Report No. PID11534

Project Name -Emergency Demobilization and Reintegration Project

Region Africa Regional Office

Sector Other social services (100%)

Public Disclosure Authorized Project ID P078288

Borrower(s) GOVERNMENT OF ANGOLA Implementing Agency

Institute for the Socio-Professional Reintegration of Ex-Combatants (IRSEM) Address: Avenida Comandante Valodia 206, 10 Andar, Edificio da AP, Luanda Contact Person: General Ant6nio Andrade, Director General Tel: 244-2-448365 Fax: 244-2-441997

Public Disclosure Authorized Environment Category B

Date PID Prepared December 9, 2002

Auth Appr/Negs Date October 17, 2002

Bank Approval Date February 27, 2003

1. Country and Sector Background A. Circumstances of the Conflict Angola has been at war since the 1960s, when competing national resistance movements, including the Movimento Popular de Liberta6ao de Angola (MPLA), and the Uniao Nacional para a Independencia Total de Angola (UNITA) began to challenge Portuguese colonial authority. Following a short-lived Public Disclosure Authorized attempt to establish a joint transitional government in January 1975, fighting among the independence movements resumed in advance of independence in November 1975. On independence day, November 11, 1975, control of Angola was divided. The MPLA held Luanda and other urban areas while UNITA held large parts of the rural south and east. In the following decade of warfare, the MPLA gradually asserted control over most of the country. The first attempt to secure peace culminated in the signing of the Bicesse Accords in May 1991, which called for multiparty legislative and presidential elections. However, when the leader of UNITA, Jonas Savimbi, lost the first round of the 1992 presidential elections, he rejected the outcome and took the country back to war. In response to UNITA's return to fighting, the United Nations (UN) in 1993 imposed sanctions against its arms and fuel trade. A second peace process resulted in the signing of the Lusaka Accords in Public Disclosure Authorized November 1994. Under the Agreement, UNITA agreed to demobilize and join a Government of Unity and National Reconciliation. This government was formed in April 1997, and demobilization was initiated under the supervision of a UN peacekeeping operation, UNAVEM II, which reached 7,500 personnel at its height. However, UNITA failed to demobilize completely and to implement other key provisions of the Agreement. As low-level fighting persisted, UNITA was suspended from parliament in August 1998, and in December of the same year the Lusaka Accords collapsed when the Government of Angola (GoA) attacked UNITA's headquarters. By mid-2000, UNITA had been pushed back into non-strategic rural areas, but remained a destabilizing guerrilla force. The third and most recent attempt to achieve peace began following a successful GoA offensive that culminated in the death of Jonas Savimbi on February 22, 2002. The GoA and UNITA signed the Luena Memorandum of Understanding (MoU) on April 4, 2002. UNITA forces were subsequently encamped in 36 quartering areas across the country. On August 2, 2002, UNITA military forces were formally dissolved. While 5,017 UNITA combatants have been integrated into the Angolan Armed Forces (FAA) for the longer term, the remaining 85,000 are to be demobilized and returned to civilian life. These developments represent the best opportunity since independence to resolve the Angolan crisis by demobilizing the former UNITA forces and reintegrating them into civilian life in Angola through an orderly process. B. Economic and Social Impact of the Conflict The long civil war has had a devastating impact on the population of Angola. Some 750,000 Angolans have died from conflict-related causes, including conflict-induced famine or disease; some 4.5 million are internally displaced; and another 450,000 are refugees. Key social indicators are very poor - Angola ranks only 146th out of 162 countries on UNDP's Human Development Index for 2001. Life expectancy is low; school enrolment rates are low; and infant and child mortality rates are extremely high. The Millenium Development Goals are distant. Food security has been precarious as able-bodied males have been conscripted into the armed forces, crops raided or destroyed, and input delivery systems neglected. Conflict, combined with corruption, macroeconomic mismanagement, and a severe shortage of technical and managerial capacity, has also resulted in the collapse of economic activity in all sectors except subsistence agriculture and the enclave oil and diamond sectors. Persistent instability in Angola has also helped to fuel conflicts in adjacent countries, especially the Congos. As a result of the continuing insecurity, defense spending fluctuated between about 15 percent and 40 percent of total public spending from 1999 to 2001. Defense expenditures remain a significant burden on the national budget and may hamper the Government's ability to implement its poverty reduction strategy. C. Government and International Response and Strategy Angola's civil conflict was escalated through sponsorship. The MPLA, which was allied with the Soviet bloc, invited Cuban troops into Luanda in October 1975, one month before independence. UNITA received military support from and financial aid from the United States. Cold War alliances also dragged Angola into wider regional conflicts, including in particular in the two neighboring Congos. The withdrawal of foreign sponsorship in the 1990s, following the collapse of the Soviet Union and the initiation of a transition in South Africa, created space for the Bicesse and Lusaka peace processes.

