May 2008 Language Versions: Dari | Pashto Overview | The World Bank and Afghanistan | World Bank Strategy | World Bank Achievements Overview After more than two decades of conflict, Afghanistan has begun an enormous political, economic, and social transformation since it was catapulted onto the world stage in 2002. Progress to date has been encouraging, but tremendous challenges remain. The Afghanistan National Development Strategy (ANDS) was completed and approved by President Karzai on April 21, 2008. Based on the ANDS, donor countries are expected to spend a large amount of development assistance through the Government of the Islamic Republic of Afghanistan. Preliminary arrangements have been made for convening an international conference in Paris in June 2008 where the ANDS will be presented to donor countries. To comprehensively address the security, governance, and development needs of Afghanistan, the government has prepared the five-year 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 Afghanistan Compact was the outcome of the London Conference on Afghanistan in 2006. It was the result of consultations between the Government of Afghanistan and the United Nations and the international community and established the framework for international cooperation with Afghanistan for the following five years. The Afghanistan Compact is a political commitment of the participants and not an actionable treaty. Since 2002, over 6 million children have returned to school, and the economy has continued to grow. Economic growth is estimated to have reached 13.5% in 2007/08. Yet the majority of Afghans still live in dire poverty without access to safe drinking water or electricity—or opportunities to improve their lives. An independent evaluation by John Hopkins University (JHU) indicates that the quality of health care has improved by 32% from 2004 to 2007, and the number of patients served has more than tripled. A recent household survey, independently conducted by JHU, indicates that the under-5 mortality rate in Afghanistan declined from an estimated 257 per 1,000 live births in 2001 to about 191 per 1,000 in 2006. This means that about 80,000 fewer children are dying each year now, compared to during the Taliban rule. Only 13% of Afghans have access to safe drinking water, 12% to adequate sanitation, and just 6% to electricity. Up to 70% of Afghanistan's estimated 26.6 million people are considered food-insecure by the UN Food and Agriculture Organization (FAO), and millions have recently been pushed into "high-risk" food-insecurity because of high food prices. Only 40% of schools have buildings, and most of the country's primary roads need repairs. Life expectancy is 43 years (compared to 59 years for low-income countries worldwide). The World Bank and Afghanistan Afghanistan became a member of the World Bank in 1955. Shortly after the Soviet invasion in 1979, World Bank operations were suspended, and the resident mission in Kabul was closed, although the Bank continued to provide assistance to Afghans through its office in neighboring Pakistan. The Bank resumed operations in Afghanistan in May 2002 to help meet the immediate needs of the poorest people while assisting the government in developing the administrative systems required for longer-term nationwide development. Prior to 1979, the World Bank had provided 21 no-interest loans, known as "credits" to Afghanistan across a wide range of areas including education, roads, and agriculture. Of the original US$230 million in credits approved by the International Development Association (IDA), the Bank’s concessionary lending arm, US$83 million was disbursed and US$147 million was subsequently canceled. Afghanistan had repaid US$9.2 million to IDA and was up to date on debt service payments until June 1992, when it stopped making payments. In 2003, Afghanistan was able to clear its debt to the World Bank, in part with the help of Japan, the UK, Sweden, Norway, and Italy, who contributed to a trust fund for this purpose. Additional funds from the multi-donor Afghanistan Reconstruction Trust Fund (ARTF), which is administered by the World Bank, helped to clear the remaining arrears, allowing Afghanistan to become eligible for loans for projects designed to help meet the country's longer-term development needs. The ARTF has emerged as one of the main instruments for financing the country’s recurrent budget and investment support for Afghanistan. To date, more than US$2.4 billion has been contributed to the ARTF by 27 donors. Since 2002, the Bank has financed 37 projects, committing around US$1.65 billion, of which over US$1 billion is in grants and US$436.4 in interest-free credits. Three budget support operations and emergency public works, infrastructure reconstruction, education rehabilitation projects, and the first phase of a rural development and public administration projects have so far been completed. Commitments of approximately US$270 million for the fiscal year 2009 (July 2008 - June 2009) will be entirely in grants. The Bank-funded projects mostly support rural livelihoods by providing job opportunities, rebuilding infrastructure, education, and basic health services. World Bank Strategy In May 2006, the World Bank Board of Executive Directors discussed a new Interim Strategy Note (ISN) for Afghanistan, which guides the Bank's engagement for the next two years, and is aligned with the government’s Interim National Development Strategy. World Bank support under the ISN has shifted slightly from the previous Transitional Support Strategy (TSS) to focus more on the rural economy. The ISN envisages a grant program of up to US$540 million over those two years, which is in line with the World Bank’s five-year pledge of US$1.2 billion made at the January 2006 London Conference. The World Bank strategy focuses on: Building the capacity and accountability of the state to ensure the provision of affordable, accessible, and adequate services; Improving rural livelihoods and promoting rural economy; and Supporting the growth of a formal, modern, and competitive private sector.
