AFRICAN DEVELOPMENT BANK ANGOLA COUNTRY STRATEGY PAPER 2017-2021 RDGS/COAO April 2017 This report is based on the results and conclusions of the combined 2017–2021 Country Strategy Paper and Country Portfolio Performance Review mission conducted in Angola from 26 October to 5 November 2015. TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS ................................................................................... i MAP OF ANGOLA .................................................................................................................. iii EXECUTIVE SUMMARY ...................................................................................................... iv 1. INTRODUCTION ............................................................................................................. 1 2. COUNTRY CONTEXT..................................................................................................... 1 2.1 Political trends ............................................................................................................. 1 2.2 Economic Trends......................................................................................................... 2 2.3 Social Trends ............................................................................................................... 5 3. STRATEGIC OPTIONS .................................................................................................... 7 3.1 Country Strategic Framework ..................................................................................... 7 3.2 Aid coordination, Alignment and Harmonization ..................................................... 10 3.3 Strengths and Opportunities/Challenges and Weaknesses ........................................ 10 3.4 Bank Portfolio Performance Review......................................................................... 11 3.5 Lessons learnt ............................................................................................................ 12 4. BANK GROUP STRATEGY FOR 2017-2021 ............................................................... 13 4.1 Rationale and Strategic Selectivity ........................................................................... 13 4.2 Bank’s strategic alignment ........................................................................................ 14 4.3 CSP Objective and Strategic Pillars .......................................................................... 15 4.4 The business program................................................................................................ 18 4.5 Bank group resources ................................................................................................ 18 4.6 Country dialogue ....................................................................................................... 19 4.7 Implementation arrangements and risks .................................................................... 19 4.8 Risks and mitigation measures .................................................................................. 20 4.9 Monitoring and evaluation ........................................................................................ 20 5. CONCLUSIONS AND RECOMENDATIONS .............................................................. 20 5.1 Conclusion ................................................................................................................. 20 5.2 Recommendations ..................................................................................................... 20 Annex 1: Indicative results framework matrix for the CSP 2017-2021 I Annex 2: Current macroeconomic assessment and outlook .................................................... III Annex 3: Key macroeconomic indicators ................................................................................. X Annex 4: Progress monitoring on the sustainable development goals in Angola.................... XI Annex 5: Comparative socio-economic indicators ............................................................... XIII Annex 6: Division of labor between development partners in Angola ................................. XIV Annex 7: Angola – Development partners aid volumes and main areas of focus ................ XV Annex 8: Angola - Portfolio of approved and ongoing operations as at 1st February 2017 . XVI Annex 9: Revised 2016 Country portfolio improvement plan (CPIP) ................................XVII Annex 10: Angola – CSP 2017-2021 selectivity criteria ...................................................... XXI Annex 11: Angola – CSP 2017-2021 sectoral linkages and the High 5s........................... XXIV Annex 12: Angola – CSP 2017-2021 indicative lending program ..................................... XXV Annex 13: Angola – CSP 2017-2021 indicative lending pipeline ..................................... XXVI Annex 14: Angola – CSP 2017-2021 indicative non-lending program ............................ XXVII Annex 15: Angola – assessment of the public financial management systems .............. XXVIII Annex 16: Angola – assessment of the country’s procurement systems ............................ XXX Annex 17: Main analytical studies consulted ................................................................. XXXIV LIST OF FIGURES Figure 1: Country Policy and Institutional Assessment (CPIA) performance ........................... 2 Figure 2: Angola - Macroeconomic Performance ..................................................................... 3 Figure 3: Portfolio distribution by sector as at 1st February 2017 ........................................... 11 LIST OF TABLES Table 1: Country Assessment of Fragility Drivers .................................................................... 4 Table 2: Doing Business Rankings (2016-2017) ....................................................................... 5 LIST OF BOXES Box 1: Gender Inequalities in Angola ....................................................................................... 6 Box 2: Key measures adopted to mitigate the oil crisis ............................................................. 7 Box 3: Agriculture and the National Strategy in Angola ........................................................... 8 Box 4: Key Developments in the Angola’s Sovereign Wealth Fund portfolio ......................... 9 Box 5: The Relevance of the Bank’s Country Office .............................................................. 12 Box 6: Gender Mainstreaming ................................................................................................. 15 Box 7: Power Sector Reform Support Program ....................................................................... 17 ACRONYMS AND ABBREVIATIONS AfDB African Development Bank AFD French Agency for Development AML/CFT Anti-Money Laundering and Terrorism Financing COAO Angola Country Office ALSF African Legal Support Facility ECNR African National Resource Center BNA National Bank of Angola CPIP Country Portfolio Improvement Plan CPIA Country Performance and Institutional Assessment CPISU Central Project Implementation Support Unit CPPR Country Portfolio Performance Review COP Conference of the Parties on Climate Change ECCAS Economic Community of Central African States EDCSP Economic Diversification and Competitiveness Support Program EIB European Investment Bank ENSAN National Food Security and Nutrition Strategy FATF Financial Action Task Force FDI Foreign Direct Investment FDSEA Sovereign Wealth Fund of Angola GDP Gross Domestic Product IBEP National Household and Well-Being Survey ICBPIP Institutional Capacity Building for Public Investment Program INE National Institute of Statistics LoCs Lines of Credit MDGs Millennium Development Goals MPLA People’s Movement for the Liberation of Angola NDP National Development Plan PDMPSA National Medium Term Development Plan for Agricultural Sector PEMFSR Public Expenditure Management and Fiduciary Systems Review PIP Public Investment Program PFM Public Financial Management PMU Project Management Unit PPP Public-Private Partnership PSRSP Power Sector Reform Support Program RDGS Southern Africa Regional Development and Business Delivery Office SDGs Sustainable Development Goals SMEs Small and Medium Enterprises TYS Ten Year Strategy UNDP United Nations Development Program i CURRENCY EQUIVALENTS (February 2017) Currency unit = Angola kwanza (AOA) 1 UA = AOA 225.44 1 UA = USD 1.36 1 UA = EUR 1.26 1 USD = AOA 165.91 FISCAL YEAR 1 January – 31 December WEIGHTS AND MEASURES 1 metric tonne = 2.204 pounds 1 kilogram (kg) = 2.204 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres ii MAP OF ANGOLA Disclaimer: This political and administrative map of Angola is for illustrative purposes and is without prejudice to the status of or sovereignity over any territory covered by this map. iii EXECUTIVE SUMMARY 1. The Country Strategy Paper (CSP) for Angola for the period 2017–2021 was prepared against a backdrop of an economy that has slowed down since 2014 due to lower international crude oil prices. The CSP 2017-2021 follows the endorsement by CODE in November 7th, 2016, of its proposed strategic pillars, including the results of the previous CSP 2011-2015 and Country Portfolio Performance Review (CPPR). While the process of preparation of the new CSP started by end-2015, it faced significant slippages due to delays in the adoption of a new annotated format of the Bank’s CSPs. In order to preserve the operational