August 2018· Angola

Interview with Dr. Amilcar Silva, President – Angolan Banking Association (ABANC), Angola

Prisma Reports (PR): Africa is becoming an increasingly attractive destination for foreign investment, both for advanced and emerging economies. Which are in your opinion the main attractions of the continent?

Amilcar Silva (AS): Africa has been transforming obsolete governments into democracies and has been healing conflicts determined by political and cultural differences that are seeding poverty, disease and backwardness. Instead, slowly but in a determined way, countries emerge to implement reform projects, which favor the use of their resources in a rational way that gradually add diversified and sustained growth, increasing the supply of employment, quality of education, improvement of basic sanitation, the fight against diseases, in short, better quality of life for the populations. This transfiguration that is taking place in the economies, I mean, of course, in Sub-Saharan Africa, is also due to the more efficient functioning of Regional Organizations, formed by the respective countries of the Zone, offering investors more favorable conditions for the implementation of investment projects, including increased security, which translates into more wealth for countries and their populations.

Globally, the economic and social profile has other contours, making the countries attractive to the inflow of investment capital, offering good business opportunities, with business risks also in regression. This new situation, which is growing, is measured by the GDP growth of the economies in this part of Africa, with consistent increases.

(PR): Christine Lagarde, Managing Director of the IMF, said in her keynote speech at the Africa Rising 2014 conference that Africa faces three main challenges: building infrastructure, building people and building institutions. How would you evaluate the work done to date?

(AS): We agree with Christine Lagarde, the IMF's Managing Director, when she does that statement. Most of the African countries, emerging from severe colonization, have come to know, in one form or another, sometimes at different times, burdensome and destructive social turbulence. Hence the need to rebuild infrastructures at all levels, to rebuild society, to train capable and competent staff who can, with benefits, replace expatriate labor. Likewise, there is a need to look at institutions, which have to be modern and efficient, without which the exercise of governance and the authority of states cannot be felt. However, the future is full of hope and, soon, African countries and their populations will experience quality of life, progress and development.

(PR): We are facing a new era in Angola, under the leadership of President João Lourenço, the first change in the head of state in almost 4 decades. One of its promises is to implement the much-needed economic diversification of the country. Which sectors have the greatest potential in your opinion?

(AS): We are a country still loaded with sequels, which has to import a lot of what it consumes, because it does not produce to satisfy the basic needs of the population, which continue to grow, causing persistent deficits and an increase of inflation that is at undesirable levels, whose struggle remains strong, because the cost of living is high. We urgently need to grow agricultural goods, produce them on a large scale throughout the country, to replace imports and also export at high levels that provide surpluses of foreign exchange, which we are lacking in other sectors. The production models must be modernized and to take advantage of this we also need specialized technical assistance in order to achieve quickly what is required.

I think I am not exaggerating if we say that we should "breathe" agriculture, which will motivate employment, combat poverty, place the prices of the basic basket without subsidies, compatible with the incomes of the population. Agricultural production, at modern levels, pushes the modernization and creativity of other sectors, making the productive sector broader to cover our needs. Of course, we include here teaching and intense vocational training. Although we are progressing, especially in the adjustment of the macroeconomic situation, without which we will not achieve the efficiency that motivates the entrepreneurs and the businessmen, we will have to be more dynamic in the execution of the programs.

(PR): The financial sector plays a key role, not only at the macroeconomic level, but also in the activities of companies and individuals. How would you describe the Angolan financial sector to the international public? What are its strengths and what does it offer compared to the countries of the region?

(AS): The banking system, aware of its responsibilities, assumes a prominent place in the Angolan economy, functioning as an engine for the country's development. It is a strong ally of progress and social inclusion, constituting itself as an essential partner of the State, to whom it provides complementary financial services to the investments that have been made, especially in infrastructures, by giving credit to interventor companies to provide them with resources to increase their financial and technical capabilities, enabling them to play an increasingly important role in the assumption of their businesses. At the same time, the banks are giving a decisive contribution to the emergence, growth and sustainability of the national private sector through new financial products adapted to the needs of companies, with private companies being the bulk of the Angolan business community as the main recipients of bank credit. In the role that the State has played in the financing of large national investments, the banks that operate in Angola are also important partners in the granting of complementary loans that directly or indirectly help financing the economy, which have proved to be of great utility and opportunity. However, the Banks’ current support to companies over the last three years has been driven by growth rates below deposits, due to the influence of the macroeconomic policies in force, resulting from the fight against inflation that still remains high.

(PR): ABANC was established 20 years ago to strengthen the Angolan banking system, as well as its relationship with society and to contribute to the development of a solid banking sector that is more attentive to the needs of the country. What milestones would you highlight in your two decades of activity?

