Angola’s Economic Future Hinges on Financial Reforms and Investment Confidence
The Challenges of Securing Inward Investment in a Global Economy
As the world’s attention turns to Africa’s economic prospects, Angola is grappling with the challenges of securing inward investment in a global economy plagued by low growth and commodity prices. With sub-Saharan Africa’s third-largest economy, Angola must navigate a delicate balancing act between trust, transparency, and reform in its financial markets.
The Impact of Foreign Currency Restrictions
The National Bank of Angola’s decision to impose foreign currency restrictions has exacerbated the problem of repatriating capital for investors, making it more expensive to import essential equipment and acting as a psychological barrier to those considering investing in Africa. To strike a balance between growing the economy and protecting ordinary Angolans from further economic shocks, the central bank must find a way to loosen these restrictions gradually.
Prioritizing Spending and Debt Management
The government’s commitment to maintaining priority spending on key services and infrastructure development has helped maintain a relatively low debt-to-GDP ratio of 36.5 percent, compared to an average of 48.28 percent over the 2000-15 period. However, foreign exchange restrictions must be loosened gradually to control inflation ahead of elections in 2017.
The Importance of Reform and International Best Practice
Economic policy must also be accompanied by reform to engender trust from the international community and increase competitiveness. Adherence to international best practice is crucial, with Angola having made significant progress in improving its anti-money laundering policies and combating terrorism financing regime.
A Growing Retail Banking Sector
The country’s retail banking sector has expanded over recent years, with banks extending physical branch and ATM access to urban and rural areas, increasing the banked population and providing new opportunities for businesses and ordinary people to access basic financial services. A more diverse range of electronic payment options is now available, supporting social development and enabling banks to grow.
The Role of Private Finance in Attracting Investor Confidence
Private finance is critical in attracting investor confidence, enabling the private sector to lead Angola’s economic growth. The continent is experiencing a surge in innovation and support for young entrepreneurs, with initiatives coming from the African Development Bank, World Bank, and organizations such as the African Innovation Foundation.
Priorities for Financial Reforms and Investment Confidence
To unlock its vast economic potential, Angola must prioritize financial reforms and investment confidence by:
- Fostering a strong financial sector
- Encouraging savings and private investment
- Providing a business-friendly environment
- Diversifying the economy through private sector-led growth
By addressing these priorities, Angola can ensure a brighter economic future for its citizens.