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Afghanistan Overview

Economy: Economic growth slowed considerably in 2013 despite robust agricultural production as heightened uncertainty surrounding the political and security transition led to a slump in investor and consumer confidence. Agricultural output reached record levels for a second consecutive year in 2013 due to favorable weather conditions, with cereals production increasing 2.7% over the bumper crop of 2012. On the other hand, uncertainty surrounding the political and security transition led to a slump in investor and consumer confidence, thus resulting in a sharp slowdown in private investment and growth in the non-agricultural sectors. Economic growth in 2013 is estimated at 3.6%, down sharply from strong growth of 14.4% in 2012. Inflation was recorded at 7.7% in 2013, slightly higher than 6.4% in 2012. On the other hand, after a decade of strong revenue growth, domestic revenues declined to 9.5% of GDP in 2013 from 10.3% in 2012 and the peak of 11.6% in 2011. The decline in revenue collections is a result of the economic slowdown as well as weaknesses in enforcement in both tax and customs administration. Growth is projected to remain weak in 2014. A smooth political and security transition would help restore confidence in the economy and enable a pickup in growth in 2015.

Education: In 2001, after the fall of the Taliban, net enrollment was estimated at 43% for boys and a dismal 3% 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 8.6 million; girls’ enrollment increased from 191,000 to more than 3.6 million. Majority of the teacher force, 195,000, have received teacher training either through Teacher Training Centers or In-service Teacher Training. Efforts are ongoing to continuously upgrade teacher qualifications and overall access to equitable and quality education in Afghanistan.

Health: According to recent data from Afghanistan Mortality Survey 2010 (AMS 2010), life expectancy at birth is at 64 years. Only 46% of Afghans use safe drinking water and 8.3% use improved sanitation facility (NRVA 2011-12). Nevertheless, there has been considerable progress over the last past years. About 85% of the population lives in districts which now have providers to deliver a basic package of health services. About 57.4% of the population lives within one hour’s walking distance from a public health facility (NRVA 2007/08). Infant and under-5 mortality in 2010 has declined to 77 and 97 per 1,000 live births respectively, from 111 and 161 per 1,000 live births in 2008. The pregnancy-related mortality ratio is about 327 per 100,000 births, which means that every two hours, a woman dies in Afghanistan from pregnancy-related causes.

Access to Electricity: The percentage of the population with access to electricity in Afghanistan is among the lowest in the world. The Ministry of Energy and Water estimates that about 30% of Afghans have access to electricity from grid-based power, micro-hydro, or solar panel stations. The situation has improved significantly in the major urban population centers along the critical North East corridor between Mazar-e-Sharif and Kabul, following the import of power from Uzbekistan and the rehabilitation of three hydro plants (Mahipar and Sarobi completed, and Naghlu ongoing). Increasing parts of some urban centers, for example Kabul, Herat, Mazar-e-Sharif, and Pul-e-Khumri, now have a 24-hour power supply for the first time in decades.

Last Updated: Apr 08, 2014

The World Bank Group and Afghanistan

Afghanistan became a member of the World Bank in 1955. Shortly after the Soviet invasion in 1979, World Bank operations were suspended, although the Bank continued to provide assistance to Afghans through the Bank office in Pakistan.

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 $230 million in credits approved by the International Development Association (IDA), the Bank’s concessionary lending arm, $83 million was disbursed and $147 million was subsequently canceled. Afghanistan had repaid $9.2 million to IDA and was up-to-date on debt service payments until June 1992, when it stopped making payments.

Operations resumed 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. Aid has since grown tremendously. To date, the World Bank has provided a total of over $2.66 billion for development and emergency reconstruction projects, and five budget support operations in Afghanistan. This support comprises over $2.23 billion in grants and $436.4 million in no-interest loans known as ‘credits’. As of February 2014, the Bank has 18 active IDA projects in Afghanistan with net commitments value of $ 881 million.

The International Financial Corporation (IFC), the World Bank Group’s private sector development arm, has provided support through investments totaling some $131 million, as well as advisory assistance involved in seven interventions in the areas of Access to Finance, Investment Climate reform, Agribusiness, SME training and Public Private Partnerships. IFC is working towards increasing its commitments to the private sector and assessing the possibility of increasing its advisory work in different areas.  

