Notice No. 04/2019 on Credit Concession to the Real Economy Sector

PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 46, OF APRIL 03, 2019 NOTICE NO. 04/2019 SUBJECT: CREDIT CONCESSION TO THE REAL ECONOMY SECTOR

• Terms and Conditions With a view to promoting the diversification of Angola's real economy and, thereby, reducing excessive dependence on the importation of goods and services and contributing to the sustainability of the country's external accounts, the Executive recently launched two initiatives, namely: i. The National Development Plan for the period 2018–2022, which includes the Program Supporting Production, Export Diversification and Import Substitution, known as PRODESI, a coordination and partnership instrument between the Executive and the Business Sector, aimed at accelerating private initiatives capable of increasing national production, expanding and diversifying exports, and substituting imports in the short, medium, and long term; ii. Presidential Decree 23/19 of January 14, which approves the Regulation on the Commercial Chain for Offering Goods from the Basic Food Basket and Other Priority National-Origin Goods, conditioning the importation of certain products to prioritize the consumption of national goods. Considering the above, it is necessary to stimulate credit concession by banking financial institutions to national producers of goods considered essential, whose national production does not yet satisfy internal demand. Thus, under Law No. 16/10 of July 15 – the Law on the National Bank of Angola and after consulting the Angolan Banks Association,

CONTINUATION OF NOTICE NO. 04/2019 Page 2 of 5 DETERMINED: Article 1. (Scope)

1. This Notice applies to credit concession by banking financial institutions for the production of essential goods that exhibit a deficit in national supply.
2. For the purposes of this Notice, the following goods are eligible: a) Broiler poultry and laying hen farming and production of their derivatives; b) Cattle, goat, and pig farming and production of their derivatives; c) Rice cultivation and production of its derivatives; d) Sugarcane cultivation and production of its derivatives; e) Bean cultivation and production of its derivatives; f) Cassava cultivation and production of its derivatives; g) Maize cultivation and production of its derivatives; h) Soybean cultivation and production of its derivatives; i) Milk and production of its derivatives; j) Edible oil; k) Fish and production of its derivatives; l) Blue soap; m) Common salt.

Article 2. (Credit Concession)

1. Banking financial institutions must develop targeted credit solutions adjusted to financing the goods referred to in Article 1 of this Notice, under the conditions established herein.
2. Banking financial institutions must interact with business associations and ministerial departments overseeing the economic activity of the productive sector to regularly obtain updated information on national production supply deficits for the products referred to in Article 1 of this Notice.

CONTINUATION OF NOTICE NO. 04/2019 Page 3 of 5 Article 3. (Sale of Foreign Currency) In the sale of foreign currency to their clients, banking financial institutions must prioritize covering exchange rate needs that directly or indirectly contribute to the production of the goods mentioned in Article 1 of this Notice.

Article 4. (Interest Rate, Commissions, Other Terms and Conditions)

1. The total cost of credit granted under this Notice, including the nominal annual interest rate and commissions, must not exceed 7.5% (seven point five percent).
2. Banking financial institutions may apply fixed or variable interest rates, the latter indexed to Luibor minus a margin; however, they must ensure at all times that the total cost of granted credit does not exceed 7.5% per annum.
3. The Luibor rate applied must correspond to the interest payment frequency.

CONTINUATION OF NOTICE NO. 04/2019 Page 4 of 5 Article 5. (Total Annual Credit Value to be Granted)

1. The credit granted by each banking financial institution during the year 2019, under this Notice, must correspond to at least 2% of the total asset value recorded in its balance sheet as of December 31, 2018.
2. Eligible for calculating the total value to be granted referred to in the preceding paragraph are credits granted from January 1 of the current year, as well as those granted in previous years for producing the goods referred to in Article 1 of this Notice that are restructured during the year due to borrower financial difficulties.
3. Eligible for the total credit value referred to in paragraph 1 of this article is credit granted by banking financial institutions under the Credit Support Project (PAC) for producing the goods referred to in Article 1 of this Notice.
4. The National Bank of Angola establishes the targets for each calendar year at the beginning of that respective year.

CONTINUATION OF NOTICE NO. 04/2019 Page 5 of 5 Article 6. (Adequate Risk Assessment and Management Criteria)

1. Banking financial institutions must apply adequate risk assessment and management criteria in all credit operations, and must ensure compliance with their obligations regarding anti-money laundering (AML) and counter-terrorist financing (CFT).
2. In granting credit, banking financial institutions must ensure that operation assessments include a detailed analysis of sector-specific risks, resorting to expert subcontracting whenever the institution itself lacks adequate knowledge to fully appraise them.

Article 7. (Deduction of Mandatory Reserves)

1. The entirety of credit granted for producing the goods listed in Article 1 of this Notice, including restructured credit under paragraph 2 of Article 5, shall be deductible from the value of mandatory reserves to be maintained by each banking financial institution.
2. The deduction shall be made from the accumulated value of disbursements at each mandatory reserve reporting date.

Article 8. (Compliance Assessment)

1. This Notice is based on the 'comply or explain' principle, requiring banking financial institutions to report to the National Bank of Angola at the frequency and format it shall define.
2. In the final report of each calendar year, banking financial institutions that have not met the target established in Article 5 must thoroughly justify the reasons for such shortfall and state their action plan for compliance.
3. If it deems the justifications provided by banking financial institutions inadequate, the National Bank of Angola may establish other types of measures and recommendations to ensure compliance with the objectives set forth in the preamble to this Notice.

Article 9. (Doubts and Omissions) Doubts and omissions arising from the interpretation and application of this Notice shall be resolved by the National Bank of Angola.

Article 10. (Entry into Force) This Notice enters into force on the date of its publication. PUBLISHED. Luanda, April 02, 2019.

THE GOVERNOR JOSÉ DE LIMA MASSANO