Windhoek-Several Namibian businesses operating in Angola are experiencing challenges related to the shortage of cash in Angolan banks. The Angolan liquidity crunch is directly related to low oil prices that account for the majority of that country’s foreign-exchange earnings.
Namib Mills this week confirmed the cash crisis in Namibia’s northern neighbour has indeed forced it to close shop in that country. “Namib Mills has ceased its operations in Angola as it is too difficult to set up an operation and the country has liquidity problems,” confirmed Namib Mills’ spokesperson, Ashante Manetti.
When questioned on the level of success in repatriating funds from Angola, Manetti responded: “Not successful at all. Once funds are in an account in Angola, withdrawing funds becomes extremely difficult due to Angola’s (lack of) liquidity.”
Last year Air Namibia also struggled to repatriate funds from Angola but this week said they managed to successfully transfer the funds towards the end of the year.
“Only the money that is generated on a daily basis from ticket sales is still in that country but we receive this when we request it,” said Air Namibia spokesperson Paul Nakawa. At its annual general meeting in Dublin, Ireland last year the International Air Transport Association (IATA) called on all governments to respect international agreements obliging them to ensure airlines are able to repatriate their revenues.
IATA estimated that Angola, which is listed among the top five nations in the world that blocked airline revenues, had held about US$237 million belonging to various airlines operating there.
Businessman Gary Sales, who has some operations in Angola, specifically dealing in car parts and animal medicines, yesterday told New Era his business has virtually come to a standstill in that country. “Banks are not transferring any money out at all. The only businesses thriving in Angola at the moment are those that sell basic necessities. These include businesses like supermarkets,” said Sales.
Another businessman based in northern Namibia, Piet Williams, who exports agricultural and health related equipment through a company called Medex, also confirmed that business in Angola has virtually dried up.
“We receive requests from customers who have money in Angolan banks, but the unfavourable exchange rate and the refusal by Angolan banks to transfer money to Namibia makes doing business with those customers practically impossible,” said Williams. He added that he hopes sales will get better in the near future.
The Angolan economy, sub-Saharan Africa’s third-largest, has been crippled by oil prices that have halved since mid-2014, with the International Monetary Fund (IMF) estimating zero growth for 2016.
Those setbacks have crippled that country’s banking industry, causing bad debts to soar and business to slow as the government cuts spending. US dollar supplies have also dried up as foreign banks pulled out of supplying a steady flow of US dollars to the country.
Transparency International ranks Angola among the world’s 20 most corrupt because of poor compliance with anti-money laundering rules.