TY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY TY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY May 2024 Liliana Sousa and Giulia Zane POVERTY AND URBAN ANGOLA VULNERABILITY IN Equitable Growth, Finance & Institutions Note VERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVER- May 2024 Liliana Sousa and Giulia Zane POVERTY AND URBAN ANGOLA VULNERABILITY IN © [2024] International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. 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Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover photo: Liliana Sousa TABLE OF CONTENTS Acknowledgements 6 Executive Summary 8 Introduction 9 Demographic and Housing Characteristics of the Urban Poor 11 Urban Poverty and the Job Market 13 Food Insecurity and Shocks 17 Conclusions 19 References 21 6 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note Acknowledgements This note was prepared by Liliana Sousa and Giulia Zane. Julian Goetz provided excellent research assistance. The authors are grateful for the inputs and insights of Boban Paul and Alejandra Campero. Overall guidance was provided by Albert Zeufack, Juan Carlos Alvarez, and Pierella Paci. POVERTY AND VULNERABILITY IN URBAN AFRICA 7 Equitable Growth, Finance & Institutions Note 8 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note EXECUTIVE SUMMARY Though rural Angola has higher rates of poverty, a third of Angolans living in poverty and 40 percent of those vulnerable to falling into poverty are in urban areas. Yet, Angola’s poverty alleviation strategy – particularly its Kwenda cash transfer program introduced in 2020 –targets only rural areas. High urbanization rates and recent shocks that disproportionately affect urban dwellers, such as food price hikes and fuel subsidy reform, mean that tackling urban poverty and vulnerability is becoming increasingly urgent in Angola. This note provides insights into the characteristics of the urban poor in Angola and identifies policy entry points relevant for targeting and tackling poverty and vulnerability in urban Angola. POVERTY AND VULNERABILITY IN URBAN AFRICA 9 Equitable Growth, Finance & Institutions Note INTRODUCTION One in three Angolans living in poverty, and 40 most urbanized countries with about 68 percent percent of those at risk of falling into poverty, of its population living in urban areas. Hence, the live in urban areas (Figure 1). The most recent disparity in poverty rates hides the fact that a third survey-based poverty estimates show that a third of Angola’s poor (3.2 million people) were living in of Angolans were living in poverty in 2018 (Box 1). urban areas (compared to 6.3 million in rural areas). Poverty rates are significantly higher in rural areas Another 2.5 million people in urban areas (and 3.3 – 55 percent compared to 18 percent in urban million in rural areas) were vulnerable – that is, they areas. Yet, Angola is one of Sub-Saharan Africa’s lived above the poverty line, but had a high risk of 10 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note falling below it in the event of a shock. Specifically, following data collection has at least a 50 percent households were considered “vulnerable” if their probability of falling below the poverty line at least predicted level of consumption in the two years once as a result of a negative shock.1 Figure 1: Poverty and Vulnerability in 2018, millions of people 9.6 3.3 5.7 2.5 6.3 3.2 Urban Rural Poor Vulnerability to falling into poverty Source: World Bank calculations based on IDREA 2018/19 and World Bank (2020). Note: This figure is produced by dividing the sample into three categories: poor, vulnerable, and non-poor (not shown in the figure). Vulnerable indicates that the household’s consumption is above the poverty line but that the household has at least a 50 percent probability of falling into poverty over the next two years. BOX 1: Data Sources for this Analysis Data Sources for this Analysis This note is based on analysis of microdata from the Inquérito de Despesas, Receitas e Emprego em Angola (IDREA 2018-2019), a household budget survey collected between March 2018 and February 2019 by the Instituto Nacional de Estatística (INE) in Angola. INE oversees the collection of national surveys and publication of key socioeconomic data. Poverty measurement is based on household expenditure and the poverty line is derived following the cost of basic needs approach and using an adult-equivalence scale. Due to differences in methodology, this survey is not comparable with earlier surveys, limiting the extent to which analysis over time can be done for Angola. Access to microdata, including the 2018-19 IDREA, is available online through INE’s micro-library database. This brief also includes official consumer price index (CPI) trends published by INE. 1. This method is based on Gunther and Harttgen (2009) and consists in (i) identifying household and community level shocks by decomposing unexplained variation in consumption and (ii) modeling the variance of these shocks as a function of household and community characteristics. POVERTY AND VULNERABILITY IN URBAN AFRICA 