telecommunications network within the Zone.
To qualify, investors must apply to the National Office of Industrial Free Zones (ONZFI). The Office attempts to issue permits within thirty days of application.
Aid and Guarantee Funds for Small and Medium Sized Enterprises (FOGAPE)
FOGAPE attempts to support small and medium sized enterprises financially and technically, up to a limit of 80% of their needs. It can help them in a number of ways:
- by guaranteeing their financial commitments to financial institutions,
- by taking a share of their capital,
- by loans, including those which get some managerial control, and
- by helping in project studies, consultancy, management, and training.
The Fund has not been very active recently, and is being restructured.
The National Investment Company (SNI)
As with the FOGAPE, small and medium sized enterprises can benefit from funds from the SNI, which may take up to a 33% share in their capital, or make medium to long term loans for equipment or leasing.
Contact addresses
Société Nationale d’Investissement (SNI) (National Investment Company)
B.P.423-Yaoundé
Tel: (237) 22.44.22 or 23.10.59
Fax: 22.39.64
Cellule de Gestion du Code des Investissements (Unit for Investment Code Management)
B.P.2031-Douala
Tel: (237) 42.20.85
Fax: (237) 43.30.07
Office National des Zones Franches Industrielles (ONZFI) (National Office of Industrial Free Zones)
B.P. 925 Douala
Tel: (237) 43.33.43 or 44.45.50
Fax: (237) 43.33.17
Cameroon Chamber of Commerce Industry and Mines
Rue de Chambre de Commerce, B.P. 4011
Douala, Cameroon
Tel: (237) 42.68.55 or 42.22.14 or 42.98.81 or 42.67.87
Fax: (237) 42.55.96
Yaoundé Office:
Tel: (237) 22.47.76
Fax: (237) 22.01.55
Chambre d’Agriculture, d’Elevage et des Forêts (Chamber of Agriculture, Livestock, and Forests)
B.P.287-Yaoundé
Tel. (237) 22.28.44 or 22.38.85
Fax 22.01.55
Douala Office:
Tel: (237) 42.52.80
GUCE, Guichet Unique des opérations du Commerce Extérieur, (One-stop-shop for external trade operations)
BP 12769 - Douala
Email: guce-gie@camnet.cm
Tel: (237) 43.60.88 or 41.02.44 or 41.02.44
Fax: (237) 43.60.78
Poste d’Expansion Economique Régional de Yaoundé (Office for Regional Economic Expansion of Yaoundé)
Nouvelle route de Bastos - B.P.1026 Yaoundé
Tel: (237) 20.25.65 or 21.07.20
Fax: 21.34.64
Syndicat des Industriels du Cameroun (Syndustricam) (Union of Industrial Companies of Cameroon)
Yaoundé Office:
Tel. (237) 20.24.68
Fax (237) 21.52.86
Douala Office:
Tel: (237) 42.30.58
Fax: (237) 42.56.16
Syndicat des Commerçants Importateurs-Exportateurs (Union of importing and exporting retailers)
Douala Office:
Tel: (237) 42.60.04
Groupement Interpatronnal du Cameroun (Organisation of Cameroonian employers)
Douala Office
Tel: (237) 42.14.89
Centre CAMPUS Cameroun (business support organisation)
B.P. 15.363 Douala - Tel.(237) 43.36.57
Email : ccam@camnet.cm
Ministère de l’Economie et des Finances (MINEFI) (Ministry of the Economy and Finance)
B.P.1070 Yaoundé
Tel: (237) 22.00.31 or 22.17.00
Fax: (237) 22.49.53
Direction des Douanes (Department of Customs)
B.P.4020-Douala
Tel: (237) 42.01.33
Ministère du Développement Industriel et Commercial (Ministry for Industrial and Commercial Development)
Tel: (237) 22.44.52 or 22.50.85 or 23.33.88
Fax: (237) 22.27.04
Direction de l’Industrie (Department of Industry)
Tel: (237) 23.26.37
Ministère de l’Agriculture (Ministry of Agriculture)
B.P.1060-Yaoundé
Tel: (237) 22.51.66 or 22.05.53 or 22.19.25
Cape Verde
Background
1998 Population (M): 0.4
1998 GNP (USD B): 0.4
1997/98 % annual GNP growth rate: 4.5
1998 GNP per capita (USD): 1,060
1989-99 % annual growth of GDP: 5.4
1993-99 % inflation: 5.1
1998 Labour force (M): N/A
1998 Female % of labour force: N/A
1997 Adult illiteracy rate as % of people 15 and above (male): 26%
1994 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: N/A
1989-99 % annual growth of gross domestic investment: 9.5
1997 Private investment as % of gross domestic fixed investment: N/A
1999 Private consumption as % of total consumption: 83%
1998 Merchandise exports (USD M): N/A
1998 Foreign direct investment (USD M): 14
1997 Present value of external debt as % of GDP: 36.1
1998 Value added as % of GDP Agriculture: 12.0
1998 Value added as % of GDP Industry: 16.4
1998 Value added as % of GDP Services: 71.6
After trebling in size in the 1980s, the Cape Verdean economy grew by a further 80% in the 1990s, with an annual growth of 5.4% from 1989 to 1999. The increase was particularly marked in the services sector, at over 6% each year, followed by industry (4.4% each year), and agriculture (3.7%). In 1999, almost three quarters of GDP arose from services. A 9.5% annual growth in gross domestic investment over the last decade has encouraged the growth of various light manufacturing industries, like clothing, footwear, and electronic components. Portugal and Italy have been large sources of foreign investment, but a wide range of investors have shown interest in the country, from the Canary Islands (tourism) to Hong Kong (textile manufacture). 1999 economic growth was 9.9%.
