Fuel subsidies: the opportunity to reallocate resources to social programs

Angola news – Fuel subsidies represent a considerable share of the General State Budget (OGE). In 2022, more than 2.15 billion kwanzas were spent on this section, 60% more than in the previous year, according to the annual report released by the State Assets and Capital Management Institute (IGAPE). This value, it should be noted, represents 92% of the expenses of the Health and Education sectors in the OGE.

By: Day of Angola

Faced with the social needs and the difficulties of many Angolan families, several specialists are starting to defend the reallocation of part of the fuel subsidies in programs such as “Kwenda”. They argue that if these impressive sums were channeled directly to the social sectors, they would help alleviate poverty and economic exclusion much more effectively.

“Kwenda”, in particular, has shown concrete results across the country with families in extremely vulnerable situations. With funding of US$420 million, since its implementation in 2020, it has already benefited 610,382 households with direct payments of AOA 33,000 quarterly.

In addition to transfers, Kwenda has a Social Register of more than 3 million people in vulnerable situations across the country, an essential tool for outlining policies to combat poverty, and which needs resources to be even more robust and comprehensive. .

The project also has Social Action Municipalization components, through the creation of Integrated Social Action Centres, and Productive Inclusion – support for vulnerable families to start income-generating activities in areas such as agriculture, livestock, fishing, crafts, culture , rural tourism and the environment, transformation of agricultural and livestock products, community funds and funds and renewable energies.

With these instruments, the initiative launched by the Angolan government, and implemented by the government agency Fundo de Apoyo Social (FAS), is already responding to the socio-economic challenges of the most vulnerable communities, with a huge impact. Kwenda also allows for the circulation of a greater volume of money in rural areas, increasing the rate of banking for populations traditionally excluded from the financial system.

By investing part of the fuel subsidy funds in the Kwenda program, which supports the areas of Education, Health and the fight against poverty, the government would be promoting even more forcefully positive changes, raising living standards, promoting sustainable development and creating a more inclusive and equitable society, as has happened in other parts of the world.

It is important to emphasize that the system of social monetary transfers, which characterizes the Kwenda program, is a model with proven results at an international level. In Brazil, between 2003 and 2021, the famous “Bolsa Familia” lifted at least 3.4 million people out of extreme poverty and helped to reduce 16% of child mortality. At the same time, it helped reduce regional inequality, improve school participation and increase food security indices. This year, specialists estimate that the “Bolsa Familia” will lift another 3 million people out of extreme poverty in the country. The program currently benefits 21.1 million families, and will have an important influence on the growth of the country’s Gross Domestic Product this year.

Elsewhere, in India, the system of social cash transfers has benefited hundreds of millions of people, with a special focus on women, the elderly and farmers. The International Monetary Fund considered the program a “logistic marvel”, due to its execution and results.

In a globalized world, and drawing on experiences from other countries, the Kwenda program makes a difference. Fuel subsidies are designed to help household savings, that’s for sure. But Angolan society and economy are not the same as they were a few years ago. Recognizing the need to strike a balance between economic considerations and social welfare, it is essential to analyze the effectiveness of this policy in combating poverty and fostering development, to the detriment of social programs of greater impact.

It wouldn’t be anything new. This week, Nigeria eliminated fuel subsidies to ease public finances, reverting the billionaire amounts to investments in public infrastructure and improving the living conditions of the populations.

As in Nigeria, if in Angola a part of the enormous amounts that the State invests in guaranteeing artificial fuel prices were directed towards initiatives such as “Kwenda”, which have a direct action on the ground, the impetus to develop our social fabric of harmonious and sustainable way would be enormous. There are resources. Let’s think about it.