Overview

  • Country Overview

    A vast country with a long coastline and central plateau, Angola thrusts inland across Southern Africa to border Namibia, Botswana, Zambia, and the Democratic Republic of the Congo. Its principal cities, including its capital, Luanda, look west over the South Atlantic to Brazil, another Portuguese-speaking nation (like itself). It has a population of about 24 million (2016).

    Economic Overview

    Angola is struggling with the rebalancing of the global oil market. Oil represents about 1/3 of its GDP and over 95% of its exports, and the sharp and prolonged decline in its price since mid-2014 has had a significant impact on Angola’s economy. Reduced revenues have caused GDP growth to decelerate from an annual average of 10.3% (from 2004 to 2014), to only 1.5% (since 2015); this has negatively affected non-oil revenues as well. The government has reacted by cutting expenditure and increasing non-oil revenue, as well as by devaluing the kwanza.

    It has also adopted an expansionary fiscal policy to boost economic activity, pegged its currency, increased forex sales, and tightened liquidity to contain inflation. This contained a downward spiral in the short-term but failed to rein in macro imbalances. These include high inflation (27% in August 2017), current account and fiscal deficits, soaring public debt, and real, negative interest rates. Public debt, estimated at 59.2% of GDP by the end of 2016, is expected to increase in 2017.

    Oil production also fell by 5.5% in the first half of 2017, due to the challenging operating environment of Sonangol, the state-owned oil company. Average production stood at 1,640 tbbl/day, 8.2% lower than its peak in 2010. Despite this, government revenue increased in 2017 due to higher oil prices.

    Angola has external imbalances, including forex shortages, which have hurt the private sector, and rapidly declining reserves. Net international reserves have decreased by 20.4% since the beginning of the year, reaching $15.6 billion in August 2017, its lowest level since early 2011. This was mainly the result of the National Bank of Angola’s (BNA) strategy to defend the currency and combat inflation by repegging it at 165.9 kwanzas per US dollar.

    The difference between the official and parallel exchange rates has since eased due to increased foreign exchange sales and monetary contraction, which reached 128% in September 2017.

    The BNA’s monetary policy was successful at substantially decreasing money supply, which pushed interbank and open market rates higher, even though the benchmark rate has held steady since April 2016 at 16.0%, and widened the interest rate policy corridor. BNA’s deflationary policy mix helped decrease the annual inflation rate from 41.9% in December 2016. But all interest rates have remained negative in real terms.

    Angola’s current economic crisis underscores its need to diversify its economy and reduce its dependency on oil revenues. Despite enormous potential to increase the amount of area under cultivation and crop yields, and diverse agri-climate regions in the country, the agriculture sector only represents about 11% of GDP.

    This is partly because for years an overvalued exchange rate had undermined the competitiveness of agriculture and other non-oil sectors. Infrastructure, skills weaknesses, and a challenging business climate remain constraints for private investment outside the oil sector. The challenging regulatory environment for business is illustrated by the Angola’s ranking of 182 out of 190 countries in the Bank’s flagship Doing Business 2017 report, although progress is being made in areas such as creating a company.

    Political Context

    Elections in August 2017 brought President João Gonçalves Lourenço into office, Angola’s first change of president in 38 years. He is taking over from José Eduardo dos Santos, who had been in office since 1979 but decided not to run again. President Lourenço had previously been Angola’s Minister of Defense. Vice President Bornito de Sousa is also new to office.

    Six political parties took part in the August polls. The ruling People’s Movement for the Liberation of Angola (MPLA), led by Lourenço, won 150 out of 220 parliamentary seats, receiving 61% of the vote. As a result, President Lourenço was sworn in on September 26, following the dismissal of cases opposition parties had filed alleging electoral irregularities. His predecessor, Dos Santos, will remain the leader of the ruling MPLA until 2018.

    The main opposition party, the National Union for the Total Independence of Angola (UNITA), led by Isaias Samakuva, received 51 parliamentary seats (26.67% of the vote), while an emerging third political force, the Broad Convergence for the Salvation of Angola–Electoral Coalition (CASA-CE) doubled its representation in Parliament with 16 seats (9.54%).

