KABUL, May 31, 2009 ─ The Ministry of Finance, Islamic Republic of Afghanistan and the World Bank today signed an agreement that will grant US$75 million to help improve local governance at the grassroots level and build rural infrastructure. The World Bank’s new grant assistance is set to support the continuation of Afghanistan’s National Solidarity Program (NSP). The NSP is part of the government’s broader effort to forge national unity and rebuild Afghanistan from the bottom up.

Since 2003, the Government of Afghanistan made a concerted effort to address state building and local governance through the NSP, while responding to an urgent need to provide basic infrastructure to the rural population. The NSP quickly became one of the most successful national priority programs, supporting local governance building and rural infrastructure rehabilitation, such as irrigation, rural roads, electrification, and drinking water supply.

"Improving the economy as well as infrastructure in the rural areas, where the vast majority of Afghans live, is critically important for bringing the country out of poverty," said HE Omar Zakhilwal, Minister of Finance Islamic Republic of Afghanistan. "Despite numerous challenges, the program has touched and improved the lives of over 19 million rural inhabitants throughout the country. To ensure its continued success, we need to further strengthen the effectiveness and sustainability of the program.

Despite great challenges, including inadequate security, the program has recorded some remarkable achievements. Between May 2003 and May 2009, over 22,000 communities have been mobilized, with 99 percent of them successfully electing Community Development Councils (CDCs). These CDCs are established through the assistance of 29 NSP Facilitating Partners which mobilize the community, facilitate elections, support the formulation of community development plans through community consultation, assist in project preparation and implementation, and build capacity among the CDC members. So far, 48,879 CDC subprojects have been partially or fully financed, of which some 27,917 subprojects have been completed.

"The needs of rural Afghans are significant and enormous," said HE Wais Ahmad Barmak, Deputy Minister, Programs, Ministry of Rural Rehabilitation and Development (MRRD) Islamic Republic of Afghanistan. "A onetime development intervention will surely not be enough to put Afghan village on a good development path. Continued support through these elected bodies will guarantee the success and sustainability of the program on the one hand, and on the other will maintain relations between the Government and Afghans at the grassroots." Government has been able to gain the trust of villagers through the NSP and this effort needs to be sustained. Discussions have therefore started within the Government about the future of NSP."

The community subprojects financed under the NSP focus on social, productive and economic infrastructure and are based on the priorities of the rural population. Of the currently funded community subprojects, 24 percent address water and sanitation issues; 17 percent rehabilitate or develop irrigation systems; 24 percent improve transportation infrastructure (e.g. roads, bridges); 14 percent provide energy (e.g. micro-hydro,); 5 percent improve livelihoods and income-generation; 13 percent work on education infrastructure and 3 percent goes towards other investments. The NSP is active in 359 of Afghanistan’s 364 districts as well as in 34 provincial centers in all of Afghanistan’s 34 provinces.

"Taking into account the progress being made, it is essential to build and consolidate the success achieved so far to ensure the sustainability of the program," said Mariam J. Sherman, World Bank Country Manager for Afghanistan. "To this end, discussion about the next step of the program has already begun. The next phase of NSP must focus, among other activities, on measures to ensure sustainability and improving the quality of the CDCs."

The new additional grant of US$75 million will specifically provide block grants to 22,600 CDCs to complete their community projects that have already been identified. In order to cover the entire rural areas in Afghanistan, the program needs to mobilize and establish around 9000 new CDCs.

The World Bank is one of the main sources of financing for the NSP and provides oversight on behalf of contributing donors. With this additional grant, the total World Bank’s support for NSP reaches about US$381million. Other sources include the Afghanistan Reconstruction Trust Fund (ARTF – US$518 million), the Japanese Social Development Fund (JSDF – US$40 million), and numerous bilateral contributors.

About the World Bank assistance:

Since the resumption of operations in Afghanistan in April 2002, the World Bank Group has financed 41 projects, committing around US$1.8 billion of which US$1.3 billion is grant and US$436.4 credit (interest-free loan).  The World Bank funded projects mostly support rural livelihoods, rebuilding infrastructure, education and basic health services. The World Bank also manages the US$3 billion Afghanistan Reconstruction Trust Fund (ARTF). Since 2002, the IFC, the World Bank Group’s private sector arm, has provided US$62.6 million of equity financing while its Multilateral Investment Guarantee Agency has guaranteed US$77.9 million of investment.

For more information about NSP, please visit: www.nspafghanistan.org