Opinion Articles

<blockquote><p style="margin-left: 0" data-pasted="true"><em>Bank lending will remain indispensable. However, as companies’ capital requirements grow and the economy becomes more sophisticated, financing sources must become more diversified.</em></p></blockquote><p style="margin-left: 0">For decades, Angola’s banking system has played a central role in financing business activity. Bank lending will continue to be essential; however, the increasing capital requirements of companies and the growing sophistication of the economy call for a broader range of financing options.</p><p style="margin-left: 0">In this context, capital markets should be viewed as a complement to and, in certain circumstances, an alternative to bank financing. This is becoming increasingly relevant as Collective Investment Undertakings (CIUs) expand, creating a growing pool of institutional capital seeking investment opportunities.</p><p style="margin-left: 0">According to data from the Capital Markets Commission (CMC), Angola’s CIU industry comprised <strong>66 vehicles with a Net Asset Value (NAV) of AOA 1.91 trillion</strong> as at June 2026, representing year-on-year growth of 56.94%. Real Estate Investment Funds accounted for 55.62% of total NAV, followed by Securities Investment Funds at 31.80%, Real Estate Investment Companies at 6.98% and Private Equity Funds at 5.61%.</p><p style="margin-left: 0">These figures show that CIUs already represent a <strong>meaningful source of institutional capital for the economy</strong>, with Securities Investment Funds and Private Equity Funds particularly well placed to support corporate financing. There remains, however, a structural imbalance: <strong>the growth in assets under management has not been matched by a proportionate increase in the supply of private-sector financial instruments</strong>.</p><p style="margin-left: 0">A growing pool of institutional capital is looking for assets with different risk, return, maturity and liquidity profiles, while many companies remain overly reliant on bank credit. When a company seeks to finance an expansion, replace equipment, strengthen working capital or develop a new project, the key question should not simply be which bank can provide the financing, but rather <strong>which capital structure is most efficient</strong>.</p><p style="margin-left: 0">A corporate bond issuance can be tailored to the characteristics of the business and its capacity to generate cash, including its maturity, coupon, security package and payment schedule. Equity financing, meanwhile, provides permanent capital, although it requires greater transparency and may result in shareholder dilution.</p><p style="margin-left: 0">Capital markets should therefore be understood as an <strong>extension of the financing options available to companies</strong>. Their development depends not only on the presence of investors, but also on the availability of <strong>companies that are ready to become issuers</strong>.</p><p style="margin-left: 0">Many Angolan businesses have the assets, revenues and projects of sufficient scale to access the market, yet do not always meet the standards of organisation, transparency and governance expected by institutional investors. Raising capital requires reliable financial statements, sound corporate governance, independent audits, robust risk management and the ability to report consistently.</p><p style="margin-left: 0">In practical terms, <strong>preparing to access the market should begin well before an immediate financing need arises</strong>.</p><p style="margin-left: 0">This is equally important for fund managers. A Securities Investment Fund can only build a genuinely diversified portfolio where there is an adequate supply of instruments with different risk, return, maturity and liquidity characteristics. If the <strong>investable universe</strong> remains concentrated in government debt, bank deposits and a limited number of corporate instruments, portfolio diversification will remain constrained.</p><p style="margin-left: 0">The growth of the CIU industry therefore presents a direct opportunity for Angolan companies. The challenge is to channel a greater share of this institutional savings into productive investment in the economy through <strong>corporate bonds, commercial paper, equities and other market-based financing structures</strong>.</p><p style="margin-left: 0">The evolving macro-financial environment further strengthens this opportunity. According to the National Bank of Angola, year-on-year inflation stood at <strong>9.33% in July 2026</strong>, compared with 19.48% in the corresponding period of 2025. This disinflationary trend is likely to affect nominal interest rates and, consequently, issuers’ cost of funding.</p><p style="margin-left: 0">In 2025, the yield on Treasury Bonds with a remaining maturity of close to three years was approximately 16.75%. In August 2026, the Public Debt Management Unit indicated three-year issuances with a coupon of 14.75%.</p><p style="margin-left: 0">Corporate bonds should not, of course, be priced directly against sovereign yields. The applicable spread must reflect the issuer’s credit risk, maturity, security package, liquidity of the issuance and prevailing market demand. Nevertheless, <strong>lower benchmark rates may create scope for companies with sound credit quality to access the market on more competitive terms</strong>.</p><p style="margin-left: 0">For some companies, bonds or commercial paper may be the most suitable solution. For others, private equity, hybrid financing structures or, at a more advanced stage, an equity offering may be more appropriate. The optimal choice will depend on the nature of the project, the company’s financial structure, its cash-generating capacity and its risk profile.</p><p style="margin-left: 0">Angola is beginning to bring together three important conditions: <strong>growing institutional savings, lower inflation and signs of declining benchmark rates</strong>. Turning these conditions into effective financing will, however, require a broader supply of high-quality private-sector instruments and a greater number of companies that are ready to access the market.</p><p style="margin-left: 0">The challenge is no longer simply to expand the investor base. <strong>It is also to increase the number of issuers, diversify the range of financial instruments and broaden investment opportunities.</strong></p><p style="margin-left: 0">Companies that strengthen their governance, transparency and financial reporting will be better positioned to attract the capital available within the financial system. The question Angolan companies should now begin to ask is not only, <strong>“How much bank credit can we obtain?”</strong>, but also: <strong>“Are we ready to raise capital through the market?”</strong></p><p style="margin-left: 0"><em>Source: Órbita 24 Horas</em></p><p style="margin-left: 0"><br></p>