11 Equitable Growth, Finance & Institutions Note Due to how widespread poverty is in rural Ango- More than a third of poor or vulnerable la, recently implemented social protection pro- households in urban areas are women-headed grams in Angola, such as the Kwenda program, – and more than a fifth are women-headed have put more emphasis on alleviating poverty in with three or more children present. In contrast, rural areas. Angolans living in urban poverty have women-headed households accounted for only a been excluded from the Kwenda program and re- fourth of those that are neither poor nor vulnerable main largely without access to social protection. in urban areas. However, in rural areas there is no Nonetheless, high levels of urbanization and the clear relationship between poverty and the gender presence of shocks that disproportionately af- of the household head. Interestingly, the difference fect urban dwellers, such as high food prices, are between poor and vulnerable households and turning urban poverty in Angola into an urgent others becomes much larger when the presence of priority. A social protection system with the objec- children in households is considered. Indeed, the tive of eliminating poverty and mitigating the neg- share of women-headed households with three ative effects of shocks needs to identify poor and or more children is much higher among poor and vulnerable people in both rural and urban areas. vulnerable households in both urban and rural Expanding the scope of social protection in Ango- areas. Twenty-one percent of households living in la requires learning about the characteristics of poverty and 25 percent of households vulnerable urban households living in poverty or vulnerable to poverty in urban areas are women-headed to poverty. households with three or more children. As a comparison, only 9.4 percent of urban households that are neither poor nor vulnerable have this characteristic. In rural areas, women-headed Demographic and Housing households with three or more children are also Characteristics of the Urban Poor overrepresented among the poor and vulnerable: 18 and 11 percent vs only 3 percent in the “other” category. Urban poverty is associated with large households with dependent children. Households living in In both urban and rural areas, household heads poverty or vulnerable to poverty in urban areas are living in poverty or who are vulnerable are older larger and have higher dependency ratios (Table 1). and have significantly less schooling than the In fact, both poor and vulnerable households are non-poor. Households whose head is over 60 years larger in urban areas than in rural areas. In both old are more likely to be vulnerable. In urban areas, poor and vulnerable households in urban areas, 14 percent of vulnerable households have an elderly more than half of the household members are head, compared to 8.6 percent of the poor and 6.8 children under the age of 15 years. The share of percent of the households that are neither poor nor children under 15 is much lower in households that vulnerable. This relationship, that vulnerability is are neither living in poverty nor are vulnerable to it, higher for older household heads, holds also in rural both in both urban (37.6 percent) and rural areas areas. Poor and vulnerable households are also (28 percent). On the other hand, the share of older associated with lower human capital and, as shown household members is low and not correlated with in the next section, worse employment outcomes: poverty and vulnerability. the average number of years of education for poor and vulnerable household heads is about half those of the other households. 12 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note Table 1: Household Characteristics by Poverty Status and Rural/Urban Urban Rural Poor Vulnerable Other Poor Vulnerable Other Demographics Dependency ratio 115.3 122.3 64.4 121.6 102.9 43.6 Share of children under 15 years of age (%) 51.7 52.7 37.6 52.3 47.2 28.0 Share of adults over 64 years of age (%) 1.9 2.4 1.6 2.5 3.5 2.3 Household size (median) 6 7 5 6 5 3 Household head (HH) Female HH (%) 35.4 37.9 27.4 28.1 27.2 29.6 Female HH with more than 3 children (%) 21.3 25.5 9.4 18.0 11.3 3.1 Age of HH (mean) 42.9 44.5 39.6 43.8 43.1 41.1 Elderly HH (60+ years) (%) 8.6 14.1 6.8 12.9 16.3 11.4 Education of HH (mean, years) 5.5 4.7 9.7 3.1 3.2 6.6 Source: World Bank calculations based on IDREA 2018/19 Households living in poverty or vulnerable to but access to adequate housing is generally low for poverty are significantly less likely to have access all types of households. Finally, in both urban and to adequate housing than households that are rural areas, poor households are also significantly neither poor nor vulnerable in urban areas (Figure more likely to live in crowded spaces (more than 3 2). Poor and vulnerable households are less likely people per room). When thinking about targeting of to have adequate walls and floor as well as access programs in urban areas, quality of housing is likely to electricity and improved waste management. to be a useful proxy variable for poverty – even