Bicesse and Lusaka demobilizations (old caseload): Two earlier attempts to demobilize--the first following the Bicesse Accords and the second following the Lusaka Accords--ended in failure. Some 160,000 combatants were identified for demobilization and reintegration under these two accords and in some cases received benefits under previous programs. The demobilization of this old caseload was led by UN peacekeeping operations,

-2 - with reintegration efforts co-financed by the GoA and various bilateral donors; the GoA did not request IDA financial assistance under these earlier processes. Post-Luena demobilization (new caseload): The April 4 MoU, signed by UNITA and the MPLA, indicates that all UNITA ex-combatants will be demobilized in 2002, except for 5,017 who will be integrated into the FAA and the police. The MoU also specifies that about 33,000 FAA will be demobilized, albeit by an unspecified (later) date. As of June 30, 2002, approximately 84,000 ex-combatants from UNITA had reported to 36 quartering areas across Angola in preparation for demobilization. By August 2, 5,017 combatants were integrated in the FAA for the longer-term, while all other UNITA combatants were incorporated into the FAA in anticipation of their demobilization. For this new demobilization caseload, the GoA has asked the World Bank to lead efforts to help it design the ADRP and to provide financial assistance, within the framework of the Multi-country Demobilization and Reintegration Program (MDRP). The Government's efforts are being supported by a multi-donor team comprising representatives of several MDRP partners, including: DfID, GTZ, USAID, ILO, UNOA, UNDP and UNICEF.

2. Objectives The overall goal of the new national Angola Demobilization and Reintegration Program is to help foster reconciliation in Angola and consolidate peace in the Great Lakes region. The three principle objectives of the program include: (i) the demobilization and reintegration into civilian life of some 85,000 UNITA and 33,000 FAA ex-combatants; (ii) the provision of reintegration assistance to new-caseload ex-combatants to be demobilized; and (iii) the reallocation of GoA expenditures from military to social and economic purposes. The ADRP is expected to have a significant impact on reducing poverty in Angola by: (i) helping ex-combatants to re-establish civilian livelihoods, thereby contributing to more secure conditions in the rural areas and encouraging internally displaced persons (IDPs) to resume productive lives in the rural economy; (ii) freeing up additional national resources for investment in social and economic sectors; (iii) investing in the human capital of ex-combatants; and (iv) enhancing the implementation capacity of community-based development organizations.

3. Rationale for Bank's Involvement Need for Emergency Assistance. The GoA's request for technical and financial assistance for the ADRP has come at a critical time in the consolidation of the Angolan peace process. The application of the Bank's emergency procedures under OP 8.50 is justified on the basis of the following criteria: (i) the program's impact on economic priorities and investment programs; (ii) its critical contribution to the stabilization of the society and economy, both in Angola and in the greater Great Lakes region, and (iii) the urgency to demobilize and provide reintegration assistance to the UNITA ex-combatants. Interim Poverty Reduction Strategy Paper (PRSP) and Transitional Support Strategy (TSS): As cornerstones of its poverty reduction strategy, the Government of Angola emphasizes improving economic policy formulation, strengthening public sector capacity and institutions, expanding the human capital base, rehabilitating social and economic infrastructure, and promoting pro-poor growth. The new TSS reflects the GoA's determination to overcome the legacies of the war, in particular by demilitarizing the

- 3 - country and facilitating the return of the country's 4.5 million IDPs; to correct macroeconomic imbalances and improve GoA resource management; to expand service delivery to achieve poverty-reducing outcomes on the ground; and to strengthen coalitions for meaningful social and economic reform. The proposed Credit is an integral part of the interim PRSP and the TSS.