Established in 2002, the Afghanistan Reconstruction Trust Fund (ARTF) is the largest single source of external on-budget financing that supports Afghanistan’s national priority programs, government operating costs and salaries, as well as the policy reform agenda. It includes support for development projects in health, education, rural development, infrastructure etc. Since 2002, 33 donors have contributed a total of $6.94 billion to the ARTF. The ARTF is administered by the World Bank in close cooperation with the Government of Afghanistan, represented by Ministry of Finance, as well as the many donors. ARTF support is contributing to the achievement of the Afghanistan National Development Strategy goals. 

The World Bank Group’s Multilateral Investment Guarantee Agency has offered a limited number of guarantees but there is interest by Government and the private sector to see additional guarantees going forward, particularly to support infrastructure investment.

The World Bank made a presentation at the Joint Coordination and Monitoring Board (JCMB) on January 29, 2014 that touched upon three areas: (i) Afghanistan’s development progress and challenges ahead; (ii) recent economic and fiscal developments; and (iii) the reform agenda beyond 2014. Looking beyond 2014, addressing Afghanistan’s poverty reduction and development challenges will require addressing reform priorities in four key areas: (i) ensuring fiscal sustainability by mobilizing revenue, securing grant assistance, and safeguarding non-security expenditures; (ii) supporting inclusive and job-creating private-sector led growth by unlocking the potential of the agriculture, services, and natural resource sectors and by tapping regional integration; (iii) improving upon the still low levels of human capital and skills; and (iv) continuing to strengthen institutions and governance.

The presentation is available in three languages (English, Pashto and Dari) here.

World Bank Strategy

The World Bank’s current engagement with Afghanistan is determined by the Interim Strategy Note (ISN), which is closely aligned with the government’s Afghanistan National Development Strategy (ANDS). World Bank support to Afghanistan over 2012-2014 will be based on supporting the delivery of some of the country's most important national priorities. It is also grounded in helping the government manage the critical transition from security and development dominated by the international community to one led by the government of Afghanistan by the end of 2014. World Bank Group support will be provided around three themes:

  1. Building the legitimacy and capacity of institutions
  2. Equitable service delivery
  3. Inclusive growth and jobs

The Bank will deliver its program through International Development Association (IDA) grants, from which Afghanistan will receive about $150 million per year, as well as the Afghanistan Reconstruction Trust Fund (ARTF), which could potentially provide up to $800 million per year in grants during the period of the ISN (2012-14). The Bank’s private-sector arm – the International Finance Corporation (IFC) — will also strengthen its support to both the private-sector companies and improving the business environment.

World Bank support emphasizes national programs that have improved the lives of millions of Afghans across the country, including in the areas of health, education, rural development, and public finance management.

Last Updated: Apr 09, 2014

Selected World Bank Achievements in Afghanistan

Education: The World Bank is helping to rehabilitate primary schools and train teachers, while giving technical assistance to strengthen the Ministries of Education and Higher Education. The Bank’s Education Quality Improvement Program (EQUIP) gives funds to communities to rehabilitate or construct school buildings and access teaching and learning materials. Funds are directed through School Shuras, now functioning in more than 13,500 schools. Since 2001, a total of 442 schools have been constructed and 416 are under construction and expected to be built by March 2015. 

The Skills Development Program revived two key institutions in Kabul: the National Institute of Management and Administration that prepares young professionals to acquire junior level jobs in the public and private sectors; and the National Institute of Music that trains gifted young musicians, establishing a nurturing platform for music in the country. By March 2015, some 9,000 students are expected to graduate from both institutions.  

Health: Over the past decade, Afghanistan has made steady progress in the health sector.  The number of health facilities in 11 target provinces nearly tripled from 148 to 432. Around 20,000 community health workers—half of them women—were trained and deployed throughout the country, increasing access to family planning and boosting childhood vaccinations. The number of facilities with trained female health workers rose from 25 percent before the project to 74 percent today.  At the same time, the number of functioning health facilities increased from 496 to more than 2,000. These interventions have produced significant improvement in the coverage of reproductive and child health services, as well as a significant drop in maternal and child mortality.

Bringing most of the efforts in public health service delivery under one umbrella in Afghanistan, the System Enhancement for Health Action in Transition (SEHAT) Program is expanding the provision of basic health and essential hospital services in both rural and urban areas, in 22 provinces and strengthening the capacity of the Ministry of Public Health at central and provincial levels to effectively carry out its stewardship functions. On February 28, 2013, the World Bank Board of Executive Directors approved a $100 million grant to support SEHAT program. The program, financed in the amount of $407 million, will be jointly supported through a contribution of $30 million from GoA, $100 million from an IDA Grant, $7 million from Norwegian Health Results Innovation Trust Fund, and $270 million from ARTF. 

