Islamic Republic of Afghanistan: Poverty Reduction Strategy Paper

Although Afghanistan has made significant gains over the years, vulnerabilities remain. The economic program Afghanistan National Development Strategy (ANDS) has been developed to sustain democracy, reduce poverty, and improve growth. ANDS, an important milestone in the rebuilding and development of Afghanistan, serves as its Poverty Reduction Strategy Paper (PRSP) and uses the pillars, principles, and benchmarks of the Afghanistan Compact as a foundation to achieve its MDGs. It has given high priority to the security sector for implementing security policies and strategies and also for building an Afghan National Army for the country's security.

Abstract

Although Afghanistan has made significant gains over the years, vulnerabilities remain. The economic program Afghanistan National Development Strategy (ANDS) has been developed to sustain democracy, reduce poverty, and improve growth. ANDS, an important milestone in the rebuilding and development of Afghanistan, serves as its Poverty Reduction Strategy Paper (PRSP) and uses the pillars, principles, and benchmarks of the Afghanistan Compact as a foundation to achieve its MDGs. It has given high priority to the security sector for implementing security policies and strategies and also for building an Afghan National Army for the country's security.

INTRODUCTION

BACKGROUND

Following almost three decades of war, the challenges facing Afghanistan’s development remain immense. By 1380 (2001), the ravages of conflict had bestowed upon Afghan citizens and the incumbent administration an inheritance of debt not wealth. With the Taliban dominating the political landscape from 1375 (1996) onwards, Afghanistan had been moving backwards in all aspects. The results of war, the destruction of core institutions of state and a heavily war torn economy led to unrivaled levels of absolute poverty, national ill health, large scale illiteracy and the almost complete disintegration of gender equity. And yet, following six years of reconstruction, at a cost of billions of dollars, the path to prosperity from extreme poverty remains as distant as ever. Insecurity, poverty, corruption and the expanding narcotics industry signify that while the challenges facing Afghanistan have changed in nature, they have not necessarily changed in magnitude. Yet, the price of securing peace and freedom at this pivotal moment in history will be nothing compared to the long term costs of failure both for Afghanistan and the international community. Averting failure and establishing Afghanistan on a virtuous path towards peace, stability and prosperity are therefore the cornerstones of the new Afghan National Development Strategy (ANDS). At the core of the ANDS is a policy of Afghanization, meaning that ANDS has been fully developed and owned by Afghanistan.

ACHIEVEMENTS SINCE 2001

In 2001 Afghanistan was certainly a thoroughly devastated country in virtually every respect. The political, social and economic structures of the country had been severely damaged or completely destroyed. Massive numbers of Afghans had left as refugees, had died during the conflict or were severely disabled. Every family had paid a price – many had to cope with the loss of main breadwinner. For the young people that remained, their education had been disrupted and in many cases, including for all girls and women, ended. Today Afghanistan has among the highest rates of illiteracy in the world. Yet despite these desperate conditions, since 2001 the country has had some remarkable achievements. The progress that has been made should be measured against the desperate conditions that prevailed at the time of the fall of the Taliban. While Afghanistan still faces many enormous challenges, the progress that has been made gives cause for some optimism that with the determination of the Afghan people to rebuild their lives and their country, the transformation to a peaceful and prosperous can be achieved.

The goals of the ANDS for the next five years ought to be viewed against what has been accomplished during the last six years. Only some of the most significant achievements can be mentioned here.

Political achievements:

  • In 1380 (2001) the Bonn Agreement established a roadmap for the political transformation of Afghanistan to a legitimate democratic state. The targets set in the Bonn Agreement were fully met on time and included:

  • The Transitional Administration was established to guide the process. It derived its authority through an Emergency Loya Jirga, the first genuinely representative Afghan national meeting in decades.

  • In 1383 (2004) Afghanistan adopted its first constitution in 30 years, which laid the political and development foundation for the country and established legal protections for private property and a market economy.

  • Free and fair democratic elections for President, the National Assembly and Provincial Councils were conducted. 76 percent of eligible voters participated in the presidential election. Women were elected to 27 percent of the seats in the National Assembly.

  • After the successful completion of the Bonn Agreement, Afghanistan and the international community entered into a new partnership, based upon the Afghanistan Compact, which was agreed at the London Conference of 1384 (2005). The Compact set ambitious goals for comprehensive state building, setting benchmarks in all sectors of security, governance, and development, including the cross-cutting goals of counter-narcotics and regional cooperation.

  • In 1385 (2006) the new National Assembly began its work, including the approval of a new cabinet; a new Chief Justice and other judges for the Supreme Court; and the National Budget. A new Attorney General with a new mission to fight corruption was appointed. New Provincial Governors were named.

  • The disarmament, demobilization and reintegration of ex-combatants has been completed. Today the national army and police forces are close to full strength. Afghanistan is no longer a safe haven for terrorists.

Social and Humanitarian Achievements:

  • Since 1381 (2002), more than five million Afghan refugees have returned home. In 1385 (2006) 342,925 Afghan refugees returned from Pakistan and Iran and 1,004 from other countries. More than 150,000 benefited from the assistance package provided by UNHCR.

  • The Government has so far distributed 30,000 residential plots of land to needy returning refugee families.

  • From under one million in 2001 the school population has grown to 5.7 million in 2007 and new enrolments into Grade 1 have ranged between 12-14 percent per annum in the last 5 years. Two million of the children (or 35 percent) enrolled are girls – a 35 percent increase in five years. The number of schools has trebled to 9,062 in 2007 including 1,337 all girls’ and 4,325 coeducational schools. Similarly, the number of teachers has increased seven-fold to 142,500 of who nearly 40,000 are female. Fifty thousand of these teachers have received in-service teacher training.

  • Major advances have been made in extending health care services throughout the country and rebuilding a decimated educational system. The percentage of the population living in districts where the Basic Package of Health Services is being implemented has increased from 9 percent in 2003 to 82 percent in 2006.

  • Over 2.5 million people have benefited from social protection arrangements covering (i) martyr’s families; (ii) disabled with war-related disabilities; (iii) orphans and children enrolled in kindergartens; (iv) victims of natural disasters; (v) pensioners; and (vi) unemployed.

  • Measurable progress has been achieved since 2003 in improving rural livelihoods. Almost 20,000 km of rural access roads (i.e., all weather, village-to-village and village-to-district centre roads) have been constructed or repaired, increasing access to markets, employment and social services. More than 500,000 households (36 percent of villages) have benefited from small-scale irrigation projects. Currently, 32.5 percent of the rural population has access to safe drinking water and 4,285 improved sanitation facilities have been provided. More than 336,000 households have benefited from improved access to financial services. Some 18,000 CDCs have been established and are implementing community-led development projects. Efforts have made to assist the poorest and most vulnerable.

Economic Achievements:

  • Macroeconomic stability has been maintained, based upon disciplined fiscal and monetary policies. A new unified currency was successfully introduced; inflation has remained low while the exchange rate has been stable.

  • Sixteen private commercial banks have been licensed; a leasing and financing company is operating; an equity fund is underway to invest in local businesses. There are also thirteen microfinance institutions providing services to almost 200,000 active clients in 27 provinces.

  • State owned enterprises are being privatized, corporatized or liquidated.

  • A lively free and privately owned media have developed and over which people are able to express political views freely -which they do daily.

  • The legal and commercial infrastructure is being put in place for a market oriented economy.

  • Electricity capacity has almost doubled compared to 2002.

  • Over 12,000 kilometers of roads have been rehabilitated, improved, or built. This includes the ring road system, national highways, provincial roads and rural roads.

  • Kabul International Airport has been expanded and extensively rehabilitated.

  • Private airlines have entered the aviation sector and established air links throughout the region.

  • A key bridge investment has opened up direct road links to Tajikistan and greatly reduced transportation times through to Urumqi in China, one of the fastest growing trade hubs in the world.

  • Two million urban residents have benefited from investments in water supply and 12 percent from investment in sanitation in major cities between 2002 and 2007.

  • About 35,000 water points 59 networks and 1,713 water reservoirs and 23,884 demonstration latrines have been constructed.

  • More than three million people have benefited directly from the rural water supply and sanitation activities in the country.

  • Around a third of the provinces reported some improvement in access to clean drinking water during the consultative process under the ANDS.

  • Irrigation Rehabilitation has been given high priority over the past four or five years. Of some 2,100 rehabilitation projects, approximately 1,200 have been completed and have been placed back into commercial service.

  • Major advances have been made in opening up the telecommunications sector to private sector investment under a ‘investment friendly’ regulatory framework aimed at maintaining a competitive market for services, and phone subscribers have increased from less than 20 thousand to more than 5 million in less than 6 years.

  • A rapid urbanization process has seen the urban population increase to almost a quarter of the total population. Despite the pressures implied by rapid urbanization, two million urban residents (31 percent of the total urban population) have benefited from investments in water supply and 12 percent from investment in sanitation in major cities between 2002 and 2007.

  • Afghanistan has world class mineral deposits that are being opened up for exploration and development. The first major investment has recently been announced for developing the Aynak copper deposits in central Logar province, an almost $3 billion investment after an extensive evaluation of tenders from nine major international mining companies.

When seen against the desperate conditions that prevailed in the country in 2001, these achievements constitute an impressive record. The ANDS sets goals for the next five years that will require even greater achievements.

AFGHANISTAN’S CHALLENGES

Few countries have simultaneously faced the range and extent of challenges with which the people and Government of Afghanistan must now contend. After nearly three decades of continuous conflict the country emerged in late 2001 as a truly devastated state with its human, physical and institutional infrastructure destroyed or severely damaged. At that time the UN Human Development Report ranked Afghanistan as the second poorest country in the World. In addition to the widespread poverty, the Government must deal with continuing threats to security from extremists and terrorists, weak capacity of governance and corruption; a poor environment for private sector investment, the corrosive effects of a large and growing narcotics industry; and major human capacity limitations throughout the public and private sectors. Meeting these challenges and rebuilding the country will take many years and require consistent international support.

The successful transformation of Afghanistan into a secure, economically viable state that can meet the aspirations of the Afghan people, live at peace with itself and its neighbors and contribute to regional and international stability will depend upon the effective utilization of all available human, natural and financial resources. In this partnership a critical role must be played by the private sector. Significantly reducing poverty will require substantially increasing employment which depends on maintaining high rates of economic growth in the years ahead. It is not sufficient to rely on the Government and the international community to sustain the high rates of investment needed to generate the levels of employment to have a major impact on reducing poverty. As the macroeconomic projections presented in Chapter 4 indicate, a substantial increase in private investment will be essential if significant progress is to be realized in meeting the social and economic objectives of the country.

Afghanistan is a country with significant potential for economic development. It has substantial water, agricultural and mineral resources and is well positioned to become a trade and business hub linking the markets of Central Asia, the Middle East, South Asia and China. The potential exists or sustainable economic growth in the future. However, there are a number of fundamental limitations in the economic environment that must be addressed if these efforts are to succeed:

  • The country’s ‘hard infrastructure’, including roads and reliable supplies of water and power, is inadequate to support rapid and sustained economic growth.

  • The corresponding ‘soft infrastructure’, which includes the human and institutional capacity necessary for an economy to function, is also extremely limited. Considerable emphasis is being given to developing capacity in both the public and private sectors and to institutional development, but these efforts will take time.

  • Economic governance is weak. The Government is pursuing comprehensive economic reform, including the introduction of new commercial laws and regulations, but the establishment of institutions needed for effective implementation and enforcement are largely lacking and will take years to develop.1

  • Afghanistan’s commercial connections to regional and global economies were severely disrupted and must be redeveloped. The development of a competitive private sector will depend on establishing access to foreign markets and developing viable export activities.

  • Critical markets for land and finance are largely undeveloped, limiting the ability of private investors to establish and operate businesses. Property rights are often contested or difficult to defend.

  • Afghanistan is experiencing high population. Continued rapid population growth will substantially increase the levels of investment that will be required to substantially reduce poverty.

Both the Government and the international community recognize that prolonged aid dependency will undermine the chances of achieving sustained economic growth and poverty reduction. However, given the major limitations in the economic environment that must be addressed, the successful transition to a competitive market economy will require sustained commitment by the Government, with the support of the international community. Simply creating conditions in which the private sector can operate alone will not be sufficient. Increased efforts by both the Government and the donor community to attract Afghan and foreign investors are needed if the goals of the ANDS are to be realized.

Social and economic development will also be severely curtailed if the insecurity that prevails is not resolved. Despite the considerable efforts by the Government and the international community, security has steadily deteriorated since 2004 in some parts of the country. Ongoing cross-border activities, particularly in the southern and southeastern provinces, have resulted in several areas being effectively off limits to meaningful development assistance.

The lack of stability reduces the ability of aid agencies and the Government to operate in many areas and to effectively implement projects and programs. The impacts of these limitations typically fall most heavily on the poor. Insecurity also increases the cost of doing business and undermines private sector growth and development.2 The difficulties in maintaining security contribute significantly to two closely related issues: increasing corruption in the public sector and the rapid growth of the narcotics industry. There is a consensus that corruption in Afghanistan is widespread and has been getting worse.3 Public corruption represents a major disincentive for private investment, substantially increasing the costs and risks of doing business. A lack of security in some parts of the country has created conditions in which poppy cultivation has flourished, feeding a growing narcotics industry that both funds terrorist activity and feeds public corruption. Although poppy cultivation has been greatly reduced in 29 of the 34 provinces, in the remaining five it has seen explosive growth to where Afghanistan accounts for around 90 percent of the world’s opium production.

INTERNATIONAL SUPPORT FOR AFGHANISTAN

After the fall of the Taliban, the international community’s response was not only military but also began to provide Afghanistan with the institutional and financial resources to start the state building process. In 2006, the Afghanistan Compact agreed between the Government and international community established goals for state building, setting benchmarks in core sectors of security, governance, and development, including the cross-cutting goals of counter-narcotics. To implement its obligations under the Afghanistan Compact, the Government developed the Afghanistan National Development Strategy (ANDS) to clarify existing conditions, establish objectives and define the policies, programs and projects needed to achieve those objections. The international community made new pledges of financial and security assistance and set out to improve its coordination by renewing and upgrading the UN Assistance Mission for Afghanistan (UNAMA), headed by a Special Representative of the Secretary General with enhanced powers for coordination.4

The ANDS represents an important milestone in the efforts to rebuilding of Afghanistan which has been underway since late 1380 (2001). During this time there have been a number of reports, conferences and strategies developed to address Afghanistan’s chal-lenges.5 In addition, the Government and the international community have entered into a series of agreements concerning the direction and support for the country’s development efforts, including notably the Bonn Agreement, the commitment to the Millennium Development Goals (MDGs) and the Afghanistan Compact. The ANDS builds on all of these and provides a comprehensive and integrated strategy that reflects recent experience and current conditions.

THE AFGHANISTAN NATIONAL DEVELOPMENT STRATEGY

The Afghanistan National Development Strategy (ANDS) represents the combined efforts of the Afghan people and the Afghan Government with the support of the international community to address the major challenges facing the country. To comprehensively address the security, governance, and development needs of Afghanistan, the government has developed the ANDS. The ANDS reflects the government’s vision, principles and goals for Afghanistan which builds on its commitment to achieve the Millennium Development Goals by 2020 and the implementation of the Afghanistan Compact benchmarks. The strategy is based upon an assessment of current social and economic conditions; offers clear intermediate objectives; and identifies the actions that must be taken to achieve these national goals. The ANDS largely focuses on the next five years, but reflects Afghanistan’s long-term goals which include the elimination of poverty through the emergence of a vibrant middle class, an efficient and stable democratic political environment and security throughout the country.

Despite the full commitment of the Government and the considerable assistance being provided by the international community, it will not be possible to fully achieve all of these objectives during the next five years. Therefore it is essential that well defined priorities be established that reflect the relative contributions of potential policies, programs and projects towards reaching these goals. This is a difficult process. The contribution of any project to increasing economic growth is uncertain and is inevitably contingent on progress in other areas. It also requires a careful analysis of benefits versus costs with alternative allocations of resources. As a result, the prioritization of activities should be seen as an ongoing process that adapts to changing circumstances and the results of program and project appraisal work on alternative use of resources. In meeting this challenge, the ANDS aims to establish institutional mechanisms that will include the Afghan people, the Government, civil society and the international community in identifying priorities in an evolving environment.

A comprehensive ‘bottom-up’ approach was used in the development of the ANDS that has taken into account all aspects of social and economic life as well as fully reflecting the diversity of people in all parts of the country. Considerable efforts were made to ensure that subnational consultations (i.e., outside of the central government in the capital Kabul) identified the priorities of the Afghan people living in each of the 34 provinces.6 In addition, a comprehensive series of sector and ministry strategies were developed that address all aspects of social and economic development. The result of this inclusive process is a national strategy that is fully reflective of the aspirations of the Afghan people. The ANDS is the product of extensive consultations at the national, provincial and local levels. The Government is committed to programs and projects that directly target the poorest and most vulnerable groups for assistance. Well targeted poverty reductions programs are emphasized both in the strategy for social protection and integrated into the design of strategies across the other sectors of the economy.

The remainder of the ANDS is organized as follows:

  • Chapter 1: provides an overview of the ANDS

  • Chapter 2: explains ANDS extensive participatory process to ensure ownership

  • Chapter 3: presents the poverty profile of the country, a key foundation for ANDS’s policy based on evidence approach

  • Chapter 4: presents the macroeconomic framework for the economy. It discusses the policies intended to maintain economic stability, the initial planning on resource allocations for the ANDS period and the total resources available for the implementation of public sector programs and projects through the external and core budgets.

  • Chapter 5: presents the strategies and priorities relating to Security pillar

  • Chapter 6: presents the strategies and priorities relating to Governance, Rule of Law, Justice and Human Rights pillar.

  • Chapter 7: presents the sector strategies and priorities relating to Economic and Social Development pillar. This addresses private sector development, energy, transport, mining, education, culture, youth and media, agriculture and rural development, public health, social protection and refugees, returnees and internally displaced persons.

  • Chapter 8: discusses critical cross-cutting issues that have impacts across all sectors. These include regional cooperation, counter-narcotics, anti-corruption, gender equality, capacity building and environmental management.

  • Chapter 9: discusses aid effectiveness measure that needs to be taken jointly by the Government and the international community

  • Chapter 10: discusses the integrated approach implementation framework of ANDS

  • Chapter 11: discusses monitoring, coordination and evaluation requirements of the ANDS

Volume II: includes 17 sector strategies, 6 strategies for cross cutting issues and 38 individual ministry and agency strategies.

Volume III: discusses the participatory process used in developing the ANDS, 34 Provincial Development Plans and development priorities.

PART I PROCESS, GOALS AND POLICY DIRECTIONS

CHAPTER 1 THE ANDS: AN OVERVIEW

The overriding objective of the ANDS is to substantially reduce poverty, improve the lives of the Afghan people, and create the foundation for a secure and stable country. This requires building a strong, rapidly expanding economy able to generate the employment opportunities and increasing incomes essential for poverty reduction. The ANDS establishes the Government’s strategy and defines the policies, programs and projects that will be implemented over the next five years and the means for effectively implementing, monitoring and evaluating these actions. The goals included in the ANDS are fully consistent with the commitments entered into in previous strategies and agreements and build on the considerable progress that has been achieved since 1380 (2001). While focus of the ANDS is on the next five years, it will continue to adjust to changing circumstances – it is intended to be a ‘living document’.

The ANDS serves as the country’s Poverty Reduction Strategy Paper (PRSP). As such, it establishes the joint Government/international community commitment to reducing poverty; describes the extent and patterns of poverty that exist; presents the main elements of its poverty reduction strategy; summarizes the projects and programs that will assist the poor; and provide a three-year macroeconomic framework and three-year policy matrix relevant to the poverty reduction efforts. The PRSP has been prepared based on an inclusive consultative process to ensure broad participation and support, while also ensuring policies are based on evidence. A public policy dialogue with all key stakeholders was carried out across all provinces, allowing government officials, private sector representatives, NGOs, the media and ordinary citizens an opportunity to discuss local conditions and concerns. This allowed these communities to participate effectively in defining the poverty problem as they experience it. In so doing, a broader choice of poverty actions based on the specific concerns of the poor have been established for each province, as well as each district.

Key issues identified by stakeholders included: (i) the lack of access to clean drinking water in all provinces; (ii) the needed improvement in provincial roads; (iii) the poor quality of public services; (iv) poorly trained teachers and doctors; (v) the lack of alternatives to poppy cultivation; (vi) the lack of vocational training for returnees and disabled people; (vii) poor access to electricity; (viii) corruption within the public administration particularly respect to the security services. The Government has examined a range of poverty actions based on the specific concerns of the poor including vulnerability, conflict sensitivity, insecurity and governance.

The ANDS lays out the strategic priorities and the policies, programs and projects for achieving the Government’s development objectives. These are organized under three pillars: (i) Security; (ii) Governance, Rule of Law and Human Rights; and (iii) Economic and Social Development.

SECURITY

Security and stability in all parts of the country is essential for economic growth and poverty reduction. Afghanistan still faces a number of serious challenges before it can assume full responsibility for this. International terrorists and domestic extremists prevent the Government from establishing effective control in some areas, particularly in the south and southeast. The large-scale production of narcotics continues to provide funds to these groups. Unexploded ordinance remains a significant threat to Afghans, with some five thousand citizens either killed or wounded in mine explosions since 1380 (2001). Currently only two of the country’s 34 provinces are completely clear of land mines. A long standing presence of illegal armed groups in different parts of the country is hindering the process of empowerment of local democratic institutions. Some of these groups have close links with police or even belong to local governments. This situation enhances corruption and is considered a key obstacle in cracking down the narcotics industry.

The Government is fully committed to, and is giving the highest priority, to successfully: (i) implementing an integrated and comprehensive national security policy and strategy; (ii) building a robust security sector reform program; (iii) strengthening civil and military operations and coordination; (iv) increasing the role of security forces in counter-narcotics activities; and (v) strengthening the civilian components of security entities. Detailed Compact benchmarks have been established to measure progress in improving capacity within the security organizations and improving security.

Significant progress has been made since 2001 in strengthening the ANA and ANP. For example, militias have been integrated into the Ministry of Defense (MoD), with the majority demobilized. A multi-sector donor support scheme has been established where individual donors are allocated responsibility for overseeing support for each of the key elements of the reform, including: disarmament, demobilization, and reintegration of ex-combatants; military reform; police reform; judicial reform; and counter-narcotics. The ANP has been receiving extensive training and equipment from the international community.

GOVERNANCE, RULE OF LAW, JUSTICE AND HUMAN RIGHTS

In 2000 the World Bank assessed the ‘quality’ of Afghanistan’s governance institutions as falling in the bottom one percent of all countries. Progress since 2001 includes the adoption of the constitution; successful parliamentary and presidential elections, and progress in improving the livelihood and welfare of women and other disenfranchised groups. Despite some progress, a number of significant issues must be addressed, including: (i) the existence of multiple and often parallel structures of state and non-state governance entities; (ii) the confusion over core centre-periphery administration and fiscal relations; (iii) weak public sector institutions and underdeveloped governance and administrative capabilities; (iv) high levels of corruption; (v) fiscal uncertainty; (vi) weak legislative development and enforcement; (vii) weak political and parliamentary oversight capacities; (viii) weak community and civil society institutions; (ix) limited capacity in a justice system; (x) gender inequality; and (xi) underdeveloped human rights enforcement capacities.

If significantly improved governance is not rapidly achieved it will be difficult to make substantial progress with respect to security and economic development. An emerging political and administrative vacuum will be filled by non-state structures driven by illegal and narcotic interests, not by the Government.

Religious affairs

The Government will focus on the following priorities: (i) to improve infrastructure for religious affairs, such as mosques, shrines, holy places, and religious schools; (ii) improve the training and capacity of Imams, preachers, religious teachers and other scholars to raise public awareness and to teach; (iii) finalize a comprehensive culture curriculum for primary and higher education; (iv) strengthen Hajj arrangement systems for Afghan pilgrims; (iv) support efforts by religious organizations to help alleviate poverty and protect vulnerable groups; (v) support efforts of the other government agencies to improve literacy, dispute resolution and to contribute to strengthening of the national solidarity. The expected results include: (i) reforms implemented in line with Islamic values; (b) improved infrastructure and financial sustainability of religious affairs, particularly of the religious education system; (iii) greater participation of Islamic scholars in raising awareness about importance of implementation of key reforms; (iv) a greatly strengthened role of the religious institutions in programs for poverty reduction.

ECONOMIC AND SOCIAL DEVELOPMENT

The economic and social development strategy, vision, objectives and expected outcomes have been prioritized within the overall macro-fiscal framework to allow a logical progression of investments that systematically overcome the core binding constraints to growth and social development. An integrated approach focuses investments through the sector strategies summarized below. The sector strategies were developed based on strategies first put forward by individual ministries and groups of ministries. Although Ministry strategies were the starting point, the sector strategies are broader than those of the ministries for several very important reasons. First, the sector strategies in many cases involve actions and programs that need to be undertaken by several ministries. Considerable attention has therefore been given to developing better coordination between ministries through Inter-Ministerial Committees. The sector strategies have also taken account of donor activities being implemented outside of ministries and informed by the Provincial Development Plans (PDPs). The success of the sector strategies will be heavily dependent on resource effectiveness, revenue enhancement and fiscal sustainability, human and natural resource development and investments in productive and trade-based infrastructure and private sector driven development.

Private Sector Development

The ANDS strategic objective is to enable the private sector to lead Afghanistan’s development within a competitive market-based economy in which the Government is the policy maker and regulator of the economy, not its competitor. The establishment of a strong enabling environment for a competitive private sector is an on-going effort by both the Government and donors. Almost all sector strategies involve the development of new legislation. The Government will enact and implement key laws and amendments to establish the basic legal and regulatory framework that will encourage private sector involvement in social and economic development. Almost all sector strategies involve institutional strengthening that is designed to improve the ability of ministries and other agencies to administer legislation in an unbiased and predictable manner.

Privatization and corporatization of state owned enterprises is an on-going program that is on schedule. It represents an important step in expanding the scope for private sector growth and development. These steps will: (i) improve general levels of efficiency in the economy; (ii) assist in eliminating corruption; (iii) encourage better resource allocation, and (iv) generate increased government revenues.

An open trade policy will facilitate a competitive environment for private sector development, avoid the high costs incurred with protectionist policies and facilitate Afghanistan becoming better integrated as a ‘trading hub’ in the region. Any proposals to provide protection to particular industries will be evaluated with a proper ‘economy wide’ perspective that fully accounts for the costs and benefits from such actions, including the negative impacts on other firms and on the consumers who must pay higher prices. Increased priority will be given to regional economic cooperation initiatives aimed at developing regional transportation and transit infrastructure, facilitating regional trade and investment flows and developing Afghanistan as a regional business hub linking Central and East Asia with the Middle East and South Asia.

A second major component of the private sector development strategy attempts to encourage increased private sector investment by creating investor friendly regulatory frameworks for private sector operations in the development of natural resources and infrastructure. This approach has been very successful in the telecommunications sector, where phone usage went from less than 15,000 under a state monopoly to over five million subscribers as private investments in cellular communication were encouraged. Significant initiatives are included in the sector strategies for energy, mining and agriculture based on leased access to state lands to strengthen these investor friendly regulatory frameworks, and pilot projects and innovative initiatives are being investigated to allow public funding to support private sector activities in the provision of education services, vocational training and public health services.

A third and closely related component of the strategy is based on a concerted effort by the Government and the donor community to more vigorously promote private sector investment. Given the limited capacities in the public sector and in the nascent domestic private sector, much of this effort will focus on trying to encourage foreign firms with the expertise, ability to manage risk and access to financial resources to take advantage of the many opportunities that exist for investment in Afghanistan. Efforts at investment promotion will be designed to convince these investors that they are both needed in Afghanistan and that they will be able to operate profitably with full government support consistent with maintaining a competitive environment.

Energy

The ANDS strategic objective for the energy sector strategy is an energy sector that provides reliable, affordable energy increasingly based on market-based private sector investment and public sector oversight. The immediate task of the ANDS strategy, with assistance from the donor community, is to expand energy availability at a price that covers cost (for all but the poorest members of society) and to do so in the most cost effective manner. The Government will also take steps to provide the basis for the transition of the sector from public provision to private provision of electricity. As the Afghan energy sector moves from primarily state owned operations to a more private market orientation, new institutional arrangements will be established.

Until recently a focus in the energy sector has been on using donor funds and contractors to rehabilitate and expand the infrastructure of the government-owned electric company DABM, with virtually no attention being given to establishing an enabling environment that would promote increased private investment in the sector. This will change with a major effort to set up a transparent regulatory framework and a pricing system that is designed to encourage private sector investment in the sector. A new market oriented paradigm, significant institutional changes and considerable capacity development will be established under guidance from the Inter-Ministerial Commission for Energy (ICE). Streamlined government oversight and greater reliance on private sector investment is essential. As the energy line ministries shift from operating as production-based institutions to becoming policy making regulatory agencies, staff capacity and in-house functions will be reoriented to market practices. The Government will assess its sector assets and establish a plan for liquidation, restructuring and commercialization or sale. In particular the Government will provide more support for the corporatization and commercialization of national power operations. All these efforts will occur even while donor funded projects continue to work to relax the severe constraints in the energy and power sectors, but will lay the framework for a shift to a more commercial energy system in the coming years..

Mining

While geological studies of Afghanistan have been conducted over the last 50 years, due to political, social and economic factors, 90 percent of the territory of Afghanistan has not been systematically studied. However the limited results have been highly promising with over 400 mineral occurrences having been identified, including Aynak copper, coal and a number of small and medium mines such as gold, silver, platinum, zinc, nickel, emerald, lapis, ruby, canset, tourmaline, fluorite, chromate, salt, radioactive elements and numerous deposits suitable for construction materials. The availability of significant oil and gas fields in Afghanistan has been well known for almost 50 years.

The ANDS strategic objective in the mining sector is to encourage legitimate private investment in the sector so as to substantially increase government revenues, improve employment opportunities and foster ancillary development. Implementation of the strategy will help to develop effective market-based economy sector policies, promote and regulate sustainable development of minerals and ensure that the nation’s geological resources are progressively investigated and developed. The Ministry of Mines is making the transition from being primarily a producer of minerals and other commodities to a policy making and regulatory institution. For mining and minerals, the emphasis is on the exploration, extraction and delivery to market; for hydrocarbons the emphasis is exploration and development. There is a great potential for the mining sector. The test will be in moving quickly from the success in attracting investment in the Aynak copper deposits to the development and exploration of the many other mineral resources of the country.

Water Resources

Agriculture accounts for 95 percent of water consumption. In the 1970s, some 3.3 million hectares were cultivated using various irrigation methods. However, because of civil conflict and drought, at present only about 1.8 million hectares of land are being irrigated. Of this, only ten percent is being irrigated using properly engineered systems with the remainder dependent on traditional irrigation methods, some of these based on run-offs from or use of aquifers that are being degraded by deep water wells and insufficient investment in recharge basins. Significant donor funded investment has gone into rehabilitating damaged or degraded irrigation systems, but little has been done in terms of making new investments the structures needed to increase efficiency in water use. There is a lack of resources needed to improve water management, including a lack of skilled human resources. Information systems are now being reconstituted, but there is a lack of reliable hydrological, meteorological, geo-technical and water quality data. The infrastructure and equipment needed to efficiently conserve and utilize water resources is insufficient. There are limited data on ground water resources and information indicating that un-regulated deep well drilling may be depleting aquifers that are essential to water supplies and traditional irrigation systems (Karezes and springs). There is a lack of economic mechanisms regulating water use and investments for water supply, sanitary systems, irrigation, and hydropower generation.