4. Description The ADRP would consist of four components: (i) demobilization; (ii) reintegration; (iii) special groups; and (iv) program implementation. The FAA has been tasked with the implementation of demobilization activities. A. Demobilization The ADRP will demobilize about 85,000 UNITA ex-combatants that have been quartered and reduce the number of FAA military personnel by approximately 33,000 over a 24-month period. Demobilization of ex-combatants of the UNITA military forces (FMU) is taking place from the quartering areas (QAs). Entitlements of the demobilized would depend on the type of discharge (a disponibilidade, a reserva, a reforma). Demobilization procedures will include (i) identification and verification of those to be demobilized, (ii) distribution of demobilization letters, (iii) collection of socio-economic data, (iv) payment of a FAA salary cash payment, and (v) transport to the community of choice. As disarmament has been completed by the FAA prior to the initiation of the Program, this activity is not included in the Program description. The GoA initiated demobilization from Quartering Areas on October 20, 2002. At this time, demobilization and transport activities are still ongoing. The GoA has indicated that it intends to conclude the demobilization phase by December 31, 2002. The ADRP will provide reinsertion assistance in the form of a combination of monetized and in-kind transitional safety net assistance (TSN), to cover the basic needs of an ex-combatant and his dependents over a period of 6 months. In addition to the payment of five months of salarty, ex-combatants are expected to receive a cash payment of US$100 equivalent as well as a basic needs kit within three months of their return. B. Reintegration Building on experiences with such programs in Angola and elsewhere as well as with community-based development projects in the country, the ADRP would provide economic and social reintegration assistance to help ex-combatants establish sustainable livelihoods. Several guiding principles would apply for reintegration assistance: (i) it would seek to minimize market distortions and maximize beneficiary choice; (ii) it would seek to involve communities of settlement and foster reconciliation wherever feasible; and (iii) to the extent possible, assistance would be provided in such a way that it is beneficial to the wider community. Implementing partners would be contracted to provide reintegration services to ex-combatants in the following areas: (i) small scale agriculture micro-projects; (ii) skills development and training opportunities; and (iii) support for short-term employment opportunities linked to on-going community works activities, and (iv) social assistance for conflict resolution, counseling and reconciliation.

The social and economic reintegration of ex-combatants will take place in the context of the return of some four million displaced civilians. The GoA is preparing an emergency rehabilitation program to support such processes and expects to support reintegration efforts for ex-combatants

- 4 - through this broader program. The ADRP will include mechanisms to help ex-combatants access broader recovery efforts. In particular, the implementing agency would recruit counselors into its provincial offices to provide ongoing information, counseling and referral (ICR) services to ex-combatants, including outreach activities intended to minimizing social reintegration. HIV/AIDS prevention and mitigation measures will be included as a cross-cutting issue. C. Special Target Groups The ADRP will provide specialized assistance to disabled and underage ex-combatants. Disabled ex-combatants would receive access to medical rehabilitation services. Underage ex-combatants would receive access, inter alia, to family tracing and unification services, trauma counseling and psycho-social care. Detailed criteria and procedures will be elaborated in the ADRP implementation manual.