    The Social Renewal Party (PRS) and the National Front for the Liberation of Angola (FNLA) received 2 and 1 seats respectively (1.35% and 0.93%), but the National Patriotic Alliance (APN) did not win a seat in Parliament (0.51%).

    More than 9.3 million people were registered to vote in the recent polls, which were witnessed by international observers.

    Angola has maintained political stability since the end of the 27-year civil war in 2002. In 2010, a Constitution established a presidential parliamentary system with the president no longer elected by direct popular vote but instead as the head of the party winning the most seats. The 2010 Constitution sets a limit of two, five-year presidential terms.

    Internationally, Angola is becoming more assertive and demonstrating a more steadfast commitment to peace and stability in Africa, in particular in the Great Lakes region, whereAngola has secured a commitment to economic and political sanctions against the region’s armed rebel groups.

    Development Challenges

    Angola has made substantial economic and political progress since the end of the war in 2002. However, the country continues to face massive development challenges, which include reducing its dependency on oil and diversifying the economy; rebuilding its infrastructure; and improving institutional capacity, governance, public financial management systems, human development indicators, and the living conditions of the population.

    Large pockets of the population still remain living in poverty without adequate access to basic services, and the country could benefit from more inclusive development policies.

    Last Updated: Dec 22, 2017

  • World Bank Group Commitment to Angola

    World Bank Group (WBG) activities in Angola are undertaken as part of the Country Partnership Framework (CPF) for 2014-2016. The overarching strategy of the CPF is the promotion of more inclusive development, and it consists of two core objectives (pillars), and one foundation plank possessing a cross-cutting nature. The pillars and foundation are as follows:

    • Pillar I focuses on supporting integrated national economic diversification by revitalizing rural economies to create greater competitiveness and employment. The focus is on the strengthening of the non-oil economy, with an emphasis on rehabilitating traditional lines of business that suffered greatly during the war, as well as technical assistance for the energy sector.
    • Pillar II focuses on enhancing the quality of service delivery and instituting a strong social protection program to improve the quality of life of the population and equip individuals to take a greater role in the development of the country.
    • The Foundation Plank of the CPS revolves around building human and institutional capacity to approach the levels common in middle-income countries, complementing the two strategic pillars.

    These objectives will be achieved during the CPF period through stronger attention to quality and implementation of the seven existing projects with International Development Association (IDA), and International Bank for Reconstruction and Development (IBRD) financing, and the three current Reimbursable Advisory Services (RAS).

    The current World Bank portfolio is comprised of seven investment projects (IDA/IBRD) with a total net commitment of $806.50 million dollars.

    Last Updated: Dec 22, 2017

  • The World Bank has successfully contributed to Angola’s development, by providing support in the following areas:

    Improved Service Delivery to the Poor

    The Angola Social Action Fund, commonly known as “Fundo de Apoio Social” (FAS), has been the main WBG support program that contributes to promoting 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, including a recently approved IBRD Additional Financing. It has been considered as the largest bottom-up poverty reduction program in Angola. The project provides direct financial support and capacity development assistance to poor communities, complementing the government’s efforts in the decentralization process.

    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. About 7,200 individuals have benefited from the project’s capacity development activities, half of whom received formal training.

    Since the end of the civil war in 2002, Angola has enjoyed strong economic growth. Between 2002 and 2008, the country experienced growth rates averaging 11 percent per annum, an impressive rate by global standards. However, poverty remains widespread. Official figures indicate that poverty declined significantly between 2000 and 2008, from 62 percent to 37 percent. However, the comparability of the two data sets and methods applied to measure poverty is limited, as the former only covered 7 of the 18 provinces. This decline should be viewed with caution. International comparison data, using US$1.9 per day 2011 PPP, indicate that poverty fell only from 32.5 percent to 30 percent between 2000 and 2008. The slow response of poverty reduction to growth is explained by the overly dependence of the country on the oil industry. Oil production accounts for 50 percent of GDP but employs less than 10 percent of workers. More than 50 percent of Angolan workers are engaged in agriculture and fisheries, and non-oil sectors face many challenges due to lack of competitiveness. Inequality is also high, with a Gini coefficient of 0.43 in 2008. There is a large regional disparity in living standards, with rural areas experiencing three times the level of poverty than the urban.

