ESTORING and maintaining macroeconomic stability is a key consideration for President dos Santos and his administration as Angola seeks to rebuild its economy, and the liberalization of the financial sector will play a crucial role in this process.

AGUINALDO JAIME Chairman of the Board of Unipetrol,

Deputy Prime Minister Aguinaldo Jaime says that institutional and economic reform is vital both for attracting foreign investment outside the oil industry and luring back Angolan capital that has been invested abroad. As a result, the government has developed a two-pronged approach in order to increase the level of private capital within the country and in turn stimulate economic growth.

Deputy Prime Minister Jaime explains, “Through a combination of the two policies, we hope to increase capital and economic efficiency, as well as bring new technology into the Angolan market. This is how we see the stabilization process with regards to the reconstruction of our economy.”

Due to the predominance of the oil industry in the Angolan economy and the high levels of inflation in the country, priorities for the country’s central bank, the National Bank of Angola (BNA), include strengthening the kwanza, while reducing inflation and the economy’s dollarization. Measures have been implemented to permit banks to expand their credit operations in kwanzas and to reduce market liquidity in order to bring inflation down.

AMADEU DE JESUS CASTELHANO MAURICIO Chairman of the Board of Unipetrol,

BNA Governor Amadeu Mauricio says that the sector is already beginning to show signs of revitalization: “The successive increase of credit levels is a sign that there is a significant increase in the level of confidence in the Angolan economy. The banks themselves are diversifying their activities and the total number of banks has increased. This means that we are already experiencing significant changes in the financial system, which will influence other indicators such as the inflation rate, the level of reserves, and the low level of average income nationwide.”

Due to the civil war, Angolan banking and finance have been limited in their diversification and largely dedicated to currency arbitrage. With peace, the Angolan banking sector is undergoing expansion as new banks enter the market and longstanding institutions amplify their services.

One of Angola’s most established banks is the Commercial and Industrial Bank (BCI). In the past, BCI’s competitive advantage was hindered to some degree by its status as a state-owned bank. However, due to changes in legislation, the enterprise is now regulated by the same laws that govern the country’s commercial banks and BCI is enjoying the new opportunities this allows them.

The African Investment Bank (BAI) is one of the most successful private institutions in Angola, and justly proud of its recent growth	The National Bank of Angola (BNA) has noticed a sector diversification, and is concentrating on further reducing inflation levels

BCI President Generoso Her-menegildo Gaspar de Almeida states, “The burden that we had from the state is disappearing. Now the demands placed on public and private commercial banks are the same and we must follow the same regulations as private commercial banks. We are optimistic about our future projects and ranking in the market.”

In the last two years, BCI has expanded its activities to include partnerships in car dealerships, participation in a telecommunications company and involvement in agricultural sector activities. Future plans involve the real estate sector; the bank is currently set to launch a housing project of 200 residences.

Another key player in the Angolan finance sector is the African Investment Bank (BAI). Founded in 1996 as the first private bank with primarily Angolan capital, BAI is now one of the most successful in the country, registering growth of over 90% in 2002. Although BAI was originally founded as an investment bank, the Angolan conflict inhibited the creation of a properly structured financial market. Consequently, BAI adapted its core business to become a full service commercial bank.

MÁRIO ABILIO M. PALHARES Chairman of BAI

President and Chairman Mário Palhares says that as a private bank BAI has had a competitive edge over state banks and continues to do so, due to a strong commitment to IT and personnel training. “We offer what other banks in Angola have yet to offer. BAI is a dynamic new bank that offers new products, new computer solutions, and inspires faith in young people with initiative. All of these factors have served to improve the state of the Angolan banking system overall,” says Mr. Palhares.

Things are also looking up in the Angolan insurance sector as new foreign investment begins to flow into the country. Companies that have traditionally had the majority of their business in the oil sector have begun to extend activity to other areas.

One such company is AAA Financial Services, which specializes in the administration and management of risk. Although its core business will continue to be meeting the needs of Sonangol, the national oil company, and other petroleum companies, AAA has also begun to expand in other directions. President São Vicente says, “We already have fire, work, accident, liability, life, and aviation insurances. Obviously, our main business is oil industry insurance, since the base of the Angolan economy is oil and diamonds, and we reflect this. However, we believe that the future is in the other types of insurance, although they still need to be developed some.”

Banking sector reform has also reduced investment risk in Angola. Strengthened institutional capacity, decentralized regulations, and higher levels of macroeconomic stability are ensuring increased investment security.

According to Ari Carvalho, Administrator with the National Private Investment Agency, there is no higher risk in setting up business in Angola today than there is for a company moving from New York to Minnesota. Mr. Carvalho believes that the only disadvantage for American investors is the longer-term payback. He advises, “American companies coming into Angola need to think locally and not look at short-term returns.”