The country has been reported to be undergoing economic reforms. State owned companies have been privatised, and various incentives have been set to attract investment. The economy has a large private sector, accounting for 83% of total consumption. Foreign donors and lenders have been active in Cape Verde.
The tourist industry is quite diverse, including hotels, restaurants, travel agents, car hire companies, and souvenir shops. It contributed 4% to total GDP in 1999, and may still have potential for further expansion, as suggested by the US$243 million invested in the sector over 1994-1999. Many tourists come from Italy and Portugal.
There are now several dozen factories in Cape Verde, mostly privately owned. Manufacturing accounted for 8.5% of GDP in 1999, and a little under half of the 144 investment projects approved over 1994-1999 were in industry. It generated many of the jobs created over the period, helping to lower the year 2000 unemployment rate of 19.9%. The telecommunication sector has also seen investments, including internet connection to the islands.
Financial institutions have been part of a privatisation drive, and foreign investors play a role in the sector, with a Portuguese group being the major shareholder in the largest bank. Interest rates are moderate, with rates at the time of writing of 7.7% per year over a one year term, rising to 13.6% per year over five years. Current inflation is low, although there is a large current account deficit (19% of GDP in 1999), which may suggest high consumer spending and possible future tension.
Many of the Cape Verdean exports are agricultural, like bananas and fish, and many are in processed form. Nevertheless, despite increasing production, the country is not self-sufficient, and has to import foodstuffs.
26% of the adult population was illiterate in 1996, but this figure will be lowered by the primary education provided to all children.
Cape Verde is a member of the Economic Community of West African States, ECOWAS.
Regulations governing foreign investment
Foreign investors must be approved by the Vice Prime Minister, as outlined in the "procedures for investment" section.
There are no restrictions on repatriating dividends.
Investors may have foreign currency accounts.
Private property is protected (I think this means against nationalisation and expropriation).
Legal forms
The main business forms in Cape Verde are:
- Sociedade em nome colectivo,
- Sociedade por quota,
- Sociedade anónima,
- Sociedade em comandita, and
- Sociedade cooperativa.
Sociedade em nome colectivo
A sociedade em nome colectivo has the following characteristics:
- members share the liabilities of the company in specified proportions,
- there is no restriction on the liability of individual members, and
- liability ends when the member leaves the company.
The company should specify the value of the goods and services which each member contributes, for the purposes of dividing profits and capital.
Sociedade por quota
In this form, the members are collectively responsible for the liabilities of the company. The share for each member is specified in the company constitution. The minimum capital allowed is 200,000 Cape Verdean Escudos.
Sociedades anónimas
The sociedade anonima form has the following characteristics:
- there must be at least two members, except in certain cases mentioned in law,
- the responsibility of each member for the companys liability is equal to the value of their shares in the company,
- the minimum issued equity capital must be at least 2,500,000 Cape Verdean Escudos,
- all equities have the same nominal value,
- the equities must have a nominal value of at least 1,000 Cape Verdean Escudos, unless the statutes specifies that the equities do not have a nominal value,
- certain information must be fixed about the company (at constitution, I guess):
-- the number of equities,
-- their nominal value, or the statement that that they do not have one,
-- the conditions of transfer of equities,
-- whether the equities belong to the bearer, or whether they are owned by a named person,
-- the categories, number, or rights of each type of equity that may be created,
-- the rules for possible conversion of equities,
-- the amount of capital received, and the time span for receiving subscribed capital, and
-- the authorisation, if given, for the issue of loans.
Sociedades em comandita
Member of the sociedades em comandita form may be one of two types:
- comanditários (they are liable for the debts of the company only to the limit of their share in the company), and
- comanditados (they share the liabilities of the company in specified proportions with other members, and have unlimited responsibility for them),
The sociedade em comandita form also has two sub-types:
- simple (I think that this means that transfer of ownership is restricted), and
- por acções (with equities - the form must have at least two members).