The efficient management of Afghanistan’s water resources is essential for social and economic development and is an area where there is a great need for public sector involvement. Both government and donor efforts have under-invested in better water resource management that will have a major impact on the productive capacity of the economy and the lives of the people. Within the water resources sector, feasibility studies will be completed and investments will be made in the needed storage facilities, recharge basins, multi-purpose dams, irrigation systems required to improve water sector management for both agricultural and non-agricultural uses. These efforts will augment on-going efforts to rehabilitate and improve management in existing systems. Over time there will be a movement away from a project by project focus on rehabilitation to an Integrated Water Resource Management (IWRM) system geared to the five major river basins in the country, with an eventual devolution of responsibilities down to independent River Basin authorities.

Transport

The ANDS strategic goal for the transport sector is to have a safe, integrated transportation network that ensures connectivity and that enables low-cost and reliable movement of people and goods domestically as well as to and from foreign destinations. The strategy will contribute to achieving the following targets established in the Afghanistan Compact. (i) Afghanistan will have a fully upgraded and maintained ring road, as well as roads connecting the ring road to neighboring countries by end-2008 and a fiscally sustainable system for road maintenance by end-2007; (ii) By end-2010, Kabul International Airport and Herat Airport will achieve full International Civil Aviation Organization compliance; Mazar-i-Sharif, Jalalabad and Kandahar will be upgraded with runway repairs, air navigation, fire and rescue and communications equipment; seven other domestic airports will be upgraded to facilitate domestic air transportation; and air transport services and costs will be increasingly competitive with international market standards and rates; and (iii) By end-2010 Afghanistan and its neighbors will achieve lower transit times through Afghanistan by means of cooperative border management and other multilateral or bilateral trade and transit agreements.

The Government continues to give high priority to rehabilitate a badly damaged road system. This includes: (i) completion of a fully upgraded and maintained ring road and connector roads to neighboring countries, (ii) improving 5,334 km of secondary (national and provincial) roads and (iii) improving and building 6,290 km of rural access roads as a key to raising rural livelihoods and reducing poverty and vulnerability in rural areas. Better rural roads will improve market access and opportunities for rural households. The actual allocation of resources amongst these three areas of planned activity will depend on the estimated rates of return from analysis of proposals put forward for funding by the international community or by the ministries involved in implementing the transport sector strategies.

A Transport Sector Inter-Ministerial Working Group will be formed that will coordinate the ministries in the sector to assure that investments are properly coordinated to obtain the highest returns and greatest impact on the poverty reduction goals. Careful consideration will be given to increasing employment opportunities, and assuring that the local resources or funds channeled through local communities are effectively used to maintain the rural roads established as part of this strategy.

Information and Communications Technology

In early 2003, Afghanistan had fewer than 15,000 functioning telephone lines for a population of approximately 25 million, one of the lowest telephone penetration rates in the world. The Government with donor assistance adopted major policy reforms for the ICT sector, moving rapidly to establish the legal framework and regulatory arrangements to promote private sector investment, resulting in a competitive environment and the rapid growth of mobile phone use from almost nothing to a present subscriber base of over five million. This development is one of the major success stories of in the implementation of the private sector based development strategy. Greater efforts will be made during ANDS period to adopt a similar investor friendly regulatory framework for development of natural resources and infrastructure. With respect to telecommunications, the ANDS strategic objective is to expand access to mobile phone service to 80 percent of the country and greatly increase access and use of the internet by consumers, the private sector and the Government.

Urban Development

The ANDS strategic objective for urban development is to greatly improve the management of urban areas through a devolution of authority and responsibilities to municipalities in a way that improves urban infrastructure and services, reduces urban poverty and allows urban residents to live safe, healthy and productive lives and cities to grow and prosper. Effective management of the rapid urbanization process will make a significant contribution to the recovery of the country. As of 2005 nearly a quarter of Afghanistan’s population lived in urban areas. Outcomes will include: (i) strengthened municipal capacity to manage urban development and deliver services; (ii) improved institutional coordination and monitoring of key urban indicators; (iii) increased access to basic services for urban households; (iv) phased regularization of tenure for 50 percent of households living in informal settlements; (v) upgrading public services and facilities, including new urban area development; (vi) increased availability of affordable shelter, including a 50 percent increase in numbers of housing units and 30 percent increase in area of serviced land on the market, coupled with access to affordable finance; and (vii) improved urban environment with green areas and open spaces

More is now being done under the ANDS to devolve authority to municipalities. The urban development strategy is designed to improve urban governance through: (i) decentralization, participatory processes, market-based approaches, and improved regulations; (ii) capacity building at all levels of urban governance; (iii) establishing a clear national land policy, including urban informal settlement policy; (iv) improved revenue generation in cities through direct cost recovery for and economic pricing of urban services, property-based taxes, and use of computer systems; (v) expanding urban upgrading pilots, including phased regularization of informal settlements, and programs to meet the immediate housing, tenure security and service needs of the poor and vulnerable people; (vi) increasing the supply of serviced land by developing new urban areas, especially within the cities, to meet the present and future housing needs of the people; (vii) improving city-wide basic infrastructure and services, in particular water supply, sanitation, roads and green areas; and (viii) rehabilitation of urban heritage facilities and sites.

Education

Efforts to improve education, which started in 2002, were focused on getting 1.5 million children into the primary/secondary school system. There are now over 6 million children at primary and secondary school. In addition universities have reopened and there are increasing opportunities for vocational training. There are now 52,200 students at higher education institutions. Although the expansion of education has been impressive, there is an urgent need to improve the quality of education. This is one area where programs designed to meet benchmarks defined in terms of enrolment or coverage fail to give adequate consideration to the quality of the service being provided. Increased priority will be given to teacher training and other mechanisms to encourage private sector investment in educational activities.

Vocational training will become an increasing focus of attention. There is an urgent need to address problems in the vocational education sector that include staff shortages, overbuilding, lack of standardization in training courses, and qualifications that are difficult for potential employers to assess. A new organization, the National Vocational Education and Training Authority (NVETA), will be established and will: (i) manage, but not operate, all vocational training institutions; (ii) set minimum core competencies for courses, carry out accreditation, and inspect vocational institutions, to ensure that they meet minimum standards; and (iii) call for tenders by ministries or by the private sector to operate vocational training facilities owned by the Government.

The potential role of the private sector has been expanded considerably in this strategy. In the primary and secondary education area there will be an expansion in private and NGO schools, encouraged by a more accommodating regulatory environment. In higher education the university cooperation plans that have already commenced will allow universities in Afghanistan to interact and be supported by recognized foreign universities. NVETA will contract with private sector groups or NGOs for provision of educational services. Some areas will be left to the private sector, including preschool education.

Culture, media and youth

The ANDS strategic objective for this sector is: (i) to create awareness and foster a sense of pride in the country’s history, future, culture and achievements; (ii) to document and preserve cultural artifacts and heritage sites; (iii) to ensure an independent and pluralistic media that contributes to an open and democratic society; and (iv) to foster a sense of confidence among the young that they can contribute to and benefit from a stable and prosperous the country. An accessible and well maintained cultural artifacts data base and the cultural artifacts collection held by the Ministry will be expanded. In the longer term, museums will be established and or expanded and historical or heritage sites will be protected. Media legislation will be enacted to provide a stable and predictable environment in which a largely privately run and independent media can operate. Media will be employed as an educational tool in addition to entertainment. Key priorities include a country-wide coverage of public Afghan media (radio and television), an increased number of hours of public broadcasting, and improved quality of programming. At this stage in its post-war development, state-owned media will be used to promote and convey information on gender policies, public health and national security. Extensive reforms have been introduced within the education strategy that is designed to assist youth. These include expansion of the education system; rehabilitation programs for young people whose education may have been limited because of the security situation; and reforms to vocational education to provide youth with marketable skills and better employment opportunities.

Health and nutrition sector strategy

By all measures, the people of Afghanistan suffer from poor health. The country’s health indicators are near the bottom of international indices, and fare far worse, in terms of their health, than any other country in the region. Life expectancy is low, infant, under-five and maternal mortality is very high, and there is an extremely high prevalence of chronic malnutrition and widespread occurrence of micronutrient deficiency diseases. Substantial improvements in the health system and the health status of the people of Afghanistan have been achieved in recent years, but there are a number of challenges and constraints that must be addressed if continued progress is to be made, including: (i) inadequate financing for many of the key programs; (ii) reliance on external sources of funding; (iii) inadequately trained health workers; (iv) lack of qualified female health workers in rural areas; (v) dispersed population, geographical barriers and a lack of transportation infrastructure; (vi) low levels of utilization for certain health services, especially preventive services; (viii) variable levels of service quality; (ix) insecurity in some provinces, making it difficult for program implementation, recruitment and retention of staff, expansion of service coverage and monitoring by the provincial and central levels; (x) lack of effective financial protection mechanisms for poor households to receive the care they need without experiencing financial distress; and (xi) lack of mechanisms for effective support to and regulation of for-profit private sector clinics and pharmacies.

Programs have been designed to expand and improve the system and to try and target vulnerable groups with preventive or curative programs. The Ministry of Public Health (MoPH) will review and develop relevant legal and regulatory mechanisms, such as accreditation systems, that govern health and health related work in the public and private sectors. The goal of the regulatory system will be to facilitate competitive and cost effective provision of services, carrying out its broader mandate to not only contract out service provision to civil and private groups but also to facilitate growth of the ‘for profit’ sector. The MoPH will review, develop and enforce relevant legal and regulatory instruments that govern health and health related work to safeguard the public and ensure service quality. The MoPH will work to identify, encourage, coordinate, and review and in some cases conduct relevant, useful research that can assist evidence-based decision making and the formulation of new policies, strategies and plans.

Agriculture and Rural Development

The ANDS strategic objective for the agriculture and rural development sector is to jointly use private investment and public sector support for efforts to transform agriculture into a source of growth and means of livelihood for the rural poor. The sector strategy articulates a road map for the way forward in which poverty reduction through economic regeneration is the central objective Some of the focus will be on the transformation of agriculture in a number of well defined zones where the conditions for growth are most favorable.

Agriculture has traditionally been the main activity for much of Afghanistan’s population, particularly in the most remote and vulnerable areas. While non-farming activities account for large amounts of time, many of these are related to processing, transporting or marketing agricultural goods. The agriculture and rural development strategy establishes ambitious plans for a series of programs that are designed to achieve an improved quality of life for rural citizens – one in which food security is assured, basic services are provided, incomes increase with households actively engaged in legal activities, employment opportunities expand and where people live in a safe and secure environment. Activities are grouped into two main components of the strategy: a Comprehensive Agriculture and Rural Development (CARD) and the Agricultural and Rural Development Zone (ARDZ) initiative.

The CARD strategy articulates a road map for the way forward in which poverty reduction through economic regeneration is the central objective. The overall focus is to support the poorest and most vulnerable segments of rural society. Proposed interventions will provide a range of measures that will differ between groups and between regions, but all are designed to help diversify incomes, including income support, direct provision of assets, skills training and market opportunities.

The second main component of the strategy, the Agriculture and Rural Development Zones (ARDZ) program, is the Government’s approach to expanding commercial activities and increasing agricultural productivity. The ARDZ recognizes that geographic priorities have to be set in support of the development of commercial agriculture. These geographic priorities will be used to target infrastructure, utilities and other support by various ministries. The Government will release publicly held land to increase private sector investment through a competitive bidding process. Further, the Government will continue to investigate and implement measures to increase financial and technical support that can be utilized by private firms to expand operations. This will ensure the process of transforming underutilized state land into commercially viable agro-processing enterprises will be as fast and efficient as possible.

Social Protection

The ANDS strategic objective for social protection is to assure that the benefits of growth reach the poor and vulnerable, either through the attention to these groups in the design of programs and projects aimed at stimulating growth or through well targeted support programs. The social protection sector has significantly improved since 2002 in all areas: social support, pension distribution and disaster preparedness. Cash transfer benefits have been established for martyr’s families and the disabled as the main instrument of the social support and national solidarity with the victims of the war. The MoLSAMD has established its departments in all provinces and strengthen its capacity for targeting and cooperating with NGOs and donors. Around 2.5 million people have been covered with some type of public arrangement for social protection. Efforts will now focus on: (i) improving efficiency of public arrangements for social risk management; (ii) diversifying market-based arrangements for social risk management; (iii) strengthening informal arrangements for social risk management (iv) capacity building and restructuring in the MoLSAMD; and (vi) improving partnership with civil society and NGOs to enhance aid coordination. The main principle for future social support will be to enhance fiscal sustain-ability by focusing on the most vulnerable and supporting the “poorest of the poor”. Finally, strengthening the public/NGOs/private sector partnership will support the Government’s intention to remain mainly in the area of policy making and providing regulations and having the private sector and NGOs increasingly involved in service delivery.

Refugees, returnees and internally displaced persons (IDPs)

The ANDS strategic objective with respect to refugees, returnees and IDP’s is to efficiently manage the voluntary return of refugees and IDPs and their reintegration into productive participation in society. World-wide experience has indicated that large, unplanned, and essentially involuntary returns which have to be managed as emergency influxes generate a range of negative consequences. Therefore the planned and voluntary return of refugees and IDPs return is the guiding principle for the sector strategy.

More than five million persons have returned to their homes since 2002. Their reintegration into society has been challenging but there has no been no pattern of discrimination against returnees. There is some evidence of secondary migration of returnees from places of origin to cities and back to the neighboring countries. The latter occur most noticeably from border provinces. Population movements have largely normalized with socio-economic factors largely replacing security and politics as the key drivers. The numbers of IDPs has also fallen significantly since 2002. Currently there are an estimated 129,000 IDPs displaced by past drought and conflict and an additional 29,000 more recently displaced by recent fighting in the southern provinces. The majority of the one million IDPs identified in 2002 have returned to their homes. During 2007 there was some rise in local internal displacement in the southern provinces of Helmand and Uruzgan due to clashes with terrorist groups. Within the region, the principle legal and operational framework governing voluntary repatriation is provided by the Tripartite Agreements (TA) signed between Afghanistan, UNHCR, Iran and Pakistan respectively. These agreements are serviced by regular meetings of Tripartite Commissions at both Ministerial and working level.

It is very probable that high levels of mass and voluntary repatriation are over. The refugees’ long stay in exile, poverty, and dissuasive conditions in many parts of Afghanistan are likely to prove difficult obstacles to overcome in the future. Security, lack of economic opportunities (employment) and social services (health and education) continue to limit return and reintegration. The most significant challenges for future will be: (i) ensuring peace and security in areas of refugee origin; (ii) improving the Government’s abilities to negotiate effectively with its neighbors on refugee, displacement and migration issues; (iii) improving the political, economic, social and organizational absorption capacities in key sectors and areas; and (iv) developing an implementation plan and supporting resources executed over a number of years.

CROSS-CUTTING ISSUES

Since 1383, the Government has given considerable attention to a set of issues that cut across all the sectors, motivated by the belief that the overall success of the ANDS will be in jeopardy if these issues are not effectively addressed. These cross cutting issues involve (i) regional cooperation; (ii) counter-narcotics; (iii) anti-corruption; (iv) gender equality; (v) capacity development; and (vi) environmental management..

The regional cooperation initiatives are intended to increase access to power; generate revenues through transit trade; reduce impediments to trade and expand both import and export opportunities; increase investment and contribute to improved employment and business opportunities; facilitate the free flow of goods, services, and technology; allow the costs or benefits of development of common resources to be shared; reduce regional tensions and facilitate regional efforts to reduce cross border crime and terrorism; and facilitate the voluntary return of refugees.

Counter-narcotics programs are designed to; (i) disrupt the drugs trade; (ii) strengthen and diversify legal rural livelihoods; (iii) reduce the demand for illicit drugs and improve treatment for drug users; and (iv) strengthen state institutions combating the drug scourge within central and provincial governments. Provincial governors will be responsible and accountable for the process of control and management of counter narcotics intervention in their jurisdiction with support from MCN.

The National Anti-Corruption Strategy is based on the following key goals: (i) enhancing government anti-corruption commitment and leadership; (ii) raising awareness of corruption and evaluating the effectiveness of anticorruption measures; (iii) mainstreaming anticorruption into government reforms and national development; and (iv) strengthening the legal framework for fighting corruption and building an institutional capacity for effective implementation of the United Nations Convention Against Corruption (UNCAC).

The ANDS goal for gender equality is an Afghanistan where women and men enjoy security, equal rights and equal opportunities in all spheres of life. The National Action Plan for Women focuses on three main outcomes: (i) government entities embracing ‘gender equality’ in their employment, promotion, policy making and budgetary allocations; (ii) measurable improvements in women’s status as evidenced by reduced illiteracy; higher net enrollment ratio in educational and training programs; equal wages for equal work; lower maternal mortality; increasing leadership and participation in all spheres of life; greater economic opportunities and access to and control over productive assets and income; adequate access to equal justice; reduced vulnerability to violence in public and domestic spheres; and (iii) greater social acceptance of gender equality as evidenced by increased participation by women in public affairs and policy discussions.

The ANDS capacity development objective is to assure that the skills needed to effectively implement programs and projects included in the ANDS exist or can be developed within the required time frame for implementation. The institutional responsibility will be with Inter-ministerial Commission for Capacity Development (ICCD) that will serve as a single reporting point for both government and donors. ICCD will provide a coordinated approach to support the effective management of funds and aid flows, to cut down on duplication and to ensure that critical capabilities for program and project implementation are well defined and (most importantly) that capacity development and technical assistance programs are properly focused on meeting these critical needs.

Environmental protection efforts are geared to: restoration and sustainable use of rangelands and forests; conservation of biodiversity; preservation of Natural and Cultural Heritage sites or resources; encouragement to community based natural resource management, prevention and/or abatement of pollution; and improved environmental management, education and awareness. Throughout all sectors, any environmental costs will be fully accounted for in appraisals aimed at ensuring that benefits of proposed programs or projects.

ENHANCING AID EFFECTIVENESS AND AID COORDINATION

The Government has implemented processes to increase the monitoring of aid-funded activities and to improve the efficiency of implementation. The Aid Coordination Unit in the Ministry of Finance has responsibility for issues related to the delivery and monitoring of external assistance. The Government would like to see increased core budget support (direct budget support), giving greater ownership and enabling a more effective allocation of resources based on needs and priorities. Channeling aid through established trust funds is also effective, with the Government able to access funds on an as needed basis. Pooling of donor funds also significantly reduces the duplication of efforts and leads to better coordination, management, and effectiveness of aid. This is especially so with technical assistance grants.

Efforts to increase capacity to implement the Core Development Budget more efficiently will result in higher donor contributions, aiding coordination. Equally important is the Government’s accountability to Afghan citizens on how aid funds have been spent. The MoF’s Public Expenditure Financial Accountability (PEFA) framework is crucial to this process. The ANDS provides the framework for priority aid delivery. Aid delivery will be greatly improved where Government, civil society and the international community align expenditures with the ANDS priorities. Further, the Government will work with civil society organizations and Provincial Reconstruction Teams to ensure that these activities are also aligned with the ANDS priorities and goals.

IMPLEMENTATION AND MONITORING OF THE ANDS

The success of the ANDS depends on effective implementation. The National Budget is the central tool for implementing the ANDS. Given this, all line ministries will first develop or align their programs and projects with the ANDS Sector Strategies; sector program and projects will then be costed and re-prioritized against the medium-term budget ceilings. Based on this, the ANDS Public Investment Program (PIP) will be prepared to enable the full integration of the ANDS into the medium term budget in accordance with the MoF’s ongoing activities to introduce program budgeting. Furthermore, the Government will improve its absorption capacity and fiduciary practices to encourage donors to implement their projects through the National (Core) Budget or, if this is not possible, to assure that programs or projects implemented through the external budget are aligned with the ANDS objectives and priorities.

At the national level, the following structures will link policy, planning, budgeting and monitoring of the ANDS: The National Assembly is responsible for legislating an enabling environment for security, economic growth and poverty reduction. The Council of Ministers headed by the President is the highest level decision-making body, providing overall policy guidance and direction under existing legislation. The ANDS Oversight Committee (OSC), composed of senior ministers, will oversee and coordinate the overall ANDS implementation process. Line ministries and other government agencies will also be responsible for implementation itself. The MoF will play an important role by making sure that the program and projects of the line ministries are costed, prioritized and integrated into the National Budget. The OSC will play a key role in coordinating overall efforts to implement the ANDS. Moreover, the Ministry of Economy will strengthen this mechanism by coordinating the work of the line ministries at the operational level. The Joint Coordination and Monitoring Board will remain the highest Government-donor mechanism in charge of coordination and monitoring, which will cover not only the Afghanistan Compact but the entire ANDS. The Consultative and Working Groups will continue to be the key forums for improving aid coordination and ensure alignment of the donor programs and projects with the ANDS.

CHAPTER 2 The Participatory Process and Provincial Development Plans

Public support for the successful implementation of the ANDS is essential. Therefore, Government has developed the ANDS over the course of the past three years through a thoroughly participatory manner, to seed the emergence of a grass roots democracy, ensuring ownership from people from all corners and walks of life, civil society, the private sector, religious establishments, international community and all government institutions at the national and sub-national levels. In the course of developing the ANDS, the Government has undertaken a public policy dialogue with all key stakeholders, embarking on a provincial based planning process across all provinces to bring government closer to its people, and the people closer to government. The outcomes and lessons learned from this consultation exercise provided an opportunity to participate in discussions on the development national policy and strategy framework.

The ANDS is the product of extensive consultations at the national, provincial and local levels. National consultations involved practically all governmental and major civil society institutions including Non Governmental Organizations (NGOs), cultural associations, religious communities, the private sector, influential individuals, experts and the international community. Sub-national consultations involved discussions with provincial governors, provincial representative bodies, representative village councils, parliamentarians representing each province, local civil society, representatives of Provincial Reconstruction Teams (PRTs) and prominent individuals in all 34 provinces of Afghanistan. More than 17,000 people, 47 percent of whom were women, directly participated in the consultation process. The consultations included all pillars of ANDS. This section summarizes the participatory and consultative process and the lessons learned from it.

ORGANIZING PRINCIPLES AND PARTICIPATION PROCESS7

The Government undertook extensive and thorough consultations, far exceeding the depth and quantity of consultations usually undertaken as part of a PRSP process. To support the comprehensive development framework of the ANDS, the aims of the consultation process were to:

  • build a national consensus with respect to the Government’s overall vision, development strategy, and greater understanding of the realistic pace at which national development could take place;

  • ensure that citizens had a real impact on development and implementation of public policy;

  • ensure ownership by the Government, which is critical for successful strategy implementation;

  • be as inclusive as possible to capture the opinions and views of different groups to ensure a representative strategy would emerge capable of addressing the needs and priorities of all citizens, and in the process ensuring Government fulfillment of the participatory requirements of the PRSP;

  • lay the groundwork for a sustainable process, which would last beyond the life of the development of the full ANDS, and ensure regular inputs into Government decision-making processes, thereby creating a participatory process which will be institutionalized over time; and

  • Strengthen the capacity of the Government to consult widely on its strategies, as well as to facilitate wider input into its policy-making.

The consultation process was designed to reflect the structures of Government at national, provincial and district levels, guided by the programmatic structure provided in Figure 2.1.8

Figure 2.1.
Figure 2.1.

ANDS oversight structure

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Consultations brought together central and provincial decision-making institutions. Valuable outcomes and lessons have been learned as part of this process, which are being used to strengthen the policy, planning and budget formulation. As the consultation design allowed for ministerial and cross-ministerial cooperation, some of the outcomes of the process have addressed cross-cutting issues. This is particularly so where national and sub-national planning, budgeting and financing intersect. Consultations have been ongoing throughout the development of the ANDS (figure 2.2).

Figure 2.2.
Figure 2.2.

ANDS timeline 1385 – 1388 (2006-2009)

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

CONSULTATION PROCESS

Consultations were conducted with primary and secondary stakeholders from the: (i) national; (ii) sub-national; (iii) international; and (iv) private sector, civil society, religious and traditional communities. Through the consultation process the Government has aimed to connect newly formed central and provincial governance structures and ensure harmonization and co-ordination of the development process. The following section provides a very brief summary of the important strategy design process.

  • National Consultation Process: The day to day preparation of the ANDS was managed by the ANDS Directorate, with the supervision of a Presidential Oversight Committee, chaired by the Senior Economic Advisors. The Oversight Committee (OSC) was formed to oversee the economic, policy and strategic direction for the implementation and development of the ANDS. The committee is composed of Cabinet Ministers, including the Ministers of Finance, Foreign Affairs, Economy, Commerce, Justice, Education and the National Security Advisor and meets bimonthly to monitor the progress of implementation of the Afghanistan Compact, I-ANDS and the ANDS. Within the framework of the various Consultative and Technical Working Groups, each Ministry and Agency developed its individual strategy, coordinated within the sector wide approach underpinning the ANDS. These strategies cut across the three pillars and seventeen sectors of the ANDS, including the mainstreaming of cross cutting issues, to deliver a mutually reinforcing, fully prioritized and integrated strategy. The Joint Coordination and Monitoring Board (JCMB) coordinates the efforts of all partners in the process, and reports the results to the President, the National Assembly, and the UN Secretary General as well as to the international community and the public. Between quarterly meetings, the JCMB Secretariat coordinates activities that keep the benchmarks on track. The JCMB serves as the official link between the Consultative Groups (CGs) as well as between the Technical Working Groups (TWGs) and the OSC. Moreover, key national stakeholders involved in the National Consultation Process include (a) the national assembly (b) sub-cabinet committees (c) consultative and technical working groups and (d) the private sector and members of the Afghan diaspora.

  • Sub National Consultation Process:9 The sub-national consultation process of the ANDS represented the first significant dialogue between the central Government and the provinces; designed to strengthen centre-periphery relations. The outcome of this consultation process included the formulation of 18,500 village based development plans, leading to 345 district development plans, which were finally consolidated into 34 Provincial Development Plans (PDPs). This process involved consultation between parliamentarians, provincial authorities, provincial development committees, village Shuras, local Ulama, the international community (including the Provincial Reconstruction Teams) and most importantly ordinary Afghan citizens. These PDPs identified needs and key development priorities for each province. Both the National (top-down) and sub-national (bottom-up) processes were developed into the sector strategies, with a move towards the formulation of Sector Wide Approach and Programmatic Budgeting.

  • International Consultation Process: Engagement between the Government and the international community has been substantially guided by the Bonn process which set high level political goals: the Securing Afghanistan Future exercise; the Afghanistan Compact and the MDG process. The international community was involved in the ANDS consultation process through the External Advisory Group (EAG). Among other issues, this organ focuses on implementation of the principles of the Paris Declaration. The ANDS Secretariat provides support to these structures to enhance coordination and effectiveness and the linkage with the national consultation process. The international community was extensively involved in the development and preparation of the ANDS.

  • Consultation with the Civil Society, Private Sector and Media: The Government carried out extensive consultation with civil society groups, including: (a) the religious establishment; (b) village shuras10; (c) non governmental and not for profit agencies; (d) cultural associations; (e) human rights organizations; (f) grassroots associations related to women’s affairs, youth development and disability; and (g) Water and Sanitation Committees (WATSAN). Six Afghan coordination bodies and partner NGOs were extensively engaged during the development of the Sector Strategies. Moreover, throughout the process the media has been actively reporting on the ANDS, through newspapers, TV, radio and internet. The role that civil society organizations have played at different levels as facilitators, communicators, advocates and monitors has been invaluable. 11 As part of the economic diagnostic and PDP work, provincial discussions were held to discuss the private sector development strategy in the five largest commercial cities, which culminated in the ‘Enabling Environment Conference’ held in Kabul in 1386 (June 2007).

Poverty diagnostic consultations: The Government’s participatory approach to poverty diagnostics involved enabling poor communities and their institutions to participate effectively in defining, analyzing and monitoring poverty as they experience it. This work was also conducted in the most remote and conflict affected communities of Afghanistan. In so doing, a broader choice of poverty actions based on the specific concerns of the poor have been established for each province, as well as each district. Government has considered a range of poverty actions based on specific concerns of the poor including vulnerability, conflict sensitivity, insecurity and governance. As a result of provincial and district planning, different targeting of poverty reduction programs/interventions have been considered to establish a best fit between poverty profile and poverty actions.

PROVINCIAL DEVELOPMENT PLANS (PDPS)

As part of the ANDS PDPs were developed for all 34 provinces of Afghanistan to provide a coordinated framework for the Government and the international community to undertake sector programs and projects at the subnational level. The linking of consultation to the provincial based planning process has allowed local communities to prioritize, sequence, plan and be involved in the implementation of projects. The PDPs developed through the Sub National Consultations ensure that the priorities in the ANDS reflect the best interests of the Afghan people and are the product of the three rounds of Sub-National Consultations that took place across Afghanistan March 2007- March 2008.

The PDPs have informed policy formulation, articulated goals and needs of the people and provided strategic direction to the sector strategies and the overall ANDS. During the Sub National Consultations (SNCs), preparation and input for the PDPs was based on the following inputs:

  • line ministry strategies and plans;

  • priorities of rural communities including those set out in Community and District Development Plans;

  • priorities of urban communities, including those set out in Urban Plans;

  • priorities of vulnerable social groups including Kuchis, refugees, returnees and Internally Displaced Persons (IDP) and the disabled; and

  • priorities of women, who attended the consultations with an average of 47 percent participation.12

Development of Provincial Profiles

The PDPs contain a profile of each province using information from both the National Risk and Vulnerability Assessment (NRVA) and UNFPA’s Socio-Economic and Demographic Profiles, providing a geographic, poverty-based and social picture of the province and perspectives on the state of provincial development. Opportunities for poverty alleviation have been included with the agreed goals and needs for each pillar. This provides a guide to potential development in each province; especially for the most urgent local needs.

Priority Projects

Ten projects have been prioritized for each sector and for each province aligned with the fiscal envelope of ministries within the outreach of national programs. In total, 80 priority projects were identified for each province. The SNCs served as an opportunity for these ideas in the shape of Community Development Plans (CDPs) and District Development Plans (DDPs) to be consolidated and improved and to reach consensus on them with a wider audience from the province before being incorporated into PDPs as priority projects. Priority projects from the eight sectors across the 34 provinces therefore represent a list of activities that respond to the most urgent sectoral needs in each province. These are being mapped into the national budget process.

PRIORITIZATION AND SEQUENCING OF THE PDPS

Prioritization of the provincial priority projects, aligned with National Programs, forms the basis on which implementation of the ANDS will take place at the local level. Out of the eighty projects prioritized during the SNC process, the most critical projects were aligned with the five most crucial sectors and prioritized into tiers. Tier one projects represent the most urgent tasks. This has allowed for a logical resource allocation and prioritization process to be carried out. Provincial budgeting, as a component of the National Program Budgeting Reform Progress, is also informed by the provincial prioritization process. It aims to empower local authorities and increase the appropriateness of resource allocation. This is currently being piloted in ten provinces and will be extended to a further ten in 1387 (2008).

INTEGRATION OF THE PDPS INTO ANDS

The data from the SNCs and PDPs was fully incorporated into ANDS in the following ways:

  • For each Sector Strategy; comments gathered from the SNCs from a provincial perspective on challenges for that particular sector have been a starting point for addressing the country’s most urgent needs. Thus each sector can be seen to respond directly to the concerns raised by the people.

