The Empresa Interbancária de Serviços (EMIS) oversees the implementation of an advanced, central payments system to speed transactions

The liberalization of Angola’s banking sector, the harmonization of national regulations with the Basel II accord and a proliferation of natural resources – Angola is now Africa’s largest producer of crude oil and holds a quarter of the world’s known kimberlites – have excited international interest and made the country a new regional leader in economic diversification

Angola is Africa’s next financial frontier: an oil- and diamond-rich nation that experienced 24.4 percent growth in GDP in 2007, but where only 5 percent of the population has a bank account. New legislation has established a framework for financial services, and a whole flock of new banks and financial institutions is taking wing. To fill the need for a modern payment network, the Angolan central bank has partnered with the country’s commercial banks to build an advanced electronic payments system run by the Empresa Interbancária de Serviços (EMIS). With so much activity in so short a time, banking is becoming a crucial part of Angola’s rapid transition to a wide-open market system.

Rising oil prices and political stability have improved the monetary situation and the investment climate, particularly for financial institutions. The country’s central bank, the Banco Naçional de Angola (BNA), has made aggressive moves to get inflation under control, and succeeded in cutting consumer inflation from 325 percent in 2000 to 12.5 percent in 2007. In 2008, BNA vice governor Dr. Rui Miguêns de Oliveira announced that the BNA will harmonize its regulations with the Basel II international financial accord. The Basel II agreement mandates uniform risk management rules for banks, and sets international standards for management methods to assess risk in small- and medium-size enterprises.

Angola’s three largest banks – Banco de Poupança e Crédito, Banco de Fomento, and Banco Africano de Investimentos – have a combined 71 percent share of the commercial banking market. Their dominance hasn’t kept new players from entering the market every year, with five launching operations in 2007 alone. Two of 2007’s entrants demonstrate the appeal of Angola’s banking sector for international investors: Finibanco, founded with capital from the Portuguese bank of the same name and Angolan partners, and Banco Angolano de Negocios e Comercio are both aimed at the country’s business-minded Chinese population and its small- and medium-sized firms.

Pedro Puna, Chairman of the Board of Directors-EMIS

Growth in the banking sector is a sign that Angola’s economy is successfully diversifying away from oil and leveraging petroleum-based prosperity into other areas of the economy. Current partnerships between the Angolan government and the country’s banks are using oil revenues strategically to expand the private sector. To do this, President José Eduardo dos Santos opened the Banco de Desenvolvimento de Angola in December 2006, which will direct up to 5 percent of government tax revenue to new infrastructure projects and help Angola’s economy reap the benefits of the 2002 peace agreement.

The Ministry of Finance has played a key role in creating a more mature financial system through efforts to address the country’s needs for new housing, roads, and railways. In Feburary 2007, the Ministry outlined plans for the government-owned Banco de Poupança e Crédito, in cooperation with a consortium of eight private banks, to finance a $157 million housing project. The partnership will float short- and medium-term treasury bonds on the financial markets to fund the deal.

EMIS, Angola’s inter-bank service company, is another joint effort between government and private banks. The World Bank first identified the need for a modern electronic payment system in 1998, and BNA quickly took up the challenge, according to EMIS Chairman Dr. Pedro Puna: “BNA assumed the responsibility to mobilize the country’s existing commercial banks to combine their efforts and create a company to set up the management of electronic payments. EMIS allowed all the banks to share costs and maximize cooperation in managing the system’s infrastructure.”

For the Angolan consumer, the most widely known aspect of EMIS operations is the Multicaixa debit card system, giving personal and business consumers access to electronic payments and the new national ATM network. Dr. Puna believes that Multicaixa is an important element in encouraging greater use of the banking system, drawing activity out of the informal economy. “The Multicaixa product has been popular with young people, as well as those with larger incomes from other age segments”, he says. “People with a Multicaixa card don’t want to carry cash on them anymore.”

EMIS has also taken a leadership role in upgrading the banking network to meet the European Mastercard Visa standards, so that Angolan businesses can accept international credit cards. “EMIS had to invest large sums to ensure that our systems were technologically compliant, change our administrative procedures, and develop new software. Eight of our 12 shareholding banks are already members of the Visa network.”

The improved macroeconomic situation has fostered the growth of financial institutions. Dr. Puna says that lower inflation and the newfound stability of the Angolan currency, the kwanza, has helped reinforce trust in the Angolan financial sector. “The BNA is continuing to pursue liberalization, which has brought about greater confidence in the currency. Savings are beginning to be made in kwanzas.”

Dr. Puna maintains that EMIS will have to act carefully but decisively to carry out its ambitious mandate in a challenging environment. “Increasing the use of banks and reducing the informal economy requires both audacity and patience. We are already seeing some positive signs, and the battle will eventually be won, but EMIS is only a piece of a complex process.”