Angola

Economic Overview

Angola’s economic prospects remain positive and its real gross domestic product (GDP) growth is expected to expand to 8.2% and 7.1% in 2012 and 2013 respectively. Despite oil price volatility, output remains strong and the government hopes to receive OPEC´s authorization to increase production gradually over the next few years. According to the International Monetary Fund (IMF), in July, inflation remained on a downward trend of 10%, but vulnerable to rising food prices. High import dependency and rising global food prices threaten to reverse the downward inflation trend of the last couple of years.

Angola’s Stand-By Agreement (SBA) program with the IMF ended in March 2012. The program included fiscal and monetary reforms to improve the exchange rate system, improved public financial management, the maintenance of a sound banking system, and fiscal transparency. Following considerable progress toward macroeconomic stabilization in the context of the SBA program, the authorities are now seeking to build a more resilient and diversified economy. This will require stepped-up investments in human and physical capital.

Despite steady progress in improving social conditions since the end of the war in 2002, the country continues to face daunting challenges on the social sector. As a response, the government continues to allocate more than 30% of its budget to social spending. This is expected to increase by 1.6% to 33.3% this year.

Political Context

The People’s Movement for the Liberation of Angola (MPLA), the ruling party, won the general elections held on August 31, 2012 with more than 70% of vote (less than the 81% obtained in 2008). Since the new constitution of January 2010 states that the candidate of the party receiving the largest number of votes becomes the president, these results secure five more years for Mr. Jose Eduardo dos Santos as Angolan President, who has been in power for the past 33 years. His running mate Manuel Vicente (second on the party's list) is the former CEO of the national oil company Sonangol, and he is certain to become the country's new vice president (VP). The vice president position was introduced in the new constitution approved in 2010 to replace the function of Prime Minister. The VP is therefore the head of the government under the President’s direct watch.

The MPLA's nearest rival, the National Union for the Total Independence of Angola (UNITA) trailed far behind with 18%. UNITA saw its share of the vote nearly double from the 10% share it won in 2008. The movement has alleged fraud in previous elections and voiced concerns about apparent irregularities in election campaigning this time around. The newly formed Electoral Coalition (CASA-CE), an off-shoot of UNITA, is credited with about seven percent of the votes, propelling it to become the third major political force in Angola. Meanwhile regional observers from Southern African Development Community (SADC), the African Union, and the Community of Portuguese Speaking Countries (CPLP) have issued their statements all considering the elections free and fair.

Development Challenges

Angola has made substantial progress in economic and political terms since the end of the war. However, the country continues to face massive developmental challenges which include reducing the dependency on oil and diversifying the economy, rebuilding its infrastructure, improving institutional capacity, governance, public financial management systems, human development indicators and the living conditions of the population.

There have been moves to crack down on corruption and improve governance in the country since the president called for greater transparency in the management of public funds, and indicated a “zero tolerance” approach. As a result, the Law on Administrative Probity was approved on March 5, 2010 by the National Assembly, but implementation mechanisms and monitoring remain unclear.

Last updated October 2012

World Bank Assistance to Angola

Angola joined the World Bank Group in 1989, and assistance began in 1991 with a credit from the World Bank's International Development Association (IDA) for economic management capacity building. The World Bank established a Country Office in Luanda from which country dialogue and project oversight take place. The World Bank works closely with the International Monetary Fund (IMF), United Nations Agencies, official donors and nongovernmental organizations active in Angola through the country office.

The World Bank has invested a total of US$948.6 million dollars in Angola to date. With government input, the World Bank is currently revising the Country Partnership Strategy for its cooperation with the Angola government for the next three to four years. This strategy will build upon previous programs and strategies between the country and the Bank.

Portfolio

The current World Bank’s active portfolio comprises six investment projects representing a total amount of committed credits and grants of US$461.5 million dollars from IDA as follows:

• Angola Emergency Multi-sector Recovery Project (EMRP2) – (US$102 million dollars credit)
• Water Sector Institutional Development Project (WSIDP) – (US$57 million dollars credit)
• Water Sector Institutional Development Additional Financing (PDISA-AF) - (US$120 million dollars credit)
• Market Oriented Smallholder Agriculture Project (MOSAP) – (US$30 million dollars credit)
• Local Development Project (LDP) – (US$81.7 million dollars credit)
• Municipal Health Service Delivery (MHSD) – (US$70.80 million dollars credit)

In addition to IDA support, Angola receives support from the International Finance Corporation’s (IFC) and the Multilateral Investment Guarantee Agency (MIGA). IFC’s business lines include Investment Services, Advisory Services, and Asset Management. MIGA provides noncommercial risk guarantees for private investments. 

Partners

The World Bank is currently preparing its Country Partnership Strategy (CPS) 2013-2016 and under such a strategy, the Bank will continue to leverage its support by working closely with other key stakeholders, beyond the financial support. This will require closer collaboration with other donors, the private sector, civil society organizations (CSOs), academia and think tanks.