  • Prioritized projects will be aligned with ministries’ national programs. This will enable a more transparent provision of services and a more clearly defined implementation and monitoring mechanism.

  • The prioritization process will assist ministries with effective resource allocation and provincial projects highlighted as the most urgent should be seen as priority action by the ministries.

OUTCOMES FROM THE PROVINCIAL DEVELOPMENT PLANNING PROCESS

One of the most valuable outcomes of the subnational consultations was the clear indication that the 34 provinces have different development priorities. As outputs, the PDPs have formed an integral part of Government policy formation, prioritization, sequencing and needs- related resource allocation. In addition, two national overriding considerations emerged as critically important to any intervention: the importance of preserving the country’s Islamic religious principles, culture and lifestyle and ensuring equity of access to resources and intervention.

Security emerged as a top priority in two thirds of the PDPs; most strongly in the south and the east of the country. In these regions, security is perceived as the fundamental basis on which all other development depends.

Key issues identified by stakeholders13 include: the (i) lack of access to clean drinking water in all provinces, for both domestic use and throughout institutions such as schools and clinics; (ii) improvement of provincial roads, 83 percent referring specifically to the need for tertiary road services, to improve communication between villages to district and provincial centers; access to basic services such as schools and clinics; (iii) improvement in the present low quality services emerged as a key priority throughout the country, especially with respect to poorly trained teachers and doctors; (iv) lack of alternative livelihoods to poppy cultivation; (v) lack of vocational training for returnees and disabled people; (vi) poor access to electricity cited in 80 percent of the PDPs; and (vii) corruption within the public administration (mentioned in 80 percent of the PDPs, particularly within the security services).

PRIORITIZATION OF THE PILLARS

Using qualitative information from the PDPs the ANDS pillars have been prioritized. This has been illustrated in two ways. Figure 2.3 shows the proportional representation of priorities within the top five sectors across the 34 provinces. Unsurprisingly, with 80 percent of the population relying on some form of agriculture, it has appeared as a national priority. Sectors such as health and social protection are also one of people’s top priorities. In order, the key priorities are:

Figure 2.3.
Figure 2.3.

Proportional representation of sectors across all 34 provinces

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

  • Agriculture

  • Security

  • Education

  • Governance

  • Health

  • Private sector

  • Roads

  • Infrastructure (energy and water) and social protection.

Table 2.4 shows the top priorities for provinces, shown for all 34 provinces. Thus in 17 out of 34 provinces security can be seen as the absolute number one priority. Roads is shown as a sub sector since people articulated this as a separate requirement from other infrastructure development (health is not mentioned because although it appears numerous times in the top five priorities for provinces, it is not considered the top priority in any province).

Table 2.4.

Sectors/pillars and the number of provinces in which they are a top priority

article image
Figure 2.5.
Figure 2.5.

Top priorities of provinces – primary ranking

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Figure 2.6.
Figure 2.6.

Top priorities of provinces – secondary ranking

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Figure 2.5.
Figure 2.5.

Top priorities of provinces – tertiary ranking

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

REGIONAL VARIATION IN PRIORITIES

From a regional analysis some general similarities can also be seen from the above map:

  • In the South and South East regions the major priority is security.

  • In the West and Northern regions priorities are mainly employment generation and infrastructure development

  • In the North East and Central Highlands areas the main priorities are provision of roads, education and agriculture.

The clearest message to be obtained form a provincial level analysis is that every province is unique in its needs, goals and priorities and this should be a major consideration within the resource allocation process.

CONCLUSION

The ANDS is the result of an extensive process of consultations involving key players at international, national, provincial and grassroots level. The insights provided by these consultations have served to highlight both national and local priorities to form the holistic vision of the country’s development strategy, keeping in mind the vast experiences of the international community in this arena. The PDPs have enabled the prioritization of provincial sectoral goals and needs into time-bound activities. The voices of the poor have informed the overall policy framework and the poverty profile, as well as the various sectoral priorities outlined in this document. It is envisioned that participation processes will be sustained throughout implementation of the strategy. Lessons learned have been formally integrated into the policy, planning and budgeting processes, including ongoing concerns about regional cooperation, conflict management, counter-narcotics, anti-corruption, gender, the environment and capacity building. It is assumed that integration of the provincial planning, budgeting and implementation into the national development process will contribute to a relevant and accountable national development process.

CHAPTER 3 The Poverty Profile

In the development of the ANDS Government has adopted evidence based policy making, through detailed poverty diagnostic work, within which to understand the causes and effects of poverty. Based on this analysis we have been able to develop the ANDS as a pro-poor growth strategy. By pro-poor, the Government means making investments that have a preferential impact on bringing poor people out of extreme poverty through the adoption of growth enabling policies and targeted social protection investments. This means that Afghanistan aims to achieve pro-poor growth, where the incomes and livelihoods of the poorest rise faster than the average growth of the economy. Key findings of the Governments 1386 (2007) National Risk and Vulnerability Assessment (NRVA) indicates the poverty rate at 42 percent (or 12 million people) were living below the poverty line, with incomes of about US$14 per month per capita. Moreover, food poverty was estimated to be around 45 percent of people who were therefore unable to purchase sufficient food to guarantee the world standard minimum food intake of 2,100 cal/day. Furthermore, 20 percent of people were slightly above the poverty line indicating high vulnerability.

In addition to the high incidence of consumption disparity, there is a significant difference in poverty levels between provinces, and between rural (36 percent) and urban (21 percent) communities. For example, the depth of poverty (the poverty gap) in the Northeast appears to be higher than in the South whereas the average distance between the poor and the poverty line seems to be larger in Badakhshan than in Zabul. Parwan and Logar provinces have poverty rates of less than 10 percent while Daikundi has a poverty rate of 77 percent and the lowest level of welfare among all groups, are women and Kuchis. Gender inequality is an important characteristic of poverty in Afghanistan. The vast majority of women do not participate in paid economic activities making them highly dependable on their husbands or families. The literacy rate among women being much lower (19 percent) than for men (40 percent) and, the net primary school enrolment rate for girls (6-9) is around 21 percent while much higher for boys (28 percent).

DATA COLLECTION, POVERTY MEASUREMENTS AND ESTIMATES

The Government has undertaken extensive assessments to improve understanding of the determinants of poverty and the impacts of growth and poverty reduction programs on different income groups. In addition to the NRVA studies, the Government has relied on information from the Participatory Poverty Assessments conducted by ACBAR (Agency Coordinating Body for Afghan Relief) and the FCCS (Foundation for Culture and Civil Society). ACBAR launched the Afghanistan Pilot Participatory Poverty Assessment (APPPA) in several provinces to enhance collective understanding of different poverty perspectives, its analysis and formulation into the ANDS poverty reduction strategy.

Data Collection: National Risk and Vulnerability Assessments

Information on the specific nature of poverty in Afghanistan is restricted by the considerable quality and quantity limitations, with the NRVA comprising the majority of information available. These have been based on limited household surveys. The 2005 NRVA covered approximately 31,000 households, allowing national and provincial poverty rates to be assessed. While the 2005 NRVA survey was a substantial improvement on previous studies, it also had several weaknesses with only one season being covered. To overcome this, a separate survey conducted in spring 2007.

Ongoing data collection includes the planned 2007/08 NRVA survey (predominantly funded by the EC). This study will cover all seasons and the consumption module includes assessment of more food items and non-food items. Moreover, stronger emphasis has been placed on survey design and the collection and computation of high quality of data.

Sub-national Consultation and the Pilot Participatory Poverty Assessment

The ANDS sub-national consultation process has contributed to a far deeper understanding of the specific nature of poverty in the Afghan context. Consultations were held in all provinces, with discussions on critical priorities for poverty reduction, such as education, health, water and sanitation, agriculture and social protection. A significant number of women (46 percent) took active part in these discussions.14

Voices of the poor

“The poor are being the ones with an empty stomach”, or “the poor are being the ones who do not have enough milk to make yogurt”. Furthermore, Afghan citizens states poverty ‘as being an incapacity to plan the future’ with the ‘poor being unable to foresee what will happen tomorrow”. One man in Bamiyan province defined poverty by saying: “the poor are the ones who can be sick today and be dead the next day”.

Interviews by: MoWA, 2007

Poverty measurement: cost of basic needs analysis

The Cost of Basic Needs (CBN) poverty line represents the level of per capita expenditure at which the members of a household can be expected to meet their basic needs comprised of food and non-food items. Adding the food and non-food poverty lines the poverty analysis based on NRVA 2005 yielded a CBN poverty line for Afghanistan estimated to be 593 Afghani per capita per month or around US$14 (at 2005 prices). However, the 2007 survey provides an updated CBN poverty line of 708 Afghani per capita per month (again around US$14 at the 2007 exchange rate).

POVERTY ESTIMATES

However, the latest NRVA survey (Spring 2007) indicates that 42 percent of the population lives below the CBN poverty line (figure 3.2). That is, almost half of the Afghan population is unable to purchase a basic food basket to provide 2,100 calories consumption per day.

Figure 3.2.
Figure 3.2.

Regional poverty comparisons

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Seasonality and poverty

Poverty levels in Afghanistan vary by season. This further compounds the understanding of poverty in Afghanistan. The Food Security Monitoring Survey (FSMS) suggests that households tend to have the richest consumption in summer following the harvest, with more restricted food consumption during winter, especially in March.15

Seasonality and poverty

During spring we plant, in winter we harvest so in autumn and winter we have enough food. At the end of winter and the beginning of spring we do not have enough.” Female participant, Shawak village, Badakhshan.

Source: APPPA final report, march 2008
Vulnerability

The 2005 NRVA highlighted that 20 percent of the population are located very close to the poverty line, indicating high vulnerability. Even small consumption shocks can result in substantially higher rates of poverty. For instance, a 5 percent reduction in consumption across the board will cause the poverty head-count rate to rise from 33 to 38 percent. According to the 2005 NRVA, a 25 percent upward shift in the poverty line would result in 53 percent of the population living in poverty. Meanwhile, a 25 percent downward shift in the poverty lines would reduce the poverty rate to 14 percent. Table 3.4 highlights the potential impact of consumption shocks on poverty incidence.

Table 3.4.

Impact of consumption on poverty rate16

article image

POVERTY IN AFGHANISTAN: MAIN CHARACTERISTICS OF INEQUALITY

Afghanistan has the lowest level of inequality in South Asia as measured by the Gini coefficient. This however is largely due to the widespread nature of poverty across the country. However, within Afghanistan, significant inequality does exist between many segments of Afghan society. The variation in poverty between the rural, Kuchi and urban populations is significant and of great importance. Meanwhile, gender inequality is one of the highest in the world.

Consumption Disparity

Consumption inequality is a concern. The World Bank has estimated (based on the 2005 NRVA) the bottom 10 percent of the population accounts for 3.6 percent of total consumption while the bottom 30% account for 15.6% of total consumption. Combined with very low overall levels of consumption, this indicates that the poorest population suffers from high levels of deprivation (table 3.5).

Table 3.5.

Share of consumption by quintile

article image

Poverty also varies significantly between provinces. Poverty headcount rates vary from around 10 percent to more than 70 percent, with poverty more severe in the Northeast, Central Highlands and parts of the Southeast. Entire provinces like Daikundi, Badakhshan, Zabul and Paktika represent large pockets of poverty.

The 2005 NRVA indicates a significant disparity in poverty between rural people and the Kuchi population compared to urban populations. Around 45 percent of rural and Kuchi populations appear to be poor as opposed to 27 percent of those who live in urban areas. Rural populations have the highest rates of food insecurity, with 45 percent not meeting daily minimum food requirements. Moreover, it is noted that 40 percent and 41 percent of the Ku-chi and of urban population respectively are also unable to meet their minimum food intake (table 3.6).

Table 3.6.

Estimated poverty headcount rates and food insecurity (spring 2007)17

article image

These disparities are reflected in primary school enrollment rates (table 3.7), though in this regards, the Kuchi population is particularly disadvantaged.

Table 3.7.

Enrollment rates (ages 6-9)18

article image
Characteristics of Rural Poverty

The rural population – who make up the majority of the poor – account for approximately 80 percent of the population. The main characteristic of the rural poverty is high food insecurity and a lack of access to infrastructure and basic public services. Illiteracy rates are prevalent among rural Afghans and the level of education is low. Rural households are highly dependable on agriculture. However, non-farm activity has started to play a bigger role in the coping strategy of the rural poor. The poorest among the rural households are those who live in remote and mountainous area, whose head is illiterate or without any education and who do not poses land or livestock.

Characteristics of Poverty among Kuchis

Kuchis are nomadic pastoralists (estimated at 1.5 million people) and are heavily dependent on livestock and migration patterns for their livelihood. In recent years, 15 percent of Kuchi families have been forced to cease migration and settle. Kuchi poverty has many of the core characteristics of rural poverty although food insecurity is not as high as in the case of rural households (table 3.6). However, the poorest Kuchis are those who have settled. Reasons for settling include loss of livestock due to recent droughts and insecurity which disrupted traditional migratory routes. Moreover, the biggest cause of being settled is growing banditry and local crime as well as conflict with settled populations over grazing areas. The failure of local authorities to deal with disputes over traditional pasture rights has already led to number of conflicts and rising poverty among Kuchis.

Characteristics of Urban Poverty

Urban poverty and food insecurity are lower amongst the rural and Kuchi populations. However, recent research regarding urban livelihoods from a European Commission funded project suggests that urban poverty is increasing, and is positively correlated with the growing urban population.19 Many informal settlements around major cities have been built in order to accommodate migrant workers, returnees and others. For years these suburbs have been one of the largest neglected pockets of poverty. A number of recent studies have concluded that low paid employment does not guarantee that citizens live above the poverty line.20 Due to poor daily wages many urban workers fall into the category of the “working poor”.21 Insecurity of employment leads to income irregularities and to a chronic shortage of money. Many urban poor households lack of finance to smooth consumption and are forced to take short term loans to purchase basic needs such as buy food and pay rent. Income fluctuation, job insecurity and high indebtedness are core characteristics of a typical “poverty trap” for the urban poor.

Gender Inequality

Gender inequality is an important characteristic of poverty in Afghanistan. The vast majority of women do not participate in paid economic activities making them highly dependent on their husbands or families. In spite of this women, especially in rural areas, actively contribute to the household income through employment (often unpaid) in agriculture and livestock activities. Nevertheless, the gender gap remains large with (i) the literacy rate among women is much lower (19%) than for men (40%) and, (ii) the net primary school enrolment rate for girls (6-9) is around 21 percent while much higher for boys (28%) (table 3.7). Female headed households are closely correlated with the high poverty due to a lack of education and employment opportunities.22

MOST IMPORTANT CAUSES OF POVERTY: POVERTY CORRELATES

A number of factors contribute to poverty, including a lack of infrastructure, limited access to markets, social inequity, historical and ongoing conflict and various productivity constraints. The APPPA found that the key determinants of poverty were: (i) a weak assets base, (ii) ineffective institutions: including the disabling economic environment; weak regional governance, service delivery and corruption; weak social protection programming; social inequalities; and (iii) vulnerability to: conflict; natural disasters; decreasing rule of law; increasing basic costs; increasing population; food insecurity; winterization; and (iv) nondiverse livelihoods. Source: APPPA Final Report, March 2008.

Literacy levels

Poverty is highly correlated with literacy skills. The 2005 NRVA highlights that poverty rates for households with illiterate heads is 37 percent, compared to 23 percent among households with literate heads. Citizens with primary education experience up to 10 percent lower poverty than families with uneducated heads.

Agriculture and livestock are positively correlated with poverty

The poorest households are found to be dependent mainly on livestock and agriculture activities. The NRVA 2005 report found that agriculture and livestock activities are the largest contributors to poor household incomes. Meanwhile, households in the top two consumption quintals earn more from trade and services. Education and literacy are also highly correlated with higher involvement in non-farming activities as is access to major roads.

Asset ownership and crop diversification

A lack of ownership of land and livestock is associated with lower poverty.23 Small land owners, landless families and families without livestock are in most cases poor. Moreover, ownership of non irrigated land is strongly associated with levels of poverty with families who are engaged in cultivating rain fed land much poorer than families that cultivate irrigated land. Equally, livestock ownership appears to decrease economic vulnerability. Urban families without home ownership are highly vulnerable as they have to allocate large parts of income to paying rent. Moreover, crop diversification appears to be an important spring board strategy for escaping poverty.

Access to education

Poverty reduction and economic growth are closely associated with the population’s level of education. As highlighted above, a literate head of household has greater earning potential and is negatively correlated with poverty. Access to education by the bottom consumption quintile is low, resulting in a lower net primary school enrollment rate.24 The 2005 NRVA also highlights a significant gender disparity in net primary school enrollment, especially among Kuchi and in rural areas, while the disparity in urban areas remains marginal.

Access to health facilities

A lack of access to health facilities and poverty are closely related. Higher household consumption is associated with more frequent visits to health facilities and higher vaCross Cutting Issuesnation rates of children (see box 3.8). Access to the Basic Package of Health Services (BPHS) has significantly improved, covering 85 percent of the population in 2006. This has contributed to a lowering of poverty rates in these areas.

Health and hospital services in the provinces

“We don’t have a clinic here but if you are lucky enough to be able to drive the 30 kilometers to the nearest hospital you find doctors who are not professional, who don’t pay attention to you, and who tell you to go out and buy your own medicine.” female participant, Papchi village, Herat.

Source: APPPA, final report march 2008
Other important causes of poverty

A number of other factors are linked with poverty in Afghanistan:

  • Indebtedness: a lack of job security, irregular income, pressure to buy food and having to pay rent forces many rural and urban poor to increase borrowing.

  • Remoteness: the NRVA data indicate poverty is much lower in areas that are close to the main roads (Ring Road). Topographical remoteness and the lack of access to major roads remains a major causative factor of poverty.

  • Female household heads and disability: research conducted by MoWA identified female households as being linked with higher rates of poverty. Likewise, having a disabled head of household or a disabled family member is also associated with higher poverty.

The remaining causes of poverty include: (i) security; (ii) large households with small children; (iii) poor access to basic services (water and electricity), and (iv) natural disasters.

Poverty and natural disasters

“In the spring the river overflows – there is no retaining wall and our lands are damaged” male participant, Bai Sar community, Herat.

Source: APPPA final report, march 2008

WHO THE POOR ARE: THE MOST VULNERABLE GROUPS

According to the Spring 2007 survey approximately 10 million Afghans, around 42 percent of the population, live below the poverty line and do not meet their daily food and non-food requirements. While high rates of poverty exist amongst Kuchi and rural households, the incidence of poverty is increasing in urban areas and large city suburbs.

Families with a large number of small children

Afghanistan has one of the largest child populations and the smallest proportion of working age populations in the world25 which exposes families with a large number of small children to economic shocks. Moreover, the country also has one of the highest under 5 infant mortality rates in the world. Children up to five years remain the most vulnerable because they require high quality nutrition as well as other forms of child care unaffordable to most families. Many rural and urban children are forced to work to bolster family incomes resulting in widespread child labor and school drop-outs, “trapping” the children in the endless cycle of poverty.

Female Headed Households

According to 2005 NRVA data, female-headed households comprise around 2.5% of Afghan households. These households are typically highly vulnerable to economic shocks, with a significant number not having a single able bodied income earner.

Disabled, internally displaced and extremely vulnerable poor

Afghanistan has one of the largest rates of disability in the world. According to Handicap International there are around 800,000 disabled people in Afghanistan. The unemployment rate among these groups is almost 90 percent. The country also has a large number of internally displaced persons (IDPs). The high vulnerability to natural disasters, ongoing conflict and forceful repatriation of the refugees from the neighboring countries contributes to overall poverty. Increasing migration to cities, job insecurity, indebtedness and the collapse of traditional safety nets has placed many urban poor into extreme poverty.

POLICY FRAMEWORK FOR POVERTY REDUCTION

Poverty in Afghanistan is complex and multidimensional. The NRVA surveys reveal the severity of poverty with one in two Afghans being classified as poor. Further, a large number of people are concentrated close to the poverty line and are highly vulnerable to natural, security and price based shocks.

To address this, the policy framework for the ANDS will be premised on the following principles:

  • Promoting pro-poor growth: the Government will tackle poverty first and foremost through promoting strong equitable and broad based private sector led growth. In parallel, fiscally affordable social protection safety nets will be undertaken as part of regular Government business.

  • Promoting pro-poor budgeting: the most important sectors impacting on poverty and poverty reduction, including security, education, health, and social protection, will see budget allocations maintained or increased over the medium term.

  • Allocating adequate resources to the poorest areas: although past expenditure allocations were in favor of the pro-poor sectors, actual spending has not always been well focused to benefit the poor and vulnerable.

  • Providing the balanced support to the Kuchis, rural and the urban poor: the majority of Government and donors interventions have been aimed at supporting the rural poor. Future support to the Kuchis, rural and urban poor will need to be more balanced based on levels of poverty.

  • Focusing on the poorest and most vulnerable: given the huge needs and scarce resources of the Government and the international community, the poverty reduction strategy will need to prioritize targeting the poorest of the poor.

  • Improving donor coordination and aid-effectiveness: donor support as well as improved donor coordination together with the elimination of duplication in delivering assistance to the poor will be essential to the success of the ANDS poverty reduction strategy.

  • Strengthening the capacity for data collection and poverty analysis: institutional capacity for data collection and poverty analysis will need to improve in order to better inform policies for poverty reduction. The Government will actively mainstream the poverty focus throughout monitoring and data collection mechanisms.

  • Building partnership between the Government and NGOs: the role of NGOs in delivering services to the Afghan poor is recognized. Strengthening the Government’s policy making capacity needs to be combined with a strengthening of the partnership with NGOs in the area of service delivery.

Implementation, monitoring and institutional strengthening

Implementation and monitoring of the ANDS poverty reduction policies will be main-streamed through the sector strategies. However, the evaluation of the overall ANDS sector policies for poverty reduction will be evaluated separately to inform policy makers about their effectiveness. The NRVA will remain the main tool for data collection on matters of poverty. However, the introduction of the household budget survey and strengthening of the CPI and national income data will also contribute to this understanding. The forthcoming Census Survey will play an important role in enhancing the understanding of poverty. The capacity of the CSO’s for data collection of key poverty and development indicators will need to be strengthened. Moreover, the Government will continue to improve its own capacity to undertake poverty analysis within the CSO and other Government agencies.

HIGH PRIORITY SECTOR POLICIES FOR POVERTY REDUCTION

Security, maintaining strong growth and macroeconomic stability

Maintaining steady growth rates of between 7 and 9 percent of the GDP (in real terms) through the promotion of the private sector is expected to lead to a reduction in the national headcount poverty rate of around 2 percent on an annual basis. Equitable growth distribution is the precondition for broad based poverty reduction. This will require higher (budget) expenditure in the critical sectors of health, education and social protection and higher levels of public spending in the poorest provinces and remote areas where poverty levels are high.

Maintaining macroeconomic stability including prudent fiscal policies is critical to growth as is maintaining price stability and single-digit inflation rates. Improving the security environment would significantly contribute to poverty reduction leading to increased economic activity and the preservation of human capital and household assets. Moreover, it would decrease internal displacement and reduce pressure on impoverished dwellers due to migrating impoverished rural families to the cities.

Generating employment and labor market policies

Given widespread low productivity employment and the large number of jobless, employment generation will be one of the most important policies for poverty reduction. An improved security and business environment will support stronger private sector growth, which will gradually become the main source of employment and the main instrument of poverty reduction. This requires expanding the mining and oil and gas sector. The Government, supported by the donors, will increase public work activities and their presence in the poorest provinces. The National Solidarity Program (NSP) will continue to play an important role in generating jobs and income for the rural poor. Skills development programs will expand to help the unemployed obtain in demand qualifications. Moreover, public administration will employ more women and disabled people. Labor market regulation and the pension reforms will be improved to provide protection from the employers, especially for workers engaged in the informal economy.

Education and health

Education and health will remain the priority sectors for public spending. The Government will continue the policy of providing free universal education. Increasing the literacy and net primary school enrollment rates and decreasing the number of school drop-outs will be the main contribution of the education sector to poverty reduction. Higher attention will be given to supporting disabled peoples access to facilities, including specialized institutions and adjusting schools and universities to meeting their needs.

The Health sector will continue to be strengthened. Building new health centers in rural and poor urban areas will be priority for health sector public spending. The special needs of disabled will be better accounted for in the Basic Package of Health Services (BPHS).

Two major issues that contribute to women’s poverty are a lack of maternal heath services and education for girls. Both issues are caused by a lack of facilities and are inter-linked with the need for culturally appropriate services for women and girls. In relation to the provision of maternal health services, there is a great need for female doctors and trained mid-wives to offer ‘culturally appropriate’ health services. Afghanistan has one of the highest population growths among developing nations and despite strong cultural limitations the overall poverty reduction strategy will need to encourage family planning.

Social protection and urban development

Social protection programs will focus on supporting the most vulnerable and the poorest of the poor. This includes “children at risk”, chronically poor women, poor disabled, mentally ill without family protection, neglected elders and drug edicts.

Many urban homes are built without the necessary construction permits, creating uncertainty and risk for typically poor families. To address this uncertainty, the Ministry of Urban Development will include pro-poor urban development programs. The first priority will be to legalize constructions in residential areas and develop basic infrastructure to improve public service delivery.

Malnutrition is one of the major causes of the high infant mortality under 5, with the poor the most vulnerable. The Government will consider introducing the Zakat-based tax to increase allocations for social programs to support these programs.

Agriculture and rural development

Rural development and agriculture are key sectors for improving the rural livelihoods. Access to markets has been indicated as an important determinant for rural poverty in Afghanistan. Programs to support crop diversification, targeted livestock, orchards, distribution and providing farming implements will contribute to poverty reduction among the rural poor. As will improved access to rural all-weather roads, sanitation, electricity, job opportunities and promoting rural enterprises. These programs are important tools for rural income generation and the elimination of poppy cultivation.

Water and irrigation

Investments in water management and irrigation will significantly contribute to higher food security and poverty reduction for those currently operating on rain fed land. In addition to malnutrition, the lack of the access to clean water, poor sanitation and sewage is one of the main causes of high infant mortality. The Government will increase public spending on improving the access clean water as well as improved health protection to address this.

Disaster preparedness and community-based insurance schemes

Natural disasters, particularly droughts and floods are one of the major sources of vulnerability among the poor. The NRVA 2005 highlighted the destruction of crops due to droughts represents a higher poverty risk than sickness or loss of a working family member. Building more efficient disaster preparedness and response will decrease the risk of falling into poverty. Further, the Government will initiate the establishment of community based crop insurance schemes to enable the poor to better mitigate the risks of losing harvest.

Energy and transport

Expanding the national road network, including the construction of the rural roads, will allow poor households to diversify income generation – from low profitable crops to more profitable activates such as trade, services and small businesses. Investments in transmission lines and power generation will increase access to electricity, improving productivity.

Social protection safety nets will be strengthened to ensure the poor can cope with the planned elimination of energy subsidies, which will increase the risk of the poor and marginal households falling further into poverty, especially for the urban households.

Justice and anti-corruption

Greater access to justice, especially for women, is an important component of the ANDS to empower the poor and provide more efficient protection to victims of violence. Justice reform will also improve the business environment and increase investments and job generation. The ANDS will also reduce corruption in key sectors such as justice, health, public administration and education, which will have a significant benefit for the poor.

Empowering the poor: role of NGOs

Expanding the service delivery and policy input role of NGOs and civil society are crucial to reducing poverty. This is strengthened by the ANDS’ participatory structure with Afghan society. ANDS progress reports will be publicly disseminated. Civil society and subnational level bodies will be consulted in preparation of the ANDS updates. Participatory poverty qualitative assessments and quantitative analysis will be provided on a regular basis to obtain input from NGOs and civil society on the key priorities for the poverty reduction. The role of the NGOs in delivering the services to the poor will also increase as will their role in providing the Government with the “voices of the poor” and policy advice.

CONCLUSION

During the pre-harvest spring of 2007, the NRVA estimated that 42 percent of the population was below the poverty line. A great many more people remain vulnerable to falling below the poverty line as a result of rising food and fuel prices or bad weather. Great reliance is being placed on private sector-led development and growth to create sustainable employment and market opportunities. It is these opportunities that will allow the majority of Afghans to improve their lives and pull themselves out of chronic poverty. As the ANDS sector strategies are implemented, great effort is being made to use participatory and consultative processes to better understand the needs of the poorest and most vulnerable groups, to inform the design of appropriate programs to address those needs. The real needs are so enormous that substantial interventions are indeed required to provide real assistance to the neediest, particularly women who are burdened with child care responsibilities, social constraints, and the disabled who are not provided enough opportunity for full participation in society in order to take advantage of improved employment and market advantages. Special programs are suggested to be put in place to target these groups so that they too share in the benefits from economic and social development programs. This is important not only on humanitarian grounds but in terms of building the community cohesion that is the foundation of a tolerant and compassionate Islamic state.

PART II THE NATIONAL DEVELOPMENT STRATEGY

CHAPTER 4 Macroeconomic Framework

High, sustainable, broad-based economic growth and the preparation of a viable macro-economic framework are indispensable for poverty reduction and employment creation. The overall growth strategy of the ANDS is based on a firm policy of private sector led growth. During the last five years per capita income nearly doubled from US$147 to US$289. Comparable rapid economic growth will be needed during in the next five years if the poverty reduction goals of the ANDS are to be achieved. This will require a supportive environment for social and economic development, which will depend crucially on making significant progress toward improving security, eliminating the narcotics industry, reducing corruption and strengthening governance. Equally important will be the continued maintenance of sound and stable macroeconomic policies.

Past high growth experience does not guarantee similar high rates of growth in the future. In recent years strong economic performance has reflected substantial public investment in reconstruction activities and large foreign assistance inflows. These factors cannot be expected to continue to contribute to economic growth to the same extent in the coming five years. While public/donor investment will undoubtedly continue to be important in the near term, there will be an increasing reliance on private economic activity for longer term growth to be sustainable and to extend the benefits of development to the entire population.

The drivers of economic growth are the rate of investment and the rate of improvement in productivity. A key strategic objective of the ANDS is to establish a secure economic environment in which it will be possible to attract sufficient levels of investment and which will encourage the employment of human, financial and natural resources in the most productive ways possible. A critical element in achieving this objective will be to substantially increase investment in the development of capacity of the workforce in order to expand employment opportunities and increase incomes.

The ability to implement the projects and programs included in the ANDS depends upon the resources that will be available. This chapter presents summaries of macroeconomic projections for the next five years on which estimates of available resources are based and projections of the domestic and donor financial resources that will be required to implement the ANDS. In order to ensure that sufficient resources will be available, a high priority for the Government is to significantly increase domestic revenues.

Fiscal policies will remain a central policy tool for macroeconomic stability, public resource allocation, and implementation of the development strategy – all of which are important ingredients for sustained robust economic growth. Foreign assistance (including core and external budget) has averaged 40 percent of GDP for the past five years. In order to best use foreign assistance for growth and development, there are two major challenges for fiscal policy. One is that distribution of financial resources (including domestic revenues and foreign assistance) must be aligned with ANDS prioritization. The other is to improve absorption capacity to improve both quantity and quality of projects and project execution.

Table 4.1.

