Diminishing oil receipts, a threat of consolidation, a looming Basel II compliance deadline, a loss of US dollar correspondent banking relationships, a shortage of foreign capital... The challenges facing Angola's banks are many, which makes the strong performances of some in the sector all the more impressive, writes James King.
After contracting in 2016, the Angolan economy is expected to make a slight recovery in line with the improvement in oil prices. However, the government has been slow to deliver the diversification that could improve the country’s fortunes further. James King reports.
Post-conflict Angola is seeking to move away from its dependency on oil revenues and develop its other plentiful resources. However, the route is littered with challenges such as long-standing corruption, burgeoning red tape and social inequality, all of which are likely to hinder the government's progress. James King reports.
Falling oil receipts and a foreign exchange crisis have hit Angola’s economy hard. A recent Eurobond issue, a prospective IMF loan and the restructuring of state oil company Sonangol should help the government fund much-needed infrastructure improvements – but any recovery is likely to be slow and hard won. James King reports.
Angola has come through a long civil war, enjoyed a relatively brief boom period, and is now encountering a long-term slump in oil prices. This has led the government to instigate economic reform and support infrastructure improvements to draw investors to the country’s other abundant resources. James King reports.
A dollar liquidity crunch amid regulatory concerns, bad loans and low oil prices have tested Angola’s banks recently. Now central bank moves to tighten rules and a wave of consolidation are shaking up the sector, resulting in survival of only the fittest. James King reports.
Angola has big potential as a visitor destination, and as a sector, tourism could be a driver of non-oil growth and jobs. But high costs and red tape are deterring overseas visitors and the country needs to work harder to deliver on its ambitions.
The Angolan banking sector has been hit hard by the oil price slump, adding to concerns about systemic loan book weakness. However, a tough new asset quality review should improve matters, as should the expansion of the country's capital markets.
Angola's failure to diversify away from oil has led to faltering growth in what has been in recent years one of Africa's best-performing economies. Though the government is managing the crisis better than in previous years, the currency remains unstable and access to foreign currency is in short supply.