Angola Enterprise Program: Microfinance Component

This paper studies the microfinance component of an enterprise program and reviews the microfinance environment in Angola by analyzing:

Supply:

• Banking system is focused on the higher segments of the market;
• Unwillingness of banks to take risk through lending, particularly to the smaller enterprises;
• Only Banco Sol is involved in microfinance, attending approximately 2000 clients.

Demand

• Limited availability of quantitative data on the number of businesses, types of activities, location, performance etc.
• Micro-enterprise sector accounts for 54.5% of the employment in the country;
• Total number of businesses in the formal and informal sectors is estimated at 660,000 units.

The paper discusses three principal components of the strategy to improve the environment for micro, small and medium enterprises by focusing on:

• Current microcredit institutions: Providing support to two existing Angolan microfinance programs;
• New microfinance initiatives: Identifying and introducing potential local partners and investors to international organizations experienced in microfinance start-ups;
• Small business credit: Supporting pilot projects for commercial banks intending to venture into lower segments of the market.

Finally, the paper presents performance targets established for 18 months after the commencement of the investments under the microfinance component:

• A functional microfinance development unit in the Central bank;
• Increase in the number of micro and small businesses availing loans from 8,000 to 15,000;
• A more supportive environment for the development of the microfinance sector based on a national policy and action plan.