The World Bank in Angola

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 more than 30 million (2018). 

Economic Overview 

For years, Angola’s economy suffered from the effects of lower oil prices and production levels despite significant progress on macroeconomic stability and structural reforms. Since 2015, the oil sector, which accounts for one third of gross domestic product (GDP) and roughly 95 percent of exports, had declined sharply. In 2020, as the COVID-19 pandemic hit, real GDP contracted by 5.5 percent, marking the fifth consecutive year of recession, with a total GDP decline of 9.9 percent.

In 2021, the Angolan economy showed signs of recovery and is estimated to have exited the long recessionary cycle with real GDP growth of 0.2 percent. The non-oil sector recovered, supported by the removal of COVID-19 related restrictions and the lagged impact of macroeconomic reforms. This offset a renewed contraction of the oil sector which declined despite higher oil prices.

The outlook for 2022 is favorable, especially due to the continued rise of oil prices and a temporary rise of production levels. As the transformation of a state-led and oil-funded economic model to a private-sector-led growth model is a complex and long-term process, the oil sector will continue to play an important role during the transition period. However, the continued government efforts to diversify the economy have been boosting non-oil sector growth.

Over the past years, macroeconomic stability has been safeguarded through a more flexible exchange rate regime, appropriate monetary policy, fiscal prudence, and debt reprofiling with major bilateral creditors. Key reforms delivered since 2017 include the Law on Preventing and Combating Money Laundering, the Fiscal Responsibility Law, and the Privatization Law. Financial regulation was enhanced by the approval of a new Financial Institutions Law in May 2021 which strengthens the resolution powers of the Banco Nacional de Angola (BNA) and includes enhanced corporate governance requirements. In addition, the BNA’s organic law was amended in 2021 to strengthen its autonomy. Moreover, a one-stop window for investors was set up to improve the business climate.

The BNA continued its efforts to keep the exchange rate flexible by allowing an increasing number of companies to sell foreign exchange directly to commercial banks. As a result, the exchange rate has appreciated by 23 percent year-on-year in February 2022. However, inflation has remained high, increasing to 27.3 percent in February 2022 compared to 24.9 percent a year prior, driven by import restrictions and supply side constraints related to the COVID-19 pandemic and rising global commodity prices.

Overall, Angola’s macroeconomic reforms are already producing some positive results as non-oil economic activity expanded before and after the COVID-19 shock, as indicated by the 41-percent growth in non-oil exports in 2021.

Political Context 

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.  

A proposal for a punctual review of the country's constitution is currently under discussion in parliament. Local election legislation and other laws will be on hold until the constitutional review process is concluded. 

Next Parliament and presidential elections are expected to take place in August, 2022.

Last Updated: Apr 07, 2022

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 and which were extended through 2019. 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 CPF 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 nine  existing projects with International Bank for Reconstruction and Development (IBRD) financing, and the three current Reimbursable Advisory Services (RAS). 

The current World Bank portfolio is comprised of nine investment projects with a total net commitment of nearly $ 1.8 billion dollars. 

Last Updated: Apr 07, 2022

The World Bank (WB) has successfully contributed to Angola’s development by providing support in the following areas:

Human Capital

The Health System Performance Strengthening Project (HSPSP) is targeting more than 200,000 people in five municipalities in which a Results-Based Financing pilot called PASSABEM is being implemented. Currently the project has:

• Identified and registered more than 103,000 beneficiaries representing 51.4% of the estimated population
• In response to the COVID-19 pandemic, the project made $15 million available for the urgent and immediate health sector response, and supported World Bank technical assistance in conducting a quantification of the COVID-19 needs which served as the basis to outline needs areas, inform procurement, and help coordinate donor support
• Purchased personal protective equipment, bio-safety and diagnostic materials, and the operationalization of the logistical response which included contact-tracing and field-based training
• To assist the government of Angola reach a 60% vaccination for its people, the Bank made available a further $150 million to buy Covid-19 vaccines.
• As of February 28, 2022, Angola had tracked the administration of nearly 17 million vaccine doses for people 12 years and older, leading to a 54% national coverage for the 1st dose and 27% for both vaccine doses;

The Social Protection Strengthening Program which has four components is at a crucial stage. The components include Cash Transfer, productive Inclusion, Municipalization of the Social Action and Unified Social Registry.

• The Cash Transfer component which aims to benefit 1.6 million poor and vulnerable families by the end of 2022 has already registered more than 550,000 households across the country. As of December 30th, 2021, more than 300,000 households had already received cash payments from the project.
• The Productive Inclusion component is already being implemented in 9 provinces and 10 municipalities. The main lines of work include agriculture, honey production, animal husbandry, community saving schemes and product processing.
• The productive inclusion component has already benefited more than 17,000 direct beneficiaries and 84,000 indirect beneficiaries in economic and productive initiatives focusing on agriculture, fishing, animal husbandry, honey production, sewing, motorcycle taxi, community saving schemes, product transformation and handcrafts. 
• The Municipalization of the Social Action component has trained 426 local technicians and built 24 Integrated Social Action Centers. The following services were delivered in the three centers:
• 18,000 people got their first birth certificate and received their identity documents;
• 981 grievance redress cases on the project have been placed;
• 953 people attended workshops on COVID-19 and child protection;
• 32 cases of family conflict resolutions were mediated.

Water 

The first phase of the Water Sector Institutional Development Program (WSIDP), also known as PDISA:

• Supported the creation and strengthening of six new water supply utilities that are providing household services to more than 800,000 new customers.
• The utilities financial and operational performance has improved significantly.
• A new regulator and a new water resources management institution have similarly been created with project support and are carrying out their mandates. 
• Additionally, 1,000 km of network was installed in Uige, Malanje, Ndalatando, Huambo, Kuito, Lubango and Luena.
• A second generation of the project, WSIDP2 ($350 million), is now effective and will scale up the infrastructure activities, provide increased institutional strengthening and incorporate sanitation activities. WSIDP2 also secured funds from the Agence Française de Développement ($150 million) and the European Investment Bank ($100 million).

Social and Economic Infrastructure 

The Angola Social Action Fund, commonly known as “Fundo de Apoio Social” (FAS), has been the main World Bank Group (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 Local Development Project (PDL), is in its fourth phase, including a recently approved International Bank of Reconstruction and Development (IBRD) Additional Financing. 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

Agriculture 

The Market Oriented Smallholder Agriculture Development Project (MOSAP) supports beneficiaries by providing training and new technologies, improving their organizational and marketing skills, and improving their access to extension services and agricultural inputs. It has also:

• Supported strengthening the farmers’ organizations
• About 725 farmers’ field schools were created by the project and helped train more than 50,0000 smallholder famers to boost the production of the major crops targeted by the project

Last Updated: Apr 07, 2022

The World Bank Group continues to leverage its support by working closely with 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 United Nations agencies (UNDP, UNICEF, the World Health Organization, UNFPA, FAO), the African Development Bank, the European Commission, USAID, the French Development Agency, as well as the oil sector companies on innovative cooperation opportunities. 

Last Updated: Apr 07, 2022