Macroeconomic projections

article image

LINKING GROWTH WITH POVERTY REDUCTION AND EMPLOYMENT CREATION

A growth strategy is the backbone of the ANDS. Poverty in Afghanistan is high by any standard. Estimated poverty incidence ranges from 34 percent around harvest season to as much as 42 percent in the leaner season. The unemployment rate hovers at around 40 percent. High annual average growth rates at 12 percent in the past few years likely have had positive impacts on reducing poverty and generating employment at the margins, which are undoubtedly hard to measure (see Poverty Profile chapter). Afghanistan’s poverty and unemployment have the following key characteristics:

  • High vulnerability: A significant number of Afghans are concentrated around the poverty line, especially among the rural population. The concentration around the poverty line implies that even small shocks could further increase national poverty figures.

  • Seasonality: National poverty has strong seasonality and uneven dispersion across the country.

  • Working poor: Low salaries subject many unemployed to the risk of falling below the poverty line. The poor are concentrated primarily in the informal sector, which pays very low salaries and leaves them without job protection.

The high poverty and unemployment rates as well as their characteristics suggest that there is a need to sustain high growth rates in the medium-term (sustainability) and results of high growth should reduce poverty and generate employment (quality).

High growth rates: GDP per capita nearly doubled from $147 in 1381 to $289 in 1385 (excluding opium). Nevertheless, GDP per capita is still one of the lowest in the world. Continued high rates of growth will be essential to achieve further increases in average per-capita incomes. Preliminary estimates of the elasticity of growth on poverty reduction suggest that there will be significant reductions in the poverty rate if growth remains strong in the next few years. These estimates suggest that the poverty rate could fall as much as 20 percentage points – from 42 percent of the population in 1386 to 22 percent in 1391.26

Sustainable growth rates: High growth rates in the past few years were mainly supported by foreign assistance and related activities (e.g. construction). Although GDP figures do not include the opium economy, this sector has nonetheless provided job opportunities and some degree of poverty reduction. However, dependence on foreign assistance and the opium economy will not be sustainable in the medium-term. A shift to private sector led economic growth will be crucial.

Quality growth rates: The results of high growth should achieve corresponding poverty reduction and employment generation. In this regard, identifying the best potential sources of growth is important. For example, while agriculture accounts for 27 percent of GDP (excluding opium), about three quarters of labor force is employed in that sector. As a sudden shift of labor force from agriculture to other sectors is unrealistic, an increase in agricultural productivity is one of the best strategies to enable higher contributions from the agriculture sector to quality growth rates.

State of the economy and constraints to growth

Economic growth has been high but volatile. Between 1381 and 1385, (2002-06) the annual average growth rate was 11.7 percent, the highest in the region. The growth rate of industry and services were either constant or accelerating, while agricultural growth has remained volatile (Figure 4.1). Sectoral breakdowns show that while growth rates of industry and services were constant or accelerating, those of agriculture have experienced high volatility. Cereal production, which accounts for approximately 75 percent of agricultural output, is susceptible to weather conditions. In industries, manufacturing and construction (heavily supported by reconstruction activities and foreign assistance) contributed equally to growth. However, in manufacturing, ‘food, beverage and tobacco’ is dominant with few other significant categories. Services, transportation, government services, and wholesale and retail trading also account for significant contributions to economic growth rates. This suggests that agriculture and its related sectors (manufacturing of food, beverages and tobacco along with transportation, trade, and services) are currently the dominant activities in the economy.

Figure 4.2.
Figure 4.2.

Contribution to growth rates

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Source: Central Statistics Office, Ministry of Finance

One of the most significant developmental achievements has been the maintenance of macroeconomic stability. Successful currency reform in January 2003, alongside prudent fiscal and monetary policy (e.g. no-overdraft policy to finance the budget deficits) have contributed to achieve macroeconomic stability reflected in the deceleration of inflation rates and stable nominal exchange rates (figure 4.3).27

Figure 4.3.
Figure 4.3.

Macroeconomic stability

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Due to increasing challenges posed by insecurity in some areas of the country, opium has become Afghanistan’s leading economic activ-ity.28 Opium production increased in 2007 by 34 percent to 8,200 tons. The impact of the opium economy on the overall economy, polity, and society is profound, including some short-term economic benefits for the rural population. However, these are vastly outweighed by its adverse effects on security, political normalization, and state building, which are key elements of high, sustainable and quality growth.

During the past five years foreign assistance has averaged about 40 percent of GDP, of which roughly one third was channeled through the core budget while the remainder was spent outside the government budget system (Figure 4.4).29 One of the Government’s key macroeconomic30 policy objectives will be using both fiscal and monetary policy to mitigate the most detrimental effects of foreign assistance and ward off any potential “Dutch Disease” effects.

Figure 4.4.
Figure 4.4.

Size of foreign assistance

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Afghanistan faces daunting challenges to achieve high, sustainable and quality growth led by the private sector. In recent years, an informal equilibrium has been evolving (figure 4.5). That is, increased informal activities negatively impact on the rule of law, weakening governance and the effectiveness of the state institutions. This suggests that some key aspects of state building and the formalization agenda are going off-track, and that overall progress is being threatened by the:

Figure 4.5.
Figure 4.5.

The Evolving Informal Equilibrium

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

  • emerging political patterns in which conflict-generated political groupings are playing an increasingly important role;

  • increasing linkages between some key figures and the consolidating drug industry;

  • continuing insecurity in some parts of the country; and

  • modalities by which most aid is delivered coupled with disappointing results thus far despite large aid inflows.

GROWTH PROJECTION AND STRATEGY

The average annual economic growth rate is projected to be 8.1 percent for 1387-1391. In subsequent years, growth rates are projected to gradually decelerate from 9.0 percent in 1387 to 7.0 percent in 1391 (Figure 4.5). This growth scenario envisages the following developments:

  • Agriculture: Agriculture is expected to grow 5 percent per year, the same rate as the average growth rates for 1382-86.

  • Industry: Industry is expected to grow 9 percent per year, supported by high investment (average investment is 34 percent of GDP). The main source of investment is expected to shift from public investment to private investment (including domestic and foreign direct investment) with domestic investment initially leading foreign direct investment.

  • Services: The services sector is also expected to grow 9 percent. Although still high in absolute terms, this is lower than the previous years’ average (14.5 percent).

A key assumption underlying this ambitious growth projection is an increasing role of the private sector over the projection period. This assumption is based on the understanding that strong private sector development better contributes to creating employment and hence poverty reduction. Under the current environment (i.e. the evolving informal equilibrium), it is essential to break the informal equilibrium using the following strategies:

  • Strengthening governance: Fighting corruption will require credible demonstrations by high-level government – including strong commitments and clarification of institutional arrangements; public administration reform including merit-based selection and appointment of civil servants; improving governance at the sub-national level; further strengthening of public financial management; and strengthening the external and public accountability mechanism (e.g. external audit, National Assembly review).

  • Responding to the challenge of the opium economy: Past lessons have indicated that a key principle for success is focusing on those parts of the drug industry that pose the greatest danger to the nation and its development agenda – in other words, the larger drug traffickers and their sponsors. Some strategies could include:

    • Focus eradication efforts on wealthier opium poppy cultivating areas and also areas that are new to poppy cultivation;

    • Increase interdiction efforts against medium and large drug traffickers and their sponsors;

    • Actors associated with the drug industry who are discovered to hold powerful “legitimate” positions in government or private sector should be removed and prosecuted;

    • The government should focus on sensible rural development, instead of short-term alternative livelihoods programs;

    • The counter-narcotics dimension should be mainstreamed into development program.

  • Improving macroeconomic policy management and aid effectiveness: It is very important that macroeconomic policy formulation is transparent and avoids short-term ad-hoc measures. Some strategies could include:

    • Further strengthening coordination among relevant line ministries. It is important that line ministries share the same view regarding the direction of macroeconomic policy;

    • Continuing to enhance the budget process and the role of the budget as the central instrument for policy and reforms;

    • Maintaining macroeconomic stability and progressing toward fiscal sustainability together with prudent monetary policy will continue to be important.

In order to break the evolving informal equilibrium, we must also ameliorate specific private sector investment constraints. The results of World Bank’s investment climate assessment in 2005 show that more than half of respondents identify: (i) electricity; (ii) access to land; (iii) corruption (discussed above); and (iv) access to finance as major constraints to private investment. As the increase in private investment is a key assumption to achieve high, sustainable and quality growth rates, the following specific strategies are suggested:31

  • Electricity: Involve the private sector to expedite power generation and distribution projects in urban centers as well as in rural areas. Specific strategies include:

    • Developing the legal framework to permit and encourage power generation and distribution by the private sector;

    • Accelerating the execution of priority power generation initiatives;

    • Improving distribution system.

  • Access to land: Implement measures to facilitate access to land by clarifying property rights, simplifying procedures for the transfer of titles, and allowing for longer-term leases. Specific strategies include:

    • Developing a strategy for industrial parks;

    • Implementing improved and simplified procedures for transfer of privately owned land;

    • Developing better legal frameworks for land registration and land adjudication.

  • Access to finance: Strengthen the financial sector to increase access to credit and financial services, paying special attention to alleviating capacity constraints. Specific strategies include:

    • Enacting an appropriate legal framework;

    • Building capacity in the financial sector;

    • Increasing the availability of financial services in rural areas.

Scaling up of industrial parks is a possible short-term solution: Although in the medium-term the Government should tackle the abovementioned issues, in the short-term the government could work to “scale up” and maximizing the effectiveness of Industrial Parks. This could provide investors and entrepreneurs with security, access to land, infrastructure (power, water, convenient transport) and some insulation from red tape and corruption, at least on an “enclave” basis.

Opportunities and Risks: There exist several potential exogenous shocks which could seriously affect growth projections. Shocks such as drought pose a serious threat to an economy dependant on agriculture. Insecurity too can harm private sector development, investment, employment creation, and reconstruction efforts, which could have a negative impact on overall growth. Finally, global economic conditions pose serious risks for the Afghan economy. A precipitous rise in oil prices would hamper economic growth especially via the private sector. Also possible slowdowns in the global economy and donor fatigue also pose risks.

Factors which may affect this macroeconomic framework in a positive or negative way, including:

  • The political situation: Presidential and parliamentary elections are scheduled to be held in 2009. Successful and peaceful elections provide confidence in political stability to the private sector and international community;

  • Insecurity: Security costs can be as high as 15 percent of total revenues.32 Further insecurity would add additional costs to companies’ operations and inhibit private investment;

  • Weather: Agriculture is directly affected by weather conditions. As the sector employs about 70 percent of the total labor force, variations in agricultural production have a significant impact on poverty and employment.

FISCAL POLICY

Fiscal policy remains a key policy instrument for macroeconomic stability, and the budget is an important tool to implement the ANDS and prioritize public sector activities. Prudent fiscal policy and effective budget planning and execution will support sustained robust economic growth. Proper budget allocation enables the reconstruction of basic infrastructure, supports private sector development, improves overall economic efficiency and enhances the population’s standard of living, especially for the poor. Despite the increase in expenditures in absolute terms, the Government remains committed to sound expenditure management and increased revenue mobilization, as well as ensuring fiscal sustainability. Fiscal prudence remains the underlying principle, which ensures macroeconomic stability and provides the government some flexibility to respond to external shocks.

The Government continues efforts to increase revenues by improving revenue administration and enforcement and broadening the tax base. This will be essential for achieving fiscal sustainability, delivering priority development expenditures and a reduction in aid dependency. Without domestic revenue mobilization Afghanistan will remain heavily dependent on external support over the long-term. The domestic revenue to GDP ratio is expected to reach 8.2 percent in 2007, which substantially exceeds the revenue target in the Afghanistan Compact for 2010.33 Although domestic revenue is expected to reach 10.7 percent of GDP in 1391 (Figure 4.6), Afghanistan’s revenue-to-GDP ratio still is among the lowest in the world, requiring sustained commitment to pursue revenue reforms. In the medium-term, a broad-based consumption tax will play an important role in domestic revenue mobilization. In order to accomplish this, broadening the tax base, improvements in tax policy, administration and enforcement will be implemented. In this regard an immediate high priority for the Government is the enactment of the amendments to the income tax law by National Assembly. Progress in domestic revenue mobilization in coming years will enable the Government to be less dependent on foreign assistance. New tax measures will focus equally on improving the revenue intake, while simultaneously reducing the cost of doing business, improving the country’s investment environment and enhancing competitiveness.

Figure 4.6.
Figure 4.6.

Medium term growth projections

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Consistent with the growth strategy of the Government, the prioritization framework of budgetary allocations is expected to allocate significant resources to productive sectors such as infrastructure, health, education, agriculture and rural development, and rule of law and governance. Cumulative total public expenditures during 1387-91 in roads, energy, water and irrigation, airports, and communications technologies alone are expected to reach about $11 billion (or about one-third of the total expenditures).34 Similarly, health and education sectors are expected to receive about 17 to 18 percent of the total resources – considerably higher than current allocations. Other priority areas include agriculture, rural development, rule of law and governance, where the Government will invest significant resources.

Figure 4.7.
Figure 4.7.

Domestic revenues and operating expenditures as a percent of GDP

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

The Government is taking measures to improve the overall absorption capacity and execution of projects in these sectors through more effective public finance management and efficient project management methods. Key public finance management reforms include introduction of the medium term budget framework (MTBF), program and provincial budgeting. Other Government reforms are targeting project preparation and management, as well as procurement procedures. The overall development budget execution rate has been steadily increasing – the core development expenditure rate for 1385 increased to 54 percent from 31 percent in 1383. The public finance management reforms and prioritization process are expected to improve the overall fiscal situation and improve the quality of public expenditures. Significantly higher execution rates and improved quality of public expenditures in key sectors over the medium term in turn will improve the growth and development process in the country.

Government expenditure policy will focus on creating an enabling environment for the private sector; enhancing production capacity and productivity; and improving the quality of life of the population. The Government’s budget allocation prioritization is expected to improve physical infrastructure, enhance human capital and build institutions necessary for private sector led growth and increased employment opportunities.

Core budget expenditures will remain constant at about 25 percent of GDP although the allocation of various expenditures changes over time to align with the Government’s development priorities. Throughout the projection period, while the share of operating expenditures decreases, that of development expenditures increases. A considerable portion of expenditure goes to security, counter-narcotics, roads and social expenditures (i.e. education and health).

Figure 4.8.
Figure 4.8.

Domestic revenues versus operating expenditures

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Fiscal sustainability is essential to ensure macroeconomic stability. The operating budget balance (excluding grants) is projected to improve from a deficit of 4.4 percent of GDP in 1386 to a balanced budget 1391 (Figure 4.7). This requires that the donor grants to the operating budget (e.g. Afghanistan Reconstruction Trust Fund) will free up domestic revenues for key development expenditures after 1391.

Two key fiscal policy challenges are on the horizon: the integration of the external budget into the core budget, and improvement of the absorption capacity of line ministries. Currently, more than two thirds of foreign assistance does not go through the Government’s treasury account, and thus information regarding these expenditures is often partial and difficult to obtain. This impedes the Government in its attempts to allocate scarce financial resources in line with its priorities and development objectives. Donors can greatly help by providing more information and/or shifting from the external budget to the core budget; the Government can also improve the situation by articulating clearer priorities – which should be achieved through the ANDS itself. In the past few years, the government has spent less than available financial resources, resulting in delayed investments needed for development. Improving the absorption capacity of the Government, therefore, will continue to be important.

Prudent debt management will continue to be essential as Afghanistan moves towards fiscal sustainability. As a supplement to donor funds the country expects to continue to use limited amounts of debt to finance specific projects and various program requirements. It is expected that any debt received will carry terms that are below market in nature as this is a requirement under Afghanistan’s current agreements with various international financial institutions and the Paris Club group of creditors. Debt sustainability in future periods is an important goal for the Government to achieve and will continue to be a guiding principle governing the country’s use of debt in the coming years.

MONETARY POLICY

Consistent with DAB’s medium to long-term strategic objectives in conducting monetary policy, it will remain vigilant against inflation. The main goal is to maintain core inflation at single digit levels, preferably between 2.5 to 4 percent, although this will continue to be a great challenge.35

Nominal exchange rates are expected to remain constant at around Afs 50 against US dollar. Stable exchange rates will contribute to contain inflationary pressure from imported products as well as provide predictability to the private sector. Nevertheless, stable nominal exchange rates imply the appreciation of the real exchange rates. In the short-term, the impacts on the appreciation of the real exchange rates would not significantly hurt competitiveness as other costs associated with security and electricity seem bigger than the negative impacts on the exchange rate appreciation. However, the Government will keep its eyes on the impact of real exchange rate appreciation for competitiveness in the medium-term.

Access to finance is one of the most severe constraints to the private sector development. High interest rates, caused by high inflation rates and a high risk premium will threaten the financial sustainability of the private sector. Such high interest rates could jeopardize the growth of the nascent financial sector in the country. In the medium to long term, prudent monetary policy together with a disciplined fiscal policy will contribute to a reduction in the risk premium. Effective financial intermediation and macroeconomic stability will eventually bring down real interest rates in the long run as prospects for long term stability improve. The central bank will closely monitor the monetary developments and ensuing liquidity situation along with developments in interest rates and credit markets and will react appropriately to these developments.

To achieve price stability, DAB intends to expand the menu of instruments that have not yet been fully utilized in directing monetary policy. The Central Bank currently relies on foreign exchange auctions as the most dominant tool to maintain price stability and reduce exchange rate volatility. The use of other tools of monetary policy – such as Open Market Operations (OMO) and Reserve Requirement Ratio (RRR) – has so far been very limited. Other monetary policy tools, such as short-term interest rates and discount rates, have not yet been introduced due to the lack of a market for such securities.

DAB will issue capital notes with various maturity periods and create a secondary market for trading of these notes. The more capital notes are traded in secondary markets, the more the need for foreign exchange auctions will be diminished. Overall, by creating a capital market and a strategic repositioning of monetary policy tools through gradual transitioning from foreign exchange auctions to utilizing other tools of the monetary policy, DAB’s room for maneuverability will expand.

Banking system

Through its regulatory mandate, DAB is committed to help banking institutions to manage the risks involved in their operations. Pursuant to Paragraph 2 of Article 2, and other articles stipulated in the DAB law, the central bank is in charge of supervising all depository financial institutions that are legally authorized to take deposits from the public on a continual basis. DAB will continue to supervise banks’ lending practices and encourage transparency and accountability in the entirety of their financial transactions, in order to avoid bank failures which can negatively impact the economy.

DAB will strive to encourage financial institutions to actively take part in economic developments by granting short-term, medium-term and long-term credits to small and medium enterprises (SMEs), owners of factories and construction companies and to start mortgage lending to commercial and residential customers. Consumer lending should also become available to the citizens of this country. To do so, DAB needs to remove any prevailing obstacles and unnecessary legal constraints by drafting required laws and regulations and submitting them for approval to the National Assembly as quickly as is practicable. Fortunately, DAB has already taken significant steps in drafting four laws which will facilitate medium- to long-term lending in the country.

External sector

Exports are unlikely to increase substantially from the current very low base. Afghanistan’s exports are currently dominated by low value-added agricultural exports and carpets. Scaling up the export base would require significant FDI (Foreign Direct Investment) inflows. Under the current situation, FDI is concentrated in the telecommunications sector and the financial sector, which are not export-oriented industries. Large scale exploitation of copper, natural gas, petroleum and precious minerals will help in the medium and long term, although investments in this sector are relatively lumpy.

The Current Account Balance, excluding the reexport of goods, is likely to decline over the projected phase. This is largely due to an anticipated decline in the imports-to-GDP ratio, particularly for manufacturing consumed goods. In the outer years, local products and services are expected to become a more significant factor in Afghanistan’s economy.

FINANCING THE ANDS

The Government has determined sectoral budget ceilings that reflect priorities established in the ANDS (see Table 4.9). This reflects the Ministry of Finance’s adoption of a system of program-based budgeting that is designed to achieve the country’s development needs. It is based on levels of domestic and donor financing in previous years and projections for future revenues.

Table 4.9.

Overall Financing Envelope for the ANDS 1387-1391 (2008-2013)

article image

Based on discussions with donors and the 1386 (2007) financial review

This process is an integral part of the Government’s Medium-Term Fiscal Framework (MTFF) and the preparation of the budget. From 1387 (2008/09) onward the MTFF and the budget will be based on the prioritization established in the ANDS and the utilization of resources for the implementation of ANDS through the budget.

These sectoral expenditure ceilings reflect the fact that security will remain the highest priority. Over the lifetime of the ANDS, security spending is expected to total $14.2 billion. The funding for this sector is expected to come primarily through international assistance. The Government estimates that in future years, the need for security assistance will decrease as the threat declines. However, given the uncertain nature of the instability facing Afghanistan, the Government envisions the possibility of potentially significant revisions to the financing envelope for the security sector.

In the short term, the Government will focus its public expenditure programs on investments in infrastructure, agriculture and rural development in recognition of the high importance of these sectors for the development of the private sector and for employment growth. Over the lifetime of the ANDS, the Government will focus progressively more resources on education, governance, health, and social protection. The Government commits to allocating sufficient resources to the key priorities of strengthening economic governance and improving the enabling environment for private sector development.

CONCLUSION

For Afghanistan to become a peaceful and prosperous country able to provide its people with an acceptable standard of living, it has to build a strong economic foundation that will support long term and broad-based economic growth with the private sector as its engine. With sound macroeconomic policies undertaken during the last five years, per capita income nearly doubled. For the poverty reduction goals of the ANDS to be achieved, comparable levels of economic growth will be needed in comings years. This will require a conducive environment for social and economic development, which in turn depends on the continued maintenance of sound and stable macroeconomic policies to enable the private sector to establish itself as a vigorous engine of growth and employment creation.

A key strategic objective of the ANDS is to establish a secure economic environment in which it will be possible to attract sufficient levels of private sector investments that will lead to the increased employment of human, financial and natural resources in more productive ways. A critical element in achieving this objective will be to substantially increase investment in capacity development and creating a skilled workforce in order to expand employment opportunities and increase incomes.

Average economic growth is projected at an 8.1 percent rate for 1387-1391. A key assumption underlying this ambitious goal is an increasing share of total investment will come from the private sector. To reach these goals, the Government will continue to maintain strong macroeconomic management characterized by fiscal sustainability, prudent monetary policies, and the avoidance of short-term ad hoc measures.

The ability to implement the projects and programs included in the ANDS depends upon the resources that will be available. In this regard, a major contribution of the ANDS has been the determination of budget ceilings that reflect the Government’s sectoral priorities. These are being built into the MTFF and the Ministry of Finance’s program-based budgeting system focused on achieving the country’s development needs. Security will remain the Government’s highest priority, while the public expenditure programs for investments in energy, water and irrigation, transportation infrastructure, agriculture, agro-based industry, and rural development will remain high priorities, acknowledging the high importance of these sectors for the development of the private sector and for long term and sustainable employment growth. In the coming years the Government will also devote progressively more resources on education, governance, health, and social protection.

CHAPTER 5 Security

Security in all parts of the country is essential for economic growth and poverty reduction. The ANDS long term strategic vision for the Security sector is to ensure security of state, persons and assets through the provision of a costed, integrated and sustainable national security infrastructure and law and order policy. The Government has developed the National Security Policy to be implemented through the Security Sector Reform (SSR) program. This will strengthen and improve coordination among the Afghan National Security Forces (ANSF), ISAF/NATO, CSTC-A. While continued international support is vital, the Government aims to assume an increasing share of the security burden – the Afghanization of the country’s security activities. However, Afghanistan still faces a number of serious challenges before it can assume full responsibility for its own security. Terrorism, instability and weak capacity of governance are preventing the Government from establishing effective control in some areas, particularly in the south and south-east. The large-scale production of narcotics continues to provide funds to these groups. Unexploded ordinance remain a significant threat, with some five thousand citizens either killed or wounded in mine explosions since 1380 (2001). Currently only two of the country’s 34 provinces are completely clear of land mines.

The “Afghanization” of the country’s security will require: (i) comprehensive security sector reform; (ii) a new division of labor between the international security forces and the Afghan National Army (ANA); (iii) a reassessment of the design, composition and size of the army; (iv) accelerated training for the officers; and (v) an intensified national recruitment drive.

CURRENT SITUATION

Afghanistan currently faces a whole range of security threats. To counter these threats and ensure national interests the Government plans to strengthen the military, economic and political ties with its regional and international partners. The security objectives are aimed at protecting the country’s independence, establishing a democratic and economically stable society, free of corruption. Implementing development policies outlined in ANDS can only be possible if there is peace and security in the country because security and sustainable development inevitably go hand in hand.

NATO is currently the major force through which the International Community is providing security assistance to Afghanistan with the International Security Assistance Force (ISAF) in cooperation with the Afghan Government. The Government aims to secure stronger commitments from NATO whilst building the capacity of Afghanistan’s national armed and other security forces. The Government is intent on building administrative capacity, investing in human resources development and justice sector, and spurring private sector development to help improve Afghanistan’s internal situation. An educated and prosperous society is less likely to be influenced by concepts spread by extremist elements. A strong National Security Structure will facilitate development of Afghanistan’s economy, social fabric and thus will enhance national unity and peaceful coexistence.

Terrorism and illegally armed groups

The major challenges to stability are terrorism-related, due to the revival of the Taliban in the south and southeast. The Government’s security forces and their international partners will focus on fighting terrorism, illegally armed groups and neutralizing armed elements operating along the borders. Given that many of these groups receive support from foreign sources, both regional cooperation and diplomatic initiatives are vital. To defeat terrorism, new strategies attuned with political objectives of the Government are being adopted, such as strengthening the effectiveness of ISAF and Coalition Forces assistance. This includes special attention to building the professional capabilities of Afghan security forces designed to defeat terrorism and to render assistance to victims of war and avoid civilian casualties. The government aims at strengthening its ownership over law enforcement to effectively overcome internal security problems. Furthermore, combating criminal activity and increased narcotics production are integrated components of the security strategy.

Countering a terror-dominated Taliban and illegally armed groups is an extremely complex form of warfare. In many ways it is a competition for the support of the population. The active support of the Afghan people is vital to success. This demands a firm political will and substantial persistence by the Government and the Afghan people, and unwavering long term commitment and patience from the international community. Government legitimacy is a pre-requisite if we are to isolate the Taliban. The Government’s support and legitimacy will increase only if we can assure the security of the people and provide them with the basic necessities of life: food, water, shelter, healthcare and the means to make a living. The use of excessive force in operations should be avoided, targets should be accurately identified, and collateral damage and especially casualties among civilians be avoided as much as possible.

Narcotics

Poppy cultivation and production of narcotics poses a serious challenge to Afghanistan’s security. The high level corruption that enables the narcotics industry to thrive endangers foreign assistance to development. Huge revenues from opium and production of narcotics have drawn in terrorist elements, organized-crime groups and extremists. Revenues from opium and drug trafficking is also a considerable source of funding to remnants of illegal armed groups. The Government’s strategy coordinates international efforts with Government plans and addresses issues such as the development of economic infrastructure, demand reduction, poppy eradication, countering drug trafficking and establishing alternative livelihood programs. As the police are reformed and the judicial system strengthened, a major effort will be made to reduce corruption, better policing officials involved in cultivation and interfering with eradication efforts.

Illegal Armed Groups

Wars and violence have turned Afghanistan into a fully armed society where people use guns to earn a living or to control resources. Illegally armed groups pose a direct threat to national security. The long-term presence of illegal armed groups in different parts of the country is obstructing Government control, hindering development of local democratic institutions and posing a serious threat to national unity. They are obstacles to the rule of law and stand in the way of social and economic development. Many commanders of illegal armed groups have close links with police or even belong to local governments. This situation enhances corruption and is considered a key obstacle in cracking down on the narcotics industry. Unless the Government is able to provide adequate security with police presence in every village and district, people will feel the need to keep guns for self-protection. People are now required to have a license to carry arms and this law needs to be enforced effectively.

The Disbandment of Illegal Armed Groups (DIAG) and the continuation of the Disarmament, Disintegration and Rehabilitation program (DDR), is the first step in disarming illegal armed groups. The existence of arms and ammunition caches and mines in different parts of Afghanistan also pose a threat, because opponents of the government can use them for terrorist operations. The government -in cooperation with international organizations – is trying to garner support from local communities to get rid of these arms caches.

Mines and Explosive Remnants of War (ERW)

Mines and other ERWs are major obstacles to infrastructure and economic reconstruction. The benchmark for locating and destroying all stockpiles of anti-personnel mines was reached in 1386 (October 2007). However the existence of mines and explosives still pose a threat to the lives of four million Afghans. Only two provinces have been completely cleared of mines. Statistics have shown that about 5,000 Afghans have been either killed or wounded in mine explosions since 1380 (2001). Unknown arms and ammunition caches and mines in different parts of Afghanistan pose an additional threat because opponents of the Government can use these for terrorist operations.

POLICY FRAMEWORK

The National Security Policy is drafted for a period of five years and reviewed annually. The policy contains two interrelated strategies: National Security Strategy and Security Sector Reforms Strategy.

The Security Sector Reforms Strategy establishes a mechanism to regulate relations between ministries and departments to ensure effective coordination. The policy encompasses the functions of other government departments including the legislative, judiciary and law enforcement. The reforms establish responsibilities and coordination in the security sector for implementation of programs and give guidelines for planning, prioritization, assessment of resources, and operations. Sustained financial support is needed to avoid compromising either development or security objectives. The OECD DAC Implementation-Framework for Security Sector Reform provides a useful framework for increasing national ownership and laying out the core elements of a ‘right-financing’ framework.37

The Government is committed to addressing the following strategic benchmarks to achieve the security sector strategic vision:

  • The Afghan National Army: (i) Through Jaddi 1389 (end-2010), with the support of and in close coordination with the government, the NATO-led ISAF, Operation Enduring Freedom (OEF) and their respective Provincial Reconstruction Teams (PRTs) will promote security and stability in all regions of Afghanistan, including by strengthening Afghan capabilities. (ii) By Jaddi 1389, (end-2010): the Government will establish a nationally respected, professional, ethnically balanced ANA that is accountable, organized, trained and well equipped to meet the security needs of the country. It will be increasingly funded from Government revenue, commensurate with the nation’s economic capacity. Support will continue to be provided to expand the ANA towards a ceiling of 80,000 personnel with additional 6,000 personnel, including trainers. The pace of this expansion will be adjusted on the basis of periodic joint quality assessments by the Government and the international community against agreed criteria which take into account prevailing conditions.

  • The Afghan National Police: By Jaddi 1389 (end-2010) a fully constituted, professional, functional and ethnically balanced Afghan National Police and Afghan Border Police with a combined force of up to 82,180 will be able to effectively meet the security needs of the country and will be increasingly fiscally sustainable.

  • DIAG: All illegal armed groups will disbanded by 20 March 2011 in all provinces. Approximately 2,000 illegal armed groups have been identified. Nearly 300 are now fully or partially disbanded and 1200 more are engaged to cooperate with DIAG.

  • Removing Unexploded Ordnance: By Jaddi 1389 (end-2010), in line with Afghanistan MDGs, the land area contaminated by mines and unexploded ordnance will be reduced by 70%; and by end-2010 all unsafe, unserviceable, and surplus ammunition will be destroyed. The goal is to clear 90% of all known mine/ERW contaminated areas by 1391 (2012). The goal furthermore is to clear all emplaced antipersonnel mines by 1391 (1 March 2013) according to the Ottawa Convention. A capacity to remove mines and ERWs beyond the 2013 MAPA transition deadline probably will be needed.

  • Counter-Narcotics: By 2013, the area under poppy cultivation will be reduced by half compared to 2007 levels.

