With the end of the civil war in 2002, Angola has become one of the major economies of the region, as the country is the second-largest oil producer in sub-Saharan Africa.

While much of this growth is derived from the oil industry (international and local oil companies are currently scrambling for the rich undiscovered oil reserves offshore and in the Cabinda province), there is no doubt that several sectors of the Angolan economy are also achieving amazing development, including mining (primarily of diamonds and base metals), construction and public works, ports, banking and telecommunications.

Angola is also developing its tourism industry. Despite this fact, Angola is one of only three countries in the Southern African Development Community that does not yet have its own stock exchange. The other countries are Tanzania and the Democratic Republic of Congo, both minor economies compared with Angola.

In the pursuit of overcoming the challenges inherent to an economy in permanent change and growth, the Angolan financial system has recently suffered deep changes which entail not only a bigger operational capacity of the system but also a wider diversity of operations performed by the entities doing business in the financial market. For this reason, the commercial banking system is becoming increasingly sophisticated in its technology, in its competitiveness and in the services that it offers to clients.

The establishment of a stock exchange has been one of the Angolan Govern-ment's priorities since the late 1990s and it has announced the intention of setting up an exchange ( Bolsa de Valores) in Luanda, supposedly before 2007, although no formal date has yet been set. The stock exchange is expected to be modelled on similar stock markets of other countries to ensure proper control mechanisms and representatives from the New York Stock Exchange, Euronext and Johannesburg Stock Exchange, among others, have already been invited to share their knowledge and experience with the Angolan politicians and technicians who form the task force responsible for setting up the Angolan Stock Exchange.

Although several laws and regulations governing the future capital market and related activities are still to be discussed, approved and implemented, the Angolan authorities have already altered some principles and proceedings of the relevant legal framework.

Having in mind that a stock exchange is a place where companies may obtain alternative financing for their businesses and that it must take place in a transparent way in order to protect investors' rights, the Angolan Government approved modern legislation towards the creation of the proper environment for the launch of the stock exchange in Angola and to give a boost to investments in the country.

The first major step was the creation of the Angolan Stock Exchange Commission, the Comissao de Mercado de Capitais (CMC), by means of the Council of Ministers Decree of 18 March, 2005.

CMC is a state-owned entity, created under the aegis of the ministry of finance, which has administrative and financial autonomy. CMC is in charge of regulating, supervising, inspecting and promoting the Angolan financial market in general and the Stock Exchange in particular.

As a regulatory body, CMC will regulate the activities of all entities under its supervision, including brokers, dealers, issuers and market operators, by means of (a) regulations published in Angola's Official Gazette and in the CMC bulletin; (b) instructions; (c) recommendations; and (d) opinions.

Within its supervising powers, CMC will authorise the establishment of stock exchange markets and of all financial intermediaries. CMC will also oversee stock markets' transactions and agents.

As an inspection body, CMC must also check whether the Securities Law is being complied with. For such purpose, CMC is entitled to (a) control the efficiency of stock markets; (b) launch disciplinary proceedings; (c) investigate any torts; and (d) report crimes to the relevant authorities.

At this stage, CMC is in the process of being formed and properly staffed with suitable qualified and trained personnel.

Following the creation of CMC, the Council of Minister's approved Law number 12/05, of 23 September, 2005 (the Angolan Securities Law).

The purposes of the Angolan Securities Law are to (a) regulate trading in securities; (b) promote an organised and transparent stock market; and (c) provide adequate protection to investors.

The Angolan Securities Law contains rules on public offering, securities registration and trading, brokers and other dealers, stock markets, clearing and settlement procedures, investment funds, issuers and listed companies and torts. Compliance with the Securities Law is to be supervised by CMC.

Under the Angolan Securities Law, the definition of securities comprises shares, debentures, participation units ( titulos de participacao), units in collective investment schemes and related subscription rights or any other securities issued in mass quantity and freely negotiable which afford their holders with credit and property or benefits of the issuer.

Moreover, according to the statutory definitions of securities, derivate financial assets and instruments – including, without limitation, future and option contracts – are also treated as securities.

The new legislation expressly sets forth the following securities and derivates: (i) shares, debentures and sub-scription bonus; (ii) subscription coupons, rights and receipts, and split certificates of securities; (iii) deposit certificates of securities; (iv) units in securities investment funds or in collective investment schemes in any assets; (v) commercial paper; (vi) futures and options contracts, and other derivates having securities as underlying assets; (vii) other derivates irrespective of the underlying assets; and (viii) any other collective investment titles or contracts, whenever offered to the public.

Subsequently, the Angolan Government, on 30 September, 2005, approved the Financial Institutions Law in an effort to adequate the financial instruments to the country's economical development, as well as adjust the type of players operating in the market to the challenges posed by the creation of an effective capital market.

The Financial Institutions Law regulates the process for the establishment, activity and supervision of financial institutions, as well as the sanctions measures for the same. Although there are still minor exceptions with the new legal framework, state-owned financial institutions are now subject to the provisions applicable to private financial institutions, which has been considered as a major attractive factor for investors aiming for transparent, liberalised and competitive markets.

Lastly, on 22 December, 2005, another important landmark was taken for the establishment of an Angolan stock market: CMC opened its offices in Luanda, the political and economic capital of Angola.

The playing field has been levelled and the required framework for the launching of a Stock Exchange in Angola has been created. New announcements on the effective creation of the Stock Exchange in Angola are expected soon.

Following the launch of the stock exchange, the Angolan Government is expected to rely heavily on the private sector to sustain economic growth, limiting its own role in the economy. Consistent with its objective of disengaging from productive activities, the Government is planning to begin to privatise part of its interests in some of the country's most important and valuable companies, bringing private-sector skills and interests into state-owned companies, including those related with the oil and mining sectors.

Angola has a land mass double the size of Texas, a population of only 13 million people and an enormous amount of unexplored natural resources. An efficient stock market will no doubt contribute to leverage the country's potential.

Mafalda Oliveira Monteiro is a partner at Miranda Correia Amendoeira & Associados.