Letters of credit (L/Cs) look likely to become the preferred financial instrument for imports into Angola according to the head of the country's central bank.

Governor of the National Bank of Angola (BNA), José de Lima Massano, last week recommended that importers use L/Cs, which should become more easily available due to imminent regulatory changes and an agreement with the African Export Import Bank (Afreximbank).

L/C advantages

The governor said that, unlike the currently used transfer orders, L/Cs guarantee both the delivery of the goods into Angola and the documentation necessary to confirm the availability of resources, specifically foreign currency, to pay suppliers.

Massano was speaking on the sidelines of a presentation of the BNA's New Instruction on Foreign Exchange Procedures for the Import and Export of Goods, which lays out new regulations for international traders and which is in the final stages of being drafted.

Afreximbank support

Meanwhile Angola has negotiated in principle an agreement for Afreximbank to confirm L/Cs for Angolan imports of essential commodities.

Earlier this month, Afreximbank president, Benedict Oramah, confirmed that it is preparing a financing line of up to US$2 billion to guarantee imports of food and medicines into Angola.

Oramah said the financing would also support the financial services sector by enabling selected Angolan banks to issue L/Cs to be confirmed by Afreximbank.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.