Notice No. 10/2022 of April 6 on the Granting of Credit to the Real Sector of the Economy

PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 60, OF APRIL 6, 2022 NOTICE NO. 10/2022 SUBJECT: GRANTING OF CREDIT TO THE REAL SECTOR OF THE ECONOMY

• Terms and Conditions

Whereas it is necessary to update the scope of application of this Notice, particularly regarding eligible credit modalities; Pursuant to the combined provisions of Article 26 of Law No. 14/21 of May 19 - General Regime of Financial Institutions Law, and Article 54 of Law No. 24/21 of October 18 - Bank of Angola Law. I HEREBY DETERMINE:

Article 1. (Subject Matter) This Notice establishes, regarding the credit that Banking Financial Institutions (hereinafter referred to as Commercial Banks) must grant to the real sector of the economy, the following: a) The terms and conditions applicable to said credits; b) The minimum requirements in terms of number and total value; c) Their treatment in the calculation of mandatory reserves.

Article 2. (Scope) This Notice applies to the granting of credit in the modalities referred to in its Article 3, for cultivation and production activities of essential goods, namely: a) Poultry farming, cattle farming, goat farming, pig farming and derivatives; b) Beekeeping; c) Commercial fishing, aquaculture and all activities related to the fishing industry;

CONTINUATION OF NOTICE NO. 10/2022 Page 2 of 7 d) Pastry and baking; e) Cultivation and derivatives of: i) Rice; ii) Coffee; iii) Sugarcane; iv) Beans; v) Tropical fruit; vi) Vegetables; vii) Corn; viii) Wheat; ix) Tubers; x) Palm; xi) Soy; f) Production of: i) Beverages, including juices; ii) Milk and its derivatives; iii) Edible oil; iv) Common salt; v) Hygiene products; vi) Packaging; vii) Soap and detergents; viii) Wood and its derivatives; ix) Steel rebar used in the construction sector; x) Glass; xi) Fertilizers and soil correction materials.

Article 3. (Credit Modalities) Commercial Banks must grant credit in the modality most appropriate to its purpose, namely: a) Medium to long-term credit for investment, including for the acquisition of machinery and equipment, which must have a maximum term equal to the payback period of said investment, and Commercial Banks must consider, in addition to financing with real guarantees, the financial leasing modality; b) Short-term credit for the purchase of raw materials and other inputs from local suppliers in the national market, which must be granted for a maximum term estimated between its acquisition and the sale or payment by the buyer of the finished product; c) Credit granted in the factoring modality.

CONTINUATION OF NOTICE NO. 10/2022 Page 3 of 7 Article 4. (Credit Access Criteria) Access to credit under this Notice is limited to banking clients who meet the following requirements: a) They are a company incorporated under the Commercial Companies Law or the Single-Member Companies Law; b) They have organized accounting and accounts certified by an accountant or certified accountant registered with the Angolan Order of Accountants and Certified Accountants; c) They have a regular tax status; d) They have proven experience in the activity they carry out and for which they are applying for credit.

Article 5. (Cost of Credit)

1. For the purposes of this Notice, the total cost of credit covers the interest rate and 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 the acquisition of raw materials, inputs, and factoring.

CONTINUATION OF NOTICE NO. 10/2022 Page 4 of 7 3. Expenses associated with any public guarantee or insurance that serves to mitigate credit risk shall be paid by the borrower and are added to the cost of credit referred to in the preceding paragraph.

Article 6. (Credit Risk Assessment and Management) Commercial Banks must: a) Formulate a policy for granting credit under this Notice that defines risk assessment and management criteria appropriate to the nature, amount, and characteristics of the credit, as well as for the establishment of impairments required by current accounting standards; b) Take into account the provisions of Instruction No. 04/19 of April 26 on Credit Granting, regarding the assessment of client solvency, considering the specificity of the credit, and must apply the same procedures to the assessment of debtors in factoring contract cases; c) Ensure a complete understanding of the specific risks of the sector in which the client's activity falls, and must, whenever necessary, resort to specialists to ensure a well-founded credit decision; d) Assess the possibility that the credit to be granted could benefit from an agricultural credit guarantee or insurance to mitigate credit risk, and must, in cases where these instruments are available, assist the client in contracting them; e) Comply with the provisions of Instruction No. 07/20 of April 20 regarding analysis periods, communication of the final decision, formalization, and disbursement of credit; f) Ensure regular monitoring of their clients, in order to timely detect financial difficulties or other circumstances that may increase the risk of default, and take appropriate measures to prevent or resolve the situation, in accordance with Instruction No. 04/2019 of April 26.

