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Financial Sector Development Strategy (FSDS) in Angola

Project Development Objective (PDO)

The main objective of the project is to assist the national authorities to develop and adopt a coherent Financial Sector Development Strategy (FSDS) to broaden and deepen Angola’s financial sector. 

Background

Angola’s financial system is characterized by a highly concentrated banking system reliant on intermediating oil revenue that exhibits declining profitability, rising nonperforming loans, and a significant (albeit falling) degree of dollarization. Financial markets are underdeveloped because of shallow interbank markets and a limited range of assets available for use as collateral. Access to financial services remains out of reach for the majority of the population and is practically nonexistent in rural areas.

The proposed FSDS will assist authorities in undertaking coordinated, prioritized, and well-sequenced activities to increase access while maintaining overall financial stability. This strategy will help accelerate development of the domestic private sector and diversification of the economy, which is a key objective of the government’s National Development Plan for 2013–2017.

Activities

The FSDS is building on several completed and ongoing activities within the following outline:

     1.  Reviewing the progress toward implementing the Financial Sector Assessment Program
          recommendations, and other diagnostics

     2.  Drafting the FSDS and conducting extensive consultations

     3.  Finalizing and disseminating the FSDS

Expected Outcomes

The expected outcomes of the project at each level are as follows:

     1.  Financial development
               •  Increased financial depth, efficiency, stability, and inclusiveness

     2.  Enabling environment
               •  Short-term: authorities have a clear roadmap with access to a prioritized,
                   time-bound sequence of actions for implementation
               •  Medium-term: support is provided and financial resources are mobilized to
                   implement reforms