20160930 dw debate:gestão das receitas petrolíferas em angola
TRANSCRIPT
Financial sector development in times of oil: A case study of AngolaRebecca Engebretsen, PhD CandidateFriday discussion at Development Workshop 30.9.2016
Overview• Motivation• What does existing
theory tell us?• Focusing on the
politics• Example: Foreign
Exchange Law for the Oil Sector
Angola: oil-rich
Angola: oil rich
UNCTAD 2014: ”Oil production and its associated activities account for about 85% of Angola's GDP, and 96% of its exports.”
Angola: oil rich
And a growing financial sector
• Banking sector assets in US$ billions
And a growing financial sector• Number of licenced banks in Angola
Source: Deloitte 2015: Banca em Análise 2015
Why study financial sector development? • Financial sector development positively
related to inclusive economic growth
• Can help diversify the economy
• Can help buffer against volatility
• What can existing theory tell us about why financial sectors - in countries like Angola - looks like they do?
What does existing theory tell us?
• Financial development hurt by the lack of demand– Non-oil economy non-competitive and low
demand for financing– Dominant extractive sector seek financing
on the international market
• BUT; Beck (2010) finds that the need for credit is no less amongst firms in RRC than in comparable countries. The question seem to be one of supply
• Volatility, for example related to highly cyclical commodity prices, bad for financial sector development– Commodity exporters subject to large
fluctuations
• BUT; Not automatic, some countries have been able to deal with volatility.
What does existing theory tell us?
Focusing on the politics• Weakness of current explanations:
financial sector development unlikely to be only driven solely by market-driven demands or structural factors
• Financial sectors are subject to significant regulation
• Outcomes also reflect political interest…
Focusing on the politics• Bhattacharyya and Hodler (2010):
Politicians in RRC only develop financial sectors when they are held accountable: otherwise will neglect
BUT: Seems less plausible when accounting for sector development (The Banker, 2015)
• Calomiris and Haber (2014): Financial sector outcomes driven by bargains between political leaders and domestic capitalists
• But; What if state dominates?
Weak privatesector
Resource- rich state
Focusing on the politics
• We need to look closer at the role of the state
• The way it finances itself• The way political leaders maintain support• Its policy priorities
• For RRC: Allocation rather than production: development is ability to extract rather than to redistribute
Example: Foreign Exchange Law for the oil sector
• Stated aims: Channel the substantial financial flows from the oil sector into the Angolan economy– Capitalise the banking
sector– Strengthen Monetary
Policy–More money for domestic
investments
Example: Foreign Exchange Law for the oil sector
• For implementation: Necessary to increase banking sector capacity
• Result of law (2015): Flow of US dollars into the Angolan banking system, boosted by US$30 billion. – Increased financial strength of state– Financial sector stronger– But so far little towardsproductive investments
Concluding remarks on the Angolan case• Foreign Exchange Law for the oil
sector: State driven initiative
• Private sector: reactive rather than proactive
• But result financial sector development – even if not broad yet