The World Bank Board of Executive Directors approved a package worth $1.320 billion from the International Bank for Reconstruction and Development (IBRD) to support the government of Angola in its efforts to promote more inclusive growth, improve water services, and strengthen the national social protection system.
The approved package will finance the following three projects:
- Growth and Inclusion Development Policy Operation, a $500 million loan to support the Government of Angola to achieve more sustainable and inclusive growth by strengthening the macro-financial and institutional environment and protecting the poor and vulnerable.
- Luanda Bita Water Supply Project, a $500 million guarantee aimed at improving access to clean water service in selected areas of Luanda by mobilizing commercial financing for the Government.
- Strengthening the National Social Protection System Project (Cash Transfer), a $320 million loan to provide temporary income support to poor households in selected areas of Angola and strengthen the delivery mechanisms for a permanent social safety net system.
The Angolan economy is at a critical point as it moves from a growth model based on oil wealth, which has left the country highly vulnerable to external shocks, to one that is more open and inclusive. These three projects support the government in its ambitious and urgent development strategy.
The Growth and Inclusion Development Policy program supports the government as it establishes a more stable macro-financial and institutional environment and promotes greater social and financial inclusion. The program supports efforts to improve debt and natural resource management, strengthen the management and commercial viability of state-owned enterprises, reform pricing and subsidies, and lay the foundations for private-sector led economic diversification. It also supports initiatives to improve financial and social inclusion by protecting the poor and vulnerable from shocks and increasing access to finance. These reforms are expected to make the country more resilient, raise investor confidence, and foster fiscal sustainability and private-sector-led growth over the medium-term.
The Bita Water Supply Project Guarantee will improve access to clean water service by mobilizing commercial financing for the Government. The first phase consists of investments in water production, transmission, storage and distribution including a water treatment plant with a production capacity of 3 cubic meters per second, 72km of gravity transmission pipelines towards Luanda, and storage and distribution systems in the suburban districts of Bita, Cabolombo, Mundial and Ramiros. The Bita Project will initially bring new or improved piped water service to an estimated 1 million people in the fast growing unserved urban and peri-urban belts of south Luanda, with capacity to serve up to two million people in the coming years.
Only about 37% of Luanda’s 7 million people benefit from connected service from the network, while another 22% get water from public standpipes. The rest relies on unregulated and extremely costly private tanker truck service (25%), or consume water drawn from illegal connections or from untreated river sources (16%). The project is expected to substantially improve living conditions by providing reliable connected potable water service to users, displacing and reducing unsafe and expensive tanker truck service, thereby reducing water supply coping costs, and enhancing public health. The project will also help scale-up enterprise reform in the water sector by supporting performance improvements at Empresa Pública de Águas de Luanda E.P. (EPAL), Angola’s largest water utility, which is state-owned.
The Strengthening the National Social Protection System Project will help ensure that the social safety net helps poor people become more resilient to economic shocks and provides opportunities for them to strengthen their human capital and reach their full potential. The project employs a two-track approach— a short-term cash transfer program to mitigate the impact of subsidy reforms on the poorest 40% of households and medium-term investments to strengthen the delivery mechanisms for a permanent social safety net system. Long-term, the project will help establish the foundation for a shift from universal, inefficient price subsidies towards poverty-targeted cash-based safety nets to better fit the needs of a young population that will require more and better investments in health, education, and skills for the future.”
“We are very happy to support Angola in its reform agenda by supporting better public spending, bringing water services to underserved population in Luanda, and also ensuring that the poor and vulnerable are protected against adverse shocks. This package illustrates the strong commitment of the World Bank to the people of Angola and achieving sustainable and inclusive development in the third largest economy of Africa,” said Abdoulaye Seck, World Bank Country Director to Angola.