World Bank Achievements Since 2002, more than 6 million students and teachers in Afghanistan have returned to school as a result of a donor-assisted Back-to-School Campaign. The numbers have exceeded expectations, and the Bank is helping to rehabilitate primary schools and train teachers, while giving technical assistance designed to strengthen the Ministries of Education and Higher Education. The Government of Afghanistan's main vehicle for providing jobs and improving roads and other infrastructure throughout the country is its National Solidarity Program (NSP) and National Emergency Rural Access Program (NERAP). The World Bank is the largest international funder of the NSP, and so far has supported activities in more than 20,000 villages through elected community development councils in Afghanistan’s 34 provinces. More than 35,000 community projects have been financed, of which more than 18,000 projects have been completed. About 88% of the community projects involve infrastructure such as irrigation, rural roads, electrification, and drinking water supply, all critical for the recovery of the rural economy, stability, and governance. NERAP projects have provided year-round access to basic services and facilities in the rural areas of Afghanistan. Through NERAP, more than 3,500 km of rural roads and 6,000 meters of cross-drainage structures, culverts, and causeways are being improved. Eight airfields have been rehabilitated so far. In just over four years of operations, the Expanding Microfinance Outreach and Sustainability Project has provided more than US$124 million in funds, including US$83.91 million in loans. There are now 15 microfinance institutions (MFIs), with a network of over 261 branches in 23 provinces, with more than 422,000 savings and loan clients. Sixty-five percent of the clients are women, and the loan repayment rate is 85%. The sector now employs over 4,200 Afghans; more than 610 have been trained in microfinance operations. The sector, as a whole, already covers 90% of its costs from its own income which is earned from lending activities. Four of the MFIs have already reached operational self-sufficiency, and most of the others will likely achieve sustainability by the end of 2008. In July 2004, rehabilitation work on the Salang tunnel was completed, opening the 2.7 km tunnel for two-way traffic for the first time since 1997. The tunnel is believed to have one of the highest altitudes (3,400m) in the world, and covers a critical section of the highway that connects Kabul to eight provinces, as well as to Uzbekistan and Tajikistan. A Government Communications Network (GCN) has been launched and is providing internet access and voice telecommunications services, including long distance and international services, to over 30,000 government employees in Kabul and Afghanistan’s provinces. A new radio spectrum monitoring system, to ensure proper use of the radio spectrum in Afghanistan, is operational. All provincial capitals are now also able to videoconference with the President and ministers in Kabul. Further, a Provincial Governor’s Communications Network is piggybacking on the GCN infrastructure. Despite the deteriorating business environment, which impedes the flow of foreign direct investment to Afghanistan, the Afghanistan Investment Guarantee Facility (AIGF) in cooperation with the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) has been making slow, but steady progress. Currently a total of three guarantees remain underwritten with AIGF, which cover the agricultural, pharmaceutical, financial, and telecommunication sectors. The total associated investment of the projects under the AIGF is about US$104 million with 830 jobs newly created as a result. |
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