They are also less likely to use improved fuels such more so in urban areas than in rural areas as the as fuels such as kerosene and LPG for cooking. difference between the non-poor and poor in this Access to improved sanitation is lower for poor dimension is starker in urban areas. and vulnerable households, compared to others, POVERTY AND VULNERABILITY IN URBAN AFRICA 13 Equitable Growth, Finance & Institutions Note Figure 2: Housing by Poverty Status, Urban and Rural a) Urban a) Rural dwelling dwelling treatment walls treatment walls 30mintowater roof 30mintowater roof space floor space floor 20 20 waste 40 water waste 40 water 60 60 80 80 electricty sanitation electricty sanitation 100 100 fuel owntoilet fuel owntoilet Poor Vulnerable Other Poor Vulnerable Other Source: World Bank calculations based on IDREA 2018/19 Urban Poverty and the Job Market vulnerability have unemployment rates of about 33 percent while those who are not poor or vulnerable face a somewhat lower unemployment rate of 24 For men, urban poverty and vulnerability are percent. For women, however, the relationship is associated with high unemployment rates (Figure less clear; in fact, non-poor women have higher 3a). Unemployment is more prevalent in urban rates of unemployment than those living in poor or areas than rural for both men and women. But urban vulnerable households (32 percent compared to 29 poverty and vulnerability is particularly correlated percent). with men’s unemployment: men living in poverty or 14 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note Figure 3: Labor Market Outcomes by Poverty Status, Gender, and Rural/Urban (% of employed) a) Employment and Activity Status Men Women 100% 100% 15.2 11.7 11.2 11.8 12.0 80% 80% 15.4 32.2 23.7 28.9 33.5 29.0 32.1 60% 60% 40% 40% 20% 20% 0% 0% Poor Vulnerable Other Poor Vulnerable Other Poor Vulnerable Other Poor Vulnerable Other Urban Rural Urban Rural Employed Unemployed Inactive Employed Unemployed Inactive b) Employment Type Men Women 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Poor Vulnerable Other Poor Vulnerable Other Poor Vulnerable Other Poor Vulnerable Other Urban Rural Urban Rural Salary Employment: Salary Employment: Self-Employment: Self-Employment: Self-Employment: Public Sector Private Sector With Employees Alone Subsistence/Unpaid Source: World Bank calculations based on IDREA 2018/19. See Tables A2 and A3. POVERTY AND VULNERABILITY IN URBAN AFRICA 15 Equitable Growth, Finance & Institutions Note Most employed women living in poverty in urban some options for wage employment in sectors like areas rely on self-employment (Figure 3b). transportation and construction, there are few such Among those working, 36 percent of men and 57 options for similarly low-skilled women. Instead, percent of women living in poverty engage in self- urban women rely largely on self-employment employed tasks in urban areas. This is similar for (with no employees), a category that includes a those vulnerable to poverty. This gender difference significant share of informal jobs such as street highlights that, while men with low skills have vendors (Box 2). BOX 2: The Importance of Street Vending for Angolan Women The Importance of Street Vending for Angolan Women Street vending is a vulnerable occupation which nonetheless represents one of the most accessible employment opportunities for lower skilled Angolan women. Own-account commerce activities account for nearly 3 out of every 10 jobs held by women in urban areas. Nationally, female street vendors are overrepresented in the top 60 percent of the population with more than one in five in the top quintile of the population. Yet, in Luanda, a city with lower poverty rates and higher income levels, nearly half (47.9 percent) of women street vendors are in the poorest 40 percent of the city’s population while only about one in ten is in the top quintile. Source: World Bank (2023). Just two sectors account for the employment of Employment in commerce activities is particularly more than 80 percent of urban women who are important for women living in vulnerable urban either living in poverty or vulnerable to falling households, accounting for 51 percent of all into poverty: agriculture and commerce (Figure employment of this group. In contrast, men 4). Interestingly, even in urban areas agriculture is living in poverty or vulnerable to poverty, work the largest sector of employment for Angolans living across more sectors, including those with wage- in poverty. Almost half (46 percent) of employed job opportunities like construction and other women and a third (32 percent) of employed men services. living in poverty in urban areas engage in the sector. 