The security sector expected outcomes are:

  • Effectively coordinated security sector, where decisions and plans are timely made and implemented and external and internal threats are deterred, contained or eliminated;

  • ANA and ANP operationally capable of performing those missions and tasks assigned;

  • ANP and ABP expenditures are fiscally sustainable;

  • Citizens have an enhanced level of justice with the help of Police and the Army;

  • Narcotics industry is reduced in line with counter-narcotics national strategy;

  • Reduction of corruption in the ANA, ANP and amongst other government officials;

  • Reduced level of deaths and casualties caused by UXOs, reduce the number of affected communities and increased safety precautions;

  • Enhanced public trust on government ability to deliver justice and security as illegally armed groups are disbanded and reintegrated; and

  • Eventual eradication of Poppy Production and crack down on drug trafficking.

SECURITY INSTITUTIONS

Afghanistan’s security sector includes a number of institutions responsible for maintaining security and enforcing laws. Increased capacity and improved coordination is necessary to achieve the strategic objectives for this sector.

The security sector includes ministries, departments and institutions that are responsible for enforcing security and laws to protect the Government and the Afghan people. These include among other: National Security Council (NSC), Office of the National Security Council (ONSC), the Policy Action Group (PAG), Ministries, National Directorate of Security (NDS), National Army and Air Forces, Afghan National Police (ANP), Presidential Guard, Parliamentary Commissions on Security and Monitoring, Public Audit and Evaluation Offices, justice and judicial institutions, Ministry of Justice, Prosecution Departments and the Human Rights Commission. To improve professional capabilities of the security institutions their duties and responsibilities need to be coordinated. This will guarantee appropriate regulations, set priorities in policy making, help forecasting financial expenses and ensure correct allocation of funds.

National Security Council

The National Security Council is the highest institution for identifying and addressing national security issues. The Council, led by the President, is responsible for developing strategies and policies, determining priorities, and is responsible for the oversight and coordination of the security sector and institutions. The National Security Advisor identifies the needs and requirements of the sector and leads the Policy Action Group (PAG) which has been established as an emergency response mechanism to address the deteriorating security conditions in the six southern provinces. The PAG directs and coordinates security, development work, reconstruction and strategic relations across all functional areas of the Government and the International Community (both civilian and military).

Ministry of Defense (MoD), and the Afghan National Army (ANA)

MoD is responsible for establishing and maintaining peace and security. The Minister of Defense is a civilian with the ministry being non-political and non-partisan. MoD stands ready to provide support to the MoI, which is responsible for border control in emergency situations. Reforms and capacity building initiatives are in process to make the MoD more transparent and accountable with a strong administration and internal discipline. The MoD is developing an ethnically balanced, non-political army with a single military doctrine and operational capabilities. Education, training and equipping the national army to create a professional army with strong operational capability to fight terrorism and armed groups are top priorities. The MoD must ensure that all military units under its command observe and respect Islamic religion and Afghan values. MoD’s primary responsibilities include:

  • National defense against foreign military aggression;

  • Fighting illegally armed groups and terrorism, and help establish the rule of law;

  • Deter wars and ensure stability to secure national interests;

  • Play an active part to solve crisis and control emergency situations;

  • Render assistance to civilian officials to control any emerging security crisis, natural disasters and emergency situations;

  • Protect and expand Afghanistan’s national interests; and

  • Support the National and Border Police to curb organized crime.

To achieve these goals, the MoD has established the ANA.

The National Army (ANA)

The National Army is responsible for protecting Afghanistan’s territorial integrity, upholding and protecting the Constitution, defending national interests and the Islamic religion, and establishing a favorable environment for public welfare and progress. The National Army, led by civilian leadership and supported by the National Police, has a mandate to improve internal security. It also plays a role to boost regional security through military cooperation with ISAF and regional and international allies. A reassessment of the design, composition and size of the ANA has led to intensified national recruitment drive and training.

Following a presidential decree to establish a National Army in 2003 the Ministry of Defense and the Afghan National Army have achieved considerable progress. The ministry is responsible for maintaining professional cadres to design appropriate policies, manage the ANA and defense institutions, and establish necessary coordination among security institutions and international partners. The quality and quantity of the ANA is rapidly growing, and will continue to grow until the army is capable of maintaining the stability of the country, defending its sovereignty, and contributing to regional security. The National Army has a mandate to assist the civilian administration and police whenever needed. If instructed by the National Security Council, the ANA will cooperate with the National Police, Anti-Disasters Department, Afghan Red Crescent Society and other civilian charity organizations to tackle emergency situations requiring disaster response and humanitarian assistance.

Ministry of Internal Affairs (MoI), and the Afghan National Police (ANP)

The Ministry of Internal Affairs is responsible for ensuring internal security, establishing the rule of law, justice and protecting the country’s international borders. MoI’s responsibilities with regard to security are to ensure internal security and fight criminal activity. High priority activities include:

  • Crack down on organized and international crimes including drugs and human trafficking; fight terrorism and other national security threats in cooperation with MoD, ANA, ISAF and Coalition forces;

  • Establish a border police force to control cross-border movements and assist with collection of customs revenues in cooperation with MoD, ANA and Ministry of Finance (MoF);

  • Enforce justice by detecting crimes, carry out investigations, and promptly handover suspects to the judicial authorities without delay in accordance with the law;

  • Provide witness protection and support to victims of crime and establish detention centers;

  • Implement the DIAG program: Collect unregistered arms in cooperation with other security departments and implement and enforce new regulations regarding private security companies.

The National Police (ANP)

The Police are undergoing reforms aimed enhancing efficiency by improving police training and education, upgrading staff and equipping the department adequately. The current MoI Tashkeel allows for 82,180 uniformed personnel in the ANP. Police capacities have been increasing with extensive help from donors that has led to the expansion of government control to provinces. However, there is a need to accelerate recruitment, education and training programs to ensure not only professional performance but also to improve the reputation of the ANP. Ensuring quality police performance and accountability of police and the MoI is the key to stabilization of the society and gaining popular support for the Government.

The Border Police (BP) are responsible for border control, in cooperation with customs officials. The BP establish check points to monitor crossings, particularly in areas with suspected terrorist activity, and are responsible for preventing human trafficking, and drug smuggling. The Counter-Narcotics Police of Afghanistan (CNPA) has been especially established to work on drug related crimes.

Significant steps have been taken since 2001 to revamp and train the Afghan National Army and the Afghan National Police. Police capacities have been increasing with extensive help from the international community. Large militias have been integrated into the Ministry of Defense, with the majority demobilized. A multi-sector donor support scheme has been established where individual donors are allocated responsibility for overseeing support for each of the key elements of the reform, including: disarmament, demobilization, and reintegration of ex-combatants; military reform; police reform; judicial reform; and counter-narcotics.

National Directorate of Security (NDS)

The National Directorate of Security is responsible for lending support to the military and police in fighting terrorism, anti-government elements and narcotics. NDS fulfill its duties by collecting and analyzing information and offering specific recommendations on security. The Directorate is designed to help improve effectiveness of operations carried out by national security agencies. NDS also shares information and cooperates with international security organizations stationed in Afghanistan. NDS is non-political institutions with merit based promotion system.

Ministry of Foreign Affairs (MoFA)

The Ministry of Foreign Affairs is responsible for organizing and following Afghanistan’s relations with other countries and international organizations. It is mandated to:

  • Establish cordial international relations based on sovereignty and mutual trust;

  • Set foreign policy objectives in line with national military strategies and activities of the National Army and border police;

  • Support and promote international peace and welfare by upholding and implementing international laws, conventions and national development strategies ;

  • Support development and encourage investment in Afghanistan and promote trade;

  • Promote regional peace and prosperity, adopt active diplomacy to achieve regional stability and support economic programs that help in securing national interests;

  • Support and promote bilateral and multilateral economic initiatives with neighbors to secure national interests.

Ministry of Counter Narcotics (MCN)

The Ministry of Counter Narcotics is responsible for the implementation of the National Drug Control Strategy (NDCS). The MCN’s policies are designed to address: (i) development of projects to provide alternative livelihood opportunities in districts where poppy is grown; (ii) programs to reduce demand for drugs including addiction treatment facilities in affected provinces; (iii) development of effective mechanisms to deal with drug-related crimes; and (iv) media and public awareness campaigns to discourage people from growing poppy and producing narcotics; and (v) poppy eradication programs..

‘RIGHT-FINANCING’ SECURITY SECTOR REFORM

Fiscal sustainability is essential for a sound and stable security forces. Given the limitations of the National Budget at present, additional time is needed before security sector expenditures can be included in the ordinary budget. The security sector must therefore rely on continued assistance from Afghanistan’s international allies. Limited internal revenue will inevitably force the Government to make some very tough decisions when it comes to security sector spending. The Government supports the development of a ‘Right-financing’ approach to the security sector, within which to strike an appropriate balance between current security needs and the goal of building a fiscally sustainable security sector based on realistic resource projections.

Afghanistan has no wish to be a burden on the international community for longer than is necessary. In line with a three phased effort to develop the Afghan military, coalition allies will move progressively from carrying the major burden of combat operations to a supporting and enabling role. The First Phase, an accelerated development both in numbers and capabilities of Afghanistan’s security forces that are adequately manned, equipped and trained to defeat all internal and external threats, is well advanced. The Second Phase is to transition from coalition-led, to an Afghanled and NATO-supported security operation. Although much of the security burden remains with our coalition allies, there has been progress in combined Afghan/Coalition operations, and in independent ANA security operations. Phase Three will encompass efforts to further improve professionalism, discipline and operational cohesiveness and the ANA will conduct independent operations and lead the fight. ISAF will move to a supporting role. At the end of this final phase, a capacity to defend the country will have been established, and the partnership with allies will become one of normalized defense relations.

SOUND ADMINISTRATION, JUSTICE AND JUDICIAL SYSTEM

Establishing a transparent and accountable judicial administration is a key in achieving durable stability in the country. The Government is committed to strengthening the justice system, incuding the Supreme Court, Attorney General’s Office, Chief Prosecution Department, Ministry of Justice, and military courts in the capital and provinces. Priority programs of the Government include appointing professional cadres, coordinating law enforcement and justice sector development programs to establish a prosperous, stable, and a just society based on democratic values and international standards. An effective legal administration that ensures the rule of law is important for people to have faith in their government. The Government is implementing programs to strengthen and support reform in the Ministry of Justice, the Supreme Court, and the Attorney General’s Office.

RELATIONS WITH NIEGHBORS AND INTERNATIONAL ALLIES

Afghanistan’s security is closely linked with international developments. The country borders with six countries and inevitably has economic and political interests with these countries that are related. The Government seeks to cooperate with its neighbors by strengthening regional security linkages with intelligence sharing to tackle cross-border infiltration, terrorism and narcotics trafficking.

The Government will make every effort to ensure regional stability, security and prosperity for itself and for neighboring countries. The Kabul Declaration on Peaceful Coexistence and Good Neighborliness was signed in 1381 (2002). It obliges Afghanistan and its neighbors to respect each others’ territorial integrity, establish friendly relations and cooperation, and ensure non-interference in each other’s internal affairs. All of the Government’s efforts to maintain security and accelerate social and economic development will not work without some degree of cooperation and support from Afghanistan’s neighbors. A secure Afghanistan in a stable region is in the best interest of entire world. The Government will work with the international community and neighboring countries for an effective diplomatic solution to security challenges. This will require: (i) concerted diplomatic pressure against the safe havens enjoyed by terrorist groups outside of Afghanistan’s borders; (ii) coordinated and effective measures for strengthening border and cross-border security; (iii) support for the programs agreed in recent regional economic cooperation conferences; and (iv) a further strengthening of the Tri-partite Commission to dialogue with Pakistan on substantial issues.

CONCLUSION

The Government is fully committed to successfully: (i) implementing an integrated and comprehensive national security policy and strategy; (ii) building a robust security sector reform program; (iii) strengthening synergies between civil and military operations; (iv) increasing the role of security forces in counter-narcotics activities; and (v) strengthening the civilian components of security entities. While international assistance is vitally necessary at the present time, the Government is planning and looking forward to taking on an increasing share of the responsibility for security in Afghanistan.

Table 5.1.

Integration of the Cross Cutting Issues into the Security Sector

article image

CHAPTER 6 Governance, Rule of Law & Human Rights

The goal for the Governance, Rule of Law and Human Rights is strengthen democratic processes and institutions, human rights, the rule of law, delivery of public services and government accountability.

Improving governance is essential to the attainment of the Government’s national vision and the establishment of a stable and functioning society. The government’s guiding principles for improving governance are openness, participation, accountability, effectiveness, efficiency, coherence, equity, inclusiveness, justice and rule of law applied at all levels of the government. The government will act as a policy maker, regulator, enabler and not a competitor, of the private sector. The main priorities for the governance sector are (i) to increase the pace and quality of public administration reform; (ii) strengthen sub-national governance structures; (iii) reform legal and courts processes; and (iv) strengthen parliamentary and legislative processes including holding free and fair elections.

While much has been achieved in strengthening the formal and informal structures of governance and rule of law, as well as extending human rights, considerable challenges still stand in the way of achieving the goals under this pillar. These include: (i) the existence of multiple, parallel structures of state and nonstate governance entities; (ii) confusion over centre/sub-national governance entities; (iii) weak public sector institutions and underdeveloped governance and administration capabilities; (iv) high levels of corruption; (v) fiscal uncertainty; (vi) weak legislative development and enforcement; (vii) weak parliamentary oversight; (viii) weak community and civil society institutions; (ix) ineffective and poorly defined justice system; (x) gender inequality; and (xi) underdeveloped human rights enforcement capacities.

Three sectors are contained under this pillar: Governance, Public Administration Reform and Human Rights, Justice Sector and Religious Affairs. Sub-national consultation and the Provincial Development Plans (PDPs) were instrumental in developing the sector strategy.

GOVERNANCE, PUBLIC ADMINISTRATION REFORM AND HUMAN RIGHTS

Role of the Sector in ANDS

In the Afghanistan Compact, the Government and the international community reaffirmed their commitment to certain benchmarks on Public Administration Reform, AntiCorruption, The Census and Statistics, National Assembly, Elections, Gender, Land Registration, Counter- Narcotics and Human Rights within the specified timelines. Functional institutions with trained staff will be established in each province to implement appropriate legal frameworks and appointment procedures. The Government will also establish a fiscally and institutionally sustainable administration for future elections and prioritize the reform of the justice system to ensure equal, fair and transparent access to justice.

The strategy includes out efforts to reduce gender inequality. Institutional and administrative frameworks will be established at the local government level that will enable women to play an important role in decision making (such as the CDCs established under the NSP). The Constitution allows limited decentralization specifying that a Provincial Councils (PC) with elected members are to be formed in every Province and, that District, Village and Municipal Councils and Mayors are to be elected through, free, general, secret and direct elections every three years.

Current Situation in the Sector

Afghanistan has come a long way in the last 7 years. In 2000 the World Bank assessed the ‘quality’ of Afghanistan’s governance institutions as falling in the bottom one percent of all countries. The rule of law, adherence to good governance practices and respect for human rights in Afghanistan is weak but improving. The ANDS vision for this sector is the establishment of a stable Islamic constitutional democracy where the three branches of government function effectively and openly, are accountable, inclusive and abide by the rule of law.

Progress since 2001 includes the adoption of the constitution; successful parliamentary and presidential elections, and progress in improving the livelihood and welfare of females and other disenfranchised groups. In addition, the ANDS sets out a series of reforms to address these constraints:

  • Justice: The Ministry of Justice (MoJ) is strengthening the review process for laws and regulations and identifying areas for reform, including instituting a code of ethics and professional standards. In March 2007, the Supreme Court, the MoJ, and he Attorney General’s Office presented new comprehensive reform strategies at the Rome Conference. These include plans to restructure the institutions; develop meritbased and transparent recruitment; promotion and accountability mechanisms for improving professional standards, ethics and discipline; improving the conditions of service for justice officials; and increasing women’s representation at all levels of the justice system.

  • Corruption: The High Level Commission against Corruption has been established to assess and analyze the factors contributing to corruption. The Commission presented recommendations to prevent corruption and developed the roadmap in its document “Fighting Corruption in Afghanistan – Strategy and Action”.

  • Legislative Reforms: Progress is being made in reforming the legal framework of the country. Laws have been enacted to promote investment and trade. Measures to deal with illegal drugs, corruption and money laundering are under review and being enacted. As part of the judicial reform program a number of other important laws will soon be approved.

  • Gender: The National Action Plan for Women of Afghanistan is being implemented to establishing greater gender equality by eliminating discrimination, building of women’s human capital and promoting their participation and leadership.

  • Governance: Public administration is generally recognized as being weak. The Government will undertake comprehensive institutional strengthening and capacity building within the ministries, provinces, districts, municipalities and villages. This will achieve improvements in the delivery of services to the people and communities living in the provinces, districts, municipalities and villages.

A number of constraints continue to face the sector: weak public sector capacity; a lack of resources and unsustainable fiscal outcomes; a restrictive legislative environment that limits private sector activity; limited legislative oversight and representational experience of public figures; extensive corruption; excessive centralization; a lack of coordinated decision-making across Government; limited female participation in the Government; limited direct accountability to clients; and state capture by illicit power-holders.

Policy Framework: Sector Strategy

The governance agenda addresses three major challenges: pervasive corruption, low public sector capacity and human rights deprivations for girls and women in Afghanistan. 80 percent of provinces identified reducing corruption in public administration as a priority during sub national consultations.

The policy framework for the proposed reform program to strengthen governance includes all national and sub-national government, parliamentary, civil society and political structures.

The mainstreaming of cross-cutting issues of anti-corruption, capacity building and gender are of particular relevance to this pillar. In summary, the policy framework for this pillar includes the following goals:

  • National Assembly Empowerment: To enhance the capacity of the National Assembly in discharging legislative, oversight, transparency and accountability functions.

  • Public Administration Reform: Public administration reform will focus on pay and grading reforms to increase competitive recruitment, hiring of a trained and capable public sector workforce, strengthening merit based appointments, conducting performance-based reviews.

  • Anti-corruption: Measures to achieve a reduction of corruption in the judiciary and throughout the government will be introduced. There will be increased monitoring of corruption at senior levels. Appropriate new applications will be introduced to limit potential corruption. Public reporting and complaints mechanisms will be expanded.

  • Enhanced availability of information to public and enforcement: Public rights to access to information will be increased. Sanctions will be enforced against those involved in the drugs trade.

  • Enhanced participation of Women in Governance: Fulfillment of the national action plan for women’s rights will be implemented and affirmative action programs made available to women.

  • Enhanced participation of Youth in Governance: A proactive policy to expand opportunities for young people that encompasses all areas of Government activity will be adopted.

  • Effective system of disaster preparedness and response: The national disaster management and mitigation policy will be implemented.

  • Independent Election Commission: The capacity of the Independent Election Commission will be strengthened. A permanent voters’ registry will be established. Regular national and sub-national elections will be held as mandated by the Constitution.

  • Single National Identity Document: To enhance public accountability and transparency a single national identity document will be issued.

  • Census and Statistical Baseline Data: The national census will be completed and the results published. National economic and poverty baselines will be established.

  • Geodesy and Cartography: Village and Gozar boundaries will be verified and mapping exercises will be undertaken.

  • Land Administration: A modern and community-based land administration system and establishment of a fair system for settlement of land disputes will be established.

  • Independent Directorate of Local Governance (IDLG): A sub-national governance policy will be developed. People’s participation in sub-national governance will be increased. Provincial Councils will be empowered. Laws on District Councils, Municipal Councils, and Village Councils will be introduced. Regular elections of District Councils, Municipal Councils, Mayors and Village Councils will be held. Public administration will be reformed at the sub-national level and the capacity of the public sector workforce at sub-national level strengthened. Provincial planning and budgeting will be institutionalized.

  • Governance Administration: Review and assessment of the facilities in all government offices will be undertaken and appropriate facilities provided.

  • Communication with and within the Government: There will be enhanced flow of information between all government entities related to national policy, strategy and national budget procedures.

  • Human Rights: The realization, protection, promotion and extension of human rights, including the Action Plan on Peace, Justice and Reconciliation will be implemented.

JUSTICE

Role of the Sector in ANDS

The role of the Justice Sector in the government’s development strategy is to ensure improved integrity, performance and infrastructure of Afghanistan’s justice institutions in each province; to streamline administrative structures, ensure professional integrity and improve coordination and integration within the Justice system between government and civil society institutions, and improve access to the justice system for all. In the longer term the sector will seek to increase specialization and diversification of justice practices to meet more complex demands – including the important and necessary interaction and relationship with informal justice systems, which are prevalent throughout the country, while expanding justice services. Transitional Justice is obviously an important aspect of the sector. The Government’s Action Plan for Peace, Reconciliation and Justice in Afghanistan acknowledges that any mechanism for building peace and justice must be carried out with the active and meaningful participation of all national stakeholders, including the justice institutions.

Contribution to the ANDS

Economic Growth: An efficiently operating justice system will encourage investment and for economic activity to move from the informal to the formal sector, thereby strengthening the ability of the government to raise revenue internally.

Employment: Growth of the private sector, a prerequisite of which is an efficient judicial system will generate increased demand for labor. In addition, improved labor and contract laws will lower the cost of hiring labor and directly encourage increased employment, particularly in urban centers.

Poverty Reduction: Economic growth and increased employment will contribute to a reduction in poverty. In addition it should be noted that women and the poor and marginalized are most likely to be the ones to suffer the lack of access to a fair and unbiased judicial system.

Security/Stability: Poor security in certain parts of the country makes service delivery difficult or impossible and justice professionals operate at great personal risk. Police devote most of their resources to maintaining security.

Contribution of the Sector to Implementation of the Compact and MDGs

Afghanistan Compact: The Justice Sector will have met the four Rule of Law Compact benchmarks by the end of 1391 (2010).

Millennium Development Goals (MDGs): Although justice and the rule of law are not among the eight plus one MDGs, they provide the enabling environment for poverty reduction and economic development.

Current Situation in the Sector

Achievements: Afghanistan has a mixed civil law and Islamic Sharia-based formal legal system that has evolved over many years. In most non-urban areas customary legal systems continue to operate. While there is considerable variation in these customary legal systems they are usually based around traditional tribunals – jirgas, maracas shuras or mookee khans. Traditional systems usually have core principles of apology and forgiveness, followed by reconciliation. Most Afghan customary systems are based on the principle of restorative justice.

The Constitution introduced three major reforms to the judicial system:

  • Art. 97 declared the judiciary an “independent organ of the State” which “discharges its duties side by side with the Legislative and Executive Organs;”

  • The Constitution created a unified judicial system with an organizational structure that is headed by the Supreme Court;

  • The constitution created a unified system of laws. The Constitution and statutes created under the Constitution are legally dominant, with the basic principles of the Sharia acting as a guide to the legislature.

In August 2006 a new Supreme Court was approved by National Assembly. The Supreme Court then adopted a new Code of Judicial Conduct, based on the internationally recognized Principles of Judicial Conduct and establishing ethical standards.

Donor activity in the justice sector has generally focused on building capacity of the judicial system, including police training and court construction.

Needs Assessment: the following needs have been identified at the national and provincial levels:

  • Salary support: to improve performance, mitigate corruption and ensure professional qualification;

  • Infrastructure and office equipment: Subject to survey of essential work to be targeted.

  • Transportation: Subject to survey of essential work to be targeted;

  • Operating costs need to be financed to improve performance of justice institutions;

  • Capacity building and training: continuing professional development requirements;

  • Information management and human resource management to be established;

  • Codes of Ethics and oversight mechanisms to be established for all legal professionals;

  • Financial management: budgets are inadequate and budget execution rates are low;

  • Public awareness: There is a need to develop tools and instrument which ensure access at all level of society.

Challenges, Constraints, Weaknesses: Weak infrastructure; lack of trained staff; delays and backlogs of appeals; lack of information technology and capacity; uncompetitive salaries; poor education and vocational training, public confidence; resource constraints; security situation: Security constraints in certain parts of the country make service delivery difficult or impossible.

Policy framework: sector strategy

The Government’s vision for justice is of an Islamic society in which an impartial and independent justice system delivers safety and security for life, religion, property, family and reputation; with respect for liberty, equality before the law and access to justice for all.

Sector Priority Policies and Goals: These are all detailed in the sector strategy, however a brief summary of the policy reform areas is provided below under three main goals:

  • Integrity, performance and infrastructure: Administrative reform and restructuring of justice institutions; legal education; systematic records systems; enhancing administrative capacity; eradicating corruption; promulgation of ethics codes, engagement of public through complaints systems; expansion of justice services through infra-structural development, procurement of transportation assets and equipment.

  • Coordination and integration with other government institutions and civil society: Improved legislation through enhanced capacity of drafting and parliamentary personnel; establishment of National Legal Training Centre for vocational education and vocational excellence; increased opportunities for external stakeholders and civil society to contribute to legal policy development in policy analysis and legislative drafting. Support the Provincial Justice Coordination Mechanism (PJCM), to improve the delivery of justice assistance in the provinces.

  • Improved Justice Practices and Processes: investigation system established to determine delays in criminal justice system and lack of representation and improved case management; Sentencing Policy developed; Juvenile Justice Policy implemented; Specialization to address cross-cutting and emerging issues in criminal justice; Enhanced and improved civil court case administration and jurisdictional structures in major litigation categories; nationwide access to legal information and representation; investigating policies for improved links between formal and informal justice sectors and oversight of the informal by the formal.

Table 6.2.

Key Objectives of the National Justice Program

article image

Integration of the PDPs: Seventeen out of the thirty-four PDPs cited security as the main obstacle to development and stability, and cited it as the priority sector in their provinces. As a result, many of the projects requested by the people indicate the need for justice sector infrastructure and a law enforcement presence at the district level.

Sector Related Issues

Role of the Private Sector: The justice system lowers the cost of doing business and allows firms to enter into commercial enforceable contracts. Businesses in the formal sector have a strong interest in promoting an efficient judicial system

Role of Civil Society: Civil society urgently requires a judicial system at both the national and provincial level that can be trusted to administer justice and has the confidence of the general population.

Policies to improve Aid Effectiveness: An important criticism has been that the donor community has neglected provincial issues and aid has been uncoordinated. Donors should not attempt to impose an external judicial system that may not be accepted throughout the country.

RELIGIOUS AFFAIRS

Role of the Sector in ANDS

The ANDS strategic objective for this sector is to provide competent and qualified religious services and increase the public awareness of Islamic religion and values in order to promote people’s participation in the poverty reduction and development programs. The Government’s primary goal is to ensure that all Afghans have equal opportunities to exercise their Islamic and religious believes and that Islamic values will be embedded in the Afghan recovery and development. The religious affairs strategy intends to establish a system which ensures that religious values are reflected with every aspect to Government policy and contributes to the overall development of the country. The sector strategy was developed after extensive consultations with religious institutions, scholars and religious leaders at both national and sub-national levels.

With respect to this the Government will improve religious infrastructures including mosques, shrines and other holy places. The Government will also develop religious schools (madrassas) and will significantly strengthen the training of imams, preachers and religious teachers. The Government will provide training opportunities for Islamic teaching. In order to meet these objectives, the strategy requires the provision of religious services, poverty reduction and effective economic development of the country

Contribution of the Sector Strategy

Economic growth: The Government recognizes that Islam is contrary to many challenges that Afghanistan faces today such as corruption, poppy production and others and that by raising public awareness of the link between economic recovery, the role of the economy in strengthening Afghan society and Islamic values support of the Government’s efforts to implement number of key reforms will be strengthened.

Poverty reduction: The religion of Islam requires all Muslims to support the poor and vulnerable in society, as well as promoting the idea of social solidarity and actively encouraging charity. With the establishment of the Zakat Administration within the government, as well as the possibility of a Zekat-based tax, donations can now be collected and redistributed in an organized manner among the most needy.

Stability: The religion of Islam is a religion of peace. The sacred religion of Islam calls on all Muslims to treat people with kindness and mercy and always try to forgive and avoid bad deeds. Religious scholars and leaders will play a significant role in propagating an end to the current conflict and encourage national reconciliation.

Human rights: Islam is based on human rights, including the rights of women, orphans and children. Affirmation of these basic rights, like all other Islamic values, will build support for the reform and implementation of the ANDS. Basic human rights and freedom are essential to building a strong free market economy in addition to being essential for any democracy.

Current Situation in the Sector

Achievements: A great deal of work has been done since the establishment of the transitional government of Afghanistan in terms of religious affairs including:

  • Afghanistan is an Islamic Republic

  • The Constitution is fully based on the principle of Islam;

  • The Constitution states in Article 2: “The sacred religion of Islam is the religion of the Islamic Republic of Afghanistan. Followers of other faiths shall be free within the bounds of law in the exercise and performance of their religious rituals.”

  • Improved Hajj services and strengthening of Ministry of Hajj and Endowment;

  • The construction and rehabilitation of hundreds of new mosques and other holy places;

  • Restoration of the endowed properties extorted by individuals;

  • Inclusion of Islamic subjects in the new curriculum of primary, secondary and higher education systems;

  • Establishment and rehabilitation of the Islamic Madrasas and Dar-Ul-Hefazs;

  • Rehabilitation of the Department of the Islamic Sciences of the Science Academy;

  • Growth of the Islamic literature through public and private media, “electronic, visual and audio”.

Needs assessments: The rehabilitation and construction of religious schools is the most pressing need for the sector. Additionally there is a need to improve the Islamic female education system and to hire an adequate number of imams.

Challenges and Constraints
  • Lack of qualified scholars’ and lack proper training for the scholars;

  • Lack of qualified cadre in religious education;

  • Weak coordination among the different religious government and non-government institutions;

  • Low level of professional capacity: lack of adequate facilities and competent professionals which hinders the effective implementation of programs;

  • Uncertain funding and the dependence of the religious institutions on private charities. A lack of adequate funding is one of the major constrain in the realization of the sector programs, which minimize the ability of the government institutions to implement their projects.

  • Security problems: continued insecurity is a barrier to the implementation of the programs in some parts of the country.

Policy Framework: Sector Strategy

The vision for the sector is to provide competent religious services and raise religious awareness of the public in order to promote their participation in the development programs of the Government. This will ultimately lead to poverty reduction and the development of Afghanistan.

Sector Priority Policies: the government will focus on the following priorities:

  • Improve infrastructure for religious affairs: (mosques, shrines, holy places, religious schools);

  • Improve the training and capacity of the Imams, preachers, religious teachers and other scholars to raise public awareness and to teach;

  • Finalize overall cultural curriculum for primary and higher education;

  • Strengthen Hajj arrangement systems for pilgrims;

  • Support efforts of other government agencies to improve religious literacy.

Expected outcomes:

  • All Government activities will not contradict Islamic values;

  • Improved religious infrastructure;

  • Financial sustainability of religious affairs sector will be achieved;

  • The religious education system will be improved;

  • Increased participation of Islamic scholars in rising awareness of importance of key Government reforms;

  • Strengthening the role of the religious institutions in programs for poverty reduction.

Government priorities for Religious Affairs:

  • Implement reforms in the education system and teaching methods in the public and private Madrasas;

  • Implement administrative reform programs in the Ministry of Haj and Endowment and its provincial offices;

  • Reform the Hajj and pilgrimage services systems;

  • Reform and improve coordination of the Sharia faculties of Afghan Universities;

  • Strengthen the support for building and maintaining mosques and other religious institutions;

  • Improve self-sustainability of the religious institutions through building shops and business centers within the properties owned by mosques and other holy places and opening bank accounts for collecting donations;

  • Establish Ulama Councils for settlement of local disputes and implementation of development programs in the community;

  • Establish Zakat related office within the ministry of Hajj and Endowment;

  • Establish effective and transparent mechanisms for collecting revenues from shrines and holy sites.