5. Financing Total ( US$m) BORROWER $60.00 IBRD IDA $30.00 BILATERAL AGENCIES (UNIDENTIFIED) $55.00 Total Project Cost $145.00

6. Implementation A. Institutional Structures 23. The GoA will assume overall responsibility for the implementation of the ADRP. The National Commission for the Social and Professional Reintegration of the Demobilized and Displaced (CNRDD) will be tasked with overall policy guidance and program oversight. The CNRDD succeeded the Inter-sectoral Commission for Implementation of the Peace Process in June 2002, with a mandate to coordinate GoA efforts in reintegrating ex-combatants. It is chaired by the Minister of the Interior; other members include the Minister of Assistance and Social Reinsertion (who chairs the CNRDD's Executive Committee); the Ministers of Planning; Finance; Health; Public Administration, Employment and Social Security; Education and Culture; and Agriculture and Rural Development; the Secretary of the Council of Ministers; the Head of the Military House; and the Head of the Estate Major General of the FAA. The CNRDD is expected to hold regular meetings to take policy-related decisions, but would not be involved in the implementation of the program.

24. As all UNITA ex-combatants have been formally integrated into the FAA before demobilization, the FAA is responsible for the implementation of demobilization activities. The Ministry of Assistance and Social Reinsertion (MINARS) will be tasked with distributing reinsertion assistance (other than salaries) to ex-combatants in their areas of return.

25. The Institute for the Socio-Professional Reintegration of Ex-Combatants (IRSEM), under the tutelage of the Ministry of Planning (MINPLAN) and MINARS, will be charged with operationalizing the CNRDD's reintegration policy instructions and preparing a technical proposal for the ADRP as well as detailed annual implementation plans. IRSEM was established in 1995 and gained experience in the implementation of reintegration activities following the Lusaka accords. IRSEM would be responsible for the supervision of reintegration activities under the

- 5- ADRP, including (i) contracting implementing partners, (ii) the management of an information, counseling, and referral (ICR) system, (iii) the coordination of reintegration assistance, (iv) and monitoring and evaluation. IRSEM would also contract qualified implementing partners to provide reintegration services to ex-combatants in the following areas: (i) small scale agriculture micro-projects; (ii) skills development and training opportunities; and (iii) support for short-term employment opportunities linked to on-going community works activities, and (iv) social assistance for conflict resolution, counseling and reconciliation.

B. Project Timing 26. The reintegration phase of the ADRP, which will be supported by IDA and the regional Multi-Donor Trust Fund of the MDRP, will be implemented over a period of three years, starting in January 2003. The GoA is fully financing the demobilization and reinsertion activities, which are already under way. The Government anticipates that all reintegration activities for ex-combatants would be implemented within a three-year time frame.

C. Monitoring and Evaluation A strong monitoring and evaluation (M&E) system, combined with close donor supervision, would seek to ensure that the ADRP reaches targeted beneficiaries in a timely and efficient fashion. The M&E system would be quantitative and qualitative in nature, providing IRSEM and its provincial offices with a comprehensive profile of ex-combatants, program benefits and outcomes. A computerized Management and Information System (MIS) would be used to track assistance provided to the ex-combatants and monitor performance throughout the life of the program. Performance Indicators. IRSEM and its provincial offices would be responsible for measuring program performance against an agreed set of demobilization and reintegration performance indicators.

7. Sustainability The ADRP is designed to aid the sustainable social and economic reintegration of ex-combatants. In this regard, it would make a positive contribution to the socio-economic status of ex-combatants, their families and their communities of settlement. Major Benefits and Risks Benefits The program should enable the GoA to consolidate its social and economic recovery efforts. The program is designed to facilitate and expedite the process of returning about 118,000 ex-combatants to productive social and economic life. The return of a relatively large percentage of the labor force to the civilian economy is expected to inject significant human resource capacity into the labor market. Their dispersion, and the provision of assistance throughout the country, could contribute to a regeneration of rural productive and financial markets. Risks and Mitigation Measures The key risk is that the ADRP is not deemed to be credible by beneficiaries, and that they resort to violent protest or seek to create insecurity. As a consequence of the GoA's recent military victory over UNITA, the change in UNITA leadership, and the commitment of both the GoA and UNITA to the peace process, it is unlikely that large scale war will resume. However residual banditry perpetrated by disgruntled ex-combatants is possible. To mitigate this risk, the ADRP preparation

