José Pedro de Morais, governor of Banco Nacional de Angola, spoke with Global Finance about the central bank’s efforts to restore order and build confidence in the country’s financial system.
Global Finance: What is the BNA’s outlook for the Angolan economy, and what further measures might be taken to improve growth and diversify the economy?
José Pedro de Morais: The government adjusted its spending plans in early 2015 to accommodate the “new normal” of low oil prices, in order to maintain a healthy balance sheet. Bond issuances have helped diversify our funding, and levels of foreign direct investment remain high. Investment in infrastructure is a national priority, and this [trend] is continuing. Angola’s economy grew in 2014 and in 2015, and it will grow this year as well. A strong and secure financial system helps provide access to capital for businesses to invest and grow, and if we can continue to help foster innovation, we will continue to play our role in diversifying the Angolan economy.
GF: You have described Angola as being on a journey toward meeting global standards of governance. What are the most important steps already taken?
Morais: The Angolan government has been building a legal framework against money laundering, drug trafficking and fraud for many years. New laws were introduced in 2010 and 2011 that mandated a very wide range of organizations and professionals that must adhere to new obligations. National banks are now legally mandated to inform the banks that they transact with of their own global regulatory requirements—it is unacceptable for any banking institution to plead ignorance that their banking partners were not in compliance.
In 2015 the BNA issued a new guide towards compliance that reflects the standards issued by the Basel Committee on Banking Supervision. All banks in Angola are mandated by law to submit an independently audited report laying out their actions implementing Financial Action Task Force and Basel standards. These audits will be verified within the first half of 2016. The central bank will also announce a new policy framework on any additional recommendations from the FATF’s recent visit to Angola.
GF: What challenges lie ahead?
Morais: The challenge for Angola and most African countries is understandably greater than [that for] developed nations because there is an historic perception of corruption and a lack of transparency. For this reason we need to ensure that the laws we have implemented are strictly adhered to in the future. So, the challenge is to root out those who defy the law and punish them while strengthening the overall compliance and governance framework. The BNA will implement punitive measures against offending institutions that are not fully compliant and intensify sanctions on banks that flout regulations. These measures will strengthen governance and compliance and ensure our financial system remains stable.
GF: What are other key policy areas in which the BNA can strengthen Angola’s financial system?
Morais: While the Angolan government is responsible for balancing the budget and determining spending priorities, our role is to create a framework for businesses to grow and ordinary citizens to prosper even during difficult times. This means we have to keep inflation at a stable rate in order to protect consumers’ spending power while keeping interest rates low enough so that businesses can borrow and invest. We also need to ensure that we maintain our credit rating. Good governance and strong anti-money-laundering laws are an important part of that equation.