CONCLUSION

Good governance and adherence to the rule of law are much needed reforms that the Government of Afghanistan is committed to pursue. While the donor community can support reforms and provide technical assistance, these reforms have to be initiated by internal decisions to implement improvements in governance. Without good governance and a sustained social contract for the acceptance of the rule of law, the total development strategy that has been developed in the ANDS will fail. This is because the strategy has at its core the development of a private sector that will generate economic growth and demand for skilled labor. In this framework, the ANDS encourages the public sector to concentrate on the creation of a safe and conducive environment that encourages the smooth operation of a robust private sector. This means a much greater focus by Government on governance issues rather than involvement in the production of goods and services that can be provided by a significantly larger and more efficient private sector.

Governance and the rule of law will remain a primary concern of the Government and has directed that a considerable proportion of available resources be devoted to strengthening the institutions responsible for delivering good governance. They include the National Assembly, the judicial system, including the courts, the AGO, the police, and the Ministries that administer much of the legislation. In its early stages, strengthening of governance and the institutions that support governance has tended to concentrate on the central government level.

The Afghan ‘ownership’ of this strategy requires that the Government seeks donors close cooperation in capacity building and know-how transfer, but retains ultimate responsibility so that a system can evolve that allows the best parts of the functional traditional governance system to co-exist with a universal system that recognizes and supports principles of social diversity, respect for human rights and the rule of law.

Table 6.1.

Cross cutting issues in the Governance, Rule of Law and Human Rights Pillar

article image
article image

CHAPTER 7 ECONOMIC AND SOCIAL DEVELOPMENT

This chapter summarizes the sector strategies developed as part of the ANDS under Pillar 3: Economic and Social Development.38 The ANDS strategy depends upon achieving sustained high rates of economic growth that will increasingly be based on private sector-led de-velopment.39 A key component of the ANDS is the development of an enabling environment that encourages the private sector to play a central role in the economic development of the country. While the sector strategies cannot specify private sector investments, which are a result of private decision making, the actions and programs designed to establish an enabling environment for the private and non-government sectors are included.

PRIVATE SECTOR DEVELOPMENT

The Government’s economic vision has been consistent since 1381 (2002)40 and remains the strategic objective for the private sector development strategy. The market based economy is enshrined in the Constitution, article 10, which states that:

The State encourages and protects private capital investments and enterprises based on the market economy and guarantees their protection in accordance with the provisions of law.

As President Karzai also stated,

We aim to “enable the private sector to lead Afghanistan’s development”.41 We will build a market-based system, driven by private sector growth,42 in which Government is the “policy maker and regulator of the economy, not its competitor”.43 If the Government is to achieve its aim of significantly enhancing per capita GDP in the next five years, 44 it must complete the foundations for socially responsible private sector growth and encourage sustained high levels of foreign and domestic private investment.

The implementation of the private sector development strategy will contribute directly to the achievement of a number of objectives embodied in the Afghanistan Compact and the MDGs:

  • Afghanistan Compact: Private Sector Development and Trade: “All legislation, regulations and procedures related to investment will be simplified and harmonized by end-2006 and implemented by end-1386 (2007). New business organization laws will be tabled in the National Assembly by end-2006. The Government’s strategy for divestment of state-owned enterprises will be implemented by end-1388 (2009).”

  • Afghanistan Compact: Regional Cooperation: “By end-1398 (2010) Afghanistan and its neighbors will achieve lower transit times through Afghanistan by means of cooperative border management and other multilateral or bilateral trade and transit agreements; Afghanistan will increase the amount of electricity available through bilateral power purchases; and Afghanistan, its neighbors and countries in the region will reach agreements to enable Afghanistan to import skilled labor, and to enable Afghans to seek work in the region and send remittances home.”

  • MDGs: Goal 8: “Further develop an open trading and financial system that is rule-based, predictable and non-discriminatory, which includes a commitment to good governance, development and poverty reduction. Goal 8: In cooperation with the private sector, make available the benefits of new technologies – especially information and communications technologies.”

The macroeconomic framework presented in Chapter 4 makes clear that maintaining high rates of economic growth during the life of the ANDS and beyond depends on a substantial increase in the level of private investment in the economy.

Key components of the private sector development strategy

The strategy to foster private sector development and increase domestic and foreign investment consists of three main components: (i) continued efforts to build a strong and stable enabling environment that will encourage a competitive private sector; (ii) expand the scope for private investment in developing national resources and infrastructure; and (iii) strengthen efforts to promote investment from domestic sources, the Afghan diaspora and foreign investors.

Component 1: Strengthening the enabling environment

The main objective of an improved enabling environment is to reduce the costs of doing business. This entails the elimination of excessive or unnecessary impediments to business activity that raise costs, and improving the ‘soft’ and ‘hard’ infrastructure essential to efficient economic activity. This requires that the private sector have access to necessary inputs at reasonable cost, including land for commercial purposes, credit and imported raw materials and intermediate goods. Efficient land, labor and financial markets and a stable, open trade regime have a major impact on the ability of firms to operate competitively.

Private sector development requires macroeconomic stability and an environment where there is a general reliance on the rule of law. While it is relatively easy to introduce a suitable legal and regulatory framework, it is considerably more difficult to ensure that it is effectively implemented. This requires that all parties, both public and private, reliably abide by the legal system. It is critical that contracts can be entered into and enforced with disputes readily resolved. A high priority of the ANDS is the strengthening of the institutions, including the establishment of effective commercial courts, responsible for the implementation of commercial laws.

ANDS strategic priorities to promote private sector development involve activities in the following areas:

  • A stable macroeconomic environment and supportive financial system: The Government will control inflation at low levels similar to those achieved in recent years. The growth of a supportive financial sector that is able to extend credit to viable firms will be supported through legal and regulatory reforms, including the implementation of secured transactions laws.

  • Private sector investment: Attracting private investment is the responsibility of the entire Government and will be an integral part of all projects and programs implemented under the ANDS. This will require institutional strengthening of Government agencies and ministries, including AISA as the lead investment promotion agency. All ministries have the scope to expand the opportunities for private business activities and to increase their contribution to the growth and development of the economy. Donors will be encouraged to fulfill their commitments to increase the goods and services sourced within the country.

  • Legislative Reform: Enact and implement key commercial laws and amendments to establish the basic legal and regulatory framework that will encourage private sector involvement in social and economic development and consistent with the Afghan conditions. ANDS priorities actions include:

    • The Government will introduce and implement the remaining commercial laws included in the Afghanistan Compact benchmark.

    • The Government will consult with representatives from private business and civil society in a meaningful and timely manner during the process of drafting policies and laws.

    • The necessary steps will be taken to establish the authority of mediation and arbitration tribunals to resolve private-private and private-public disputes, including land issues.

    • The Government will ensure that no law will be implemented unless it has been published in the newspapers, and made available electronically and in hard copy to the public. Regulations, including import tariff rates, will be made readily available on the Ministry of Finance website.

  • Administrative Reform: The Government will ensure that ministries and agencies are able to competently administer commercial laws and regulations in an unbiased and predictable manner. These actions will include:

    • Invest in capacity development for National Assembly so that MPs are better informed and supported in their role and understanding of proposed laws.

    • Ensure the competency and transparency of tribunals by establishing standards and building the capacity of arbitrators, mediators and lawyers.

    • Undertake financial audits of state owned assets and corporations.

    • Implement effective programs to provide institutional strengthening and capacity development throughout the public sector.

  • State owned enterprises: The Government will continue the program of privatization and corporatization of state owned enterprises, a process that is presently on schedule. This will: (i) improve the level of efficiency in the economy; (ii) assist in eliminating corruption; (iii) encourage better resource allocation; and (iv) generate increased government revenue.

  • Formalizing private sector operations: The Government is encouraging firms to formalize their activities by introducing tax number identification and applying commercial laws and regulations. Consideration is being given to innovative efforts to channel some public funds now being used for vocational training through properly registered firms in compliance with tax laws for their use in financing training for their employees in properly accredited vocational training programs.

  • Improve private sector access to finance: The Government will implement a well defined strategy to expand the availability and range of financial products and services, especially targeting small and medium enterprises. Priority actions include:

    • Passage and enactment of four key financial laws: Secured Transactions, Mortgage, Leasing and Negotiable Instruments Laws.

    • Establish an independent banking and business training institute as a joint commercial bank – DAB initiative.

    • A credit information bureau will be established to facilitate commercial and consumer lending.

    • The financial tribunal will be established to provide swift legal resolution of financial disputes.

  • Maintain a pro-trade environment: The Government remains committed to maintaining trade policies with low barriers for imports and exports and a liberal foreign exchange system. The Government’s trade policies will take into account the need to increase domestic revenues and support increased domestic production by the private sector. Pressures can be expected to arise from some groups for tariff protection, which would likely impose burdens on consumers or other producers in the economy. Such proposals will only be considered by evaluating the economy-wide costs and benefits, including the impact on consumers. The Government will undertake systematic tariff reform as part of the budget process and in consultation with the private sector and will avoid ad hoc changes. The Government will continue to vigorously seek to increase access for Afghan goods and services in foreign markets though bilateral, regional and multilateral trade agreements. The Government remains committed to WTO accession. Expanding trade with neighboring countries will help to establish Afghanistan as an important ‘trading hub’ in the region.

  • Firm-level technical assistance: The Government is determined to assist the private sector develop its competitiveness and to substantially increase the volume of domestic production. At present, Afghanistan’s exports are very low by regional standards, dominated by dried fruit and carpets. However, in recent years a number of new manufacturing industries have begun to emerge, some with demonstrated export potential, such as production dairy products, honey, cement, sunflower products, glass, sugar beet, olive oil, cashmere, and flowers and floral essences. The Government will seek firm-level technical assistance to increase the ability of firms in these and other new industries to compete more effectively in potential export markets.

  • Trade Facilitation: The Government will introduce trade facilitation measures to reduce the costs of moving goods within the country and across borders, including endeavoring to relax restrictions arising from transit agreements with neighboring countries. Institutional capacity to support the export of domestically produced goods and services will be increased, including for example the technical resources to establish that Afghan agricultural products meet sanitary and phyto-sanitary (SPS) requirements of importing countries and international product standards are met. The Government will reduce the burden of export documentation and processes will be further streamlined and essential services, including market information will be provided to the exporters by the EPAA.

  • NGOs and civil society: The strategy recognizes the vital contribution that NGOs and other civil society organizations are making in implementing the social and economic goals of the ANDS. The Government will maintain an open and effective social dialogue with civil society and encourage their contributions to social and economic development.

Component 2: Expand opportunities for the private investment in infrastructure and natural resources development

The country requires enormous investment in infrastructure, including roads, power generation, water supply, and irrigation. A substantial part of these requirements could be undertaken profitably by private investors with an appropriate regulatory environment. Private investment in the development of natural resources, particularly minerals development will become viable when suitable regulations are in place.

  • The Government will establish a multi-sector regulatory authority following an approach similar to that used to develop the telecommunications industry. This regulatory system will establish appropriate fees and royalties, public purchase agreements (e.g., for power), ensure transparent procedures and dispute resolution mechanisms. Its mandate will be to maximize private investment in these areas.

  • Opportunities for entering into public-private partnerships for investment in infrastructure projects, such as roads and bridges, will be developed based on international best practices.

  • The Government will encourage private provision of public services wherever it will be feasible, including areas such as health, education, municipal services, etc.

Opportunities to expand private investment occur in sectors where multiple ministries have responsibilities. This will require improved coordination and strengthening the capacities of most ministries and agencies. To be successful, the development and promotion of private investment opportunities cannot be the responsibility of only one or two agencies or ministries, but must entail a concerted effort by the entire Government. Efforts to encourage private sector investment also require the understanding and cooperation of the donor community.

This aspect of the private sector development strategy is reflected in many of the sector strategies set out below. For example, it represents a major reform in the energy sector designed to attract private investment into the power sector and development of energy resources. It is the basic foundation for development of the mining sector. It plays an important role with respect to the efforts to make more efficient use of state owned land to stimulate commercial agriculture. The Government will seek to attract medium and large scale agricultural producers and processors to invest in commercial agriculture in order to increase employment and market opportunities in rural areas and to develop export markets for higher value Afghan products. It is reflected in innovative efforts to try and use public funding to support and improve private provision of education and health services. There is scope for using donor funding to develop a vibrant and competitive domestic private construction industry in the projects being implemented by Government ministries.

Component 3: Concerted private sector investment promotion

The third component of the strategy involves concerted efforts to promote investment from foreign and domestic sources, including from the Afghan diaspora. After a long period of isolation, Afghanistan must rebuild commercial ties and demonstrate that there are considerable profitable opportunities for investors in the country. The Afghanistan Investment Support Agency will play a central role in this process and will be strengthened. But the responsibility for promoting increased investment will be a government-wide task and will be an integral part of all projects and programs undertaken as a part of the ANDS.

The objective is to make known to potential investors the opportunities available in Afghanistan, to ensure them that the Government recognizes the importance to the country of increased private investment and to work with potential investors to assure them that their investments will not fail due to unpredictable and unfavorable changes in the tax environment or policies towards private investors. This needs the full support of the international community. This can be done through focused efforts by donors to create conditions necessary for increased private investment in the country. It can also be done by bilateral donors using their relationships with firms in their own countries that are potential investors in Afghanistan to make known the great importance the Government is now placing on the need to expand private sector investment and operations within Afghanistan.

ENERGY

Role of the Sector in ANDS:

Energy is a critical input to economic growth. The ANDS strategic vision and goal for the energy sector strategy is: “An energy sector that provides drivers of growth in the economy with long term reliable, affordable energy based on market-based private sector investment and public sector oversight”. This strategy supports (1) commercially and technically efficient energy delivery as a priority; (2) reformed sector governance that will safeguard consumers, workers and resources; (3) the establishment of a market-based enabling environment where legitimate private investment will be facilitated; (4) the diversification of energy resources for long term low cost energy, energy security and clean energy use; and (5) identifying and supporting inter-sectoral supporting linkages including comprehensive system-based planning not limited to projects, energy for industry and vehicles. The Government puts great emphasis on expanding domestic capacity for electricity generation and will take steps to provide the basis for a transition of the sector from public to private provision of electricity. As the Afghan energy sector moves from primarily state owned operations to a more private market orientation, new institutional arrangements will be established.

The Afghanistan Compact benchmarks that specifically deal with the energy sector include:

  • “By end 2010, electricity will reach at least 65 percent of households and 90 percent of non-residential establishments in major urban areas and at least 25percent of households in rural areas.”

  • “By end 2010, at least 75 percent of the costs will be recovered from users connected to the national power grid”, a benchmark that the Government now intends to exceed for all but the poorest members of society.45

These are ambitious goals. Meeting these objectives will require the transformation of the sector similar to the changes that took place in the telecommunications industry with the reorganization and commercialization of public sector activities and with a greater role being played by the private sector.

Current situation in the sector

The energy sector suffered considerable damage due to war and operational neglect. The country has never had high rates of electrification. Today it is estimated that 20 percent of the population have access to public power (grid-supplied) on certain days for a limited number of hours. Nationally seven grids distribute power, with supply coming from domestic hydro generation; imported power and thermal generation. Isolated diesel generation has dramatically increased since 2002 and will continue to play a large role in power supplies. Rural populations use local waste, solar panels, batteries and small wood, coal, kerosene supplies for basic cooking and heat.

Over the past five years, the Government has worked with the international community to increase the availability of electricity and other energy resources and to carry out the planning necessary to make the transition to a more sustainable and efficient private sector led energy sector. A power sector master plan (2003-04); a gas sector master plan (2004-05), and a renewable energy plan (2006) were developed and/or updated. Considerable Investment in expanding domestic generation capacity has been undertaken, including the rehabilitation of the damaged power infrastructure. To a lesser extent, repairs at gas, coal and other energy infrastructure have taken place while millions of dollars have been spent for diesel fuel and support of more than 1,700 small renewable energy projects. Since 2006, there has been an on-going program for commercialization of operations in power operations by the state owned power company, DABM.

The Inter-Ministerial Commission for Energy (ICE) was established in 2006 to coordinate Government policy in energy; to leverage donor resources; and integrate sector planning. Cadastre and Inspectorate functions are now located at the Ministry of Mines to support oil, natural gas and coal contracts.

The efforts mentioned above have resulted in a significant improvement in the availability of electricity and other energy sources compared to the devastated conditions prior to 2002. Electricity capacity compared to 2002 has almost doubled, largely due to imported supply, which was non-existent prior to 2002 (see Table 7.1). However, on a per capita basis, the electricity generating capacity is well below what it was in 1978. The present goal of electricity availability set for 2010 is below 40 kwh per capita, (compared to a present availability in, for instance, Tajikistan of over 2,200 kwh per capita). Technical standards of operations remain antiquated and do not appropriately reflect the new technologies or modern safety measures.

Table 7.1.

Electricity supply sources and operating capacity

article image

Despite progress and efforts to date, the existing governance arrangements and policy framework for the sector are still insufficient to support a market-based energy system. Some of the obstacles to making the desired transition include:

  • Dispersed institutional support: Seven ministries include energy as part of their portfolio.

  • Lack of regulatory framework: No legal or regulatory regime (though an energy law is under preparation) is in place to guide sector operations. There are no legal professionals trained in commercial energy law or regulatory processes.

  • No divesting or meaningful commercialization of state energy assets: The Government and energy enterprise operations are overstaffed and highly inefficient, lacking fundamental tools and capacity to support technically and commercially viable operations. This includes power, natural gas, coal and liquid fuels. Some of the state owned enterprises and budgetary units operate with considerable government support with virtually no audit, fiscal or legal oversight.

  • A drain on budgetary resources: A sector that could be generating revenues for government with normal rates of taxation applied to sector activities is, under present arrangements, a major drain on government resources.

  • Inefficient and wasteful use of electricity: Underpriced electricity is used inefficiently. Appropriate cost recovery will provide incentives to cut down on this wasteful use.

  • Limited opportunities for private participation: There are no legal impediments to private investment in the energy sector. In practice, there is a weak legal and regulatory infrastructure in place to support and monitor investments. Potential investors cite unclear policies and corruption as a barrier to investment. In a well developed market, the majority of services now provided by the 11 SOE and three budgetary units that support energy operations could be implemented by the private sector in ways that are more cost-effective and technically efficient. Areas where private sector engagement has immediate potential with appropriate regulatory include independent power production and oil and gas concessions.

In the Provincial Development Plan consultations, a number of issues were frequently highlighted across a range of sectors and in a majority of provinces, and therefore emerge as overarching development priorities. Access to electricity, both for domestic use through the extension of availability of electricity to more remote villages, and for productive purposes such as factories and businesses was mentioned in 80 percent of the PDPs.

Policy framework: sector strategy

Substantial new investment is required in the sector to increase domestic generating capacity and ensure adequate supplies. A central thrust in the strategy will be increased investment in energy related infrastructure. The three key hydro power projects (described above) will substantially add to generating capacity, but also support agricultural growth and improved management of water resources. Substantial additional private investment is also required. The Government will leverage currently available donor funds to ensure longer term access to private investment and capital. Policies to support private investments will be established. Improved procurement, accounting functions, contracting and reporting at the government level will be put in place.

A new market oriented paradigm will be developed, supported by significant institutional strengthening and capacity development. As the energy line ministries shift over time from operating as production-based entities to become policy-making regulatory agencies, staff capacity and in-house functions will be reoriented to market practices. The key programs of the sector are: (i) efficient operation of infrastructure; (ii) market based sector governance; (iii) rural electrification and renewable energy; (iv) expand supplies, (for additional detail refer to the full sector strategy in ANDS Volume II).

The Priority Polices and Projects include:

  • Implementation of key power infrastructure projects: The Government will give priority to the implementation of four major infrastructure projects that will substantially increase power supplies, but also contribute to expanded irrigation and rural development: (i) the Kokcha-e-Ulia Hydro Power Plant, which will generate a total of 1,900 MW and add 57,000 hectares of irrigated agricultural land; (ii) the Baghdara Hydro Power Plant, which will generate 210 MW, benefit more than 105,000 families, increasing irrigation coverage; (iii) the Irrigation and Power Project of Kokcha-e-Sofla, which will generate 100 MW of power, benefiting more than 950,000 families in the area; and (iv) the Sorobi II Hydro Power Plant, which will generate 180MW and help meet electricity needs in Kabul. Other key projects include expansion of the public power grid through the rehabilitation and upgrading of Kabul and other key infrastructure areas (i.e., distribution -lines, substations, meters); the development of the North East Power System (NEPS) to be followed by the South East Power System (SEPS), Western and Eastern Power Systems; the development of the Sheberghan gas and oil fields; construction of new transmission and related distribution for power imports; installation of a dispatch and control system as well as a reactive power system.

  • Restructured energy sector governance: The Government will consolidate energy planning and policy-making functions through the Inter-Ministerial Commission for Energy (ICE). This may involve some regrouping of Ministerial functions as well as improved line ministry staff capacity to plan and budget. Use of the ICE mechanism as well as improved public information will be essential for improved government coordination in the energy sector. Related or duplicated energy functions at various ministries will be consolidated and appropriate line ministry terms of references will be introduced. It is essential that the donors themselves improve the way in which they are engaged with the energy sector. At present there are 25 donors engaged in the sector; in addition there are 15 different US agencies. Afghan counterpart resources are limited and stretched to the limit. Improved governance will mobilize investment, mitigate corrupt practices and improve the technical quality of energy supply. A viable legal and regulatory framework will be established that includes the development of market-based power purchase and production sharing agreements.

  • Legal reform and Regulatory standards. Finalization of primary legislative and regulatory tools is essential. These include mining regulations, the Hydrocarbons Upstream Law and drafting legislation for the electricity sector. There are no meaningful technical standards or financial standards for operation in place; these need to be urgently developed as well as staff capacity to implement them. The Government is working with the international community to draft a revised Hydrocarbons Law as well as mining and hydrocarbons regulations). Drafting of regulation for hydrocarbons is underway in the strengthening of the cadastre and inspectorate functions and more focus on grid and off-grid regulation of electricity as well as liquid fuels is required.

  • Commercialization and/or divestiture of state and “quasi-state” assets: The Government will assess its sector assets and a plan for liquidation, restructuring and commercialization or sale. In particular the Government will provide more support for the corporatization and commercialization of national power operations. Commercialization and increasing the efficiency of the state power company DABM includes, for example, the installation of international accounting and procurement practices that will follow in other energy sub-sectors.

  • Improve the enabling environment for private sector investment. As new energy developments emerge including new power import transmission, gas-fired power, coal-fired power and new hydro generation, the introduction of the private sector to finance and operate these assets will be important. In most instances no local capacity is in place to support these market operations and private investments. A market-friendly enabling environment to facilitate private investment must be developed that is sufficiently flexible to entice private investment but effective in how these investments are monitored to safeguard Afghan resources, workers, consumers and environment. The ANDS energy sector strategy calls for the establishment of a sector regulator, which will adopt a transparent licensing regime and establish conditions that will attract private investment in electricity generation and in the related fields of mining, natural gas and hydropower. A market-friendly enabling environment to facilitate private investment will be developed. Key areas for investment in the near term include: (i) increased domestic power generation that includes new hydro power, natural gas and coal-fired power facilities; (ii) power distribution including lines, substations and metering; (iii) power construction and services (i.e., outsourcing); (iv) exploration and exploitation of coal, natural gas and oil; (v) installation and operation of rural energy services.

  • Expanded Public Power Grid: The Government is committed to improving energy access for people across the country. A high priority in this area is the rehabilitation and expansion of grid-supplied power, including investment in new generation, distribution and transmission. The Government is also implementing a series of large and small infrastructure improvements, generation, transmission and improved distribution of electricity throughout the country. Future actions include: (i) rehabilitation and upgrading of Kabul and other key infrastructure areas (i.e., distribution – lines, substations, meters); (ii) development of the North East Power System (NEPS); to be followed by the South East Power System (SEPS), Western and Eastern Power Systems; (iii) construction of new transmission and related distribution for power imports. Installation of a dispatch and control system as well as a reactive power system will be underway in 2008. These on-going donor funded activities to expand the power grids will be adjusted to be compatible with the move to a more market based system.

  • Increase Access to rural energy services: Micro-hydro, solar, waste and even small diesel power and energy generating sources will be promoted to improve rural access. Commercial operation of these services will be encouraged and technical standards will be established to ensure cost-recovery, sustainability and safety. High levels of cost recovery will avoid preempting potentially more efficient provision of such services by the private sector. Several private firms are involved in the development of off-grid power supplies based on wind or solar power and efforts will be made to encourage the development of these activities, or at least not undermine their viability with subsidized public sector activities.

  • Increase Regional Cooperation and Trade in Energy Products: Afghanistan is geographically well positioned to import additional resources from neighboring countries. Afghanistan joined as a full member the Central Asia South Asia (CASA) 1300mw project in November 2007. Power purchase agreements (PPA) are being finalized for regular power imports from neighboring countries and new PPAs are being negotiated for increased power imports. Afghanistan is also participating in ongoing planning for a Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. A number of regional energy trade and import arrangements have commenced and will contribute to long-term energy security.

  • Poverty Reduction Initiatives: The energy sector will provide essential power supplies needed for private sector development, job creation and poverty reduction. Investments in the sector will create direct employment opportunities in the development of power plants, oil, gas and coal fields, the construction of grid systems and the commercial operations of the sector. The development of small energy installations will contribute to local economic development particularly in rural areas. Subsidies for electricity will be maintained for the poorest households. Micro-hydro, solar, waste and even small diesel power and energy generating sources will be promoted to improve increased rural access to power. Commercial operation of these services will be encouraged and technical standards will be established to ensure cost-recovery, sustainability and safety. A number of private firms are currently involved in the development of off-grid power supplies based on wind or solar power and efforts will be made to encourage the development of these activities.

  • Environmental Protection: The environmental implications of the expansion of the energy sector will be fully accounted for. These will be both positive, such as reduced pressure for deforestation, while others may be potentially negative, such as increased green house gas emissions. There will be scope for using wind and solar energy, particularly in areas away from the regional grids, and the relative benefits of this type of energy should be recognized in policies to support their use.

The energy sector strategy therefore combines efforts supported by donor funding to expand public sector operations while laying the groundwork for much greater involvement by the private sector investors. The relative weight given to these two components will be dependent on the relative effectiveness of the two efforts over the implementation period for the ANDS (for details refer to ANDS Volume II).

Integration of the Provincial Development Plans (PDPs)

Access to electricity, both for domestic use through the extension of availability of electricity to more remote villages, and for productive purposes such as factories and businesses was cited in 80 percent of Provincial Development Plans. PDPs in eight provinces, principally in the center, south and south east of the country report progress in access to electricity since 2005, however, provinces in the center and south also most frequently mentioned the need for improvement. Little mention or understanding was cited with respect to the non-electricity use of energy, i.e., for heating, fuel for small equipment, vehicle fuel, etc.

Expected Outcomes:

The key outcomes of the sector strategy are:

  • Improved Governance and Commercialization

  • Expanded Public Power Grid

  • Increased Access to Rural Energy Services

  • Enabling environment for private sector investment in energy sector. (For detail information refer to Appendixes 3-National Action Plan and 4-Monitoring Matrix.)

WATER AND IRRIGATION

Role of the sector in ANDS:

The ANDS strategic vision and goal of the water sector can be summarized as follows: to manage and develop the water resources in the country so as to reduce poverty, increase sustainable economic and social development, and improve the quality of life for all Afghans and ensure an adequate supply of water for future generations.

There are significant water resources in Afghanistan. Average annual precipitation is equivalent to about 165,000 million m3, yielding an annual surface runoff water volume of about 57,000 million m3. This amounts to approximately 2,280 m3/year per capita. This would be an adequate amount, except: precipitation is primarily in the form of snowfall and the resulting snowmelt runs off in a matter of a few months without adequate catchment systems; and precipitation in not evenly distributed geographically. Reliance is therefore placed on groundwater extraction that is not sustainable and currently only an insignificant amount of surface water storage exists. Deep water drilling without adequate investment in recharge basins or storage structures is degrading the aquifers on which much of traditional irrigation systems depend. Despite considerable assistance in rehabilitating irrigation systems, progress towards establishing a comprehensive plan with prioritized and costed investments is still in the formative stage.

The Afghanistan Compact Benchmarks for Water Management commit both the Government and the donors to the development of sustainable water resource management strategies and plans covering irrigation and drinking water supply, and irrigation investments will result in at least 30 percent of water coming from large waterworks by end 2010. Other Compact Benchmarks under Urban Development, Environment, Agriculture and Rural Development directly address and contribute to the water sector, as follows:

  • Urban Development: Investment in water supply and sanitation will ensure that 50 percent of households in Kabul and 30 percent of households in other major urban areas will have access to piped water and improved sanitation.

  • Environment: Environmental regulatory frameworks and management services will be established for the protection of air and water quality, waste management and natural resources.

  • Agriculture: The necessary institutional, regulatory and incentive framework will be established for securing access to irrigation, water management systems and food security.

  • Rural Development: Rural development will be enhanced for 90 percent of villages through the provision of safe drinking water, sanitation (50 percent) and small scale irrigation (47 percent) by the end of 2010.

Millennium Development Goals: The MDGs state that: “access to water and sanitation, electricity, and livelihoods sources have been negatively impacted through the decades of war. Drinking water supplies reach only 23 percent of Afghanistan’s total population – 43 percent in urban areas and 18 percent in rural areas. The country’s total sanitation coverage of only 12 percent deserves attention. While around 28 percent of the urban population is covered, only 8 percent of rural population had access to improved sanitation in 2006.46

Target 10 of the MDGs is to halve by 2020 the proportion of people without sustainable access to safe drinking water and ensure environmental sustainability.

The sector strategy incorporates feedback and comments from the sub-national consultations. Access to clean drinking water has been identified as a priority in the Provincial Development Plans in all provinces. Participants generally voiced concern that unsafe drinking water is a cause of disease, and the provision of safe drinking water is therefore seen to be as much a public health issue as an issue of infrastructure, rural and urban development. In over a quarter of PDPs, the need for access to clean drinking water is specifically raised by women who often have the responsibility of collecting water for the household. However, this issue is not confined to the domestic context and the PDPs in six provinces highlighted the need for access to safe drinking water in public institutions such as schools.

Current situation in the sector

Given the importance of water resources, the Government has made improved water management a high priority. Steps are being taken to address shortcomings in governance as well as meeting some of the most pressing needs through donor funded projects. Some key achievements have been:

  • The formulation of the Supreme Council for Water Affairs Management (SCWAM) to coordinate and overcome the problems of diverse ministerial responsibilities for water management. A Technical Secretariat has been established to develop new water laws and develop a consistent set of policies for water management. New environmental laws were recently enacted by the National Assembly.

  • Steps have been undertaken to re-organize water resource management on the basis of an Integrated Water Resource Management System based on the five main river basins. Development will still be planned and implemented centrally, but in the future individual river basin organizations or authorities will be established. Feasibility studies have been completed or are underway for small, medium and large water infrastructure projects. The rehabilitation and modernization of hydrological stations have been started. Research and modeling of the availability of allocation of safe drinking water supplies in Kabul are being developed.

