Overview

  • Economic 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 almost 29 million (2016).

    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, and 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 eased due to increased foreign exchange sales and monetary contraction, which reached 128% in September 2017.

    The BNA’s monetary policy was successful at decreasing money supply substantially, 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.

    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 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 votes. 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%). The National Patriotic Alliance (APN) did not get any 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 steadfast commitment to peace and stability in Africa, in particular the Great Lakes region. Angola 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 developmental 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 in poverty and without adequate access to basic services, and the country could benefit from more inclusive development policies.

    Last Updated: Oct 12, 2017

  • World Bank Group Commitment to Angola

    World Bank Group (WBG) activities in Angola are undertaken within the context of the Country Partnership Strategy (CPS) for 2014-2016.  The overarching strategy of the CPS is the promotion of more inclusive development, and it consists of two core objectives constituting 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 them 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 CPS period through stronger attention to quality and implementation of the five existing International Development Association (IDA) projects as well as through new International Bank for Reconstruction and Development (IBRD) lending, and the expected build-up of a series of Reimbursable Advisory Services (RAS).

    The current World Bank portfolio is comprised of five IDA funded investment projects and an IBRD programmatic Development Policy Operation in the amount of $450 million. The portfolio has a total net commitment of $876 million dollars. 

    Last Updated: Oct 12, 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 forwarding 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 the government’s efforts in the 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.

    Strengthening Public Sector Management

    To support the government’s efforts to improve macroeconomic stability, the WBG financed the Economic Management and Technical Assistance (EMTA) project. The main objective of the project was to assist the government in 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 a 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.

    Last Updated: Oct 12, 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), the European Commission, USAID as well as the oil sector companies on innovative cooperation opportunities.

    Last Updated: Oct 12, 2017

Api


LENDING

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

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
Largo Albano Machado 23/25
Maculusso, Luanda
Angola
+244-222-394677
Luanda
Maria Mboono Nghidinwa
Communications Consultant
+244 222 393 389
mnghidinwa@worldbank.org
Washington
Olivier Godron
Country Program Coordinator
1818 H Street, NW
Washington, DC 20433
+1-202-473-9626
ogodron@worldbank.org