(AS): Since its inception, ABANC has done efforts to represent and defend the interests of its associates, the banks that have activity in the country. Therefore, its model of operation has been adapted to follow the evolution and increasing sophistication of the banking sector, and its relations with financial sector stakeholders have been strengthened and intensified. ABANC has created a database for the systematic collection of information and, based on it, we publish annually a report on the national banking sector, which is in its 5th edition, prepared with the intention of analyzing by time series the activity developed by banking financial institutions in each exercise in a comprehensive and profound way. We also have an institutional website where we publish pertinent and relevant information about the banking sector. We also dedicate a great part of our activity carrying out various initiatives in the field of training of the banking human capital, organizing annual events that deal with matters of interest to increase the intervention and credibility of banking professionals in their relationship with clients.

(PR): The Economic Commission of the Council of Ministers approved on Thursday the National Plan for Financial Inclusion, and from ABANC are committed to making contributions that contribute to enhance the process of financial inclusion. How are you promoting this inclusion and bringing financial products closer to citizens who were previously excluded?

(AS): Policies aimed at financial inclusion have been a priority in the business plans of the players in the banking market, and this is being made in several areas, subsidizing the National Plan for Financial Inclusion. Annually, ABANC publishes a study on the population's bankarization, in its 6th edition, complementing the information provided by BNA. In terms of access, the coverage of banking services is expanding throughout the country, evidenced by the positive evolution of financial inclusion indicators. On the other hand, Angolan banking institutions have followed the trend of digital transformation, with continuous innovation of the means of payment and digital channels of service to its clients. Complementing the increase in the bank branch network, the trend of the massification of mobile and internet banking services at the national level reveals positive impacts on the reduction of costs associated with the expansion of the banking network, and also contributes to increase bankarization levels. From the perspective of usage, not only is the increase visible in bank accounts, but also in the growth of simplified accounts, Bankita accounts, aimed at the low-income segment. The implementation of mobile banking services under way in Angola appears as a more accessible and flexible platform for accessing financial services to low-income and rural residents with the potential to reduce the impact of the informal financial sector.

(PR): How are you promoting new technologies and innovation in the Angolan banking sector?

(AS): The national banking sector continuously makes significant investments in technologies, embracing innovations as a differentiating factor in the face of competition, similar to what happens in other geographies. This technological transformation is visible in a continuous modernization of the banks’ internal processes and technological platforms, in the greater sophistication of alternative channels of assistance and in the introduction of digital solutions to reinforce security, performance and convenience in banking operations, better quality and speed in service, and expansion of the offer of available services, adapted to the specific needs of each segment. The banking system has undergone profound changes in recent years, with the greatest demand coming from a more sophisticated regulatory and prudential framework, with the adoption of the IAS/IFRS accounting standards, with the highest efficiency and complexity of the payment system, using new technologies to improve the operational efficiency and quality of the services provided.

(PR): One of the major components of the financial business is to generate trust in customers, and for the foreign investor it is of paramount importance to verify that there is a stable and solid financial sector. What message of confidence would you like to convey?

(AS): Despite the vicissitudes, related to the price fall of oil in the international market and its impact on the national macroeconomic environment, the Angolan banking system, as a result of its maturity, has adjusted its business strategy over the last three years, having reinforced its investment in the greater capacity of its human capital, in the function of compliance and in the fight against money laundering, in the system of internal control and risk management. We recognize that challenging situations are opportunities for growth, and Angola’s banking sector is now more transparent and resilient to face the future, always being active in financing the State, companies and families, as an indispensable partner for sustained and diversified growth of the economy.

(PR): President Lourenço said that Angola will give priority to important partners such as the US, marking 2018 a quarter of a century of diplomatic relations between both countries. In October 2016, the BNA met with the Association of North American Banks to present the plan to adapt the Angolan financial system to prudential standards and good international practices. In what areas would you like to see closer collaboration?

(AS): Different banking systems around the world, thanks to the strong, constant and urgent regulation of central banks to strengthen the banks' capacities to combat money laundering and terrorist financing, chose as global priority the implementation of compliance measures, whose complexity reaches high proportions and hindered the relationship between banks from different countries, the so-called correspondent banks. The requirements imposed by US’ financial authorities, which affect all banking systems, have forced the BNA, the country's central bank, to take immediate steps to adopt the strong measures in force throughout the world, requiring banks to deal with these issues. The country was deprived of relations with banks in the US, with the consequent losses. The complexity of all procedures and legislation do not allow progress as we would wish, so it is absolutely necessary that we benefit from help in specialized assistance, especially from the US, because there the demands are relentless and without them we take risks that we do not want and we can not take. Fortunately, there is much understanding from the American authorities, that we hope to maintain and we will do everything to preserve. The commitment of the whole Angolan banking system put in this fight, fills us with optimism regarding our professionalism and skills.

(PR): President Lourenço also said that one of his priorities is to continue "promoting the image of the country abroad, both in the expectation of exports of goods and in attracting foreign direct investment." What image would you like the international community have about Angola?

(AS): Angola is a country that was subject to various vicissitudes that caused us to have great difficulties that could not be solved at the right moments and which provoked an accumulation of situations that, although the country being more able to do so, we still weren’t able to heal. We live today a time of great changes, aimed at putting an end to our imperfections. Therefore, I hope that very soon, we will become a prosperous, democratic country, where people will live with quality and where the foreign community, residing or not, likes to live, sharing our experience.