Angola’s rapid economic growth and impressive recovery from decades of civil war are attracting investors from the U.S., Africa, Asia, and the Portuguese-speaking world. To translate local opportunity into international success, the Banco de Negócios Internacional (International Business Bank, BNI) is pioneering new services for Angolan and international businesses. Less than two years after it was founded by some of the rising stars of the Angolan financial sector, BNI is already making its mark.

As the first Angolan bank dedicated to business, BNI brings a modern approach to the country’s nascent banking services market. “Given Angola’s stage of development, it is critical that there are specialized banks oriented towards investment banking” says BNI chairman Dr. Mário Palhares. “We still have to create a stock market, and the capital market must be strong as well – otherwise, the growth of the banking system will be very limited.”

Banco de Negócios Internacional aims to sweep up the underbanked sub-sectors of Angolan society and create an investment climate for financial services providers

The wide-open banking market in Angola means that the opportunities for financial services firms are considerable. Dr. Palhares believes that the more widespread use of banking services will create multiplier effects in the economy and bolster the financial sector overall. “If you compare Angola to countries with a higher level of penetration by banks, you have to take culture into account. When the population agrees to put their money in a bank, we will automatically see a substantial improvement in our situation. A higher level of deposits promotes lending, strengthens the overall banking system, and helps banks become truly national. Above all, banks speed up economic development because they lessen the dominance of the informal economy.”

By the time BNI started operations in 2006, other banks had already established themselves in the high-growth, low-inflation environment created by rising oil exports. Dr. Palhares recalls that smaller players like BNI had to be agile to gain a foothold. “We invested in innovation to build our market share. The larger the bank, the greater the tendency to be less dynamic and flexible – smaller banks are more agile and have a greater capacity to innovate. There are niches that large banks just aren’t capable of managing, and we will increase our own market share by filling them.” BNI has thrived by providing specialized services: consulting to the public and private sectors, international financial products for businesses and high-income personal banking customers, and support for mergers and acquisitions.

Dr. Palhares says that BNI’s strategy has been to broaden access to banking, while deepening the services offered to existing customers. “There is still a large segment of the population that the financial and banking sector has yet to attract, and there are Angolan individuals and businesses who want more services than most banks currently provide. At BNI, we created the ‘24-hour Express Network’ targeted at SMEs and other private enterprises, all based on plastic: debit, credit, Mastercard and Visa.”

Expanding financial services outside of Luanda is an essential element in the government’s plan to spur rural development and relieve some of the pressure on Angola’s crowded capital. Dr. Palhares agrees that bringing banking to underserved areas is good business for BNI as well as good policy for Angola. “If we create the right development conditions in the provinces, we can stem the so-called rural exodus to urban areas. Giving banking a presence beyond Luanda will extend access to credit for individuals and industries in the provinces and rural areas, helping generate employment.”

BNI’s attention to the needs of Angolan small- and medium-sized businesses is attracting interest from government partners. In 2007, the state-owned Banco de Desenvolvimento de Angola (BDA) signed an agreement to sell its services through BNI’s growing network of branches, with several locations in Luanda as well as offices in Cabinda, Benguela, Huíla, and Huambo provinces. This partnership brings the specialized, development-oriented services of BDA alongside the commercial banking services offered by BNI.

Mário Palhares, Chairman of the Board of Directors of BNI

Dr. Palhares believes that the chance to build a modern banking infrastructure from the ground up will create unprecedented opportunities for Angolan banks. In his analysis, the government’s commitment to transparency means the Angolan financial environment compares favorably to that of countries with more established banking sectors. “I don’t view the banking sector as different than any other sector in our economy. The development of the Angolan banking sector is comparable to what is happening in Portugal, France, Spain, or other African countries. Similar to what has happened in Europe, our Central Bank is steadily increasing the pressure for greater rigor, larger capital reserves, lower risks, and bank consolidation.”

BNI’s impressive record is due to the hard work and savvy of Angola’s financial professionals, but Dr. Palhares thinks that the sector overall has much to learn. “It was easy for us to find Angolan banking expertise, but we are still a growing country. When the country sets up a stock market, capital markets, and other such institutions, our banking professionals will be able to put into practice what they only know in theory.”

The next challenge, as he understands it, is to compete against global players as well as domestic ones. “When BNI started up, we began our business with 100 percent Angolan investment, and we didn’t contemplate foreign investment. Today, we must consider globalization. We can’t think only at a domestic level, we must also consider opening up to international institutions. We cannot close ourselves forever.”

‘BNI’s mission is to become the best bank in Angola’
Interview with Dr. Mario Palhares

What are the major investment opportunities and challenges posed by the Angolan market?

Dr. Mário Palhares: In the oil industry, investment opportunities are endless. Take the current boom in infrastructure construction as an example: besides generating direct job opportunities, it opens up investments in the ceramic industry, aggregates, and so on. The challenges are the same that you see in other developing economies, and we’re reorganizing public services in order to let investors form companies as quickly as possible.

How much of a role does customer participation play in the financial sector?
The growing use of banking services by private, corporate, and public customers means that the financial flows generated by the economy are now managed by the financial system. This means that we can funnel them into economic development, and help the financial sector diversify its portfolio of products and services. Greater use of these services generates more funds to finance the economy, which increases the demand for financial services; it’s a virtuous circle.

What are BNI’s priority objectives?

Our goals are to pursue the development of a base of corporate and private clients by offering excellent service, supported by a portfolio of products that meet their needs, and, in the middle term, expanding that portfolio to accommodate different types of customers. Above all, BNI’s mission is to become the best bank operating in Angola.

How would you currently rank BNI in the Angolan marketplace, and what do you foresee for its future?

Our rank is the product of two important components of our operations and overall strategy. The first is that we serve large corporations and institutional investors, and the second is that we offer private banking services. BNI’s clientele for that kind of personal banking is middle- to high-income individuals in the Angolan market who demand a much larger range of products and services from their bank.

What services are BNI able to offer domestic and international investors?
BNI can supply consulting services during the creation of the business, provide financing, and support the fiscal and legal operations that companies have to go through during startup. It’s a basic element of our investment banking business. For international customers, what we bring to the table has a lot to do with our international connections and networks.

How important is a strong monetary and financial system in attracting foreign investment?

A strong monetary and financial system means that the country follows consistent macroeconomic policies and that the government, along with the independent monetary and financial authorities, control the budget, exchange system, and monetary policy. With these, we can demonstrate our stability and earn the confidence of international institutions.