16 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note Figure 4: Sector of Employment by Poverty Status, Gender, in Urban Areas (% of employed) Men 100% Agriculture/Fishing Other Services 80% Construction Commerce 60% Public Administration 7.6 Private Security 40% 7.6 5.4 Transport/Coms 8.8 Manufacturing 6.7 20% Extractive 18.4 11.2 12.8 Domestic Work 0% 3.1 Poor Vulnerable Other Women 100% Agriculture/Fishing Commerce 5.4 4.2 80% Domestic Work 4.5 Other Services 60% 22.3 Manufacturing 27.2 Public Administration 40% 26.8 Construction Private Security 20% 26.9 Transport/Coms 16.9 Extractive 5.6 0% Poor Vulnerable Other Source: World Bank calculations based on IDREA 2018/19. Sectors of employment are listed in order from least to most common from top to bottom. POVERTY AND VULNERABILITY IN URBAN AFRICA 17 Equitable Growth, Finance & Institutions Note Food Insecurity and Shocks food shortage and close to 60 percent reported worrying about food. This suggests that perhaps vulnerability is even more widespread than what is Angolans living in poverty or vulnerable to captured by our methodology. poverty in urban areas report high rates of food insecurity (Figure 5). In 2018, close to 70 High food prices are the leading cause of lack percent of Angolans living in poverty in urban areas of food in urban areas (Figure 6). This reflects reported experiencing lack of food in the past 12 the importance of monitoring food price shocks, months and almost 80 percent reported worrying especially in urban areas, and having strategies in about food in the past 7 days. Similarly, close to 60 place to mitigate their impact. In contrast, in rural percent of vulnerable urban households reported areas, where most households living in poverty experiencing lack of food and about 75 percent or vulnerable to poverty produce their own food, reported worrying about food. In rural areas, shocks to agricultural productivity – especially rates are lower and less correlated to poverty and drought - seem to be more relevant, though high vulnerability: close to 55 percent and 51 percent food prices is also a concern. While local climate of households living in poverty and vulnerable to shocks had direct and large impacts on access poverty, respectively, experienced a lack of food. to food in affected rural areas, current evidence Interestingly, in both urban and rural areas, about 50 suggests few if any impacts on urban food security percent of the households that are not considered potentially due to Angola’s heavy reliance on poor or vulnerable also reported experiencing a imported food (Box 3). Figure 5: Food Insecurity by Poverty Status and Rural/Urban Figure 6: Cause of Food Shortage in Urban/Rural Areas drought 69.9 other pests Did not have enough food in the past 59.9 54.8 53.3 50.8 flood land 12 months (%) 49.2 5 10 15 market inputs 20 25 30 roads prices Poor Vulnerable Other Poor Vulnerable Other Urban Rural Urban Rural Source: World Bank calculations based on IDREA 2018/19 Source: World Bank calculations based on IDREA 2018/19. 18 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note BOX 3: The Interaction of Climate Shocks and Local Food Price The Interaction of Climate Shocks and Local Food Price Global warming is influencing weather patterns, causing heat waves, heavy rainfall, and droughts and thus can affect food security both through adverse impacts on agricultural production and through rising food prices (World Bank 2022b). Yet, with regard to the latter transmission channel, there is no statistically significant correlation between local climate shocks and food prices. Such low correlation might be explained by the fact that Angola, and especially Luanda, imports a large proportion of its food: over 45 percent of maize needs, 80 percent of rice and 90 percent of wheat needs are met through imports, predominantly from Southern Africa and Portugal. Thus, food prices in local Angolan markets are likely to be exposed to shocks in countries that export grains to Angola. Food price inflation has outpaced the already to poverty (Figure 7). Food prices increased by 92 high inflation in Angola over the last three percent while non-food prices increased by 63 years, posing significant challenges for urban percent, a gap of 29 percentage points between households living in poverty and those vulnerable December 2020 and January 2024. Figure 7: Consumer Price Index for Food and Non-Food Items, (12/2020 as base month) 200,0 191,8 180,0 163,0 160,0 140,0 CPI 120,0 100,0 80,0 60,0 Jan Jul Jan Jul Jan Jul Jan Jul Jan 2020 2021 2022 2023 2024 Food Non-food Source: World Bank analysis based on official CPI indicators. POVERTY AND VULNERABILITY IN URBAN AFRICA 19 Equitable Growth, Finance & Institutions Note CONCLUSIONS A third of Angolans living in poverty or vulnerable are less likely to produce their own food. Yet, the to falling into poverty live in urban areas. country’s flagship cash transfer program, Kwenda, Economic shocks and recent reforms – such as launched in 2020, only operates in rural areas. currency devaluation and gasoline subsidy reform A significant concern in developing strategies to – have contributed to high inflation. Angola’s tackle the needs of the urban poor is how to identify continued reliance on food imports has led to those that most need support – the population inflation that is particularly high for food. This is living in poverty and those vulnerable to poverty. a particular vulnerability for the urban poor who 20 POVERTY AND VULNERABILITY IN URBAN ANGOLA Equitable Growth, Finance & Institutions