Notice No. 10/2024 of 20 December on Credit Concession to the Real Economy Sector

PUBLISHED IN THE OFFICIAL GAZETTE, 1ST SERIES, NO. 242, OF 20 DECEMBER 2024 NOTICE NO. 10/2024 SUBJECT: FINANCIAL SYSTEM

• Credit Concession to the Real Economy Sector
• Terms and Conditions

Given the need to update the scope of application of the Notice on credit to the real economy sector, as well as to broaden the range of goods and services eligible for financing, it is necessary to revise Notice No. 10/2022 of 6 April on Credit Concession to the Real Economy Sector; In accordance with the combined provisions of Article 36 of Law No. 14/21 of 19 May (General Regime for Financial Institutions Law), with Article 31(f) and Articles 98(1) and (3) of Law No. 24/21 of 18 October (Banco Nacional de Angola Law). I DETERMINE:

Artigo 1. (Object) This Notice establishes the terms and conditions that Banking Financial Institutions must observe regarding credit concession to the real economy sector, specifically: a) The specificities applicable to such credit operations; b) Requirements for the credit operations to be granted; c) The treatment of credit operations in the calculation of mandatory reserves.

Artigo 2. (Scope)

1. This Notice applies to Banking Financial Institutions, within the scope of credit concession activities, under the modalities referred to in Article 3, for the following culture, production and/or transformation activities of goods and their value chain: a) Agricultural production: i. Annual crops, namely maize, rice, wheat, massambala, massango, cotton, sisal, beans, soybeans, peanuts, sunflower, cassava, sweet potato, Irish potato, yam and various vegetables; ii. Perennial crops, namely coffee, cocoa, palm groves, citrus fruits, apples, bananas, pears, mangoes, guavas, papayas, among other fruit trees. b) Animal production: i. Apiary farming; ii. Aquaculture; iii. Poultry farming; iv. Cattle farming; v. Goat farming; vi. Sheep farming; vii. Pig farming. c) Commercial fishing; d) Industry and transformation of: i. Food goods, primarily agricultural; ii. Packaging; iii. Hygiene products; iv. Fertilizers and soil correction materials; v. Milk and dairy products; vi. Wood; vii. Construction materials; viii. Feed; ix. Common salt; x. Textiles and clothing.

2. The provisions of this article also apply to logistics, transportation, conservation and their respective value chain when associated with the production and/or transformation of eligible goods.

Artigo 3. (Modalities and Purpose)

1. Credit granted by Banking Financial Institutions under this Notice must comply with a modality appropriate to its purpose, namely: a) Medium-to-long-term investment credit, intended for financing capital expenditures, with an amortization term adjusted to the investment return cycle, considering the financial leasing modality; b) Short-term credit for working capital reinforcement, for acquiring raw materials and inputs from suppliers, primarily local ones, with a term reflecting the operational purchase-and-sale cycle or the period until input payment; c) Credit in factoring modality.

2. The provision under paragraph (b) of the preceding number also applies to the acquisition of production factors for annual agricultural campaigns.

Artigo 4. (Access Criteria to Credit)

1. Access to credit under this Notice is limited to banking clients who cumulatively meet the following requirements: a) Be a company incorporated under the Commercial Companies Law, Single-Person Companies Law and Presidential Decree on Cooperative Companies; b) Have organized accounting and accounts certified by a chartered accountant or certified public accountant registered with the Angolan Order of Chartered Accountants and Certified Public Accountants; c) Have a regular tax status; d) Have proven experience or demonstrate management capacity and develop the activity for which credit is requested; e) Be a client of the banking financial institution from which financing is sought; f) Not present a technical bankruptcy situation in the last two economic years; and g) Not have a record of credit default with CIRC in the last 12 months from the date of submission of the financing request, including group companies and partners with qualified participation.

2. Without prejudice to the preceding number, the degree of requirement for these conditions must be proportional to the size and operating time of the requesting entity and the amount of credit requested.

3. For cooperatives, specific characteristics and risks associated with both the nature of the operation and the prospective borrower must be evaluated.

4. Whenever the requesting entity lacks proven experience or does not demonstrate management and operational capacity for its requested activity, it may avail itself of duly proven technical assistance.

Artigo 5. (Cost of Credit)

1. For the purposes of this Notice, the total cost of credit covers the interest rate plus commissions.

2. The total cost of credit to be granted must not exceed: a) 7.5% (seven point five percent) per year, for investment credits; b) 10% (ten percent) per year, for credits for acquiring raw materials, inputs and factoring.

3. Expenses associated with any public guarantee or insurance serving as credit risk mitigation must be paid by the borrower and are added to the cost of credit referred to in the preceding number.