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

1. Each Commercial Bank must ensure the disbursement of a minimum number of credits, according to its net asset value as of December 31 of the previous year:

Total Net Assets	Minimum Number of Credits to be Granted
Equal to or greater than Kz 400,000.00	25
Equal to or greater than Kz 200,000.00	20
Greater than Kz 50,000.00	15
Up to 50,000.00	5

2. The following are not eligible for meeting the minimum number: a) Credits granted in the factoring modality; b) Short-term credit renewals, granted under Article 3(b) of this Notice, in the year of their granting, and renewals in subsequent years, beyond the first, in each calendar year.
3. The total of outstanding balances, referring to credit granted by each Commercial Bank under this Notice and those preceding it, at the close of each fiscal year, must correspond to at least 2.5% (two point five percent) of the total net asset value recorded in its balance sheet as of December 31 of the previous year.
4. Credits granted to related entities are not eligible for meeting the requirements of paragraphs 1 and 3 of this Article, namely to: a) Holders of qualified participations in the Commercial Bank and related natural or legal persons; b) Members of the management and supervisory bodies of Commercial Banks and their spouses, descendants or ascendants up to the second degree of the direct line, and to companies managed by them or in which they hold a corporate participation.

CONTINUATION OF NOTICE NO. 10/2022 Page 5 of 7 Article 8. (Deduction of Mandatory Reserves)

1. Eligible for deduction from the mandatory reserves to be established by each Commercial Bank are the credits eligible for meeting the requirement defined in paragraph 3 of the preceding Article, applying the following weightings: a) 100% (one hundred percent) of principal due and overdue for less than 90 (ninety) days, disbursed under Article 3(a) of this Notice and those preceding it; b) 50% (fifty percent) of principal due and overdue for less than 90 days, disbursed under Article 3(b) of this Notice;

CONTINUATION OF NOTICE NO. 10/2022 Page 6 of 7 c) 25% (twenty-five percent) of principal for credits overdue for more than 90 days and credits restructured due to client financial difficulties, granted under this Notice and those preceding it. 2. The Bank of Angola may, exceptionally, upon request by a Commercial Bank, allow the deduction of mandatory reserves for amounts related to restructured credits granted to projects considered relevant in the national context, which do not meet the requirements established in paragraph (b) of the preceding paragraph, determining specific weightings applicable to those cases.

Article 9. (Information Reporting)

1. Commercial Banks must report to the Bank of Angola information on credit granted under this Notice, in the format to be established in specific regulation.
2. For the purpose of requesting the deduction of mandatory reserves, Commercial Banks must submit to the Bank of Angola the following information, which may request any additional elements whenever deemed necessary: a) Loan agreement (only at the time of the first disbursement and the first renewal in each calendar year, for renewed short-term credits); b) Statement proving disbursement (for each disbursement).
3. Commercial Banks must inform the Bank of Angola whenever a credit becomes overdue for more than 90 days or is restructured due to client financial difficulties.

Article 10. (Publication of Information) Commercial Banks must maintain on their institutional website, in a highly visible location, information regarding access requirements to credit under this Notice, including an updated list of documents and other information that must be submitted by the client for this purpose.

Article 11. (Sanctions)

CONTINUATION OF NOTICE NO. 10/2022 Page 7 of 7

1. This Notice is based on the "comply or explain" principle, and Commercial Banks that have not met the annual targets established herein must justify the reasons for such failure by February 28 of each year.
2. The Bank of Angola decides on the measures/sanctions to be applied, on a case-by-case basis, depending on the justifications presented and the compliance history of the Commercial Bank in question, by March 31 of each year.

Article 12. (Repeal) All regulations contrary to the provisions of this Notice are hereby repealed.

Article 13. (Doubts and Omissions) Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the Bank of Angola.

Article 14. (Entry into Force) This Notice enters into force the day following its publication. PUBLISH. Luanda, March 29, 2022. THE GOVERNOR JOSÉ DE LIMA MASSANO