Economy: The political and security transition has affected Afghanistan’s economy much more deeply than anticipated. More frequent incidences of violence and delays in the elections process and cabinet formation continued to fuel uncertainty and affected investor confidence. Economic growth slowed to 1.3 percent in 2014, down from 3.7 percent a year earlier. Unlike in previous years, agriculture did not contribute to growth in 2014. Production levels were high for a third year in a row but did not supersede the strong agriculture output in 2013. Growth in 2014 was mainly driven by expansion in industries (2.4 percent) and services (2.2 percent). Further, private investment activities showed strong signs of slowdown in 2014, evidenced by a drop of nearly 50 percent in new firm registrations since 2012.
While the country experienced significant fiscal pressure in 2014 as a result of declining revenues and increasing financing shortfalls, vulnerabilities in 2015 remain high. Though revenues recovered in the first half of 2015, they remain below the initial targets. The most recent projections indicate domestic revenues to reach 114 billion Afghanis (equivalent to 9.8 percent of GDP) by end 2015, compared to the initial target of 120 billion Afghanis. Recurrent expenditures are projected to increase in 2015, due to growing security costs. Substantial, additional discretionary donor grants this year - agreed under the New Development Partnership Agreement with the US - may likely help to balance the budget this year. Nevertheless, the budget may run a deficit if the Government fails to meet the agreed commitments that triggers funds under this and other budget support programs.
The medium-term outlook is unfavorable: Growth, projected at 1.9 percent, will likely remain sluggish in light of a further deterioration in security over the first three quarters in 2015. The number of new firm registrations in the first six months of the year, which is a proxy for investor confidence, remained at the same level as in the first half of 2014. A mild recovery is expected for 2016. Real GDP growth is projected to increase to 3.1 and 3.9 percent in 2016 and 2017 respectively, conditioned on improvements in the security environment and strong reform momentum, which could help restore confidence in the economy.
Education: In 2001, after the fall of the Taliban, net enrollment was estimated at 43 percent for boys and a dismal 3 percent for girls. Moreover, there were only about 21,000 teachers (largely under-educated) for a school-age population estimated at more than 5 million — or about 240 students for every marginally trained teacher. Since 2002, school enrollment has increased from 1 million to 8.7 million, of which 36 percent are girls.
The majority of the teacher force—195,000—have received teacher training either through Teacher Training Centers or In-service Teacher Training. Efforts areongoing to continuously upgrade teacher qualifications and overall access to equitable and quality education in Afghanistan. In the same period, the number of teachers had grown from 20,000 to more than 187,000.
Health: The Afghan health system has made considerable progress during the past decade thanks to strong government leadership, sound public health policies, innovative service delivery, careful program monitoring and evaluation, and development assistance. Data from household surveys (between 2003 and 2011) show significant declines in maternal and child mortality. The under-5 mortality rate and infant mortality rate dropped from 257 and 165 per 1,000 live births to 97 and 77 respectively. The maternal mortality ratio is 327 per 100,000 live births, compared with 1,600 in 2002. The number of functioning health facilities increased from 496 in 2002 to more than 2,000 in 2012, while at the same time the proportion of facilities with female staff increased.
Despite significant improvements in the coverage and quality of health services, as well as a drop in maternal, infant and under-5 mortality, Afghan health indicators remain below average for low income countries, indicating the need to further lower barriers for women accessing services. Afghanistan has one of the highest levels of child malnutrition in the world, with about 40.9 percent of children under five suffering from chronic malnutrition while both women and children suffer from high levels of vitamin and mineral deficiencies.
Access to Electricity: Afghanistan has one of the lowest rates of electricity usage in the world. It is in the bottom 10 percent globally (around 100 kilowatt hours per year per capita consumption) and only about 38 percent (as of June 2015) of its population is connected to the grid. In 2011, the last year for which reliable data is available, Afghanistan’s estimated 32 million people consumed only about three million megawatts (MW) of grid-supplied electricity. Imported power supplied almost three-quarters of this energy, while domestic hydro supplied about 17 percent and the balance (13 percent) came from diesel thermal plants in Kabul and generators. The reliability of the grid, particularly in Kabul, has improved significantly over the past few years. But load shedding and outages are still a sufficiently common occurrence that few have given up their private generators.
Low connectivity to the grid conceals a vast difference between rural and urban access. While over 75 percent of the population in large urban areas like Kabul, Kandahar, Herat, and Mazar-e-Sharif have electricity, less than 10 percent of the rural population has access to grid-connected power. Large parts of Kabul, Mazar-e-Sharif and Pul-e-Khumri have a 24-hour power supply. These cities are part of the North East Power System (NEPS), which imports 150 MW from Uzbekistan throughout the year, supplemented by 150 MW from Tajikistan during the summer. The total currenty transmission lines capacity is: 326MW from Uzbekistan, 164 MW from Iran, 433 MW from Tajikistan and 77 MW from Turkmenistan.
Last Updated: Oct 20, 2015