  • Significant progress has been made in providing increased access to safe drinking water and sanitation. The Afghanistan Urban Water Supply and Sewerage Corporation (AUWSSC) has been established. Some 80 water supply and sanitation projects have been implemented around the country. Research and assessment of the underground water resources available to Kabul is on-going. The urban water supply systems will be transformed into quasi-public agencies. Two million urban residents (31 percent) have benefited from investments in water supply and 12 percent from investment in sanitation in major cities between 2002 and 2007. About 35,000 water points 59 networks and 1,713 water reservoirs and 23,884 demonstration latrines have been constructed. More than three million people have benefited directly from the rural water supply and sanitation activities in the country. Around a third of the provinces reported some improvement in access to clean drinking water since 2005 during the consultative process under the ANDS.

  • Irrigation Rehabilitation has been given high priority over the past four or five years. An estimated 1.8 million hectares of land is under irrigation; 10 percent gets water from engineered systems and large works, the remaining through traditional irrigation methods. Of some 2,100 rehabilitation projects, approximately 1,200 have been completed and have been placed back into commercial service. The Government will continue to work with the mirabs that manage these systems. 47

Despite some progress in establishing better governance in the sector and in rehabilitating existing assets, a lot more needs to be done. Prior to 1979, some 3.3 million hectares were cultivated under various irrigation methods, compared to the 1.8 million hectares now being irrigated. The remaining amount employs traditional irrigation methods. Out of 7.9 million hectares arable land, 5.3 million hectares is irrigable. Irrigation water management is a high priority of the Government.

There is a lack of skilled human resources with experience in water management. Information systems are only now being reconstituted and there is a lack of reliable hydrological, meteorological, geo-technical and water quality data. There is a lack of the infrastructure and equipment needed to efficiently conserve and utilize water resources that result from seasonal runoff with the snow melt. There is limited data on ground water resources and information indicating that un-regulated deep well drilling may be depleting aquifers that are essential to water supplies and traditional irrigation systems (Karezes and springs). There is a lack of economic mechanisms regulating water use and investments for water supply, sanitary systems, irrigation, and hydropower generation.

Unclear delineation of responsibilities between ministries complicates planning. Some donors are focused on emergency projects that are not integrated into an integrated system of water use. Access to drinking water and sanitation, while improved, is still not in compliance with the Millennium Development Goals. There is a lack of hydro geological investment in urban areas. A significant risk exists for underground water contamination. A major river basin water supply master plan with good information on water balances, that is, supply versus demand for water for drinking, irrigation, hydro power and environment purposes is not yet available. There is a pressing need to enhance the ground water resource recharge capacity. Coordination among water related institutions and agencies remains weak.

This sector strategy incorporates feedback and comments from the sub-national consultations. The projects identified and prioritized during the SNC process are included in the Water Sector Strategy. Access to clean drinking water has been identified as a priority in the Provincial Development Plan in all provinces. Participants generally voiced concern that unsafe drinking water is a cause of disease, and the provision of safe drinking water is therefore seen to be as much a public health issue as an issue of infrastructure, rural and urban development. In over a quarter of PDPs, the need for access to clean drinking water is specifically raised by women who often have the responsibility of collecting water for the household. However, this issue is not confined to the domestic context and the PDPs of six provinces highlight the need for access to safe drinking water in public institutions such as schools. Around a third of the provinces spread across the country report some improvement in access to clean drinking water since 2005.

Policy framework: sector strategy

For the immediate future, the Government centrally will play the dominant role in setting policy priorities and decisions pertaining to development and management of water resources at the national level. The Government, acting through its operating entities, can influence the necessary international cooperation relating to several international water bodies. This extends to coverage provided by policy frameworks, appropriate legislation, and institutional structures under which water management can over time be devolved to the river basin and/or river sub-basin levels. Ground-water on the other hand seldom has aquifer boundaries coinciding with river basins. Management of groundwater aquifers may necessitate collaboration with special inter-basin entities established for that purpose. (For additional details refer to ANDS Volume II).

Towards an Integrated Water Resource Management System (IWRM)

The water sector is extremely diverse. The responsibilities for supply management and use of water are distributed among a number of line ministries. The sector’s governance mechanisms (organizational structure, policies and legislation) are in the process of reformulation and implementation. Adoption and implementation of an effective IWRM program will take into consideration all activities and development requirements influencing water resources. This will include sociological and ecological considerations, in addition to water supply, irrigation, hydroelectric power, sanitation, land use, fisheries, and forestry. The program will prioritize a series of specific activities required to effectively implement IWRM policy framework.

The river basin approach to water management will lead to improvements in capturing surface water using storage reservoir and recharge basins. By devolving authority to the RBA and thus encouraging more effective use of water resources, the water resource strategy (when integrated with programs in the transport, agriculture, health, education, power sectors, along with counter narcotics programs, private sector development programs) will contribute to sustainable development and poverty reduction.

Key Components of the Water Sector Strategy

While an IWRM approach has major benefits, supplementary comprehensive river basin data management programs are needed to support this approach. It is important to improve mechanisms regulating water use and to attract investment to rehabilitate and construct irrigation, water supply and sanitary systems, as well as hydropower generation. Essential legislation and a new policy framework governing the water sector have been prepared. The sector is in the process of transitioning from a project-by-project approach to a sector-wide approach, using an integrated water resources management (IWRM) system. Improved governance mechanisms were identified and are being implemented. Foremost among them was the formation of the Supreme Council for Water Affairs’ Management (SCWAM), and its associated Technical Secretariat.

Until the IWRM comes into effect, considerable reliance will have to be put on a project-by-project approach for continued investments in rehabilitation of existing systems. New projects need to be assessed relative to the returns from rehabilitation efforts and returns in other sectors

Responsibilities for a number of water related activities are distributed among a number of line ministries and agencies. Each of these entities have prepared sector specific strategies focusing on their particular sector mandate, often underemphasizing water related programs and/or activities. Development of a water sector strategy therefore requires coordinating all relevant water sub-sector strategies being administered by individual government entities into one single unified water sector strategy document. The following sub-sectors have been included in this unification: (i) urban and rural water supply and sanitation; (ii) irrigation and drainage; (iii) hydro power; (iv) industrial water supply and wastewater disposal; (v) flood protection and preparedness; (vi) drought mitigation measures; and (vii) environmental requirements, including forestry, fisheries, and bio-diversity. Facilitating related development of each of these sub-sectors will require institution building, enhancement of legal frameworks, capacity development, enlisting economic mechanisms, and intensive rehabilitation of infrastructure.

The Strategic Policy Framework for the Water Sector approved by SCWAM recommended that the following policies, laws, regulations and procedures should be developed in order to move forward in the development of the water sector. Under this policy framework, the Water Law of 1991 will be revised; water resources and irrigation policies and regulations will be established along with an institutional framework for water resources management; regulations for Water User Associations will be developed; plans will be developed and steps taken to preserve surface and underground water resources; national urban and rural water supply and sanitation policies and institutional development will be implemented; access to safe drinking water and improved drainage and sanitation systems will be established; and key groundwater and hydropower development plans and policies will be established.

For the immediate future, the Government will play the dominant role in setting policy priorities and decisions pertaining to the development and management of water resources. This extends to policies, legislation, and institutions under which water management can in time be devolved to the river basin and/or river sub-basin levels. (Management of groundwater aquifers may sometime necessitate collaboration with special inter-basin entities established for that purpose.) Ongoing and planned water sector projects have been structured into eight programs (i) Institutional Setup and Capacity Building (ii) National Water Resources Development (iii) National River Basin Management (iv) Irrigation Rehabilitation (v) Urban Water Supply and Sanitation (vi) Rural Water Supply and Sanitation (vii) Riverbank Protection (viii) Agriculture “Food Security for All”. For detail on all of the programs refer to ANDS volume II. The highest priority programs are:

  • Institutional Building and Capacity Development Program: Activities in this program focus on the institutional and human capacity development of water resources management as well as infrastructure development at national, river basin and sub-basin levels. These activities have been combined into a comprehensive program to enhance cooperation between projects and avoid duplication of efforts.

  • National Water Resources Development Program: Under the Water Law the Ministry of Energy and Water is responsible for the preparation of a national water resources development plan. This plan will cover the development of water resources for the social, environmental and economic needs of the country as well as: (i) elaborating river basin development and management plans, fostering ministry and water users’ capacity for on-farm and off-farm water management; (ii) preparing for discussions on trans-boundary water issues with some neighbor countries; (iii) supporting analytical capacity and research; (iv) enabling private investments in the water sector; and (v) proper planning and implementation of infrastructure for rain and flood water harvesting, supplementary irrigation, groundwater recharge and soil stabilization. As a first step in the development of this national development plan, a Master Plan for the Kabul River Basin has been prepared. In addition, the Ministry has prepared a list of water resources development projects in the five river basins.

  • Irrigation Rehabilitation Program: Several projects to address the immediate needs in irrigation infrastructure have been developed.48 Although these projects mainly focus on the infrastructure, they contribute to the development of water resources and address related issues like the rehabilitation of the hydro-metric network for data collection on river flows and weather. Components of the emergency irrigation rehabilitation program for the period 2008 to 2013 include the rehabilitation of the National Hydrological Stations to aid in the undertaking of national hydrological surveys to aid in planning and building irrigation infrastructure; and rehabilitation of nationwide small, medium and large traditional irrigation schemes, such as the ‘Emergency Irrigation Rehabilitation Project’ – a three year country-wide project for the rehabilitation of infrastructure and capacity building.

These programs respond to the dual tasks of remodeling and modernizing institutions while at the same time rehabilitating and improving infrastructure. They consider short term emergency water infrastructure rehabilitation and income generation needs as well as the long term goal of sustainable development of institutions and creation of new multifunctional infrastructure.

The development of the country’s water resources will continue to be heavily influenced by programs and projects implemented by donors. It is essential that these activities be effectively coordinated and aligned with the priorities in the ANDS. SCWAM will undertake a leadership role among government organizations in providing coordination with the international community. The ANDS water sector goals are achievable with the implementation of an effective integrated water resource development strategy. Some of the benefits will be realized only over the long term, while others will be realized within a very short time span.

Expected Outcomes

The key expected outcomes of the Water Sector Strategy are:

  • Improved water sector legal and governance structures and institutions in place

  • Sustainable water resource management strategies and plans covering drinking and irrigation water supply developed and implemented.

  • Water resources for drinking and irrigation purposes improved as well as poverty reduction and employment creation.

  • Infant mortality decreased and life expectancy increased as result of higher access to clean water. (For more detailed information refer to Appendixes 3-National Action Plan and 4-Monitoring Matrix.)

AGRICULTURE AND RURAL DEVELOPMENT

Role of the Sector:

The ANDS long term strategic vision for agriculture and rural development is to ensure the social, economic and political well-being of rural communities, especially poor and vulnerable people, while stimulating the integration of rural communities within the national economy. This will require transforming agricultural production so that it is more productive and increasingly commercially oriented and expanding off-farm employment opportunities as the basis for increasing incomes among the rural population. This sector strategy articulates a road map for the way forward in which poverty reduction through economic regeneration is the central objective. A central focus is on supporting the poorest and most vulnerable segments of rural society and promoting the development of medium and large scale commercial agricultural activities. Advancements in the sector will improve the quality of life for rural citizens, increase food security, improve the delivery of basic services, increase incomes and contribute to establishing a safe and secure environment.

The Afghanistan Compact Benchmarks related directly to agriculture and rural development call for measurable improvements in:

Compact Benchmark 6.1
  • The necessary institutional, regulatory and incentive framework to increase production and productivity will be established to create an enabling environment for legal agriculture and agriculture-based rural industries.

  • Public investment in agriculture will increase by 30 percent. Particular consideration will be given to perennial horticulture, animal health, and food security by: instituting specialized support agencies and financial service delivery mechanisms, supporting farmers’ associations, branding national products, disseminating timely price and weather-related information and statistics, providing strategic research and technical assistance, and securing access to irrigation and water management systems.

Compact Benchmark 6.2
  • assistance to and rehabilitation and integration of refugees and internally displaced persons; and

  • assistance to female-headed households that are chronically poor and increases in their employment rates.

Other major Government goals relating to agriculture and rural development should be noted, including:

  • creating the necessary policy and regulatory framework to support the establishment of micro, small and medium-size rural enterprises;

  • creating the enabling environment for sustainable management and use of Afghanistan’s natural resources;

  • access to safe drinking water will be extended to 90 percent of villages, and sanitation to 50 percent;

  • road connectivity will reach 40 percent of all villages.

  • 47 percent of villages will benefit from small-scale irrigation. (See ANDS Volume Two for more details)

Current Situation

Agriculture has traditionally been the major activity for a large proportion of the population, particularly in the most remote areas. The years of turmoil left much of the country’s agriculture and rural infrastructure in a serious state of disrepair and led to a significant reduction of cultivatable land and degradation of the environment. Between 1978 and 2004, agricultural production declined by an average of 3.5 percent a year; 50 percent of the livestock herd was lost between 1997 and 2004.

Recent performance in the sector has been positive. Measurable progress has been achieved since 2003 in improving rural livelihoods. Through a variety programs, almost 20,000 km of rural access roads (i.e., all weather, village-to-village and village-to-district center roads) have been constructed or repaired, increasing access to markets, employment and social services. More than 500,000 households (36 percent of villages) have benefited from small-scale irrigation projects. Currently, 32.5 percent of the rural population has access to safe drinking water and 4,285 improved sanitation facilities have been provided. More than 336,000 households have benefited from improved access to financial services. Some 18,000 CDCs have been established and are implementing community-led development projects.

The contribution of agriculture to GDP increased from 48 percent in 2006 to 53 percent in 2007, although the longer run trend (not including opium) is down due mainly due to rapid growth in construction and other activities. Other achievements include: 5.5 million metric tons of wheat and other grains produced in 2007 compared to 3.7 million metric tons in 2002; 0.9 million metric tons of horticulture and industrial crops produced in 2007 compared to 0.4 million metric tons in 2002; 3.2 million animals received veterinary and health services; 5,000 metric tons of improved wheat seed was produced and distributed to farmers in 28 provinces; $120 million is to be invested in commercial agriculture; more than 3,000 cooperatives and farmers organization have been created and strengthened; and 20,000 cooperative members trained.

However, significant improvements are still to be made. With a few notable exceptions, all rural citizens are poor in relative and absolute terms, lacking both physical and social assets. 80 percent of the Afghan population live in rural areas, most of whom are engaged in agriculture to some degree, although many are also heavily engaged in processing, trading or marketing activities of agricultural products; 12-15 percent of total land area is suitable for cultivation; water constraints inhibit cultivation of up to one third of irrigated land; three million hectares of land are rain-fed, in a country of repeated droughts; 58 percent of villages have limited seasonal or no access roads (the average distance to the nearest road is 4.6 km); 13 percent of rural Afghans have access to electricity at some point during the year; more than 70 percent of rural Afghans do not have access to safe drinking water; 96 percent of rural Afghans do not have access to safe toilets/sanitation (28 percent have no toilets at all). The continued high population growth projected for Afghanistan will imply continued decline in per capita levels of agricultural resources unless major investments are made in improved water management.

Ongoing instability, widespread poverty and lack of governance resulted in a dramatic upsurge in opium poppy cultivation, involving 3.3 million people (14 percent of the population). Poppy production is now highly concentrated in five southern and eastern provinces, whereas production in the other 29 provinces has fallen and is half 2004 levels.

Further, the unstable security situation coupled with capacity constraints presents major obstacles to program implementation, including community mobilization, survey and design of projects, service and input provision, selection of qualified contractors and NGOs willing to work in high-risk areas, and the ability to monitor projects for quality assurance and financial control purposes. These constraints affect the pace, cost and quality of development activities.

Most farmers are engaged in subsistence or near-subsistence agriculture, and many farming families lack food security with risky livelihoods often combined with chronic debt. Further, many rural households are involved in down-stream agricultural activities, including processing, transporting and marketing. As a result, the country’s vulnerability to natural disasters and food shortages is high. The ability to engage in agricultural pursuits is central to improving wellbeing of the rural poor.

Limited coordination between ministries and between the Government and the international community has impeded progress. Government funds have been channeled through highly centralized ministries, with many national programs and donor-funded projects working independently of each other. The role of provincial administration units has been and remains unclear, especially in the areas of economic planning, budget execution and service delivery. Provincial governments have limited authority, budgetary resources or technical skills to facilitate development. Ministries which deliver services to the rural population are still struggling with the legal structures of past administrations and over-centralization of administrative processes has impeded the timely and effective delivery of services to local communities.

The Government recognizes that to meet these enormous challenges nationwide, progress may be slow, incremental and uneven; it may take a generation or more to adequately meet the needs of all rural Afghans. Nevertheless, the Government is committed to providing a proper enabling environment for the rural economy and working to address the needs and articulated priorities of the rural population. This long term effort requires a considered and cohesive policy framework.

Policy and Strategic Framework

The Government is committed to working to address the needs and articulated priorities of the rural population. This long term effort requires a considered and cohesive policy framework across ministries and sectors. The following are the key components of this policy framework of this sector:

  • Comprehensive and strategically cohesive poverty reduction programs

  • Public/Private sector responsibilities

  • Assurance of food security

  • The restoration and expansion of Afghanistan’s licit economy through the promotion of livelihoods free from dependency on poppy cultivation

  • Land tenure security

  • Assistance to farmers to increase production and productivity

  • Environmental protection and assistance to communities to manage and protect Afghanistan’s natural resource base for sustainable growth

  • Improvements in agricultural and rural physical infrastructure and irrigation systems providing services to meet basic human rights

  • Development of human resource capital

  • The strengthening of local governance

  • Institutional coordination

  • Cross sector policy development

  • Strengthening of national capacities

  • Mitigation of natural and man-made disasters

The strategy intent focuses on five thematic areas of programming. The following five thematic areas are loosely sequenced, based upon their level of interdependence

  • Local Governance

  • Agricultural Production

  • Agricultural and Rural Infrastructure

  • Economic Regeneration

  • Disaster and Emergency Preparedness (See ANDS Volume Two for more details)

The key priorities of this program are the:

  • Development of a comprehensive set of programs and projects – the Comprehensive Agriculture Rural Development program – designed to improve rural livelihoods and reduce rural poverty; and

  • Support of commercialized agriculture, leading to an improvement in agricultural productivity throughout the rural economy.

Comprehensive Agriculture and Rural Development program: The Comprehensive Agriculture and Rural Development program (CARD) is a series of programs designed to support the poorest and most vulnerable segments of rural society. The CARD represents the Government’s approach to providing diversified income sources, through income support, direct provision of assets, skills training and market opportunities, and is crucial to providing alternatives to producing narcotics. Interventions will be targeted and tailored to specific regions and groups.

In implementing the CARD, the Government will ensure that efforts to promote activity in the sector will stimulate and not displace spontaneous viable private sector development. The devolution of authority will be undertaken over a number of years to ensure the capacities at all levels of government exist. The Government will work to reconcile the introduction of sub-national governance measures down to the village level with existing community organizations. In particular, the role between proposed Village Councils and the existing Community Development Councils set up under the National Solidarity Program and which have been given legal status will be clarified. Strengthening sub-national governance structures in line with the newly-formed Independent Directorate for Local Governance will also be undertaken.

The Government will work with NGOs, civil society and the international community on the prioritization of the sub-components of the overall CARD program and to develop the funding requirements in some detail within a log frame matrix, identifying what will be done by when. This will allow a cooperative effort by the international community and the Government to reallocate resources towards those efforts that appear most effective in improving rural livelihoods. Ongoing monitoring and evaluation will be essential to address identified constraints and successes and alter the programs as necessary.

The principal program among the 15 programs of the CARD is the National Solidarity Program (NSP), the Government’s main community development program. Implemented by the Community Development Councils (CDC), the more than 50,000 projects benefit approximately 2 million people in rural areas. The NSP is developing the capacity of CDCs to identify community needs and transfer funding and necessary support resources to fund localized small scale activities of importance to rural communities, such as roads, irrigation, water wells and school. It is a successful and popular program used to empower these communities. It is a major contributor to meeting a number of the Compact benchmarks and is a successful example of country-wide Government, donor and NGO coordination. It establishes the framework for future programs that provide greater control to local communities, including the private sector, over development funds.

The other 14 programs of the CARD include:

  • The National Food Security Program will promote and implement food security opportunities at the household level, benefiting over 1.2 million households by 2010. This will decrease malnourishment rate from 57 percent to 35 percent. A key component of this program is the support to improve local governance in 38,000 villages.

  • The National Area Based Development Program will support all District Development Assemblies to develop district level development plans which will support comprehensive rural development and regeneration.

  • The Horticulture Program will support horticulture development and supply farmers with saplings, provide equipment for trellises and establish pest control systems leading to a 20 percent increase in perennial crop production and significant exports through public private sector partnerships.

  • The Livestock Program will support livestock production by importing purebred sheep, establishing commercial dairy plants and poultry units for women farmers, increasing productivity and output.

  • The National Rural Access Program will support rural road construction and rehabilitation that will provide all weather road access to 65 percent of villages by 2013.

  • The Rural Water Supply and Sanitation Program will assure that by 2013 98 percent of villages will have access to safe drinking water and 50 percent of villages will have improved sanitation facilities. This will substantially improve health, hygiene and welfare in rural communities.

  • The Irrigation Program will establish irrigation infrastructure on an additional 105,000 ha of new irrigated land by 2018 and improve on-farm water use efficiency.

  • The National Resource Program will establish National Resource Management committees and develop national resource management plans for forests, rangeland, wildlife and desertification control.

  • The National Surveillance System Project will assist MRRD and CSO in the development of a national poverty, vulnerability and food security surveillance system and enable the government to provide credible and timely information to all government and non-government agencies.

  • The Rural Electrification Program will result in over 4,000 villages being connected to local electrical facilities.

  • The Rural Enterprise Program will provide training and finance to establish rural enterprises across 70 percent of all CDCs and create an estimated 2.1 million jobs, better integrate the rural economy with the national economy and reduce poppy cultivation.

  • The Research and Extension System will establish a research and extension capability; provide access to credit, support farmers organization and private sector market development through cooperatives, leading to agricultural growth and diversification.

  • The Emergency Response System will provide a mechanism for humanitarian and disaster response that will provide emergency assistance, assure access to areas affected by snow and disasters and protect vulnerable people and assets.

  • The Capacity Building Program will provide the institutional and organizational capacity at the national, provincial and district levels needed to successfully implement the other CARD programs. (See ANDS Volume Two and Appendix “National Action Plan/Policy Matrix” for more details)

Support for Commercial Agriculture: There is virtually no large scale commercial agricultural activity currently undertaken in Afghanistan. This has not always been the case. Earlier turmoil destroyed much of the country’s agricultural and physical infrastructure, halting commercial activities. There has been limited recovery since 2002. This includes ongoing efforts to increase the international community’s, including ISAF, procurement of agricultural products from local producers, promoting large scale production and supply chain processes.

The Agriculture and Rural Development Zones (ARDZ) program is the Government’s approach to expanding commercial activities and increasing agricultural productivity. This is necessary to increasing incomes and employment opportunities in rural areas and to develop potential agro-based export potential.

The ARDZ recognizes that geographic priorities have to be set in support of the development of commercial agriculture. These geographic priorities will be used to target infrastructure, utilities and other support by various ministries. The Government will release publicly held land to increase private investment. Competitive bidding for the rights to lease these lands will be similar to the competitive bidding to lease development rights for mineral resources and the competitive bidding for the rights to use the telecommunications spectrum. Further, the Government will continue to investigate, implement and monitor key steps necessary to increasing financial and technical support so that private firms are able to expand operations. This will ensure the process of transforming underutilized state land into commercially viable agro-processing enterprises will be as fast and efficient as possible.

The Government’s objective is to largely rely on private investment and public sector support to transform agriculture in some well defined zones where the conditions for growth are most favorable and high value added commercial agricultural activities can flourish.

This requires integrating and upgrading existing private and public sector networks and investing in essential infrastructure projects that shorten trade distances, reduce costs and increase productivity, encouraging entrepreneurs to expand private sector activity.

In implementing the ARDZ, the Government will:

  • identify and map agricultural growth zones;

  • quantify the necessary factors required for accelerated growth within each zone;

  • identify key competitive product value chains and the connector firms that drive these value chains;

  • develop plans to extend the reach of agricultural zones into more remote rural areas;

  • ensure rural development activities are national in scope and linked to the agricultural growth zone plans; and

  • mobilize private sector investment and operations as the key element in the success of the agricultural growth zone initiative.

To date, five distinct agricultural growth zones have been identified:

  • a North Western Zone centered on the primary market town of Mazar-i-Sharif that includes ten secondary market towns and which is well positioned to take advantage of trade linkages with the Central Asian Republics;

  • a North Eastern Zone centered on the primary market town of Kunduz that includes seven secondary market towns and which, with the new bridge at Shirkhan, is well positioned for trade with Tajikistan and, with good road connections to Urumqi, with China;

  • a Central Zone centered on the primary market town of Kabul that includes thirteen secondary towns and which is linked with the important market center in Jalalabad and the regional market in Peshawar, Pakistan;

  • a South Eastern Zone centered on the primary market town of Kandahar and which includes four secondary towns (one of which is the important agricultural production town in Lashkargah) and which is linked to the regional market in Quetta, Pakistan; and

  • a Western Zone which is centered on the primary market town of Herat and which includes four secondary market towns and which has linkages to markets in and through Iran.

As part of the ARDZ, the Government has begun the process of establishing the Executive Management Unit with Presidential authority to coordinate and develop a five year action plan and organize the necessary funding and commitment from line Ministries and donors so as to establish a program implementation plan. This unit will ensure critical infrastructure, such as power, water, transportation links, telecommunications, financial services and vocational programs are available. The Unit will work with relevant Ministries to ensure priority is given to providing services in these zones. (See ANDS Volume Two for more details)

Expected Outcomes

The Agriculture and Rural Development expected outcomes are as follows:

  • Strengthened Local Governance: Functioning formal and informal local governance, including social and economic activities implemented and maintained by communities that contribute to the human capital development and improved livelihoods. Improved management of local natural resources including clarifying the legal status of natural resources, roles of both communities and institutions in governance and management will help ensure food security, contribute to poverty alleviation and improve both ecological integrity and the natural resource base.

  • Poverty Reduction and Food Security: The National Food Security Program (NFSP) will increase household food security and nutritional status while contributing to national food security and economic growth in rural areas.

  • Increased Agricultural Production and Productivity: Public and private sector partnerships strengthen horticulture industry. Increased livestock production and productivity will improve food security and incomes that will lead to a reduction of illicit agriculture and a decline in livestock imports. Agriculture diversification through various value-added activities, research, extension, access to credit, market development, establishing/strengthening farmers’ organization, private sector development, trainings, will improve the rural economy. (See ANDS Volume Two for more details)

  • Provision, and maintenance of Agriculture and Rural Infrastructure: Successful crop production requires: technical irrigation management (e.g., availability of irrigation water supply, improving water efficiency and productivity, building effective and efficient irrigation and village based irrigation infrastructures, utilize modern irrigation technologies and human resource water management (e.g., organizing and strengthening mirabs, farmers associations, irrigation associations, decentralization of irrigation management at basin and sub-basin levels, water allocation. etc.).

TRANSPORT

Role of the Sector in ANDS

The ANDS strategic vision and goal for the transport sector is to have a safe, integrated transportation network that ensures connectivity and that enables low-cost and reliable movement of people and goods domestically as well as to and from foreign destinations. This will give impetus to economic growth and employment generation and help integrate Afghanistan into the global economy. A high priority is to have in place an efficient and viable road transportation network for achieving economic growth and poverty reduction, particularly in rural areas.

In the 1960s and 1970s, a large portion of the ‘ring road’ and connecting roads to neighboring countries were constructed. This network was subsequently largely destroyed during three decades of war and political strife. The Government has continued to give high priority to completing the rehabilitation and extension of this system over the past six years. Due to the significant impact of the road system on economic activity and the impact on poverty reduction, this will continue to be a high priority under the ANDS strategy.

The Transport Sector Strategy will achieve the following targets established in the Afghanistan Compact. (i) Roads: Afghanistan will have a fully upgraded and maintained ring road, as well as roads connecting the ring road to neighboring countries by end-2008 and a fiscally sustainable system for road maintenance; (ii) Air Transport: By end-2010, Kabul International Airport and Herat Airport will achieve full International Civil Aviation Organization compliance; Mazar-i-Sharif, Jalalabad and Kandahar will be upgraded with runway repairs, air navigation, fire and rescue and communications equipment; seven other domestic airports will be upgraded to facilitate domestic air transportation; and air transport services and costs will be increasingly competitive with international market standards and rates. (iii) Regional Cooperation: By end-2010 Afghanistan and its neighbors will achieve lower transit times through Afghanistan by means of cooperative border management and other multilateral or bilateral trade and transit agreements.

Current situation in the sector

Since 2001, significant achievements have been made in the transport sector as donors contributed over $3.3 billion to rebuilding the transport system between 2002 and 2007. Some of the main achievements include:

  • An estimated 12,200 kilometers of roads have been rehabilitated, improved, or built including segments of the ring road system, national highways, provincial roads and rural roads.

  • Kabul International Airport has been expanded and extensively rehabilitated.

  • Four major airports (at Herat, Mazar-i-Sharif, Jalalabad, and Kandahar) as well as seven other regional airports are either slated for, or currently undergoing, extensive rehabilitation and expansion.

  • In July 2007, trade and transit agreements with Uzbekistan and Turkmenistan were reached. A transit agreement is currently being drafted with Tajikistan. These agreements will help reduce transit time for shippers moving goods trans-nationally.

  • The introduction of the automated customs and data systems (ASYCUDA) has been initiated which will reduce transit times and encourage promote trade, and aid in tracking customs collections.

Much remains to be done to expand and improve the transportation system. Road, air and rail links all require significant investment. Some of the most pressing needs include:

  • A system for road maintenance and rehabilitation urgently needs to be put into place and made operational. Roads that have been reconstructed will begin to deteriorate unless maintenance is done in a systematic way.

  • Approximately 85 percent of the total 130,000 km road network (some 43,000 km of national, regional, urban and provincial roads and an estimated 87,000 km of rural roads) is significantly degraded, with a major portion not passable by motor vehicles. Most bridges and culverts are in bad condition and at risk of collapse.

  • A limited number of airports are available for commercial use and all are in need of infrastructure improvements. None of the civil air services meet the international standards and practices required by the International Civil Aviation Organization (ICAO) and the International Air Transport Association (IATA). While there has been private entry into the civil aviation sector and regional connections have expanded, much must still be done to create a truly ‘open skies’ regulatory framework that both encourages new entry but maintains international standards for safety.

  • The country has no internal rail links, but relies on rail heads in neighboring countries for trade. The railhead transfer stations are inefficient, increasing the costs of rail transportation. Mines cannot be developed and potential resources cannot be explored and utilized without having a railway links to the neighboring/regional countries.

  • Transport sector ministries and institutions are weak in the human capacity and organization to carry out budgeting; procurement and contract administration; and adequate management of transport-related assets. The institutions lack the necessary regulatory and enforcement frameworks and personnel management systems. There are overlapping ministerial responsibilities in the sector. There is a lack of coordination and communication within the transport sector governance institutions and with other sectors. For detail refer to ANDS Volume II.

The Transport Sector Strategy incorporates feedback, proposed projects and comments which emerged from the Sub-National Consultations process. The construction of roads was among the top five most prioritized sectors in the PDPs. In areas such as Badakhshan, Bamyan, Ghor and Sari Pul, road construction was listed as the number one priority.

