Business & Industry

Jun 20, 2018

NEW CYCLE OF INVESTMENT IN ANGOLA

The economy of Angola is starting a new cycle of recovery, taking into account the steady increase of the price of crude oil and the technical assistance of the International Monetary Fund

By ALEKSANDR SHAVCHENKO

But the major trump for the recovery is the recent internal and external creation of a positive expectations climate by the new Government resulting from the elections of August 2017 assuring in a very concrete way that higher transparency will be used from now on regarding the use of public assets and the attraction of foreign investments that bring know how and help to create jobs to youngsters that conclude studies and wish to get an employment.

The dimension of the domestic market is growing with the steady increase of the population and the political and social stability that, as the elections have demonstrated, open new opportunities more interesting and productive for those who wish to invest and win in this new cycle that is now beginning.

Due to the fall of the price of crude oil in 2014 Angola, as all other oil producers, has suffered in the last three years a severe economic crisis that forced the need to adopt austerity measures that brought repercussions on the reduction of the growth rhythm, on the increase of inflation and the strong devaluation of the Kwanza, the national currency.

But thanks to the accumulated exchange reserves, to the support that major Angolan banks extended and to the stabilization policy implemented, in spite of the inevitable restrictions of social nature imposed, Angola succeeded to overcome the difficulties without hiccups and the country is today ready to launch a new cycle of recovery.

In fact, the shock caused in 2014 brought important lessons that the Angolans learned by themselves, that difficulties are better faced with a united front and that it is great the risk of a country to rely on the export of a single product which price is calculated in an open global market and each producer has no manoeuvre capacity to resist the movements of world supply and demand.

All Angolan community suffered from the crisis, but among the most targeted sectors are the commercial banks, as they were forced to face a macroeconomic unbalance situation, with a lowering of resources, higher volume of bad debts, reduction of income and a lower number of solvent borrowers.

But if there were banks that suffered substantially with this recessive climate, others were able to face those difficulties and keep a positive track in terms of deposits received, loans awarded and profits attainted and that even took advantage of such conjuncture to reorganize towards the future.

Banco Sol has succeeded to overcome the difficulties in this period of crisis and reinforced its ranking in the Angolan banking system and maintained adequate solvency and profitability levels. With 17 years and with a network of about 200 branches all over the country Banco Sol manage a volume of deposits of about 2.2 billion dollars, reached 55 million dollars of net profit in 2017, roughly the same level of previous years, what means a profitability of 26 % of the equity, and accumulate 220 million dollars of Own Funds.

It has more than 600,000 clients in Angola but, besides the normal activity of retail banking, Banco Sol took advantage of this phase to prepare for supporting national and foreign investors in project analysis and organizing corporate e project finance deals, privatizations and acquisitions, starting the activity of investment banking.

Banco Sol has also worked for ameliorate the efficiency of payment services and transfers abroad and gave more attention to a straight accomplishment of the compliance rules, in accordance with legal regulations, having implemented a detailed program to assure the rigorous fulfilment of all the legislation on money laundering and finance of terrorism, an issue that BNA, the central bank of Angola, has been giving a top priority in order to ameliorate the international reputation of the national banking system.

The priority of internationalization adopted in 2013 and since then pursued in a consistent way has placed Banco Sol in conditions for giving a good response to requests arising after the recent approval of the new Private Investment Law, assuring less bureaucracy and more celerity and protection to the rights of investors, what is a step forward in the direction of opening the economy of Angola to national and international investment that may bring economic and social development to the Country.

The current great priorities are the launching of new projects in agriculture and agro-business, light industries, petrochemicals, telecommunications and information technologies, tourism and in the vast area of services, according to a clear strategy of diversifying the economy for reducing the dependence of the exports of crude oil. Angola needs foreign investment for creating competitive companies and jobs, not only in the oil and gas industry, having feasibility studies that demonstrate that there are many projects in Angola that may reach high rates of return on investment.

Investing in Angola is a valid option for those that have a medium and long term view, as we will see an acceleration of the economic and social growth if there is a sustainable effort of investment oriented for the diversification of the national production, the import substitution of products that can be produced in Angola and the exports promotion, mainly to other Countries of the Southern African Development Community (SADC) of which Angola is a member, that is the major priority of the new economic policy of the Government.

The critical point is to know how to take advantage the opportunities and for that it is essential the support of a local Bank that knows well the context and may help to overcome the normal difficulties that may always occur when an investor start up a new venture. It is an active role that local Financial Institutions should play promoting partnerships which may bring new investments that are interesting to Angola and to the external investors and those partnerships must operate according to the best international practices of transparent governance and management.

It is a role that Banco Sol wishes to perform and is now better prepared to articulate with international banks and institutions and with foreign clients, including United States, Europe and China, that wish to look at the new opportunities that the Angolan economy opens to the world. 

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