Measures to restructure and privatise the financial sector aim to promote competition and increase transparency
new 17-storey building on the skyline of downtown Luanda is one of the
more visible signs that the war-shattered economy of Angola is beginning
to get back on its feet.
The $50 million tower block is the headquarters for the wholly state-owned
Bank
of Commerce and Industry (BCI). Accelerating its privatisation programme,
the government is planning to sell a stake of up to 51 per cent in BCI
by 2002.
Other financial institutions being considered for sale include Angola’s
Savings and Credit Bank. More recently, the state-owned Agriculture
and Fisheries Bank was closed down as part of the International Monetary
Fund’s (IMF) restructuring programme for the country.
The banking sector, like every part of the economy, virtually needs
to be rebuilt from scratch or extensively restructured, and there is
pressure from the IMF for institutions to become more transparent.
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The
central bank, National Bank of Angola (BNA), is working to become more
independent from the state while playing a leading role in reform.
“Angola has made a major effort,” says bank governor Aguinaldo
Jaime. “It has done so under particularly harsh
conditions because we lack resources, despite the increase in the price
of oil. It is about time the financial institutions matched the major
efforts of the government.”
He points out that the authorities are trying to achieve a seismic shift
from a centralised to a liberalised economy in which the private sector
plays the major role. “When we decided to shift away from that
kind of [centralised economy] model, the reform programme started.
“Our first change was to liberalise the exchange rate because it
used to be fixed administratively by the central bank. In fact, there
were times when the difference between the official exchange rate and
the parallel market exceeded 500 per cent.
“We
are modernising the functioning of the national monetary market and
we are strengthening our supervision department so that all the players
in the financial system can play according to the rules. All these measures
have been taken with one objective – to make the central bank totally
independent from the state.”
In the private sector there are BAI, an Angolan investment bank, BCA,
an Angolan commercial bank, and three Portuguese firms – Banco
do Fomento, Banco Portugues do Atlantico and Banco Espirito Santo. There
is also a handful of bank representative offices, including Citibank
and Banque Paribas, providing specialised financing and services.
Mr Jaime adds: “We are trying to give incentives to the private
sector so that the economy can function properly. We think the best
way of helping the private sector is to have a modern and rebuilt financial
system. In this way, we are introducing competition and we want more
banks to come to Angola.
“We have taken some very courageous measures. This is not easy
because people are used to having everything provided by the state.
They are not used to employment competition and efficiency, and it takes
some time to be understood.”
In
its drive to make the sector more transparent, the central bank has
taken measures to eliminate tax evasion and employed foreign experts,
some from Britain, to reform the tax administration. “Efficiency
will increase as a result of these measures and our reforms will create
a good economic structure,” he says.
The launch of central bank bills has created a primary market between
the BNA and other banks. In turn, a secondary market is appearing in
which the banks pass on the bills to the public.
Mr Jaime says people were sceptical when the bills were first introduced.
“They would not believe in the efficiency of these bills because
they knew the state had a big foreign and national debt. But our internal
reserves have increased greatly, the exchange rate is quite stable and
we don’t have the frustration we had before. There is no depreciation
of the national currency any more.
Relationships with foreign banks have improved greatly
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“Now
people realise that instead of buying dollars to keep their savings
they can invest them in national currency in central bank bills because
the remuneration is attractive and the interest rates are above inflation.
The finance ministry is also preparing treasury bills that will supplement
the role being played by the central bank,” he says.
The largest bank in terms of capital, BCI granted more than $11 million
in loans last year, a 42 per cent increase on 1999. Generoso
Hermenegildo Gaspar de Almeida, chairman of the BCI board
of directors, says fixed deposits have risen 302 per cent over the same
period. The bank is in the first year of a three-year strategic restructuring
plan and progress has been “positive” so far.
Relations with foreign banks have greatly improved and Mr de Almeida
says an account reconciliation process is under way. Dormant loans have
been renegotiated with Portugal’s Espirito Santo Bank and new credit
facilities have been devised for the trade sector and small investments.
BCI
has branches in 10 of Angola’s 18 provinces, as well as several
agencies. With more than 4,300 accounts, Mr de Almeida, who joined the
bank in February last year, says it is planning to expand its network
of branches in Luanda and other parts of the country.
Privatisation is welcome, he says, as this will give Angolan investors
the opportunity to buy shares in BCI for the first time.
A former governor of the central bank, Mr de Almeida adds: “Today,
the situation is very different because the BNA and the ministry of
finance can control inflation. There are still some things that escape
control, because the country needs more stability and free circulation
of people and goods, but the way things are going it is easier to maintain
tighter control to combat inflation.”
About 60 per cent of BCI’s operations are related to the import
and export trade. “With the new measures it has adopted, credit
control is made indirectly by the central bank. Because of our internal
assets we can provide credit with better facilities, so we can now support
some industries and projects.”
BCI
also works on behalf of a state-created fund that was created to support
small investors. The Fundo de Desenvolvimento Economico e Social (FDES)
was set up to motivate small entrepreneurs and it grants credits of
up to $500,000. “We have had hundreds of requests and the first
investor projects were approved this year,” says Mr de Almeida.
“We have already created a real estate department and we will develop
other sectors in order to increase our internal capital.”
As Angola develops, it will need a developed capital market. “The
banks can provide a safe passage for this phase because we are more
organised and we know how to manage such things,” he adds. “There
will be a need for enterprises that have the organisation and capacity
to manage the market and our banks can do it.
“Angola is changing and we are getting the stability and peace
we need. Many foreign companies are coming here. Now is a good time
for people to invest. Privatisation will allow the entry of foreign
partners in the banking sector.”
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