“In the end of the civil war the economy has grown tenfolds. To an economy of over 120 US dollars. The robust economic growth of the banking system is driven by the high oil revenue,” Sean Marion, Associate Managing Director of Moody’s told CNBC Africa.
Moody’s is an international financial analysis company that provides in information on global economic integration.
Angola’s economy is on the rise with GDP growth of 8.1 per cent in 2012, 5.7 per cent in 2013 and an estimated increase of 6.8 per cent in 2014.
The oil sector is this largest contributor to the nations GDP with an estimated increase of 9.2 per cent in 2014.The non-oil sectors which include commerce, agriculture and construction have an estimated growth of 6.7 per cent in GDP.
These projections are expected to continue the robust economic growth in Angola. Moreover, this growth has impacted on the financial sector allowing banks in the country to grow.
“In the next two years the lending growth in banking assets is expected to grow by 10 per cent to 15 per cent” he said.
According to the World Bank the government has installed reform processes to help develop local banks and diversify the accessibility of financial services to local firms. There are currently over 20 banks of which majority are privately owned as opposed to nine banks in the early 2000s.
“The foreign exchange law forcing oil companies to execute their payments of goods and services via local banks using the local currency, will assist increase the growth predicted to be 10 per cent to 15 per cent increase per annum,” said Marion.
Despite the government intervention to build infrastructure and create lending opportunities there are still present threats that can deny the growth of Angolan banks.
“Key risks are in two group’s. Number one, the vulnerability to change in oil prices, the Angolan economy is quite dependant on the oil proceeds and [secondly] the ineffective legal system for secured lending, enforcement for profit lending,” he said.
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Angolan banks require collateral for nearly all loans, and collateral requirements allow lending to previous people who qualified for this security agreement therefore, making it difficult for first time debtors to receive capital for new ventures leaving possibilities for the new economic development to circulate among the same people.
BY: THANDO MATUTU