Jan. 10 - Angolan banks are preparing to handle hundreds of millions of dollars from foreign oil companies operating in the African country when a law requiring them to use local lenders comes into effect later this year.
Emidio Pinheiro, the chief executive officer of Banco Fomento Angola, the country’s second biggest private bank, expects oil companies to start using local banks to pay part of their taxes and suppliers by the end of June.
“It’s a very significant challenge for the financial system,” Pinheiro said in a phone interview from Luanda. “I believe we will be ready for it.”
In the past, oil companies weren’t required to use banks in Angola, Africa’s biggest producer of crude after Nigeria, as lenders couldn’t handle such transactions, Agencia Angola Press reported on Oct. 26, citing a proposal of the new oil law.
The law, approved by parliament in Luanda on Nov. 29, will be phased in so that Angolan banks can adjust to it, Pinheiro said.
The southern African country, which emerged from a civil war in 2002, is adopting measures to increase transparency in the banking sector, said Pinheiro.
Last year, President Jose Eduardo dos Santos signed into law a bill designed to prevent money laundering and the funding of terrorist activities. The country ranked in the bottom 15 of 183 countries in a Transparency International corruption study last year.
“Such laws will bring more credibility to Angola’s economy and create a more business-friendly environment,” said Pinheiro.
Angola is attracting more foreign companies as its economy booms. Gross domestic product is is expected to grow 10.8 percent this year, up from an estimated 3.7 percent in 2011, according to the International Monetary Fund.
“There is a lot of interest in Angola from foreign investors, mainly because the country’s energy sector remains robust,” he said. “There is also interest in farming and other industries.”
About 21 banks operate in Angola, including Standard Bank Group Ltd., Africa’s largest lender. Banco Fomento Angola, which is controlled by Banco BPI SA, Portugal’s third-biggest publicly traded lender, accounted for more than 60 percent of BPI’s nine- month net income last year, according to BPI.
--Editors: Hilton Shone, Digby Lidstone | Bloomberg