In Angola 2007/2008 - (Page 28) BANKING & FINANCE Steady Progress on a Grand Economic Plan By any measure, the steady progress of Angola’s transition over the past five years to a stable, diversified, thriving economy is breathtaking. With a 2005 GDP growth of 20.6 percent, a 6 percent increase over 2004, Angola is one of the world’s fastest growing economies. Angola’s 2005 GDP results far exceeded those of its neighbors in the Southern African Development Community (SADC) for the second consecutive year – in 2005 members of the SADC posted 5 percent GDP growth on average. Sustained high oil prices, increased oil output, and revenues from the diamond sector are the key reasons behind Angola’s GDP success story. But even excluding oil and diamonds, the 2005 annual growth rate still registered an estimated 14 percent, largely due to strength in agricultural production. The success of macroeconomic policies, begun in 2004 to control inflation and stabilize exchange rates, was also evident in the 2005 growth figures. In 2005, Angola’s national currency, the Kwanza, appreciated 5.7 percent compared with depreciation of 8 percent and 34 percent in 2004 and 2003, respectively. Inflation in 2005 was 18.5 percent – 3.5 points above the government target – but an encouraging 12-point decrease from the prior year. Angola’s declining inflation rate is also moving closer to the average inflation rate for Sub-Saharan Africa of 10.6 percent. Perhaps a key factor in Angola’s relatively recent debut on the global economic stage is major government initiatives designed to foster the country’s transformation to a stable market economy. These efforts focus on building the legal, regulatory, and financial infrastructure and transparency necessary to attract local and foreign investors. Regulatory Strides A highlight of the financial sector in 2005 was the enactment of two important pieces of legislation: the new Law of Financial Institutions (Law 13/05, 30 September 2005) and the Securities and Exchange Law (Law 12/05, 23 September 2005). The new Law of Financial Institutions, which replaces Law 1/99, 23 April 1999, paves the way for new intermediaries in the financial sector that will introduce the financial products, services, and activities characteristic of a market economy. These include entities that engage in areas such as leasing, factoring, investment management, and venture capital funding. The Law of Financial Institutions sets criteria for the establishment of new financial entities and segregates them into banking and non-banking financial institutions, each with a separate regulator. Banks are regulated by Angola's central bank, the National Bank of Angola (Banco Nacional de Angola, or BNA). Non-bank financial institutions are regulated by one of three agencies: the BNA oversees currency, credit, leasing, microcredit, clearing, and related activities; the Instituto Segurança Social (ISS), under the Ministry of Labor, oversees social security; The Instituto Nacional para os Seguros (INS) supervises pension funds and insurance companies; and the Comisão Mercado de Capitais (CMC), under the Ministry of Finance, oversees stock brokers and investment funds. The 2005 Securities and Exchange Law and the incorporation of the Angolan Stock Exchange Company (Bolsa de Valores e Derivativos de Angola) in the first quarter of 2006 represent giant steps in Angola’s drive to develop prosperous, transparent capital markets with adequate investor protections. The law governs the activities of market participants such as settlement institutions, custodians, brokers, financial institutions, employees, auditors, consultants, and others operating in, and charged with maintaining the integrity of, the country’s securities market. Technology Drives Productivity Angola’s Real Time Payment System (SPA) became operational in 2005. SPA is an automated system for the efficient processing and clearing of electronic payments throughout the economy. It encompasses Automated Teller Machines (ATMs), the GEMA system for facilitating trading in the financial markets, and the SPTR system for transfers by the Ministry of Finance, BNA, and other financial institutions. Bancarization – the promotion among the general population of the use of financial products such as savings accounts, credit cards, and mortgages – is important to Angola’s development strategy. The Real Time Payment System will also play a major role in giving consumers access to the banking system. At the end of 2004, only 2 percent of Angolans held bank accounts, compared to 7 percent of people in other low-income Sub-Saharan countries. Foreign Direct Investment Expanded oil production helped catapult Angola to fourth 28
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