Policy framework: sector strategy

The Government continues to give high priority to rehabilitate a badly damaged road system. This includes: (i) completion of a fully upgraded and maintained ring road and connector roads to neighboring countries, (ii) improving 5,334 km of secondary (national, urban and provincial) roads and (iii) improving and building 6,290 km of rural access roads as a key to raising rural livelihoods and reducing poverty and vulnerability in rural areas.49 Better rural roads will improve market access and opportunities for rural households. The actual allocation of resources amongst these three areas of planned activity will depend on the estimated rates of return from analysis of concrete proposals put forward for funding by the international community or by the Ministries involved in implementing the Transport sector strategies. A Transport Sector Inter-Ministerial Working Group has been formed to coordinate the work of the ministries in the sector to assure that projects are properly designed to obtain the highest returns and greatest impact on the poverty reduction goals. Careful consideration will be given to increasing employment opportunities, and assuring that the local resources or funds channeled through local communities are effectively used to maintain the rural roads established as part of this strategy. The main programs of the strategy are (i) Regional, National Highways and Provincial Roads (ii) Rural Road (iii) Urban Transport (iv) Civil Aviation (v) Transport Sector Maintenance (vi) Pubic Transport (vii) Railway Program. (For further details refer to ANDS Volume II.)

In addition to the above work on the road transportation system, there are many areas that need to be addressed to both increase returns from an improved network but also to improve other aspects of the total transportation system. These include:

  • Transportation Services and Trade Facilitation: Improved transportation services, customs, and logistics management will require new investment and coordinated multilateral efforts, including work with the Economic Cooperation Trade Agreement (ECOTA), the Central Asian Region Economic Cooperation (CAREC), and the Shanghai Cooperation Organization. The Government will undertake feasibility studies to assess the economic viability of railway development within Afghanistan and links with neighboring countries.

  • Air transport links: The Government gives high priority to the development of a new airport in Kabul. In addition, the Government will implement programs to ensure that the principal airports and the civil aviation authorities conform to the requirements of the ICAO and IATA, including establishing a new Civil Aviation Authority to promote air transport in a competitive environment. A regulatory framework will be introduced to encourage private investment under an ‘open skies’ policy.

  • Regional Transportation and Transit: Regional transportation investments will be coordinated by the Inter-ministerial Working Group for Transport to assure that investments are designed in such a way as to best serve the development goals of Afghanistan. Relevant investments include the rail links that will be constructed under the agreement for developing the Aynak copper fields in Logar province and the energy transmission lines developed under transit arrangements.

  • Urban Road Networks: Under the urban sector strategy, much greater authority and responsibility is being given to municipalities. The development of the national and regional road networks will be coordinated with municipal authorities with responsibilities for the urban road networks. Municipal transportation management will be strengthened to improve urban road quality, road network maintenance, road network planning, and transportation facilities and services.

  • Railways: The Government will pursue the Afghanistan Railway Project which will include 1,824 km rail links to connect Kabul, in the East with Islam Qala in the West through Kandahar and Hirat. The Government will also undertake feasibility studies to assess the economic viability of railway links with neighboring countries.

  • Aviation: The Government will seek investment in a new international airport in the Kabul area to provide Afghanistan with a modern international airport and implement programs to ensure that the principal airports and the civil aviation authorities conform to the requirements of the ICAO and IATA, including establishing a new Civil Aviation Authority to promote air transport in a competitive environment. A regulatory framework will be introduced to encourage private sector investment under an ‘open skies’ policy.

  • Interaction with vulnerable groups: Use an integrated participatory regional development approach in rural areas, combining improved roads with agriculture, water, education, health, and counter-narcotics initiatives so that the poor derive the benefit from roads. Undertake transport development through investments in secondary and rural roads to significantly increase provincial and village access to the national road system.

Expected Outcomes

The key expected outcomes of the transport sector strategy are:

  • An efficient and safe road transportation system, through:

    • improved connectivity throughout Afghanistan;

    • lower road user costs;

    • improved business environment for private sector development, creating jobs and reducing poverty;

    • lower accident and fatality rates, measured by personal injuries per million vehicle kilometers; and

    • reduced journey times due to congestion.

  • A viable civil aviation sector that provides efficient access to the country and region:

    • increased domestic and international passengers and freight traffic;

    • improved stakeholder information on the viability of air transport systems;

    • improved governance within the civil aviation sector; and

    • overall improvement in urban air quality from reduced congestion, better fuel quality and improved fuel efficiency. (For more detailed information refer to Appendixes 3, National Action Plan and 4, Monitoring Matrix.) Information and Communication Technology

INFORMATION AND COMMUNICATIONS TECHNOLOGY

Role of the sector in ANDS

The ANDS strategic vision and goal for the Information and Communication Technology (ICT) sector is to make affordable communication services available in every district and village of Afghanistan through an improved enabling environment for private sector investment. ICT will contribute to the Government’s efforts for a broad-based reconstruction effort. A modern telecommunications sector, incorporating e-government initiatives will enhance the effectiveness, efficiency and transparency of the public sector and the provision of social services. All Afghans, men and women alike, will in time be able to access ICT to access information and social services, foster the rebuilding process, increase employment, create a vibrant private sector, reduce poverty and support underprivileged groups.

ICT provides an opportunity to bridge the communications gap that exists within the country. Women in particular face movement restrictions due to security concerns and local traditions. To establish greater national unity, it is important that all 365 districts, major villages and rural areas should be able to communicate with Kabul, with each other, and with the rest of the world. ICT is a basic en-abler of informal social and economic discourse necessary in the strengthening of civil society and the promotion of economic activity (e.g. access to markets and pricing). Despite its importance, there are no explicit AC benchmarks or MDG goals for this sector. The ICT Sector Strategy will achieve the following targets established in the I-ANDS: By end-2010, a national telecommunications network to be put in place so that more than 80 percent of Afghans will have access to affordable telecommunications; and more than $100 million dollars per year will be generated in public revenues.

Current situation in the sector

In early 2003, Afghanistan had fewer than 15,000 functioning telephone lines – a telephone penetration rate of 0.06 percent, among the lowest in the world. In addition to a shortage of basic telephone switching capacity, the local transmission network delivering last mile services, presented an even more difficult bottleneck. The cabling conduit, trunk cables and copper wires were old or completely destroyed. Afghanistan did not have a functioning long distance network to provide national or international connectivity. The absence of transmission and switching facilities meant that citizens could only complete calls within their own cities and were unable to reach any other parts of the country or the outside world.

The Government adopted major policy reforms for the ICT sector in October 2002, which was immediately posted to one of the first government websites. This initial broad policy statement was further refined and divided into two separate policies – one for basic telecom infrastructure and regulatory principles, and a second for ICT applications and a vision for the Information Society. These policies have remained the basis for the reforms over the last five years. The basic principles have been given a statutory basis, in the form of the Telecom Law that was promulgated in December 2005. The telecom infrastructure aspects are being implemented by ATRA, which was established in June 2006. The ICT applications aspects are being implemented via the ICT Council, which was established in May 2007.

The transparent approach taken to the adoption of the policies and the consistency of the vision from design to implementation has produced rapid results. The fact that most of the existing infrastructure was either antiquated or broken meant that the industry was free to essentially start again with a clean slate. In 2003, the obvious choice for personal communications was wireless. Accepted global standards meant that the equipment was reliable, cheap and could be deployed rapidly. In July 2003, two nationwide mobile (GSM) networks began operation, following an international competitive tender. The licenses required commercial service to be offered in Kabul within six months of the effective date, with nationwide service within 18 months. Pursuant to the original Telecom Policy, these first two licenses also were provided a legal duopoly for three years. In October 2005 and May 2006, two additional nationwide mobile (GSM) licenses were awarded, with identical terms and conditions. There was immediate strong demand for mobile services, with over 5 million Afghans now having access.

The 2003 ICT sector strategy has been the reference template for subsequent reform policies, procedures and activities. The Telecom Law was promulgated by President Karzai on 18th December 2005. The law is compliant with the World Trade Organization Basic Telecom Agreement framework requirements in that it separates the three basic functions and assigns responsibilities to three independent sector elements, as follows (i) Policy – MoCIT; (ii) regulation – ATRA; and (iii) operations – Licensed Service Providers. The Telecom Law has led to the establishment of the independent sector regulator, ATRA. The legal authority of ATRA rests with its five member board appointed by the President.

Figure 7.2.
Figure 7.2.

Growth in phone use

Citation: IMF Staff Country Reports 2008, 153; 10.5089/9781451800388.002.A002

Despite the considerable progress in expanding the use of mobile phones, much more needs to be done to take advantage of the telecommunications revolution in both the private and public sectors. Impediments to the growth of ICT sector include:

  • Lack of Security represents an impediment to construction and maintenance of ICT infrastructure in remote areas. Lack of clear property rights adds to construction times.

  • Government bureaucracy (length of time for simple decisions) adds time and costs to development and operation of the system.

  • Lack of electricity and high cost of diesel fuel for generators raises construction and maintenance costs.

  • The high level of illiteracy reduces the immediate impact of many internet applications, especially limiting the access of women to internet services.

  • The numbers and skills within ICT work force is a constraint to the adoption and promotion of ICT.

  • The limited awareness and acceptance of ICT within Government leadership

Policy framework: sector strategy

The immediate goal of the sector is to increase access to telecom services to cover 80 percent of the country. Most populated areas will be covered by 2010. A key component of this effort will be the completion of the Fibre Optic Cable and Copper Cable Network, allowing an expansion of high-speed data services and extending mobile phone coverage. The private-sector is expected to make additional major investments in the telecommunication sector. With the establishment of a national data center by end of 2008, and implementation of e-Government, e-Commerce, e-Health (telemedicine) towards the end of 2010 Afghan citizens will be able to more fully participate in the information age. For the next five years, MoCIT policies, working through ATRA will also deploy satellite-based services to the less populated areas where personal mobile facilities are too costly. The current program is to reach at least 3,000 villages by 2010. Plans are also underway to issue new licenses for the provision of fixed wireless access for broadband internet.

There will be a $100 million revenue contribution to Government revenue by 2010. The ICT sector is already the most heavily taxed, primarily because it is comprised of the largest formal enterprises in the country. A major study is currently being prepared that will provide guidance to the ICT Council, and the Government on improving governance and increasing public sector capacity for the industry.

The key programs of the ICT sector are (i) Enabling Environment (ii) Infrastructure Development (iii) E-Afghanistan (iv) ICT Literacy. For detail refer to volume II. In addition to the investment in the cable network, the policy priority for the Government is the passage and implementation of ICT legislation that will create an appropriate environment for further growth and development. MoCIT has commenced drafting the ICT Law, which will address infrastructure and services, including issues such as legal recognition of electronic/digital signatures and formation of electronic contracts (affecting transactions both in public and private sectors), content regulation, competition regulation, electronic evidence, data privacy protection, consumer protection and rights, domain name registration and regulation, intellectual property rights, encryption and security, financial and banking sector law and regulation relating to electronic transfers and settlements, taxation of transfers, customs, jurisdiction, dispute resolution and civil and criminal offences, limitations of liability of internet service providers, cyber piracy and digital rights management, facilitation of e-government and cross border interoperability of e-commerce frameworks affecting trade.

The sector priority policy is passage and implementation of ICT legislation that will create an appropriate environment for further development. MoCIT has commenced drafting the ICT Law. The telecom law addresses the telecom infrastructure and services, but the law doesn’t cover the content of the services. The ICT law will address issues such as legal recognition of electronic/digital signatures and formation of electronic contracts (affecting transactions both in public and private sectors), content regulation, competition regulation, electronic evidence, data privacy protection, consumer protection and rights, domain name registration and regulation, intellectual property rights, encryption and security, financial and banking sector law and regulation relating to electronic transfers and settlements, taxation of transfers, customs, jurisdiction, dispute resolution and civil and criminal offences, limitations of liability of internet service providers, cyber piracy and digital rights management, facilitation of e-government and cross border interoperability of e-commerce frameworks affecting trade.

The ICT Council, through the MoCIT, will work to achieve the following:

  • By end-2008, actions designed to promote transparency and citizen access to public information will be implemented. This will include adopting Rules and Procedures to require all Government institutions to publish documents on their official websites (as a supplement to the Official Gazette). Actions designed to promote Government efficiency, reduce costly waste and ensure information system inter-operability will be implemented. This will involve adopting a full set of Rules and Procedures that will govern the competitive procurement and utilization of ICT by all Government institutions. An e-Government resource center will be established for the design and implementation of projects. MoCIT will promote private investment for Afghan Telecom to reduce the financial burden on the Government, and adopt the legal instruments for private investment in the sector. Afghan Post offices will be modernized using ICT to ensure reliable collection and distribution of mail. The infrastructure of mobile networks will be adapted to enable mobile commerce, meaning the use of phones to transfer funds and conduct other financial transactions (pay utility bills and taxes, make retail purchases). MoCIT will submit draft ICT legislation governing e-transactions, electronic commerce, electronic signatures and cyber crimes to the National Assembly. The Afghanistan National Data Center will be ready to host the e-government applications.

  • A unified curriculum and regulatory framework for private ICT training centers will be drafted in cooperation with Ministry of Education. MoCIT will have established an IT Training center in all provincial capitals where security permits.

  • By end-2009, further efforts will be made to reduce corruption by reviewing all Government services and making recommendations for the adoption of ICT to streamline and automate (for example, customs processing, procurement and licensing).

  • An ICT Village will be established in Kabul, this facility will attract foreign and local investments in ICT. Efforts will be made to ensure that all schools have access to internet and multimedia resources, together with a basic curriculum that includes browsing, searching and messaging.

  • By end-2010, the ICT sector will contribute five billion Afs ($100 million) annually to the treasury by broadening the tax base (attracting additional investors to the market, rather than over-burdening the existing ones). ATRA will foster a transparent legal-regulatory regime that attracts a further 37.5 billion Afs ($750 million) in private investment, and adds 50,000 jobs.

  • National ICT networks will be expanded and interconnected so that at least 80 percent of Afghans will have access to affordable telecom services.

  • By end-2018, all pupils should be digitally literate by the time they leave school. Digital literacy will be adopted as one of the basic skills of all young Afghans.

The ICT sector strategy incorporates feedback, proposed projects and comments from the Sub National Consultations. The ministry actively utilized its video conferencing capabilities to reach out to all 34 provincial capitals and many of the 240 district capitals that are presently served by the District Communications Network (DCN) infrastructure. MoCIT has also worked with National Assembly to reach all communities. The Ministry has furthermore conducted planning sessions by bringing together representatives from all 34 provinces for workshops in Kabul. ATRA is in the process of instituting greater responsiveness to the needs of remote communities, by making available financial support from the Telecom Development Fund (TDF) upon request from community leaders.

Policy framework: key initiatives and issues

The MoCIT is responsible for providing the institutional leadership for the ICT sector. It has the primary responsibility for developing policy and supervises the implementation of a number of key ICT projects, such as the National Data Center, the Optical Fiber Cable and the Copper Cable Network projects.

Afghan Telecom is presently a corporation that is 100 percent owned by MoCIT however it is being privatized (an 80 percent share is to be sold), reflecting the Government’s 2003 Telecom and Internet Policy. This will lead to the further expansion of the mobile phone network.

The Ministry’s Information Communication Technology Institute (ICTI) provides specialized technical training and certification has launched a four year ICT bachelors program (the first class of 50 students have recently commenced studies). Since 2003, it is also in the process of considering a transformation to public-private partnership in order to ensure that its curriculum meets the needs of the private sector (which has a huge demand for properly skilled workers).

The ICT Council is the primary forum for all stakeholders in the ICT sector. It consists of all of government institutions that have ICT activities and is open to all other institutions as they acquire ICT infrastructure and applications. The ICT Council is chaired by the First Vice President and its total membership is fully inclusive of all interested parties, including the private sector, civil society organizations, and academia. The National Assembly has become an important institutional player in the ICT sector, both in terms of policy and utilization.

The role of the private sector is central to this strategy. A modern telecommunications sector, incorporating e-government initiatives wherever possible, will enhance the effectiveness and efficiency of the public sector. By mobilizing resources to build up the ICT sector within the public sector institutions, MoCIT will also be accelerating the development of ICT support capabilities of the private sector in Afghanistan, both through contracts and via participation in the policy processes of the ICT Council.

The ICT sector is Afghanistan’s biggest success story in terms of attracting private sector investment, $925 million as of the end of 2007. This is expected to reach $1.5 billion by end 2010. According to numerous studies this is by far the largest investment in the licit economy.

Expected outcomes

The key expected outcomes in the Information and Communications Technology sector are;

  • Improved Enabling Environment

  • Improved Infrastructure with Fiber Optic and Copper.

  • E-Afghanistan created

  • ICT Literacy improved

It is expected there will be wide community acceptance of ICT facilities. Access to facilities will be expanded. Government administration will be predictable and unbiased, in accord with all legislation. The role of the private sector will be increased. ICT access will be generally available in education institutions, including many primary and secondary schools. For detail information regarding outcomes refer to action plan and M&E matrices. For detail information refer to Appendixes 3-National Action Plan and 4-Monitoring Matrix.

URBAN DEVELOPMENT

Role of the sector in ANDS:

The ANDS strategic vision and goal for urban development sector is to ensure increased access to improved services, and affordable shelter while promoting sustainable economic development as part of efforts to reduce urban poverty through encouragement of private investment. The urban areas in the country will become hubs for economic growth with all basic infrastructure and services. The management of urban areas will be improved through the devolution of authority and responsibility to municipalities in ways that improve urban infrastructure and services, reduce urban poverty and allow urban residents to live safe, healthy and productive lives and cities to grow and prosper. Effective management of the rapid urbanization process will make a significant contribution to the recovery of the country. Cities contribute to economic growth through their high productivity as a result of economies of scale and agglomeration, and by providing opportunities for the accumulation of capital, investment, trade and production. Urban investments create employment opportunities and urban jobs account for a disproportionate share of GDP. Urban growth can stimulate rural development through increase demand for food, markets for rural products, off-season employment for farmers, and remittances and provide opportunities to move goods and services in the region. However, cities are often linked to increased violence, crime and insecurity. Improving the urban environment, the supply of urban services, providing employment opportunities, utilizing the potential resources and improving the livelihoods of the population will lead to improvements in security.

The importance of effective management of the urban development process has been recognized in the Afghanistan Compact benchmarks:

  • Urban Development: By the end of 2010; Municipal Governments will have strengthened capacity to manage urban development and to ensure that municipal services are delivered effectively, efficiently and transparently; in line with MDG investments in water supply and sanitation will have ensured that 50 percent of households in Kabul and 30 percent of households in other major urban areas will have access to piped water.

  • Energy: By end-2010: electricity will reach at least 65 percent of households and 90 percent of non-residential establishments in major urban areas, at least 75 percent of the costs will be recovered from users connected to the national power grid.

The Millennium Development Goals most relevant to the urban sector development include:

  • Goal 7: By 2020 halve the proportion without access to safe drinking water and sanitation. Significantly improve the lives of all slum-dwellers by 2020. Sustainable development to reverse the loss of environmental resources

Current situation in the sector

Achievements: While investments in the urban sector continue to lag far behind actual needs across the country, there have been some achievements. The most important are as follows:

  • Water supply and sanitation: 2 million urban residents (31 percent of the total urban population) have benefited from investments in water supply and 12 percent from investment in sanitation in major cities between 2002 and 2007.

  • Up to 1.4 million people (20 percent of urban population) have benefited from rehabilitation of public works, with 250,000 (4 percent) benefiting from upgrading programs

  • In addition to legislative reforms, a pilot land tenure security project is underway in Kabul

  • The Dehsabz City Development Authority has been established to facilitate the development of new city housing for up to 3 million people north of Kabul. Additionally, new small settlements (satellite townships) have been planned for 1 million people.

  • Regional and city planning: strategic development plans are being prepared for 7 regional cities, while a city development plan for three major cities (Mazar, Jalalalabad, Kabul) and existing-Kabul plan is due for completion by mid 2008.

  • Urban policy: initiatives include a comprehensive National Urban Program (NUP), a draft National Land Policy was submitted in 2007 for approval to the Ministry of Justice. And a draft of national building codes for construction has been developed.

  • Institutional reforms within MoUD, KM & IDLG (established in 2007) continue, along with investments in strengthening institutional capacity.

  • Almost 5 percent of vulnerable families has been provided improved shelter in major cities. Private sector so far has made little contribution to the development of housing sector.

  • Three conservation initiatives are under way in historic quarters of Kabul, Herat and Tashqurghan.

  • The Afghan Urban Water Supply and Sanitation Corporation has been established as a quasi independent public entity.

As of 2005 nearly a quarter of Afghanistan’s population lived in urban areas. By 2015 it is estimated that almost a third of Afghans will be living in urban areas. Current needs include:

  • Urban Poverty: In 2002, one fifth of the urban population was living below the poverty line. The NRVA (2005) study found that 28 percent of urban households perceive themselves to be food insecure, 31 percent fall below the minimum level of dietary energy consumption, 45 percent borrow money to purchase food, and 48 percent sometimes have problems satisfying their food needs. It is estimated that 4.95 million people inhabited informal settlements in 2006, suggesting that 68.5 percent of the urban population is living without security of tenure.

  • Water and Sanitary Conditions: In 2005, about 20-22 percent of urban households had access to safe drinking water, although the percentage varies significantly between urban areas. The country’s total sanitation coverage is only 8 percent, (16 percent urban and 5 percent rural as of 2002). Few places in the world face such scarce and alarming water supply and sanitation coverage levels. The percentage of urban households using: (i) traditional covered latrines and (ii) improved latrines, and (iii) flush toilets are about 67 percent and 15 percent, and 9 percent, respectively. In Kabul city, 14 percent use a flush latrine, 2 percent are covered by a sewerage system.

  • Roads: About 61 percent of urban dwellers access homes through unpaved roads and about 25 percent through footpaths, including in Kabul.

There are a number of challenges and constraints facing the Sector:

  • Low coverage of basic services and inadequate public resources to meet growing needs

  • A rapid pace of urbanization partly due to returning refugees and rural-urban migrants, leading to high population density

  • Widespread urban poverty and limited access to productive employment

  • A high proportion of informal settlements and associated problems

  • Lack of capacity and coordination among urban sector institutions

  • Limited scale of private sector investment in urban enterprises, facilities or services

  • Lack of accurate data on which to base critical policy decisions

  • Land security and titling: Absence of proper land registration system, Land grabbing, inadequate legal instruments and institutions

  • Lack of available financial funds due to limited interest of donors in the urban sector.

The Urban Sector Strategy incorporates feedback, proposed projects and comments from the Sub National Consultations (SNCs) and is a response to the people’s needs and development goals. Key urban infrastructure needs emerged from City Development Pland (CDPs) and PDPs-related consultations as well as CAP (City Action Plans based on the city profiles report) have been integrated into the strategy, reflecting the range of sub-national development needs

Key components of the urban sector strategy

The objective is to ensure increased access to improved basic infrastructure and services, and affordable shelter while promoting sustainable economic growth. The key to the urban sector development strategy is a national urban policy that decentralizes decision making to the local level, encourages participatory processes based on urban community councils or other neighborhood organizations, adopts a market based approach that encourages private sector activity and that establishes a regulatory framework focused narrowly on environmental protection and the rationalization of land use. The main programs of the sector strategy are (i) Urban Governance, Finance and Management (ii) Land Development & Housing (iii) Urban Infrastructure & Services (for details of program refer to volume II).

Urban Governance: The Ministry and Municipalities will be restructured and jointly work to prepare city action strategies and structure plans for Kabul and the 34 major urban areas, with special attention to local area plans for selected, fast growing areas, strengthen urban and municipal governance, finance and management. This involves establishing an enabling environment where stakeholders participate in municipal elections and residents can have a say in policy formulation and the design of implementation activities. This will be done through democratically elected Community Development Councils (CDC) at the neighborhood level, comprising clusters of households, and Area Development Councils (ADC) at the sub-urban district level.

Finance and Management: Steps will be taken to increase revenue generation capacity and improve management by upgrading accounting and budgetary practices and linking the capital budget to the planning process. Review existing revenue base and assets and develop action plans for revenue improvement plans to include widening revenue base, improved collection rates, user charges, co-financing or co-production with users, property or sales taxes, intergovernmental transfers, municipal borrowing, mobilization of local government resources through loan guarantees. Develop mechanisms to increase local revenues to finance part of the costs of improved urban service. Promote public partnerships with the private sector and NGOs to more efficiently provide urban services or meet urban needs. The draft Public Finance and Expenditure Management Law will be enacted.

Urban Development and Land Management: The Government will prepare a national spatial development plan. The plan will provide (i) a framework for balanced urbanization, urban-rural links, and greater regional coherence; (ii) a town planning policy, processes, laws, standards, and guidelines as well as development regulations; (iii) effective land management and information systems and a national settlements plan will be put in place; (iv) improve tenure security gradually through improving infrastructure and services; (v) clarify property rights, providing temporary certificates, addressing environmental and planning concerns; (vi) land management laws will be passed with the objective of preventing unlawful occupation of government and private land for economic (and political) gains; facilitating land registration and adjudication; and enabling government acquisition of private land for public purposes; (vii) improve land management through steps to register land titles; (viii) develop a system for settlement of land disputes; (ix) develop a computerized (GIS) land management system; (x) cadastral surveys and reconciliation of cadastre with actual conditions; (xi) linkage of cadastre to a municipal property tax system and with the land registration data; (xii) linkage to a planning and development control system; (xiii) create new serviced and un-serviced land in connection with new urban plans that identify real demand for serviced land at specific locations within individual towns and cities and in all urban areas.

Standards of servicing will be based on affordability of target groups. Priority will be given to sites and service schemes, an approach that has proven effective in many countries. The strengths of these schemes are that they can: cater to various household affordability levels and needs through various planning, servicing and technical standards; provide basic infrastructure and services relatively efficiently; permit progressive development through provision of a sanitary core (known as an “embryo” housing unit). Sectoral agencies will consider other options for providing developable land including: land-sharing, land readjustment, land pooling, and infill development.

Land security will be improved through mapping and land surveying of communities, tenure formalization, and land registration. If informal settlements are recognized and provided with tenure security, they are more willing to invest their own financial and other resources in improving the community and their houses. Moreover, they can use the title as collateral. Security of tenure may include formal and informal arrangements, from full land title to customary rights. Although the tenure legalization approach is popular, it is also possible to regularize without any policy intervention to legalize tenure. The regularization strategy focuses on physical interventions, such as infrastructure, amenities provision, and health and education services.

The Government, through the Dehsabz City Development Authority, will continue to examine the potential for the development of a new city on the Dehsabz plain north of the existing Kabul City. As part of the Dehsabz project, the Barikab area located to the north of the new city will become a private commercial agricultural zone designed to not only supply many of the needs of Dehsabz, but to become a center for the cultivation of exportable agricultural products. The development of this urban center will be undertaken primarily by the private sector. The extent of the Government’s direct role will generally be limited to planning, investment in some of the basic urban infrastructure and facilitating private commercial investment. This project will be largely financially self-sustainable and become a center for new investment in private agro-based and service industries. Most of the land in Dehsabz belongs to the Government hence, the sale and lease of land will generate revenues needed for investment in the new city and for the pressing reconstruction and infrastructure development needs of Kabul.

Housing: New housing will be produced and improved through: (i) public sector housing production (ii) support to informal and small scale housing producers – the ‘peoples housing process’; (iii) support to research and development of appropriate building materials and technologies; (iv) upgrading the skills of contractors and laborers; (v) supporting entrepreneurs to upgrade or set up building components manufacturing units; (vi) support to private sector production, particularly of rental housing.

Housing programs will consider the particular needs of various groups such as civil servants, returnees, Kuchis, IDPs, widows and other vulnerable groups. Housing finance will be provide – for purchase, rehabilitation, and construction of new housing – through: integrating housing finance; stimulating private banks to increase mortgage lending to low-income households, through, for example, mortgage guarantees; initiating community mortgage schemes; lowering mortgage interest rates; reducing collateral and down payment requirements; introducing flexible repayment schemes. This will enhance purchasing power of urban inhabitants and attract private investment in housing programs. This will lead to a system of affordable land and housing and assured cost recovery for the investors.

Housing subsidy programs will be provided for very low income households, including both owners and renters. The following options will be examined: direct loans to purchase an existing or construct a new house; government guarantees of loans made by private sector lenders, thus enabling households to purchase houses without a down payment; mutual self-help housing programs which makes homes affordable to groups of households by valuing to work, or “sweat equity”, by each homeowner; portable rent subsidies that give eligible households a choice about where to live, including market rate rentals subsidies directly to the property owner who then applies the subsidies to the rents that are charged to low-income tenants.

Urban Infrastructure and Services: A concerted effort will be made to improve infrastructure including roads, footpaths, storm drainage, water supply, electricity, street lights, sanitation, and solid waste collection. Social infrastructure will be improved, including open space, children’s’ parks, community and health centers, schools, and markets. Support will be provided to house construction and rehabilitation, but only in line with an approved plan and with careful consideration given to levels of cost recovery. Steps will be taken to rehabilitate and extend water supply and sanitation services, giving priority to rehabilitating existing areas to an adequate level of service before extending service to new areas. Extensions to new areas will be done in connection with an approved plan for new settlement development. Improve solid waste management through waste minimization (reduce, reuse, and recycle) and improved collection, transport and transfer, and disposal alternatives. Consideration will be given to privatization, community management, affordability and cost recovery. Improve urban transportation management through improvements to circulation and road networks, transportation facilities and services by function, type, capacity, and condition, bus system, bicycles and pedestrians, transportation demand management including on- and off-street parking system management.

The most significant heritage areas will be identified and a detailed inventory of heritage assets will be undertaken. This will be done in coordination with NGOs already working on the preservation of heritage areas. Conservation plans for each heritage area (rehabilitation and preservation) will be developed and implemented through efforts to raise public awareness, economic incentives to private owners, tourism development, legal protection, public investment, and outreach to international bodies.

Key steps to improve and monitor progress with urban development will include the identification of indicators on which strategic, tactical, and operational decisions will be based; the establishment of GIS and databases to manage information; and the improvement of analytical routines and creation of the creation of web-based information systems. The priority focus will be on the establishment of land information and registration systems in municipalities.

Expected Outcomes

The following outcomes are expected to be achieved in this Urban Sector Strategy in coming five years:

  • Strengthened municipal capacity to manage urban development and deliver services.

  • Improved institutional coordination and monitoring of key urban indicators

  • Increased access to basic services for urban households50:

    • Kabul: 50 percent of households with piped water, sanitation, drainage and waste collection; 30 percent coverage for programs of hygiene promotion

    • 30 provincial towns/cities: 30 percent of households with piped water, sanitation, drainage and waste collection; 10 percent coverage of hygiene promotion programs.

  • Phased regularization of tenure for 50 percent of households in informal settlements, in parallel with upgrading of public services and facilities, as well as new urban area development.

  • Increased availability of affordable shelter, with 50 percent increase in numbers of housing units and 30 percent increase in area of serviced land on the market, coupled with access to affordable finance.

  • Improved urban environment with green areas and open spaces.

For detail information, refer to Appendix 3-National Action Plan and 4-Monitoring Matrix.

MINING

Role of the sector in ANDS

The ANDS strategic vision and goal of the mining sector is to establish Afghanistan as an attractive destination for investment in survey, exploration and development of mineral resources. The intention is to encourage legitimate private investment in the sector so as to substantially increase government revenues, improve employment opportunities and foster ancillary development centered on mining activity. Implementation of the strategy will help to develop effective market-ba