2 January 2013

Angola: Banks Invest in Expansion, Currency Stabilisation

Luanda — The banking sector, alike the other sectors of the Angolan economy, in 2012 invested in the expansion of products and services into the most remote municipalities of the provinces, with a view to supporting the Government's initiative to relaunch and boost the country's economic activity.

With end of the year, the sector reached 1,155 agencies, of the 22 various banks that operate in Angola which, in theory, corresponds to one counter for every 17,316 inhabitants, taking into account the estimate of 20 million inhabitants of Angola.

In addition to the Financial Education Programme - a National Reserve Bank (BNA)'s initiative - the expansion of the banking activity, with the opening of new agencies and provision of innovating goods and services contributed to the expansion in number of people using bank services, with a rate of about 23 percent, against 11% of 18 months back.

The banks BPC (Savings and Credit Bank) BIC (International Credit Bank), BFA (Angolan Foment Bank), BAI (Angolan Investment Bank), Banco Sol and Banco Millennium are those that contributed most to the expansion of banking activity in the country and boosting of the economy, by granting credit to locality entrepreneurs' initiatives.

With the approval by the Angola Reserve Bank (BNA) during the year 2012, the rules about correspondent banking services can reach more easily to villages and towns, which will significantly increase the number of citizens with access to banks financial services.

Despite the international context, marked by the slowing down of the pace of advanced economies and emerging countries, Angola and SADC countries continued to grow above the world average, as a result of the implementation of programmes within the fiscal and monetary policies, which allowed the major macroeconomic indicators to remain stable.

According to data released by BNA, the inflation rate reached in August and the first time the one-digit level, in late November when cumulative inflation of the year was 7,96 percent, while inflation over the last 12 months was 9,83 percent. The aim was to achieve by the end of 2012, an inflation rate of around 10 percent, according to the goals set by the Executive.

Until November last year, the Kwanza, Angola's national currency, was stable and the average exchange rate of the primary market had only depreciated 0,42 percent against the US Dollar, contributing to the stability of the Kwanza the total allocation of foreign exchange by BNA, of about Usd 17 billion, that is, 33.5 percent higher than the value placed in the same period in 2011.

With a view to the strengthening of the external accounts, required for the management of potential adverse shocks from the international economic environment, net international reserves reached by the end of November, USD 30,8 billion.

In the domain of financing to the economy, in 2012 the credit to the economy grew by 19 percent as compared with same period of 2011, highlighting the credit in national currency that grew 32 percent.

As for deposits, during 2012, it increased by about 10 percent, with dominance by the national currency that assumed a greater weight, accounting for 52,43 percent of the total portfolio.

For 2013, the BNA, as part of its action in terms of monetary policy, prioritises the deceleration of the inflation rate, aiming at nine percent, as established by the Government in its proposed State Budget submitted to the National Assembly (Angolan Parliament).

Incidentally, the regulator of the banking activity in the country intends to increase the efficiency of the transmission mechanisms of monetary policy, working to make the interest rate to become the main instrument of monetary policy at medium term and the inflation rate the nominal anchor for the purpose of formation of expectations on the part of economic agents.

For this reason, the bank management will seek to continue the gradual implementation of the controlled inflation targets system, thus consolidating the new operational framework for monetary policy.

Studies conducted by BNA show that the exchange rate is a variable that most influences inflation, so it is necessary to continue with the process of de-dollarisation of the economy.

Since 1 July 2013, payments of operations of the oil sector in the domestic market can only be made in local currency, which will be another important step in the valorisation of the national currency.

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