Angola Angola

– Angola Angola

2006 At a Glance Population (mn) 16.4 a M im o l m A bo GABON y o Franceville L o L k o o m T r e s Lac� o l h Mouila a u � a Mai-Ndombe p a

a Djambala ng P a L i Tchibanga y A Léfi Fim Population Growth (annual %) 2.8 N T ni E REPUBLIQUE� A a U Kw MAYOMBE X Lu Ka ken B sai ie A CONGO T E Bandundu K e E e Lukeni r ï Sibiti a u Z o l i ngo u C ua DEMOCRATIQUE� o N i i K ar Sa Brazzaville nkuru Official Language Portuguese a Lub Dolisie e b fu 857m Madingou Kinkala m a Kinshasa W Pointe-Noire 798 m re aï D U C O N G O Z

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dos Tigres ZAMBIE g Z o PLAINES� Ponta da Marca 1637 m am SILOWANA bè Ondjiva� z Exports of goods and services (% of GDP) 74.2 Cunene e � K K une e w n a C nd S u o D Enana� i 1700 m Ombalantu to K C ubango E � E Katima Mulilo�

L Oshakati S OVAMBOLAND K � E Opuwa Rundu� w a T E n Gross official Reserves (US$ bn) D L E V O K O A K � d Kasane 5.229 O o O ka R v a N n g COLLINES� o Cap FriaT C TSODILO Etosha Pan DEPRESSION� O D 1375 m A DELTA DE� Tsumeb DE MABABE S U L'OKAVANGO T Gross Official Reserves (In months of imports) 5.7 N KAUKAU VELD BOTSWANA A NAMIBIE Maun M

I Otjiwarongo B D E S E R T � D U � UNDP HDI Ranking 161 KALAHARI ANGOLA

1. Overview of Financial System The central bank’s main objective is to ensure Angola’s financial system has recently undergone that the value of the national currency is sustained. a series of reforms to liberalize and privatize the Additionally, it has authority to supervise financial previously state-controlled financial system. The institutions, control their liquidity and solvency, and World Bank and the IMF have played a major role maintain their deposit accounts under terms and in introducing financial sector reforms through the conditions that the Board of Directors may decide. Financial Institutions Modernization project (1992 to 2002), when the banking and insurance sectors Bank and Non-Bank Financial Sector were liberalized and new regulatory and supervisory Prior to liberalization, the banking sector comprised two systems were put in place. state-owned banks. The sector has since expanded The Central Bank of Angola, previously one of two to include 13 commercial banks, two of which are major Angolan banks, had its name changed to Banco Portuguese-owned. A new legislation proposed for Nacional de Angola (BNA) after independence in the sector is expected to increase the scope of the 1975, and inherited the responsibilities of a central banks’ financial activities and considerably enhance bank, bank of issue and commercial bank, the only the sector’s attraction to foreign investors. legal holder of foreign currency, and responsible The stock of credit to the economy from the for all foreign transactions under Organic Law banking system moved from Kwanza 149,738.4 mn 69/76. Further reforms restricted BNA’s role in December 2005, to Kwanza 203,257.9 mn in solely to monetary policy, issuing bank, banker June 2006, an increase of 35.74% or USD 675.24 of the Government and reserve bank, effectively mn. The considerable increase of the credit to the transforming the BNA into a pure central bank. economy can be explained by (i) the new dynamism Angola – that liberalization has created in the sector, and (ii) USD 1 bn for bonds to pay its debt to private local emerging confidence of the banking institutions in the companies, some of which have been able to sell the broader economy. bonds directly to local banks or use them as collateral The insurance sector has also received extensive for credit. The size of TBC issues range between AOA assistance from the World Bank. A new insurance 100,000 and AOA 50 mn and are issued weekly. agency, the AAA Financial Services, was created in The nominal yields on the short-maturity TBCs 2003. The state-owned ENSA was restructured into declined during the first semester of 2005, from three firms in the same year; a holding company, an 46.44% in December of 2004 to 32.03% in June insurance company (SARL), and a reinsurance firm 2005. (Ango-Re). The insurance system is supervised by the Insurance Supervision Institute, which is located Secondary Market in the Ministry of Finance. Most of the government bonds are bought and Angola is now viewed as a prime emerging African held by local banks in Angola, and as a result it has market on the continent, resulting in heightened hindered the development of an active secondary interest from foreign banks aiming to enter the bond market. Angolan markets. Several Portuguese and South African banks are opening new branches in Angola. 3. Foreign Exchange As of June 2005, total assets of the banking sector The Angolan Kwanza (AOA) is a managed floating reached USD 4.6 bn (USD 3 bn in deposits), up from currency. Since September 1990, the AOA has USD 3.5 bn in 2004. experienced a series of foreign exchange policy changes, including devaluation in 1996 and the fixing Capital Markets of the official rate to the USD. Since June 1998, the There is presently no stock exchange in Angola. AOA official exchange rate has followed a crawling However, a Financial Markets Law has been passed peg regime with a rate determined on a weekly which envisages the early establishment of the basis, without pre-commitment to any specifically Angolan Stock Exchange (Bolsa de Valores). The announced path. exchange, once it has opened, is expected to generate In 2003, the central bank implemented an about USD 1 bn in tax revenue per year and would exchange rate stabilization program using foreign commence with an initial offering of ten companies exchange reserves to buy Kwanza out of circulation. with a combined market capitalization around USD Since then, the Kwanza has been remarkably stable, 5.5 bn. When operational, foreign and local investors averaging AOA 83.72 / 1 USD in 2004 and AOA 87.1 will have equal access to the listed shares. / 1 USD in 2005. For most of 2006, the currency traded within a narrow range of AOA 83.39 / 1 USD 2. Fixed Income Markets and AOA 80.36 / 1 USD. This is largely due to the Government Securities government’s policy of intervention aided by the The central bank has developed a market for short- recent surge in export earnings as a result of high oil term bonds, called Titulos do Banco Central (TBC), prices. with maturities ranging from 91 to 182 days. It has also The foreign exchange market is driven largely by developed a market for long-term bonds (Obrigacoes the inter-bank market whose participants are the banks do Tesour) that have a maturity range from 1 to 7.5 and the central bank. The central bank publishes a years. In December 2002, to effectively influence daily reference rate, for accounting and statistical money supply and finance the budget deficit, the purposes, computed as a weighted average rate Government of Angola approved the issuance of of the rates dealt with by the banks during the day. the TBC by the Ministry of Finance. It earmarked Banks are authorized to deal among themselves and – Angola

5. investment Taxation with their customers at freely negotiated rates. The central bank nominates currency dealers who Capital gains and personal income tax rates are 35% are authorized to buy and sell foreign currency. and 15%, respectively.

6. Key Contacts AOA Per Unit of USD (Year End) • Banco Nacional de Angola 100 80 151, Av. 4 de Fevereiro, No. 151, Luanda, Angola 60 Tel: +244-222-399125 40 Fax: +244-222-390579, 394986 20 Web: www.bna.ao 0 2001 2002 2003 2004 2005 2006 Source: Bloomberg B

4. Participation of Foreign Investors and Issuers

Capital and money market transactions, capital repatriation and personal capital movements are subject to strict controls. Very often, these transactions require approval and/or licensing by the central bank. It is, however, envisioned that the creation of a stock exchange in the near future will grant foreign investors equal access to listed securities. Currently, dividends earned in Angola can only be remitted abroad by foreign investors if the amount of investment in the Angolan host company exceeds USD 250,000.