5. Conclusion and Recommendations
For most of the 2006–15 period, Angola found itself in the unusual position of having more resources than it could efficiently spend. Despite its resource abundance, it faced many of the same types of challenges – in terms of quality of institutions and capacity of industry – as other low-income countries emerging from civil war. In the area of infrastructure, this was evident in the limited value for money achieved, despite significant investments.
Angola would have benefited substantially from strengthening the institutions governing public investment and infrastructure delivery. In hindsight, it would also have done well to accumulate far more of its resource revenue in a stabilization fund, which could have helped to smooth out fluctuations in oil revenue and made it easier to cope with the economic and fiscal challenges following the downturn in international oil prices from mid-2014. The government’s lax management of resource revenue bears witness to its unrealistic expectation that oil prices would remain high, and reinforces the impression that there was too much money around, with too little oversight, to ensure prudent management of the country’s resource wealth. Rent-seeking through kickbacks and other corrupt practices were left largely unchecked, which increased the use of available resources but reduced their effectiveness in supporting post-war reconstruction through quality infrastructure.
In the current context of fiscal constraint and rising public debt, it is critical that the Angolan authorities get a full picture of the efficiency shortcomings of past major investments, and that bold reforms are undertaken to make public investment more efficient.
In the current context of fiscal constraint and rising public debt, it is critical that the Angolan authorities get a full picture of the efficiency shortcomings of past major investments, and that bold reforms are undertaken to make public investment more efficient. The IMF’s new PIMA framework, and the OECD’s recent recommendations on policy options for infrastructure governance, represent good starting points. However, the Angolan context requires even more emphasis on reforms that promote transparency and accountability, as well as on those likely to generate income and employment, contribute to inclusive economic growth and aid poverty reduction.
To signal a fresh start, the authorities should immediately ensure that the National Procurement Portal becomes fully operational and lists all ongoing tender processes. The government should also make public the registry of construction companies involved in public works projects. It should consider adopting the Infrastructure Data Standard of the Construction Sector Transparency international multi-stakeholder initiative. This would require disclosing 40 data points on infrastructure investments – including the project scope, cost and completion date of projects, and variances against such criteria – at the end of each construction project in a systematic manner. Future investments should also be subject to approval only if social impact studies have been conducted, and if projects have demonstrated likely positive social impacts in addition to economic feasibility.
Priority should be given to programmes that provide finance for small projects over those that finance megaprojects. The government’s own integrated programme for rural development and poverty reduction (which could be expanded to cover peri-urban areas) represents an initiative that should be maintained and improved through better governance mechanisms.
UK and other foreign companies with or planning to do business in Angola should strictly follow anti-corruption policies and due diligence procedures, as well as insisting that transparency and governance issues are addressed.