Exclusive: “Increase in World Bank financing depends on reforms in Angola”
Olivier Lambert, a French national, is the representative of the World Bank in Angola. In an exclusive interview with PLATAFORMA, the former diplomat outlined the economic future of this African country. Among the many difficulties he sees, Lambert addresses the problems that the Covid-19 pandemic will bring to Angola, highlights João Lourenço’s work in the government, talks about the need to end poverty and ends up talking about Angolan relations with the countries of the CPLP.
The World Bank predicted that the Angolan economy will be one of the hardest hit due to the Covid-19 pandemic. What are the reasons for these predictions?
The Angolan economy will be one of the hardest hit by Covid-19 due to the low degree of economic diversification, given the strong dependence on the oil sector. The Covid-19 pandemic has significantly affected the world economy, reflected in a negative shock on demand for oil. This shock had an adverse impact on the Angolan oil sector, which represents about 96% of exports and 60% of tax revenues, through the combined effect of the reduction in the price of oil and the decrease in oil production. In addition, the fall in oil activity will have an impact on the non-oil sector, mainly due to the reduction of tax revenues, and less availability of foreign exchange.
Given these data, what are Angola’s trade and market opportunities with the outside world at the moment?
Covid-19 reinforced the need for Angola to accelerate the implementation of structural reforms with the aim of improving the business environment, and thus increasing the capture of necessary investments to streamline the process of economic diversification. On the other hand, the World Bank estimates that the Covid-19 pandemic and containment measures will have a huge impact on the world economy, a 5.2% reduction is expected. The crisis has impacted demand and demand, trade, and finance for most countries. This has a negative impact on Angola’s market opportunities abroad. The economy is expected to start to recover in the second half of the year, as restrictions are eased. However, there is still a lot of uncertainty, for example, a prolonged pandemic would have very adverse effects on the recovery of the world economy.
The crisis has impacted demand and offer, trade, and finance for most countries. This has a negative impact on Angola’s market opportunities abroad
The World Bank has been working with Angola for a long time, so, more than anyone, it will be able to foresee the future in the short term as far as a post-Covid crisis 19 is concerned. Do you think there will necessarily have to be a new and different partnership strategy after the effects of this pandemic?
The Local Office of Angola was opened in 1989 and loan operations began in 1991. Since then, until today, USD $ 3,785.6 billion has been financed for 35 projects. Since the end of hostilities in 2002, our engagement has intensified and 24 projects have been approved since then, 11 of which have already been closed. But it is important to say that the implementation in that first generation of operations, largely multisectoral (construction and rehabilitation of basic infrastructure), which were fundamental for the country’s post-war reconstruction, were largely satisfactory considering the serious limitations on institutional capacities in the country. Covid-19 will be a limitation, but this period that we mentioned also had serious limitations. But the strong performance of the projects was largely due to the good leadership of the Ministry of Planning (which was then governor of the World Bank) and which guided the implementation of operations.
What projects are prepared immediately, even taking into account the current scenario?
The current portfolio consists of nine national projects for a total of USD $ 1,768.7 million in the sectors (health, education, agriculture, water, statistics, social protection and Budget Support), with two other regional projects in the health sectors and agriculture worth USD $ 85 million. It should also be noted that following President João Lourenço’s request to the President of the World Bank, for financial support to help the Government of Angola respond to the National Contingency Plan for the control of the Covid-19 Pandemic, in March 2020, several actions have been carried out taking into account three main pillars, such as: protecting lives, protecting livelihoods and protecting the future.
In 2019, the World Bank doubled its financial support to the country, with more than 2.5 billion euros for various projects. Now, it confirms that already in 2020 there was another financial aid to make to Covid-19. In view of the economic prospects you outlined at the beginning of the interview, can you expect an increase in these funds?
The BM Group has sought to adjust its support in line with the reform program that the government has sought to print in the country. Therefore, increased funding has a lot to do with it. However, it is good to keep in mind that World Bank support goes far beyond financial. The BM has sought to share knowledge and good practices to help Angola in this important phase, as well as to support the Government in seeking ways to make projects self-sustainable. There are strong prospects that the BM’s support for Government efforts can be increased.
What funds have already been made available to help fight the pandemic in Angola?
