Commercial banks maintain 'brake' on credit to the mining sector due to industry risks.

Of the total gross credit released between 2022 and June this year, the mining sector absorbed only 0.153%, a margin considered low by sector operators.

Angolan commercial banks still reveal significant resistance to financing the mining sector, pointing out the risks and challenges faced by the national industry, indicates the report on financing mining projects by the Instituto Superior Politécnico Metropolitano de Angola (IMETRO).

According to the document sent to Kieto Economia, financial institutions operating in the country demonstrate a strong resistance to investing in the extractive industry given the main challenges faced by the mining industry, including geopolitical risks, fluctuations in commodity prices and environmental challenges.

“These factors contribute to banks’ resistance to investing in mining projects, which are seen as high risk and with uncertain returns,” says the text.

A study developed by IMETRO professors/researchers, with emphasis on Francisco Ngongo, technical coordinator of the study, and Lubanza Pedro, senior researcher, points out that bank credit dedicated to the mining sector is extremely low, representing only 0.153% of total credit intended for the extractive industry between 2022 and June 2024.

For Francisco Ngongo, it is necessary to create a strategic and informed approach to financing the sector, and that there must be greater integration and good practices to reduce risk aversion, which is essential to unlocking the potential of mining in the country.

Lubanza Pedro considers that opportunities for alignment between the interests of banks and the needs of the sector are crucial to creating an environment that facilitates financing, considering the strategic importance of mining for the economic development of Angola.

However, international good practices in mining financing and the opportunities that private capital can bring to the sector in Sub-Saharan Africa will allow for greater inclusion of local banks in the financing of mining projects and also the sector's understanding of how to reduce risk aversion.

The Instituto Superior Politécnico Metropolitano de Angola in partnership with Bumbar Mining, within the scope of the 3rd Banking & Mining Forum, will launch this Friday, August 30th, at the Hotel Epic Sana, in Luanda, the first report on financing mining projects in Angola.