Title: Country Partnership Strategy for the Republic of Angola
Language: English
Type: Document
Nature: Guidelines
Published: August 15, 2013
Region: Sub-Saharan Africa (SSA)
Country: Angola
Keywords: About *, About PPP **, Knowledge Lab ***, Angola
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Document(s):
Document Summary:
The World Bank Group Country Partnerships Strategy for FY14-FY16 for Angola.
Document Details:
- This World Bank Group Country Partnership Strategy (CPS) for Angola covering Fiscal Years 2014-2016, the first in nearly 4 years, comes at an important juncture in Angola’s development history of transitioning to shared prosperity. After emerging from a devastating 27-year civil war in 2002, the country has to date achieved a period of remarkable reconstruction and recovery and fast economic growth. As a result of the sharp rise in per capita income which surpassed the eligibility threshold for IDA resources for several years, Angola will be transitioning at the end of FY14 to a middle-income IBRD country. The CPS was prepared to support that transition and to define areas that could be supported with a new set of instruments, among which knowledge takes the center stage.
- There are significant challenges remaining from the earlier period of reconstruction which need to be addressed to lift Angola’s development effort to a higher plane. Despite the rapid growth, particularly fueled by the development of Angola’s oil and gas sector, 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 and population groups, there is a clear need for a more inclusive development policy and shared prosperity.
- Recognizing this need, the Government has emphasized the need for economic diversification, equitable distribution of wealth, and better service delivery in its medium- term National Development Plan. The 2008 economic crisis which significantly slowed the pace of economic growth and public investments served as a reminder of the risks of Angola’s overwhelming dependency on the oil industry. The successful completion of the economic adjustment program supported by an IMF Standby Arrangement now provides Angola with a more stable environment in which a strong shift in development orientation could be implemented.
- Capacity constraints continue to impede progress on diversification and human development. Angola is not likely to meet any of the Millennium Development Goals by 2015, and ranks very low on human development and business environment indicators. Although the non-oil sector has performed better in recent years, there are still overbearing bureaucratic hurdles and governance challenges that inhibit growth of the private sector. Despite large public investments in expanding the social infrastructure for key public services, lack of human resources to run the facilities efficiently has prevented more rapid improvements in education and health outcomes.
- The availability of large revenues from oil provides Angola with the ability to accelerate its development trajectory. The Government recognizes that such a financial cushion will shrink over time as oil and gas resources are gradually depleted. Therefore, it is placing a heavy emphasis on building human resources capable of sustaining a more diversified economy that leads to poverty reduction.
- Responding to the above challenges and prepared with significant local consultations and strong Government ownership, the World Bank Group’s CPS aims at: (1) supporting integrated national economic diversification through timely knowledge and technical assistance support on spatially balanced rural development, energy sector expansion and development, and private and financial sector development; (2) enhancing the quality of services in education, health, and water and sanitation, and deepening the protection of the vulnerable and marginalized citizens; and (3) building adequate human and institutional capacity to enable sound economic management, develop skills needed in a diversifying economy, and to build resilience to potential shocks from the global economy or climate change. Gender and governance dimensions underpin the support the WBG will provide to Angola under the CPS.
- The WBG’s program will make use of a range of financial and advisory instruments available from IBRD, IFC, and MIGA, as well as knowledge services from the World Bank Institute (WBI), to support poverty reduction and shared prosperity. The program will include Analytical and Advisory Activities under each of the two Pillars and Foundation Plank of the CPS, including a number of technical assistance activities to be funded through reimbursable advisory services (RAS). Where there is a clearly defined need, the WBG will also be ready to provide longer-term support through various financial products from IBRD, IFC, and MIGA to leverage private investments and to lower the cost of financing Angola’s long-term development.
- Partnership among the Bank, IFC, MIGA and WBI, as well as with key development partners, has deepened during the preparation of the CPS. The synergistic benefits of such partnerships were already recognized by the Government as a key potential strength of the WBG as Angola’s development partner who can offer a package of support tailored to the country’s needs at different stages of investment and reforms to promote shared prosperity. A Finance Partners mission and workshop in Luanda planned for September 2013 will further unpack how the WBG arms can work as One Bank to achieve better results to meet Angola’s development challenges.
- Risks to the CPS remain substantial, however, owing to the depth of existing disparity in Angola and the capacity gaps that impede the pace of reform implementation. High dependency on Angola’s oil sector, which constitutes about half of GDP, is another vulnerability in case the demand or price of oil drops significantly. The flip-side of this risk is that an oil boom could divert resources from investment to consumption and reduce the Government’s commitment to structural reforms. A downturn in economic activity arising from a variety of domestic and external factors could lead to a surge in public frustration over the existing disparity and distortions. The proposed CPS constitutes a calibrated engagement to mitigate these risks by promoting measures to reduce poverty and to achieve shared prosperity. There is a shared ownership of the priorities contained in the CPS within Government and the WBG. The Mid-term Review of the CPS will provide an opportunity to reassess Government’s interest and commitment, and to adjust the program content accordingly.
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