Angola: Financial Sector Profile
Social and economic prospects significantly improved following the 2002 peace agreement which brought an end to the decades-long civil war. Angola is now one of the fastest growing economies in Africa, as well as one of the continent’s largest oil producers, and the fifth largest diamond producer in the world. Angola’s economy has become heavily reliant on the oil and gas sector, which accounted for almost 60 percent of GDP in 2008, while agriculture, which employs almost half the labor force, represented less than 7 percent of GDP.
Sharp increases in oil production and prices have helped support strong economic growth over the past decade, with real GDP growing by an average of 15.4 percent a year between 2003 and 2008. Significant falls in world prices and demand for oil and diamonds following the onset of the global economic and financial crisis in late 2008 have had a significant negative impact on Angola’s economy, causing real GDP growth to decrease from 13.8 percent in 2008 to 2.4 percent in 2009. GDP growth further decreased to 1.6 percent in 2010, but the economy is however expected to experience a strong recovery with real GDP is projected to grow by 7.8 percent in 2011 and 10.5 percent in 2012, supported by rising oil production and prices.
The economic crisis has led to an increasing dollarization of the economy as foreign currency deposits have risen to reach over four times the amount of local currency deposits in 2009. Difficulties maintaining the local currency also led to a rapid depletion of foreign currency reserves throughout the first half of 2009, which eventually forced the Central Bank to suspend foreign exchange auctions, impose limits on its foreign exchange sales, and seek liquidity injection from the IMF. This injection of liquidity, coupled with rising oil revenues, helped ease liquidity shortages and allowed the Central Bank to resume foreign exchange auctions by the end of the year. In further macroeconomic stabilization efforts, the Central Bank also moved to limit credit concession, raise reserve requirements for bank deposits to 30 percent, and increase domestic bond issuance in order to sterilize excess liquidity of the Kwanza (local currency).
Angola’s financial sector has broadly continued to expand despite the effects of the global financial crisis and domestic foreign exchange shortages. While the growth rate of credit to the economy did slow down in 2009, after reaching 137 percent in 2008, the ratio of financial system deposits to GDP has continued to increase, rising from 17.8 percent in 2008 to 22.4 percent in 2009.
The banking sector largely dominates the Angolan financial system. 20 commercial banks, most of which are foreign-owned, operate in the country. However concentration remains high and the three largest state owned banks represent a dominant share of the market. The sector, as a whole, has continued to experience significant growth in recent years; between 2008 and 2009 deposit money bank assets increased from 16.7 percent of GDP to 24.4 percent, while the bank deposits to GDP ratio rose from 18.4 percent to 23.8 percent and private credit by deposit money banks expanded to 24.4 percent of GDP, up from 16.7 percent. The bank credit to bank deposits ratio also increased from 79.1 percent in 2008 and 100.1 percent in 2009.
Access to financial services remains limited; by 2009, less then 132 out of every 1000 adults had deposits in commercial banks, while only 22 out of every 1000 were commercial bank borrowers. This relatively low figure is partially explained by the complex administrative procedures associated with opening bank accounts and obtaining loans. In addition, penetration of microfinance institutions remains low, with only two microfinance institutions (MFIs) registered with the National Bank of Angola.
Capital markets are in their nascent stages of development. The opening of the Angola Stock Exchange, which had been scheduled to open in the course of 2010 with 10 companies listed, has been indefinitely postponed.
Angola’s fixed income market remains small. The government continues to be the only active issuer and offers bill and bonds of varying tenures and maturities in both Kwanzas (local currency) and US dollars. As of April 2011 Angola received long-term foreign currency ratings of B+ by Fitch and Standard and Poor’s, and B1 by Moody’s.
There are no intermediaries active in the market, and government securities are issued directly by the central bank to commercial banks, which are the only active investors on the debt market. Activity on the secondary market is very limited and most investors adopt a buy-and-hold strategy. There is no active derivatives market present in the country.
The insurance sector was liberalized in 1999, and five companies are currently operating in the country. Their revenues derive mainly from the oil and gas sector.
|2007||2008||2009||Average Africa 2009|
|Liquid Liabilities /GDP||0,164||0,196||0,235||0,412|
|Deposit Money Bank Assets / GDP||0,114||0,166||0,244||0,32|
|Other Financial Institutions Assets / GDP||n.a.||n.a.||n.a.||0,288|
|Private Credit By Deposit Money Banks and Other Financial Institutions / GDP||0,083||0,125||0,19||0,272|
|Bank Credit / Bank Deposits||0,625||0,791||1,007||0,728|
|Net Interest Margin||0,055||0,059||0,065||0,069|
|Stock Market Capitalization / GDP||n.a.||n.a.||n.a.||0,947|
|Remittance Inflows / GDP||n.a.||n.a.||n.a.||0,237|
|Mobile Cellular Subscriptions (Per 100 People)||28,263||37,587||-||40,33|
|Private Credit Bureau Coverage (% Of Adults)||0||0||0||4,539|
|Public Credit Registry Coverge (% Of Adults)||2,3||2,7||2,5||2,575|
|Number of commercial bank branches per 100,000 adults||1,372||1,095||0,598||6|
|Depositors with commercial banks per 1000 adults||102,076||118,135||132,302||311|
|Borrowers from commercial banks per 1000 adults||15,407||19,979||22,168||87|
For statistical coherence and comparability purposes, the FSDIs are extrapolated from a limited number of sources (AfDB, IMF, OECD, WB), where a common data collection methodology was applied to all countries surveyed. For additional data from other sources, please refer to the Documents section.