Legal Update/ Angola: Credit to the Economy by commercial banks


Angola has revised the the terms, conditions and requirements of credit operations to the economy by commercial banks, according to official legal database Legis-PALOP+TL.

As of April 7, 2022, Banking Financial Institutions (Commercial Banks) must, in relation to credit to be granted to the Real Sector of the Economy, grant credit in one of the following ways:
⦁ Medium and long-term credit for investment, including for the acquisition of machinery and equipment, which must have as a maximum term the payback period of said investment, and Commercial Banks must consider, in addition to financing with real guarantees, , the type of financial leasing;
⦁ Short-term credit for the purchase of raw materials and other inputs from local suppliers in the domestic market, which must be granted for the maximum estimated period between its acquisition and the sale or payment by the buyer of the finished product;
⦁ Credit granted in the factoring modality.
⦁ Cover the activities of culture and production of essential goods, namely poultry, cattle, goats, pigs and derivatives;
beekeeping; commercial fishing, aquaculture and all activities related to the fishing industry; pastry and bakery;
culture and derivatives of rice, coffee, sugar cane, beans, tropical fruits, vegetables, corn, wheat, tubers, palm trees and soy; production of beverages, including juices, milk and its derivatives, cooking oil, common salt, hygiene articles, packaging, soap and detergents, wood and its derivatives, steel rods used in the construction sector, glass, fertilizers and correction materials of soils.

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Commercial banks must also comply with the following maximum limits of the total cost of the credit to be granted, which includes the interest rate and commissions:
⦁ 7.5% per year on investment loans; and
⦁ 10% per year on credits for the purchase of raw materials, inputs and factoring.

Under the new legislation, another requirement for banks is to ensure the disbursement of the following minimum numbers of credits, according to the value of its net assets as at 31 December of the previous year:
⦁ For total net assets equal to or greater than 400,000,000,000 Kwanzas (approximately 950,000,000 USD), the minimum number of credits to be granted is 25;
⦁ For total net assets equal to or greater than 200,000,000,000 Kwanzas (approximately 475,000,000 USD), the minimum number of credits to be granted is 20;
⦁ For total net assets above 50,000,000,000 Kwanzas (approximately 118,000,000 USD), the minimum number of credits to be granted is 15;
⦁ For total net assets up to 50,000,000,000 Kwanzas (approximately 118,000,000 USD), the minimum number of credits to be granted is 5.

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Not eligible for compliance with the above mentioned minimum numbers of credits is financing granted in the form of factoring; and short-term credit renewals, granted in the same year, and renewals in subsequent years, in addition to the first, in each calendar year.

Commercial Banks must comply with the above points based on the “comply or explain” principle. If they do not reach the annual targets, they must justify the reasons for doing so by February 28 of each year. The National Bank of Angola (BNA) will decide on the measures/sanctions to be applied, on a case-by-case basis, depending on the justifications presented and the compliance record of the Commercial Bank in question, until 31 March of each year.

Commercial Banks must formulate a policy for granting credit; take into account the BNA rules on Credit Granting and on the Deadlines for Analysis, Communication of the Final Decision, Formalization and Availability of Credit; use experts to ensure a well-founded credit decision, whenever necessary; assess the possibility that the credit to be granted may benefit from a guarantee or agricultural credit insurance in order to mitigate credit risk; and ensure regular monitoring of its customers, in order to timely detect financial difficulties or other circumstances that may increase the risk of default and take appropriate measures to prevent or resolve the situation.


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