    The same is true for the Human Development Index (HDI). Angola’s HDI puts the country in the low human development category. According to the 2016 Human Development Report (HDR), Angola ranked 150th out of 188 countries and territories. However, the HDI values and ranks presented in the 2016 HDR are not comparable to those published in earlier editions, as the underlying data series methodologies have been improved.

    In order to improve data for poverty measurement and better allocation of resources for social programs, the WBG started in May 26, 2017 a project for the enhancement of the statistical capacity. The Statcap project is made of three components: 1. Institutional Reform and Capacity (US$3.5m); 2. Data Production and Dissemination (US$56.3m); and 3. Project Management (US$2m). The most important activities are under Component 2 and include the Agriculture Monitoring System [RAPP-Agriculture Census and follow-up surveys (US$24m)] and the Welfare Monitoring System [IDREIA-HBS (US$25m)]. The RAPP pre-test was successfully implemented in early July 2017 and the main data collection will take place during February-May 2018. Census results dissemination are expected for December 2018. On the IDREA, the pilot survey is planned for November 2017 and the main data collection shall take place during January-December 2018. While not covered by the project, the Government will implement a parallel HBS that will ensure comparability with the 2008 HBS. The final poverty assessment report produced by the NSO is expected to be ready two months after data collection.

    Supporting smallholder farmers

    About 80% of the country’s farmers are smallholders and they face many constraints, including knowing little about improved farming practices and new agricultural technology; having poor access to extension services and limited access to seeds and fertilizers; and not having enough market information. To support the government’s efforts to improve the living conditions of smallholder farmers, the WBG financed the Market Oriented Smallholder Agriculture Development Project (MOSAP) which supported the beneficiaries by providing training and new technologies, improving their organizational and marketing skills, and improving their access to extension services and agricultural inputs. It also supported strengthening the farmers’ organizations. About 725 farmers’ field schools were created by the project.

    The project was designed to fit into Angola’s Poverty Reduction Strategy (PRSP), which highlighted rural development with a focus on food security and the revitalization of the rural economy. By the time the project ended in March 2016, it helped train over 50,000 smallholder farmers to boost the production of the major crops targeted by the project. To scale-up MOSAP’s achievements to include more regions of Angola and more beneficiaries, a new smallholder agriculture project was approved by the Board in July 2016 and launched in Bie Province in March 2017. In addition to doing capacity building for smallholders, the Smallholder Agriculture Development and Commercialization Project (SADCP) aims to strengthen the Angolan Ministry of Agriculture’s capacity for statistics, policy analysis, market information, irrigation development, and agricultural extension.

    Last Updated: Dec 22, 2017

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

    Last Updated: Dec 22, 2017

Api


LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

More Photos Arrow

In Depth

Apr 19, 2018

Africa's Pulse, No. 17, April 2018

A new analysis of African economies shows the region’s growth is projected to reach 3.1% in 2018, and average 3.6% in 2019–20.

Oct 30, 2017

Monitoring Progress in Policy

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

International Development Association (IDA) in Africa

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

World Bank Africa Multimedia

Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

Doing Business in Angola

The Doing Business report provides objective measures of business regulations and their enforcement. See where your country ranks.

Additional Resources

Country Office Contacts

Main Office Contact
Largo Albano Machado 23/25
Maculusso
Luanda, Angola
+244-222-394677
For general information and inquiries
Wilson Mbanino Piassa
Communications Associate
Luanda, Angola
+244 222 393 389
wpiassa@worldbank.org
For project-related issues and complaints
angolaalert@worldbank.org
Welcome