Historical Sketch

The Portuguese navigator Diogo Cão was the first European to reach the shores of present-day Angola in 1482. In the mid-16th century, the first Portuguese trading posts were founded and formed the basis of the later Portuguese West Africa colony. The name Angola was not used consistently until the late 19th century. In 1951, the Portuguese colonies were transformed into overseas provinces. In the 1960s, the war of liberation began which continued until the Portuguese revolution of 1974, which triggered the end of the colonial empire. Angola attained independence in 1975, but the power struggle between the different liberation movements turned into civil war. A first peace agreement failed in 1992 because the results of the general elections was contested by one of the parties. Ten years later, in 2002, the armed struggle finally came to an end.

Monetary History Overview

In pre-colonial times, various commodities were used for payment in trade, their value ratios varied locally and over time. The Olivella snail (called "zimbo", literally "nzimbu", or "lumache") was traded in loads of about 30kg (called "cofo" after the baskets used to collect the snails in the sea). Salt was traded in ingots of dimensions 40-60cm x 10-15cm (or "2-3 palmos x 1 mão" in Portuguese). Copper ingots were commonly brought into manilla form (called "luchaze" in Portuguese) or cross form (called "handa"). Cloth made of raffia palm fibres (called "ibongo, plural "libongo") was frequently traded in bales of four, called "likuta" (plural "makuta"), a word the Portuguese took over as a monetary unit.

The Portuguese trading posts brought silver and copper coins into the region through the long-distance trade. In 1762, the colonial government passed a decree to issue local silver and copper coins. The unit of account was the Angolan Macuta, corresponding the value of a cloth bale in local trade and to 50 Portuguese Reals in the motherland. The Angolan silver coins were undervalued by 17% to prevent their exportation. In 1861, the Portuguese accounting was introduced, and the local coinage was withdrawn. The Portuguese National Overseas Bank began operations in 1865 and issued paper money for the colony. In 1901, its banknotes were declared legal tender. The Angolan Milreis was nominally identical to the Portuguese, however the convertibility of the colonial banknotes was limited. The Portuguese currency reform of 1911 was implemented in Angola with three years delay. The 1st Angolan Escudo was initially on par with the metropolitan currency, but the Portuguese economic crisis after the First World War strongly affected the trade with the colony and caused the Angolan currency to depreciate. In 1921, a local currency board was created to prepare the remediation of the colonial currency. In 1926, the state-owned Bank of Angola began operations and took over money issuance from the Overseas Bank. Two years later, the Angolan Angolar was created as new colonial currency, with parity to the Portuguese Escudo restored. In 1953, Portugal passed a new constitution for its overseas territories which prescribed the unification of the colonial currencies (except for India). Hence in December 1958, the Angolar was renamed into 2nd Angolan Escudo. Apart from the name change, the monetary situation remained as it was. After independence in 1975, Angola needed about two years to take over monetary sovereignty. In November 1976, the central bank opened for business, and in January of the following year, the 1st Angolan Kwanza became the national currency. The exchange rate remained frozen at the initial value for more than a decade, hiding the depreciation caused by the ongoing civil war. In 1990, a currency reform was carried out. At the changeover to the 2nd Angolan (New) Kwanza only 5% of the cash holdings was actually converted, the rest being kept as a three-years government bond, means in fact confiscated through the subsequent depreciation. Over the next two years, the Kwanza was stepwise devalued to less than 1% of the initial value. In March 1993, the exchange rate was floated, and Angola went into hyperinflation. In mid-1995, a first redenomination was carried out by removing three zeros to create the 3rd Angolan (Adjusted) Kwanza. The political and economic situation had not changed so that hyperinflation continued and the currency depreciated rapidly. During 1999, the situation had calmed down, and a second redenomination could be carried out in December 1999, this time with six zeros cut. The 4th Angolan Kwanza still depreciated at a lower pace, but stabilized only around 2004, two years after the end of the civil war. In the mid-2015, petroleum dependent economy turned into a decline, and the Kwanza started depreciating again, losing 80% of its value until the end of the decade.

Angola joined the International Monetary Fund (IMF) on 19.09.1989.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources