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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 76225-AO INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND Public Disclosure Authorized MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY (FY14 - FY16) FOR THE REPUBLIC OF ANGOLA Public Disclosure Authorized August 15, 2013 Southern Africa Country Department 2 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Public Disclosure Authorized Sub-Saharan Africa Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Date of the last Interim Strategy Note April 26, 2007 Currency Equivalents (As of August 14, 2013) US$1.00 = Angolan kwanza 96.34 Government Fiscal Year January 1 to December 31 Acronyms and Abbreviations AAA Analytical and Advisory Activity INE National Institute of Statistics BAREC Building Africa’s Resilience to Climate Change M&E Monitoring and Evaluation CPAR Country Procurement Assessment Review MDGs Millennium Development Goals CPE Country Program Evaluation MIGA Multilateral Investment Guarantee Agency CPI Corruption Perceptions Index NGOs Non-Governmental Organizations CPPR Country Portfolio Performance Review PAD Project Appraisal Document CPS Country Partnership Strategy PICPDR Programa Integrado de Combate ã Pobreza e Desenvolvimento Rural CSOs Civil Society Organizations PEFA Public Expenditure and Financial Accountability DFID Department for International Development (UK) PES Economic and Social Plan DPL Development Policy Lending PERs Public Expenditure Reviews DPO Development Policy Operation PFM Public Financial Management ECP Estratégia de Combate à Pobreza PPP Public Private Partnership EITI Extractive Industries Transparency Initiative PRSP Poverty Reduction Strategy Paper ENAD National School of Administration RAS Reimbursable Advisory Services ESW Economic and Sector Work ROSC Reports on the Observance of Standards and Codes FDI Foreign Direct Investment SAPP Southern Africa Power Pool GDP Gross Domestic Product SDI Spatial Development Initiative GEF Global Environment Facility SMEs Small and Medium-Sized Enterprises GFDRR Global Facility for Disaster Risk Reduction SOEs State-Owned Enterprises IBRD International Bank for Reconstruction and TA Technical Assistance Development IDA International Development Association TB Tuberculosis IEG Independent Evaluation Group TI Transparency International IFAL Institute for Local Administration TVET Technical and Vocational Education and Training IFC International Finance Corporation UN United Nations IMF International Monetary Fund WBI World Bank Institute IDA/IBRD IFC MIGA Vice President: Makhtar Diop Jean Philippe Prosper Michel Wormser Director: Laurence Clarke Cheikh O. Seydi Ravi Vish Task Team Leaders: Young Chul Kim Jumoke Jagun-Dokunmu Antonio Barbalho Team Members: The Angola CPS for FY14-FY17 was prepared under the guidance of the Country Director Laurence Clarke, with strong involvement of IFC, MIGA, and WBI from concept stage. The core CPS Team included Ana Maria Carvalho, Yisgedu Amde, Domingas Pegado, Maria Teresa Benito-Spinetto, Luiz Tavares, Elio Codato, Ivo Imparato, Joel Kolker, Mazen Bouri, Laura Rose, Julio Revilla, Roberto Panzardi, Humberto Cossa, Manuel Salazar, Maika Watanuki, Jose Chembeze, Aniceto Bila, Guo Li, Cristina Santos, Patricio Marquez, Dirk Bronselaer, Furqan Saleem, Joao Tinga, Marilyne Gonzales, Maria Da Silva Pereira, Marco Hernandez, Ziauddin Hyder, Katia Daude, and Conor Healy. Contributions are gratefully acknowledged from Sudharshan Canagarajah and Mohamed Khatouri. Administrative support was provided by Luisa Matsinhe, Maggie Mendes and Adelia Suurna. ii Country Partnership Strategy FY14-FY16 for The Republic of Angola TABLE OF CONTENTS EXECUTIVE SUMMARY............................................................................................................................ v I. Introduction ....................................................................................................................................... 1 II. Country Context ............................................................................................................................... 2 A. Impact of Prolonged Conflict....................................................................................................... 2 B. Recent Political Developments .................................................................................................... 3 C. Poverty and Inequality ................................................................................................................. 4 D. Millennium Development Goals (MDGs), Gender, and Regional Disparity .............................. 5 E. Recent Economic Developments.................................................................................................. 9 F. Medium-Term Economic Perspectives ...................................................................................... 11 G. Governance and Accountability ................................................................................................. 12 H. Government’s Development Vision and Priorities .................................................................... 14 III. PROPOSED WORLD BANK GROUP COUNTRY PARTNERSHIP STRATEGY ......................................... 16 A. Lessons and Recommendations from Past WBG Involvement ................................................. 17 B. The Proposed CPS Strategic Objectives and Guiding Principles .............................................. 18 IV. IMPLEMENTING THE FY14-FY16 COUNTRY PARTNERSHIP STRATEGY .......................................... 31 A. Delivering through Integrated Partnerships ............................................................................... 32 B. Risks ........................................................................................................................................... 34 V. CPS ANNEXES Annex 1. Proposed Deliverables Under The Country Partnership Strategy ................................... 36 Annex 2. Angola CPS Results Matrix ............................................................................................. 37 Annex 3. Angola – Statistical Issues ............................................................................................... 42 Annex 4. Key Constraints to Shared Prosperity in Angola ............................................................. 44 Annex 5. Social Indicators .............................................................................................................. 46 Annex 6. Background Note on Potential Areas for Bank Engagement .......................................... 47 Annex 7. CPS Consultations ........................................................................................................... 53 Annex 8. Key Messages from Assessment of Bank Group Engagement with Angola .................. 54 Annex 9. Potential Activities of IFC, MIGA, and WBI during CPS Implementation .................... 55 Annex 10. Exposure Indicators ....................................................................................................... 58 Annex 11. IFC Operations .............................................................................................................. 59 Annex 12. IFC Investment Operations Program ............................................................................. 60 Annex 13. Selected Indicators of Bank Portfolio Performance and Management .......................... 61 Annex 14. Angola – Donor-Sector Mapping .................................................................................. 62 Annex 15. Angola – At a Glance .................................................................................................... 63 Annex 16. Operations Portfolio (IBRD/IDA and Grants) ............................................................... 66 Annex 17: Angola Trust Funds, FY14 ............................................................................................ 67 iii FIGURES AND TABLES Figure 1: Agricultural Production ..................................................................................................... 2 Figure 2: Agricultural Trade ............................................................................................................. 2 Figure 3: Income & Oil Revenues ..................................................................................................... 8 Figure 4: Structure of Angolan Economy, 2010 ............................................................................... 8 Figure 5: Angola’s ECP Priorities ................................................................................................... 14 Figure 6: Current IDA Portfolio ...................................................................................................... 31 Figure A 1: Provincial Average Income, 2007 ............................................................................... 44 Figure A 2: Regional Disparity in Literacy and Public Services .................................................... 45 Table 1: Poverty Headcount in 2008 - 2009 ..................................................................................... 4 Table 2: Angola: Millennium Development