Sociedades cooperativas
The characteristics of this form are as follows:
- the number of members may vary,
- the amount of capital is variable,
- there is freedom of membership and leaving,
- the minimum number of members is six, except for companies engaged in the marketing of goods when the minimum is twenty,
- there is no maximum limit on the number of members, unless required by law,
- each member has one vote,
- the initial issued capital must be at least 200,000 Cape Verdean Escudos,
- at least a third of the issued share capital must be received from the subscriber,
- certain information must be fixed about the company (at constitution, I guess):
-- the company name,
-- the addresses of the head office, the other offices and establishments, and the representatives,
-- the objective,
-- the term of the company, if appropriate,
-- the initial issued share capital,
-- the share capital received,
-- any increases in the minimum subscribed capital,
-- the identity of the parties involved,
-- the constitution, power, and functioning of the company, and
-- the rules of economic and financial management.
Procedures for investment
Setting up a company
There are a number of stages for setting up a company in Cape Verde:
- A certificate must be obtained confirming that there is not already a company with the proposed name. It is available from the office of registration (in Portuguese, "conservatória").
- A public notary must give an official authentication of the constituting document of the company, for example the statutes or memorandum of association.
- At least 10% of the authorised or legal issued capital must be transferred to a bank account for that purpose. A bank statement or receipt must be obtained.
- The constituting documents or statutes should be published in the Official Bulletin of the Cape Verde Government ("Boletim Oficial do Governo de Cabo Verde").
- The investor should register with the Ministry of Finance.
- The investor should register with the Department of Commerce.
- The investor should then obtain their registration certificate from the office of registration.
Foreign investment
Foreign investors must be approved by the Vice Prime Minister. They can request approval by writing to the Centre of Promotion of Tourism, Investment, and Exports (PROMEX), with the following documents:
- three copies of a completed application form,
- a summary description of the company,
- identification of the investor (I think that this would be an identity card or similar),
- the curriculum vitae of the investor, and
- the bank references of the investor.
The decision of the Vice Prime Minister should be returned within thirty days of the request. The investor may be asked for extra information. If the investment application is accepted, then an External Investor's Certificate will be issued. The investment operation must be started within the time scale agreed, or the Certificate expires.
Before the start of business, the enterprise must be inspected by the authorities. Inspection will occur within thirty days of the request for inspection being issued. I am not sure whether the Government or the investor would make the request.
Certain other foreign investment activities must be registered with a bank. Unfortunately, I do not know what these are.
Labour considerations
There are no restrictions on hiring foreign workers.
Taxes
Company income tax is levied on enterprises registered in Cape Verde, or earning income there.
Personal income tax is levied on people living in Cape Verde, or receiving income there.
Income tax rate is charged at rates of 20% and 35%.
Interest on term deposits is taxed at 20%.
Dividends and other shares in company profits are taxed at 15%. I think that profits paid to foreigners are taxed at 20%.
There is a tax (Imposto Único sobre o Património) of 2% levied on publicly traded shares, and the value of buildings. I guess that this is levied on sales of the assets.
Stamp duty charged on sales of goods and services is 0.7%.
Investment incentives
Enterprises which work in the maritime transport industry are exempt from profit tax. The exemption lasts for five years after the start of the activity.
Companies in the tourist sector are exempt from consumption tax, fees, and general emoluments on imports used in the business.
Companies and private medical clinics are exempt from customs duties and consumption tax on imports of new and modern equipment (I do not know what the precise definition would be).
Car hire companies are exempt from customs duties and consumption tax on the import of light passenger cars, if they are used exclusively in the business.
Other incentives offered include:
- support for training workers,
- provision of industrial properties, and
- administrative facilities.
Contact addresses
Centro de Promoção do Turismo, do Investimento e das Exportações (PROMEX),
(Centre of Promotion of Tourism, Investment, and Exports),
Avenida OUA,
P.O. Box 89/C,
Achada de Santo António - Praia,
Cabo Verde
Tel: (238) 62.26.21 or (238) 62.26.89
Fax: (238) 62.27.37
E-mail: promex@mail.cvtelecom.cv
Central African Republic
Background
1998 Population (M): 3
1998 GNP (USD B): 1.0
1997/98 % annual GNP growth rate: 4.5
1998 GNP per capita (USD): 300
1990-98 % annual growth of GDP: 1.5
1990-98 % inflation: 5.4
1998 Labour force (M): N/A
1998 Population aged 15-64 (M): 2
1998 Female % of labour force: N/A
1997 Adult illiteracy rate as % of people 15 and above (male): 44
1994 % share of income or consumption (highest 10% of population / lowest 10%): N/A
1997 Telephone main lines per 1000 people: 3
1990-98 % annual growth of gross domestic investment: -5.4
1997 Private investment as % of gross domestic fixed investment: 42.2
c. 1998 Merchandise exports (USD M): 174
1997 Foreign direct investment (USD M): 6
1997 Present value of external debt as % of GDP: 53
1998 Value added as % of GDP Agriculture: 55
1998 Value added as % of GDP Industry: 18
1998 Value added as % of GDP Services: 27
The CAR relies heavily on its natural resources to generate wealth. Agriculture accounts for half of gross domestic product, while the large majority of exports are in the form of minerals or cash crops, mainly diamonds, cotton, timber, and coffee. There are reported to be substantial opportunities for expanding mining and crop production