Rural Development: The National Solidarity Program (NSP), the Government of Afghanistan’s flagship rural development program, is empowering rural communities by facilitating democratically elected Community Development Councils (CDCs). To date, over 32,000 CDCs in 390 districts representing over 98 percent of districts in Afghanistan have received over $1.3 billion in block grants; and implemented over 77,000 rural infrastructure sub-projects in their respective villages. About 80% of the projects involve infrastructure such as irrigation, rural roads, electrification, and drinking water supply, all critical for the recovery of the rural economy. More than half the projects have been completed.

Improving access to basic services and facilities through secondary and tertiary roads, the Afghanistan Rural Access Project will increase the number of people living within two kilometers (km) of feeder roads and reduce travel time to essential services. The project is expected to build 500 km of secondary roads and 600 km of tertiary roads by March 2015. 

Customs: The Customs Reform and Trade Facilitation Project assisted the Afghan Customs Department (ACD) to migrate to the web-based ASYCUDA World system, an automated system for customs data. This system is in operation at Islamqala, Kabul and Kabul Airport Customs where it has further expedited the release of legitimate goods. By March 2015, ACD will also install systems for real time monitoring of customs operations, and cross-border custom-to-custom data exchange with neighboring countries.

Horticulture and Livestock: Building on the 5,000 hectares of fruit orchards established since 2009 through its predecessor, the National Horticulture and Livestock Project (NHLP), in addition to rehabilitating 6,000 hectares of old orchards, will plant  1,500 new vineyards and orchards of apricots, pomegranates, almonds, and pistachios in 1393. The project is also expected to reduce animal brucellosis by 15 percent throughout the country, granting a means of sustainable income to the rural poor by March 2015.

Irrigation: With over 85 percent of rural population relying on agriculture, irrigation remains a pressing need in rural Afghanistan. The Irrigation Restoration and Development Project (IRDP) is ensuring irrigation of some 300,000 hectares of land by rehabilitating irrigation systems and building a limited number of small multi-purpose dams. The rehabilitation of 43 medium and large irrigation schemes has been completed. It is expected that work on 60 irrigation schemes will be completed by March 2015.

Rural Enterprise: Since its inception, the Afghanistan Rural Enterprise Development Project (AREDP) has mobilized 41,800 rural poor—almost half of whom are women—in 3,500 village Savings Groups (SGs), which have collectively saved over $1.5 million. Federated in 35 Village Savings & Loans Associations (VSLAs), they have issued over 10,400 loans to SG members with a repayment rate of about 95 percent. 

On average each VSLA has $3,300 as loan-able capital which will be further boosted with a seed grant injection in the coming months. This improves access to finance for group members who cannot access such funds from commercial banks or microfinance institutions.  AREDP also works towards strengthening market linkages and value chains for rural enterprises by providing technical support to over 450 Enterprise Groups (58 percent women) and 150 Small and Medium Enterprises that have been selected for their potential as key drivers of rural employment and income generation. AREDP uses Community Development Councils as an entry point into communities and is currently working in 20 districts of five provinces: Parwan, Bamyan, Nangarhar, Balkh, and Herat.  

Market Development: The Afghanistan New Market Development Project aims to pilot a business development program in the four urban centers of Kabul, Mazar-e-Sharif, Jalalabad and Herat, which are the major hubs of economic activity. The projects aims to help enterprises gain market knowledge, improve product quality, boost productive capacity, acquire new technologies, and develop and implement business plans to increase their presence in both domestic and export markets. To date, the Facility has received applications from over 500 SMEs. Moreover, the Facility has signed cost-sharing grant contracts with over 200 SMEs.

Telecommunications: The Afghanistan Information and Communication Technology Sector Development Project is helping expand telecommunications connectivity, giving Afghans greater access to telephone and Internet services. It supports the Government’s use of mobile technologies to improve public service delivery in strategic sectors in Afghanistan. The project will train 1,500 young Afghans to develop IT skills and improve their employability by March 2015. Implementation of three contracts for the installation and commissioning of approximately 1,000 kilometers of fiber optic cables; and one contract for the establishment of a shared government mobile services delivery platform has taken off. Optical fiber cable construction is pro­gressing; about 50 kilometers of duct­ing has been completed. The Ministry of Communications and IT adopted an open access policy for the national backbone net­work, ensuring non-discriminatory access to wholesale internet bandwidth for all firms. Some 450 Afghans have been trained under the IT skills development program.

Last Updated: Feb 28, 2014

LENDING

Afghanistan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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