2020 Entrepreneurial Activity Review

At the macro level of the economy, Angola has been severely impacted by COVID-19. This is evidenced
by the 54% of Angolan adults (18–64) who reported that household income had “strongly decreased” as a result of the pandemic, and the 84% overall who reported a decrease. The rate of those reporting a strongly decreased household income is the second highest among GEM participating economies by a good margin, behind only Togo (75%). Yet much of Angola’s measured entrepreneurial activity in 2020 did not appear overly reactive — whether positive or negative — to the pandemic. This is evidenced by the 83% of Angolans who stated that they intend to start a business in the next three years, the most by far of any GEM economy. Of these prospective entrepreneurs, only 15% reported that the pandemic had influenced their expectation, reflecting an entrepreneurial ambition in Angola that does not seem to be overly swayed by the shifting economic landscape.

Angola leads all GEM economies in its Total early- stage Entrepreneurial Activity (TEA) rate, at 49.6% (there is no 2019 benchmark as the country did not participate in that year’s GEM cycle). This high TEA rate suggests that the ambitions in Angola of those intending to start a business — even though high at 83% — do tend to carry through into active entrepreneurship. These ambitions extend to new jobs: 16.4% of the Angolan adult population intend to hire six or more employees in the next five years, behind only Colombia (16.7%) among GEM participating economies. Despite Angolans’ early-stage entrepreneurship, a much smaller percentage of entrepreneurs seem able to sustain their business over 3.5 years, at which point levels
of early-stage entrepreneurship turn into GEM’s Established Business Ownership (EBO) rate. In 2020, Angola’s EBO rate was 9.2%, below that of Burkina Faso (12.4%) and Togo (17.8%), indicating a need for policies that enable firm growth, perhaps through government-led incentive programs or by more firms looking for external financing opportunities.

2020 Framework Conditions Review

Framework Conditions in Angola received relatively low expert scores, with a few notable exceptions. Because Angola did not participate in the 2019 GEM survey cycle, discerning improvements or declines
is difficult, making comparisons to peer economies an essential means of gauging performance. For
the condition of “Access to entrepreneurial finance” Angola’s 3.1 score placed it 44th among GEM participating economies, ahead of Burkina Faso (2.7) and below Togo (3.2). Much like Burkina Faso and Togo, which both also have high entrepreneurial intentions and TEA rates among their adult population, financing will be in high demand for some time, perhaps higher than ever following the pandemic. Therefore, finding more creative means of linking entrepreneurs to financial opportunities will be essential to Angola’s recovery.

Unfortunately, on its overall governance-related indicators, Angola’s scores show much need for policy improvement. While “Government policy: support and relevance” scored 3.8 (higher than Burkina Faso but lower than Togo), both “Government policy: taxes and bureaucracy” and “Government entrepreneurship programs” were ranked at or near the bottom of GEM participating economies for 2020. This is reflected in Angolan experts’ assessment of the government’s response to the pandemic, which was scored at 3.3, 40th among GEM participating economies. However, relative to peer economies, Angola does seem to have stronger societal attitude toward entrepreneurship, which may also explain its high rate of entrepreneurial activity measured by the Adult Population Survey (APS). While its entrepreneurial response to the pandemic was 6.1, 37th overall but higher than both Togo and Burkina Faso, its “Social and cultural norms” scored 4.6, 30th among GEM participating economies and highest among African GEM economies.