Angola: Water sector institutional development project

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1. Key development issues and rationale for Bank involvement

Since the signing of the peace accords with União Nacional para Independência Total de Angola (UNITA) in April 2002, political stability has been established throughout the country, the Government is recognized by all parties and has remained cohesive and functioning. The economy has benefited from higher international oil prices and the prospect is that oil production will double over the next two years to about 2 million barrels per day. While this favorable economic outlook has attracted a significant volume of foreign direct investment, the weak institutional and human resource capacity that exists in the country and the huge amount of work to be done makes improving the quality of life for the population a difficult undertaking.

Angola's nearly 30 years of civil conflict has had a devastating effect on the country's economy, infrastructure and the citizen's quality of life. Since independence in 1975, it is estimated that about 4 million people have been displaced, and that most of these people fled to Luanda or other urban centers. During the last 10-15 years, the growth of the urban population has averaged 5.5% per year, and today at least 66% of the total population lives in squalid conditions in overcrowded urban and semi-urban areas with limited access to basic urban services. The combination of inadequate services and the rapid growth of the urban centers have produced cities suffering from some of the worst health and environmental problems in Africa. The use of contaminated water, the insufficient volumes of water, the inadequate storm water drainage and the lack of adequate sanitation have resulted in high and steadily increasing rates of water and excreta related diseases. The outbreak of cholera in Luanda, which started in February 2006 and has resulted in more than 48,000 cases, is evidence of these terrible conditions.

Most urban centers are served by water supply and sanitation systems which were built during colonial times for much smaller populations. Most of these systems have been damaged during the wars and have suffered from a lack of proper operations and maintenance. As a result, according to UNICEF, only 34% of the urban population has access to safe water, well below the 55% average for Sub-Saharan Africa. Due to the precarious physical condition of the various urban systems, there is always an insufficient supply of water in the systems, which means that most of the time there is an unequal distribution and reduced quality of water. These results in an average of 34 liters/day being provided to urban residents, but in fact, the distribution ranges from about 80 liters/day in the privileged areas to the detriment of the poorest or more vulnerable areas where people are forced to live on about 3 - 5 liters/day. In addition, since the water to the poorer areas is normally provided by private vendors, the cost of water is frequently more than US$10/cubic liter. The number of urban residents with access to adequate sanitation facilities is even less than those with access to safe water.

Given the low consumption of safe water by the poor, Government has determined that the supply of safe water is a problem to be given top priority, and it has committed to ensuring that people living in the poorest urban areas have access to at least 15 lpcd of safe water. To achieve this objective, Government has: (i) begun a program of investments to improve the physical infrastructure totaling about $350 million during the last 5 years, (ii) addressed institutional and human capacity issues, and (iii) requested the identification and preparation of a Bank financed project to assist the Ministry of Energy and Water to strengthen the capacity of the various organizations in the sector to deliver sustainable water supply and sanitation services.

Some of the institutional and legal reforms that have been introduced to modernize the water sector include the: (i) promulgation of a new water law (Law 6/02) passed in 2002; (ii) water sector strategy (Programa de Desenvolvimento do Sector das Águas) was approved by the Council of Ministers; (iii) drafting of the regulatory framework for the water law; (iv) preparation of master plans to address the physical and institutional issues in the major urban centers, (v) devolution of service provision responsibility to Provincial Governments, and (vi) preparation and approval of legal instruments to convert the current provincial water departments into water utilities (empresas públicas) governed by commercial principles. Work is proceeding now to establish these utilities and it is expected that by early 2007, utilities would be established in at least 6 cities. Government also has plans to establish a new Water Resource Management Institute so that this important natural resource can receive the professional attention that it deserves. Plans are underway to legally establish this Institute by the end of 2006.

The Bank started to re-engage with Angola after the signing of the 2002 peace accords, and a Transitional Support Strategy (TSS) was prepared in March 2003 and an Interim Strategy Note (ISN) was approved in January 2005. The purpose of the Institutional Development - Water Sector Project is assist Government to strengthen the institutional and human resource capacity of the newly created water supply utilities to deliver sustainable water supply and sanitation services. This is consistent with Pillar 2 of the ISN which is to expand service delivery to war-affected and other vulnerable groups.

While work proceeds to rehabilitate and expand the water supply and sanitation systems, the major issue confronting the water supply sector is the development of institutions which are capable of providing sustainable services. The World Bank's experience in establishing sustainable operating companies to deliver water supply and sanitation services in many countries throughout the world is critical at this stage in the development of the water sector in Angola. The expertise of the World Bank would be useful in the design and implementation of these new utilities as well as in designing systems which will enable the provincial governments to maximize the use of the local private sector in the delivery of services to both improve the quality of services provided and to reduce the cost to the consumer. The Bank's experience in designing and implementing regulatory agencies to ensure that the needs of all parties are properly served is also very timely.