- 6- team is consulting closely with all stakeholders to ensure that their concerns are known and addressed in the program. Recent GoA activity, including the partial implementation of demobilization activities and the creation of a new National Commission for the Social and Professional Reintegration of the Demobilized and Displaced in June without consultations, indicate a risk of uncoordinated GoA activity that could undermine the ADRP. This risk is being mitigated through close collaboration between the GoA and the MDRP partners in the preparation and supervision of the ADRP. There is also a risk of resource mismanagement, whether this involves the leakage of ADRP resources to unintended purposes through corruption, or the failure to translate demobilization savings into increased social and economic spending. To mitigate this risk, appropriate safeguards with respect to financial management, procurement and disbursement will be developed to avoid any such misuse of program resources. In addition, GoA expenditures will be carefully monitored by IDA and other MDRP partners active in Angola. There is a risk that the Multi-Donor Trust Fund associated with the MDRP will provide insufficient resources to cover the funding gap fully. To mitigate this risk, donor contributions to the MDTF will be sought before Board presentation. If sufficient partner funds were nonetheless not forthcoming, ADRP parameters would be adjusted to the available resources. Finally, there is an external risk that events in the greater Great Lakes region will drag Angola back into conflict. Angola is currently withdrawing its forces from the Congos. However in the event of a collapse of the peace process and resumption of hostilities within Angola or in the sub-region, IDA would consider exercising its remedies under the legal agreement. Even if large-scale violent conflict did not resume, delays in the implementation of the peace process might affect the implementation of the program.

8. Lessons learned from past operations in the country/sector Based on lessons learned in IDA operations elsewhere in Africa and the findings of evaluations completed by the Bank's Operations Evaluation Department (OED), relevant best practices were identified and integrated into program design as noted below. Demobilization. This phase is short but logistically complex. The successful implementation of demobilization activities facilitates the subsequent provision of targeted reinsertion and reintegration assistance. Key demobilization activities include the distribution of non-transferable ID documents, the collection of socio-economic data and the establishment of a database on the beneficiary population; and the dissemination of information about program benefits and civilian life. Reinsertion. Upon demobilization, ex-combatants lose their source of (formal or informal) income. Experience suggests that they are typically in critical financial situation until they can generate income sufficient to sustain a reasonable livelihood. During this period (the "reinsertion" phase), ex-combatants require a transitional safety net to cover their families' basic material needs. The objective of this transitional assistance is thus to enable ex-combatants to return to their community and to sustain themselves and their families for a limited period immediately following demobilization. Economic and social reintegration. Ex-combatants are often an economically and socially vulnerable group as they lack marketable skills, material assets and social networks. In addition, they are often a

- 7 - high-risk group due to their familiarity with weapons and violence. Where this is the case, targeted support is advisable to help them establish sustainable livelihoods. To be relevant and cost-effective, such assistance should be tailored to their socio-economic profile and adjusted to the economic environment. Female, child and disabled ex-combatants often require customized economic, social and medical support to establish sustainable livelihoods. Ultimately, ex-combatants are reintegrated into a broader economic context. The creation of viable long-term employment opportunities for ex-combatants is closely linked to private sector investment and associated employment generation. It should be noted that ex-combatants also provide a human resource contribution to the civilian economy. Institutional issues. Program coordination and supervision by one civilian agency, balanced by decentralized and community-based implementation, constitutes a powerful institutional arrangement. Wherever possible, existing implementation capacities should be leveraged. The employment of ex-combatants as counselors and field staff can facilitate reintegration.

9. Environment Aspects (including any public consultation) Issues

10. Contact Point:

Task Manager Johannes Zutt The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: +1-202-4731262

11. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop

Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.

This PID was processed by the InfoShop during the week ending January 10, 2003.

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