Note The results reported in this note suggest the living in poverty or vulnerable to poverty are following entry points for effective targeting of unemployed, both men and women. Developing urban poverty: programs that provide temporary monetary support combined with skills-training and 1. Target childhood poverty and hunger, support in job seeking or support to micro particularly those in women-headed households, enterprises could be particularly beneficial for since one third of urban households living in poverty reduction in this context. poverty are headed by women and more than half of the members of households in poverty 2. Improving women’s economic opportunities: are children under the age of 15. Improved Women’s employment opportunities are access to schooling, including early education, particularly weak and highly correlated and well implemented school feeding programs with urban poverty. It is critical to address could help directly tackle childhood poverty. constraints to women’s wage employment opportunities. Low-skilled men are significantly 2. Geographical targeting based on poor more likely have wage employment in a variety housing conditions. The analysis shows of sectors such construction, transportation, that poor and vulnerable households are the public sector, or in other service jobs. significantly less likely to have adequate walls One barrier faced by women is the heavy and floor as well as access to electricity and burden of household care which limits their improved waste management. This suggests availability for fixed-schedule work and, in that geographic targeting that considers the many cases, for jobs to which they cannot quality of walls and floors can be particularly bring young children.2 Affordable childcare and valuable as a tool for identifying the urban poor early childhood education could help working for inclusion in social safety net programs. mothers improve their employment prospects. 3. Target interventions for women working in In the near term, initiatives to support small-scale agriculture or commerce, like women’s microenterprises are essential as street vending. These two sectors account for the lack of employment opportunities leads 80 percent of jobs for women in urban areas most women living in poverty towards self- living in poverty. employment in agriculture and trade. 4. Expand social safety measures during 3. To improve health outcomes, increase access periods of high food prices. Given the high to jobs and markets, and boost microenterprise risk of food insecurity in urban areas and high productivity, there is substantial need for vulnerability to food price shocks, these are affordable and reliable electricity and water critical moments for food support or other services, an expanded and affordable public targeted support. transit system, and broader access to digital tools, particularly mobile money and electronic An effective social safety net cannot end poverty payment options.3 Digital development can be on its own. It should be integrated with other beneficial not only help boost opportunities sectoral interventions. The analysis suggests for the self-employed and small enterprises, two areas that are particularly relevant for urban including many led by poor and vulnerable Angola: Angolans, but also for implementing a well- functioning and responsive safety net in 1. Tackling high unemployment, especially Angola.4 among youth. About one-third of people 2. Source: World Bank (2023) 3. Source: World Bank (2023) 4. Source: World Bank (2023) REFERENCES Gunther I. and K. Harttgen (2009) “Estimating Household Vulnerability to Idiosyncratic and Covariate Shocks: A Novel Methods Applied in Madagascar,” World Development, Vol. 37, No. 7, pp.1222-1234. Paul, B. V., A. Campero Peredo, E. Archibald, H. Mehta, L. Sousa, G. Zane, R. Diro, K. Krishnamurthy, L. Allognon, S. Antos, and N. Hernandez. 2024. Establishing an Adaptive Social Protection System in Angola (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/099021524040036108/ P17948519e34aa03518a4a13eea791cca3f World Bank. 2020. In Search of Inclusive Growth: A Poverty Assessment of Angola. World Bank, Washington, DC. © World Bank World Bank Group. http://documents.worldbank.org/curated/en/099020924085516638/ P1715491e087270a51865012df69da6ab7e; 2022a. Angola Country Climate and Development Report. CCDR Series; © World Bank, Washington, DC. http://hdl. handle.net/10986/38361 License: CC BY-NC-ND. 2022b. “What You Need to Know About Food Security and Climate Change”. Washington, DC: The World Bank. https:// www.worldbank.org/en/news/feature/2022/10/17/what-you-need-to-know-about-food-security-and-climate-change. 2023. Navigating Education, Motherhood, and Informal Labor: The Experiences of Young Women in Luanda. © Washington, DC: World Bank. http://hdl.handle.net/10986/40401 License: CC BY-NC 3.0 IGO. 22 Equitable Growth, Finance & Institutions Note POVERTY AND VULNERABILITY IN URBAN ANGOLA TY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY TY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY POVERTY | POVERTY | POVERTY | POVERTY | POVERTY | POVERTY