Banco Económico: Angola on the Brink of a New Era

Angola is a country with huge economic potential that is facing an encouraging political environment for foreign investment.

There are several activity sectors with a strong development potential, including agriculture, tourism, infrastructure, environment and the manufacturing industry. Although the next two years will still be a time of economic adjustment, now is the time to look for investment opportunities in the country.

This may be a challenging year in the Angolan market, considering the economic adjustments that will continue to affect families and companies. The expected increase in prices of utilities will have a further impact on the economy. Unemployment levels are currently uncomfortably high, and cost-reduction will be mandatory for many companies.

The adjustments introduced in the economy will show results in the medium term. Investment is critical for the development of the economy, with the creation of new businesses and jobs. Given the state’s limited capacity in this role, the private sector and external investment must play a part in boosting the economy and ensuring a steady evolution of the main macroeconomic indicators.

The Angolan government is working hard to improve the business environment and to promote the country to private and international investors. In terms of economic outlook, these measures to attract foreign capital to the Angolan economy are very positive, and market agents are reacting positively. Investors, banks and the international community are enthusiastic, and if things continue along this path, the benefits should soon be seen.

In the banking industry, results of the consolidation efforts in the financial system are expected for the year ahead. The central bank will continue to raise the requirements on the financial sector. An asset-quality review will be carried out this year, which may dictate additional capital requirements. Attention is focused on the availability of capital, so new players in the market, mainly foreigners, can be expected.

Another factor in the equation is the Extended Fund Facility agreement with the IMF. This facility will allow the government to make necessary structural investments and reforms.

The entry of the IMF also adds peace of mind to some investors, and can boost confidence for foreign investment.

Some challenges remain. Although the foreign currency market has stabilised, the economy contracted significantly last year. The devaluation of the currency had a huge impact on sales for many companies, with reported reductions of 30-40 percent as a result of a loss of local purchasing power. In the corporate and financial industries, cost reduction strategies and adjustments to business structure must be considered.

In 2018, we had a solid increase in terms of commercial activity. Our year-end results will be positive. We also have improved all of our KPIs in terms of the bank’s commercial activity. We have raised our customer base by 20 percent and increased revenues and the number of transactions made, year-on-year. For that, it was very important to stabilise the foreign currency market. The new policies from the central bank stabilised the operations of our corporate customers, who can now access foreign currencies more easily and regularly through the banks.

In March 2018, for the first time, we published our Moody’s rating — becoming the second bank in Angola to be rated by this international agency. It was a significant step for our clients who had faced restrictive rules for banking services, and an asset for our banks. Moody’s ranked us at the same rate level of the Angola Republic, a great outcome.

Banco Económico has a sound market strategy based on deep market segmentation of products and services for retail consumers and corporate clients. The bank has a solid portfolio of financial solutions, including current and savings accounts, leasing, trade finance, investment banking, digital banking, savings and investment solutions, insurance, forex hedging products, real estate and pension investment funds. Banco Económico is well exposed to the corporate segment and expecting continuous growth.

Through a structure based on specialised business areas, Banco Económico has different products and services customised to the needs of different economy sectors — oil and gas, trade finance, investment banking, corporate and entrepreneurship — as well as to the main economic activities, which are vital to the country’s sustained development.

Banco Económico has been an active supporter of the country economic development due to its strong position in the corporate segment, mainly in the top-level corporates and SMEs. On the individual consumer side, we have been moving from an approach of private banking to a more retail, mass-affluent market bank. We are preparing for a new phase of the Angolan economy.

We believe this new influx of foreign investment will create more companies, more jobs and more wealth, and problems we have faced — such as high unemployment and lack of capital — will decrease in upcoming years.

We are preparing the bank for this period, and revisiting our business plan and our strategy to start approaching new market segments that have so far not been tackled.

Angola is entering a new era and we will have the opportunity to target lower and emerging market sectors. We will push our operation and business results forward. These are the main changes in terms of how Banco Económico will approach the market, and the future.