Artigo 6. (Credit Risk Assessment and Management)

1. Banking Financial Institutions must formulate a policy for credit concession under this Notice, defining appropriate risk assessment and management criteria suited to the nature, amount and characteristics of the credit, as well as for establishing impairments required by current accounting standards.

2. Banking Financial Institutions must observe specific regulatory norms on customer solvency assessment and service provision deadlines, ensuring continuous monitoring and preventive measures to mitigate default risks.

Artigo 7. (Minimum Requirements for Credit to be Granted)

1. Each Banking Financial Institution must ensure the disbursement of a minimum number of operations to new beneficiaries, based on the Asset value in the Report and Accounts for the last financial year, as defined by the following indicators:

Total Net Assets	Minimum number of new operations to be carried out
Equal to or greater than Kz 900,000.00	30
Equal to or greater than Kz 400,000.00	25
Greater than Kz 100,000.00	20
Up to Kz 100,000.00	10

2. For compliance with the minimum requirements, credits granted are not eligible: a) In factoring modality; b) To holders of qualified participations in the lending Commercial Bank and related natural or legal persons; c) To members of the administrative and supervisory bodies of the lending Commercial Bank and their spouses, descendants or ascendants up to the second degree in the direct line, and to companies managed by them or in which they hold a corporate participation.

Artigo 8. (Deduction of Mandatory Reserves)

1. Eligible for deduction from the mandatory reserves to be established by each Banking Financial Institution are credits meeting the requirement defined in paragraph 1 of the preceding article, applying the following weightings: a) 100% (one hundred percent) of outstanding and due capital for less than 90 (ninety) days, disbursed under Article 3(a) of this Notice; b) 60% (sixty percent) of outstanding and due capital for less than 90 (ninety) days, disbursed under Article 3(b) of this Notice; c) 50% (fifty percent) of capital for credits due for more than 90 (ninety) days or restructured credits due to client financial difficulties, granted under this Notice and its predecessors.

2. Without prejudice to the preceding numbers, credit operations in default for a period equal to or greater than 180 days are not deductible from the mandatory reserves to be established by each Banking Financial Institution, until the operation is duly normalized, in accordance with the agreement between the commercial bank and the client.

Artigo 9. (Exceptional Deduction in Mandatory Reserves)

1. The Banco Nacional de Angola may, exceptionally, upon request by a Banking Financial Institution, authorize the deduction of mandatory reserves for restructured credits, with weightings higher than those provided in Article 8, regarding projects deemed relevant to the economy.

2. The aforementioned exceptional authorization is limited to credits associated with projects of strategic importance for regional development, and excludes credits granted under the modalities provided in paragraphs (b) and (c) of Article 3 of this Notice.

3. For the implementation of this authorization, specific weighted coefficients will be fixed, applicable according to the particular characteristics of each case.

Artigo 10. (Information Reporting)

1. Banking Financial Institutions must report to the Banco Nacional de Angola information on credit granted under this Notice, in the format established by specific regulations.

2. For the purpose of requesting mandatory reserve deductions, Banking Financial Institutions must submit to the Banco Nacional de Angola the following information, with the latter able to request any additional elements whenever deemed necessary: a) Loan contract, only at the time of the first disbursement; and b) Statement proving disbursements and installment settlements, whenever occurring.

Artigo 11. (Publication of Information) Banking Financial Institutions must maintain on their official website, in a highly visible location, information regarding access requirements for credit under this Notice, including an updated list of documents and other information that must be submitted by the client for this purpose.

Artigo 12. (Compliance or Explanation Deadline)

1. After its entry into force, Banking Financial Institutions have a period of 12 months to comply with the minimum requirements set forth in this Notice, which must be renewed at the end of each cycle.

2. Banking Financial Institutions that have not met the annual targets established in this Notice must justify the reasons within a maximum of 22 business days after the end of the cycle.

Artigo 13. (Revocation) Notice No. 10/22 of 6 April on Credit Concession to the Real Economy Sector and respective Circular Letters is hereby revoked.

Artigo 14. (Doubts and Omissions) Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the Banco Nacional de Angola, and must be sent to the electronic address dro@bna.ao.

Artigo 15. (Sanctions) Non-compliance with the provisions established in this Notice constitutes a regulatory offense, prescribed and punishable under Law No. 14/21 of 19 May (General Regime for Financial Institutions Law).

Artigo 16. (Entry into Force) This Notice enters into force on the date of its publication. PUBLISHED. Luanda, 27 December 2024. THE GOVERNOR MANUEL ANTÓNIO TIAGO DIAS