Country Office Contacts
Main Office Contact
+258-21-482-300

Rafael Saute
Sr. Communications Officer
+258-21-482-944

Av. Kenneth Kaunda, 1224
Maputo, Mozambique
rsaute@worldbank.org

In Washington:
Olivier Godron
Country Program Coordinator
+1-202-473-9626

1818 H Street, NW
Washington, DC 20433
ogodron@worldbank.org

This page in:

Angola Overview

Economic Overview

Angola’s economic growth as measured by its gross domestic product (GDP) has slowed down in 2013 (real GDP was at 4.1% in 2013 from 5.2 in 2012) amid lower performance of the oil sector, which accounted for more than 40% of GDP during the same period. Oil prices, while higher compared to the 2009-10 crisis levels, reached an average of $107.3 a barrel, below the 110.9 a barrel in 2012. Non-oil GDP is accelerating thanks to developments in the electricity sector and the recovery of the agriculture sector following the long drought, which affected agriculture output. GDP growth is expected to accelerate in 2014 as oil production recovers. For the first time since the 2009 crisis, Angola is estimated to have registered a fiscal deficit.  Lower oil-related revenue as a percentage of GDP brought about an estimated fiscal deficit of 1.5% of GDP. The 2014 budget (adopted in December 2013) is expansionary with capital expenditures expected to increase by about 3 percentage points of GDP, to about 13% of GDP. It outlines expenditures of $55.4 billion (41.9% of GDP), with the broad aim of helping to diversify the heavily oil-dependent economy and boost job creation. Revenue is put at $48.6 billion, giving a deficit equivalent to 4.9% of GDP.

The current account surplus is shrinking as oil exports earnings are declining. It was estimated at 5.5% of GDP in 2013, down from 9.2% of GDP in 2012.  By the end of 2013, international reserves stood at $33 billion about the same level as in 2012. After reaching a peak in June, net international reserves declined in July and again in December mimicking a decrease in government foreign exchange deposits in the Central Bank.  International reserves play a pivotal role, shielding Angola’s economy from oil price fluctuations.

Thanks to declining global food prices and the efforts of the Angolan central bank to stabilize the nominal exchange rate, inflation has continuously declined. The year-on-year rate of inflation slowed to a multi-decade low of 8.9% in January 2013, and further down to 7.69% in December 2013 (y-o-y). However, as food imports are a major component of Angola’s consumption basket, consumer-price inflation is highly sensitive to changes in global food prices and the exchange rate. Inflationary risks are also linked to the planned fiscal expansion and the implementation of the new oil Foreign Exchange Law.

There are significant challenges remaining to lift Angola’s development effort to a higher ground. Large pockets of the population still remain in poverty and without adequate access to basic services. Taking into account Angola’s high population growth rate and existing income, and service access disparity across different regions, there is a clear need for more inclusive development policies.

Political Context

Angola has maintained political stability since the end of the civil war. The new Constitution adopted in February 2010 established a presidential parliamentary system. Under the new system, President is no longer elected by direct popular vote, but instead the head of the party winning the most seats in Parliament becomes President. The 2010 Constitution sets a limit of two five-year presidential terms effective from the 2012 election.

Parliamentary elections were held under the new Constitution in August 2012. Movimento Popular de Libertação de Angola (MPLA) won 175 out of 220 seats, receiving over 72% of the votes. As a result, the incumbent Jose Eduardo dos Santos was sworn in as President together with Vice President Manuel Vicente, former head of the state oil company, Sonangol a month later. União Nacional para a Independência Total de Angola (UNITA) is the main opposition party with 32 parliamentary seats, while Convergência Ampla de Salvação de Angola (CASA-CE) created just six months before the elections, and Partido de Renovação Social (PRS) won eight and three seats respectively.

Following the elections, the newly constituted government worked quickly to operationalize the MPLA elections manifesto “enhancing growth and distributing better” into National Development Plan, 2013-2017 which focuses on poverty reduction, eradication of hunger, accelerated infrastructure development, assistance to young entrepreneurs, and better access to education and vocational training.

The prospects for rule of law and peace are good. Progress is being made in ending armed conflict in the country, including in the oil-rich province of Cabinda where the Armed Cabinda separatists Frente de Libertação do Enclave de Cabinda (FLEC) have fought for independence since 1975. A Memorandum of Understanding (MOU) was signed between the government and a faction of FLEC in 2006 seeking to bring a formal end to the conflict. However, sporadic attacks on government and other members of the society are still common.

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.

As a resource-rich developing country, Angola’s fiscal policies are essential to its medium-term growth. Effective fiscal policies can stabilize the economy against external shocks, and public investment, especially in infrastructure, is a primary mechanism for transforming the revenues of the resource sector into valuable public goods capable of supporting economic diversification and inclusive growth. While the authorities have taken steps to improve the resilience of the economy since the onset of the global financial crisis, there remains considerable scope to strengthen fiscal policy. Angola’s level of public investment is very low in comparison to other countries in the region, and at present current expenditures—including energy subsidies—account for the majority of public spending. Angola’s strong public debt profile and the revenue boost provided by the recovery of the oil sector offer a valuable opportunity to expand development spending and attract greater private-sector investment in the non-oil economy. However, in order to maximize its impact, new public spending must be efficient and productive. Sound fiscal rules and strong public investment management systems are essential to ensuring high-quality fiscal policy.

Recent reforms to curtail quasi-fiscal operations by Sonangol and to increase the transparency of oil-revenue management are positive steps. Angola’s recently established Sovereign Wealth Fund (SWF) can strengthen the country’s macroeconomic stability by isolating oil revenues and minimizing their inherent volatility, but its mandate and governing framework have yet to be defined in detail.

Last Updated: Apr 11, 2014

World Bank Assistance to Angola

The World Bank’s current assistance strategy as set forth in its Country Partnership Strategy (CPS) for the period FY14-FY16, establishes the parameters through which the World Bank and Angola collaborate. The CPS takes as its overarching theme the promotion of an inclusive growth with two core pillars and one foundation plank of cross-cutting nature, as follows: 

  • The First Pillar focuses on supporting integrated national economic diversification by revitalizing rural economies toward greater competitiveness and employment. The target being strengthening of the non-oil economy, with emphasis on recuperating traditional lines of business that suffered greatly during the war, as well as providing technical assistance for the energy sector;
  • The Second Pillar aims at enhancing the quality of service delivery to improve the quality of life of the population and equip them to take greater role in the development of the country and instituting a strong social protection program; and  
  • The Foundation Plank of the strategy revolves around building human and institutional capacity to approach levels common in middle-income countries.

These objectives would be achieved during the CPS period through stronger attention to quality and implementation performance enhancements in the five existing projects, as well as through the expected build-up of a series of Reimbursable Advisory Services (RAS) and International Bank for Reconstruction and Development (IBRD) lending.

Portfolio

The current World Bank portfolio is comprised of five International Development Association (IDA) funded investment projects with a total net commitment of $426 million dollars. These include:

Last Updated: Apr 09, 2014

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, 4% 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 the 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: Apr 09, 2014

The World Bank continues to leverage its support by working closely with other key stakeholders. Such entails closer collaboration with other donors, the private sector, civil society organizations (CSOs), academia and think tanks. Some of the institution’s traditional partners include UN agencies (UNDP, UNICEF), development partners (European Commission, USAID) as well as the oil sector companies on innovative cooperation opportunities.

Last Updated: Apr 09, 2014

LENDING

Angola: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

Around The Bank Group

Find out what the Bank Group's branches are doing in Angola.