Clifford Chance
Angolan foreign exchange regulations
7 June 2012
The Angolan economy is heavily dependent on income generated by its oil and gas sector and, whilst the country is rebuilding its economy after years of civil war, it has limited (albeit growing) local production. The economy is therefore primarily US dollar based and the fluctuation in oil prices has significant consequences on the country's foreign exchange reserves.
For example, the decline in oil prices in 2009 led in Angola to a rapid decrease in the net international reserves and an acute shortage of foreign currency and resulted in considerable delays in foreign currency payments. It also became clear at the time that the foreign exchange regulations had not been fully observed.
The Angolan government has therefore reinforced the strict application of its foreign exchange regulations and is also moving to an increased use of the local currency, the kwanza, as the currency for domestic payments. The kwanza is not freely convertible and may not, except in the limited circumstances described in this memorandum, be exported from or imported into Angola. This means that cross-border payments need to be effected in foreign currency.
The foreign exchange regulations impose a monitoring obligation on the Angolan banking institutions involved in settlement transactions. In addition, the recent Law against Money Laundering and Financing of Terorism (Lei No. 34/11) of 12 December 2011 obliges the Angolan banking institutions to take measures if they believe that the transaction to which the payment is related lacks economic substance or could be related to a criminal activity (including tax crimes).
This memorandum describes some aspects of the Angolan exchange regulations that may be relevant for non-oil sector companies that invest in Angola or are conducting business with Angolan parties. Oil sector companies have a special foreign exchange regime which is not addressed in this memorandum.