The World Bank continues working with UNDP, UNICEF, European Commission, USAID and other bilateral agencies as well as sector oil and diamond companies on innovative cooperation opportunities.

Last updated October 2012

Improved service delivery to the poor

Governance was one of the key pillars of the Bank’s Interim Strategy Note (ISN) that ended in June 2009 and will continue to be emphasized in the next Country Partnership Strategy currently under preparation. The Angolan government continues to recognize the importance of the involvement of community members and local organizations in the country’s development and has formulated policies and programs to encourage such approach to development. The process towards decentralization gained momentum in Angola between 2007 and 2008, when the government of Angola advanced in terms of strategy, policy and legal framework through the adoption of key instruments with the intention of building the foundation for creating devolved, elected local governments.

The Angola Social Action Fund, commonly known as “Fundo de Apoio Social (FAS)” has been the main World Bank support program which contributes toward decentralization. The project, which has improved poor communities’ access to basic social and economic infrastructure and provision of services, has been in implementation in various phases since 1994. The project, now called the Local Development Project (PDL) is in its fourth phase, and has been considered as the largest bottom-up poverty reduction program in Angola. It provides direct financial support and capacity development assistance to poor communities complementing government’s efforts in the construction and rehabilitation and decentralization processes.

During the third phase of the project, 1,575 pieces of community infrastructure were constructed and rehabilitated in all 18 provinces of the country enabling about 2.3 million Angolans to gain access to basic social and economic services. Mechanisms and practices for participatory governance systems have been established, in which local governments are increasingly more accountable to their constituencies and about 7,200 individuals benefited from its capacity development activities, half of whom (3,108) received formal training.
The fourth phase of the project, which began implementation in August 2011, consists of interlocking and complementary components:

The first component aims to increase access to improve social and economic infrastructures for poor households by financing the rehabilitation and construction of basic public works and the acquisition of essential goods in response to local development plans and through municipal grants.

The second component aims to improve business development skills and participation in markets of selected producer groups by providing a combination of technical assistance to selected municipalities to prepare their municipal economic development strategies, technical assistance to participating provinces to conduct sector and value chain studies, technical assistance and training for FAS to prepare and implement the matching grants manual, provide matching grants to selected producer groups and business development service providers, technical assistance and training to producer groups and business development service providers on business skills, managements, and marketing and organization of workshops on microfinance.

The third component aims to strengthen the capacities of public entities and civil society to be inducted in the participatory planning, management, and monitoring of basic public service delivery and expenditure management.

Social inclusion and poverty reduction

The Bank supported the demobilization and reintegration program of the Angolan government through the Multi Donor Reintegration Program (MDRP) in 2002, when the country had just ended the long civil war. This was a fundamental exercise for the country to achieve its political stability after the peace agreement was signed. The MDRP was a multi agency effort that contributed to the demobilization and reintegration of ex-combatants in the greater Great Lakes region of Central Africa.

The Angola Demobilization and Reintegration Project (ADRP) helped to consolidate economic stability by demobilizing an estimated number of 105,000 ex-UNITA soldiers, supported their reinsertion into civilian life, and facilitated the reallocations of government expenditure from military to social and economic sectors. At the end of the project implementation, 61% of ex-combatants were self-employed, 35% were unemployed, four percent were formally employed, 9% had access to agriculture land, 98% had established families and 93% considered themselves reintegrated into their communities of destination. Another 92,297 direct and indirect beneficiaries had completed reintegration activities. More than 260 sub-projects had been contracted in close collaboration with community based organizations and NGOs.

Due to good results achieved with the implementation of the ADRP the Angolan government is financing a follow-up program to support thethe social and economic reintegration of ex-combatants in several provinces.

Strengthening public sector management

To support government’s efforts to improve macroeconomic stability, the Bank financed the Economic Management and Technical Assistance (EMTA) project. The main objective of the project was to strengthen the government's capacity to formulate sound analysis and to implement sound policies in areas which were critical to the design and implementation of its poverty reduction strategy, as well as the medium-term planning including the establishment of a more transparent and efficient public finance framework. Major results included the modernization of payment systems, such as the Real Time Gross Settlement (RTGS) availability which is now above 99% with continued increase in number of transactions and amounts. Increased retail services as the number of cards, Automated Teller Machines (ATMs) and Point of Sales (POS) grew: 685,000 cards; 486 ATMs, 850 POS. The RTGS system is facilitating a large value inter-bank payment and settlement in real time online mode on a transaction by transaction basis.

Another major result is the Household Expenditure Survey, also known as Inquérito do Bem Estar da População (IBEP) co-financed by the Bank and UNICEF, conducted in 2008 and 2009 across all 18 provinces and whose results were recently published by the Ministry of Planning. The survey indicates, amongst other, that approximately 37% of the population lives below the poverty line, with 58.3% in rural areas and 18.7% in urban areas.

Last updated October 2012