So far, the BM has made available USD $ 15 million for the immediate response to the emergence of the Covid-19 pandemic and plans to allocate more resources to support the National Contingency Plan through existing projects in the health sector, and there are also others, in different sectors, who may also provide indirect support to combat the pandemic. The amount of funding has yet to be determined. However, what I can say is that it should fit into the support of three pillars, which are protecting lives (health insurance), protecting livelihoods (a multisectoral socio-economic response) and preparing for the future (Economic recovery after the crisis of the Covid-19).
He referred that the availability of more funds will depend, above all, on the reforms that the Angolan government will necessarily have to implement to restructure the country’s economy. Is the World Bank satisfied with what has been implemented so far?
The government undertook a very comprehensive reform program in a complicated economic context. There are important advances, for example, in improving the business environment, competition, privatization, and good governance. Reforms are underway in most sectors, including energy, telecommunications, water, etc. At the same time, the implementation of reforms of this type takes time because it is necessary to strengthen the regulatory and institutional base for the good functioning of the sectors. The important thing is to keep the focus on the expected results: better access to public services, a more competitive economy and monitor progress to identify barriers during implementation.
Also in 2019, the World Bank installed an office in Luanda in order to be able to finance the private business sector. After almost a year, can it be said that this bet was positive?
Currently, the International Finance Corporation (IFC) has an investment portfolio of around US $ 100 million in Angola. The opening of an office has substantially increased our capacity to better serve the Angolan private sector.
What areas of this sector have received the most support?
IFC is focused on implementing a five-year strategy and at the moment the work involves areas of agribusiness, financial services, telecommunications, energy, health and education and transportation. In addition to the so-called normal business, IFC is in the initial phase of structuring possible systemic structures to support the Angolan private sector in the current crisis, in partnership with other financial institutions.
He recently revealed that Angola has many challenges, one of which would be to be able to overcome poverty. What others do you identify and believe can be overcome?
Angola does have several challenges to overcome poverty. However, the most serious ones are limited to human capital. The country’s wealth is not in oil or diamonds, but in people. Therefore, we believe that the structural roots of poverty in Angola include under-investment in social services and human capital; inadequate mechanisms of demand and supply in health, education, water and sanitation services and the absence of productive inclusion interventions. Another three major challenges related to human capital in Angola are child malnutrition, low educational quality and teenage pregnancy.
In the face of all the adversities and challenges it mentions, the role of the government must also be decisive for a more positive future. How do you evaluate the work and the relationship of the World Bank with João Lourenço, president of Angola?
As you know, the BM’s support for Angola has increased significantly over the past three years. This is a clear demonstration that the relationship between President João Lourenço and the BM is very good. The opening of the IFC office to support the private sector, for example, was also an explicit request from the government for the direction of the BM. The government’s role is fundamental. In fact, it is the government that designs and implements all economic and social policies in the country. Institutions like the BM are only here to support and advise where requested.
World Bank support for Angola has increased significantly over the past three years. This is a clear demonstration that the relationship between President João Lourenço and the World Bank is very good
Angola works a lot with the PALOP and others with official Portuguese language. Do you think these could continue to be a big help or do you think Angola should look more to other financially stronger countries?
Angola’s historic relations with Brazil, Portugal and other PALOP countries cannot be ignored at all. Despite the moment of great hardships that the country is going through, Angola continues to be a country with enormous potential and there is certainly room for cooperation with mutual benefits with its CPLP peers. The mastery of the English language continues to be a challenge for many Angolans and this in itself limits the effective and systematic opening of the country beyond CPLP countries. As you know, trust is an essential element in relations and between CPLP countries there is this element of trust. However, at the current stage, the country needs to redirect its strategies in areas that in fact bring significant changes in the lives of citizens in the short, medium and long term. Therefore, any cooperation with peers from or outside the CPLP, which helps to resolve the current crisis, should be encouraged.
What message would you like to leave to the Angolan people?
I have known Angola since 1984, when I came on a one-year mission. After this period, already at the World Bank, between 1999 and 2002 I followed the project management of Angola from Washington; In 2004 I came for a three-year mission and, finally, I returned in 2018 to occupy the current position. So, as you can see, I have had connections with Angola for many years. One of the things that most caught my attention in my monitoring of Angola over the years has been the positive way in which Angolans have faced their adversities. I want to believe that, in the same spirit, the country will come out of this crisis. Now, it is necessary for the country to reinforce its resilience mechanisms by investing in its human capital. It is important that the ongoing reform process continues so that better fruits can be reaped in the future. Crises are typical of any country in the world. The important thing is to get out of them stronger than when you entered them.
This article is available in: Português