Bloomberg News

Angolan Central Bank Governor Sees Room for Lower Interest Rates

February 13, 2013

Angola’s central bank has room to lower interest rates to spur investment in Africa’s second- biggest oil producer, Governor Jose de Lima Massano said.

Policy makers cut the benchmark interest rate for the first time in a year in January, lowering it to 10 percent from 10.25 percent as inflation slowed. Commercial banks charge borrowers between 12 percent and 14 percent.

“There is still room for interest rates to come down to get to a point where they can influence more investment,” Massano, 43, said in an interview yesterday at his offices in Luanda, the capital. “They can come down without damage to price stability.”

Angola is strengthening economic policy to help rebuild after a 27-year civil war that ended in 2002. Interest rates have come down from 23 percent two years ago, when Massano created the Monetary Policy Committee. Inflation has eased from 13.7 percent in August 2011 to 9 percent in December. The Angolan kwanza has weakened 1.1 percent over the past year to 95.9443 to the dollar as of late yesterday.

Since then, the bank has shifted its focus of monetary policy away from controlling money supply toward improving coordination with the Ministry of Finance on economic stability, Massano said.

“We still have some structural deficiencies in our economy, such as bottlenecks in the transportation of goods, so we have discussions with the government about those barriers,” he said. “It’s a more pragmatic monetary policy, not just sitting and waiting.”

Bond Market

Oil dominates Angola’s economy, accounting for more than 60 percent of domestic output and 97 percent of export earnings. Offshore oil fields operated by companies including Exxon Mobil Corp. (XOM:US), Chevron Corp. (CVX:US), BP Plc and Total SA pump about 1.8 million barrels of oil a day, second only to Nigeria in Africa.

Angola plans to create its first bond market within months, to be overseen by Angola’s Capital Markets Commission, setting the stage for a stock market within two years, Massano said. While some local companies may need more time to meet requirements on financial reporting and transparency, the nine largest banks in the country are ready to list on the exchange, he said.

Banco Regional Do Keve SA, an Angolan lender, raised $20 million of subordinated debt in the country’s first corporate bond sale in September.

Oil Law

A law enacted in October requires foreign oil companies to pay suppliers from accounts with local banks, potentially boosting liquidity and the currency as it funnels $33 billion a year through the economy, according to Joao Fonseca, executive director at Luanda-based Banco Angolano de Investimentos.

The central bank will ensure lenders can meet increased demand from oil companies for local currency, Massano said.

“We feel we have the instruments necessary to reach the goals of no embarrassments for the oil companies and their payments, stability for the economy and the right incentives for making goods in the country,” he said.

Angola has 23 registered domestic banks and 10 units of foreign financial companies, according to the website of the central bank.

To contact the reporter on this story: Colin McClelland in Luanda at

To contact the editor responsible for this story: Antony Sguazzin at

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