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

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 vloans, 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 were disbursed and $147 million were 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 $3.09 billion for development and emergency reconstruction projects, and five budget support operations in Afghanistan. This support comprises over $2.68 billion in grants and $436.4 million in no-interest loans known as ‘credits’. As of October 2015, the Bank has 15 active IDA projects in Afghanistan with net
commitments value of over $1 billion.

The International Finance Corporation (IFC), the World Bank Group’s private sector development arm, continues to work with its investment and advisory service partners in Afghanistan. IFC Investment Services now has a committed investment portfolio totaling some $80 million in five companies, which include commitments in the financial, telecommunication, and hospitality sectors. IFC is exploring investment opportunities across the manufacturing, financial markets, and infrastructure sectors, and undertakes senior-level business development missions to Afghanistan on a quarterly basis. IFC Advisory Services is also very active in Afghanistan with eight active projects during the reporting period.

The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) has $154 million of gross exposure in Afghanistan, supporting telecoms and agribusiness projects. MIGA recently launched its "Conflict Affected and Fragile Economies Facility", which will boost the agency’s capacity to insure investments in Afghanistan. The telecommunication project (MTN) is also receiving financing from IFC. The two agribusiness projects are in dairy and cashmere production.

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, 34 donors have contributed a total of $8.15 billion to the ARTF. The ARTF is administered by the World Bank in close cooperation with the Government of Afghanistan, represented by the Ministry of Finance, as well as the many donors. ARTF support is contributing to the achievement of the Afghanistan National Development Strategy goals.


Last Updated: Oct 20, 2015

The World Bank Group’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 2012-2015 is based on supporting the delivery of some of the country's most important national priorities. World Bank Group support is being provided around three themes:

1.      Building the legitimacy and capacity of institutions

2.      Equitable service delivery

3.      Inclusive growth and jobs 

The Bank delivers 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 (2012-15). The Bank’s private-sector arm—the
International Finance Corporation (IFC) — is also strengthening its support to both private sector companies and improving the business environment.

The World Bank Group 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.

In September 2015, the World Bank Group (WBG) Afghanistan Country Office held a number of consultative meetings with various stakeholders including representatives from the Government of Afghanistan, donors, private sector, and civil society organizations. The aim of these consultations was to engage with various stakeholders on the Bank’s Systematic Country Diagnostics (SCD). The SCD precedes preparation of a new WBG Country Partnership Framework (CPF). The SCD is intended to be an evidence-based, diagnostic report to identify key constraints and priorities for each country to accelerate progress toward reducing poverty and promoting shared prosperity in a sustainable way. The SCD is not intended to be limited to expected areas of World Bank Group engagement, but rather to inform the policy discussion with a broad community of stakeholders in Afghanistan’s development.

The SCD under preparation notes that Afghanistan faces three fundamental constraints in its efforts to reduce poverty: fragility and conflict; demography and geography; and declining aid. Despite significant economic and social progress since 2003, poverty nationwide remained stagnant at about 36 percent between 2007 and 2012. Furthermore, an unprecedented
transition since 2012 has led to a marked decline in economic performance. The SCD recognizes that sustained development progress will require a reduction in levels of conflict and violence.  At the same time, Afghanistan will need to make progress in addressing three important priorities: (i) strong and inclusive growth and job creation; (ii) expansion of prioritized service delivery; and (iii) maintaining fiscal stability.

Last Updated: Oct 20, 2015

Selected 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 Management Shuras (councils), now functioning in more than 14,400 schools. Since 2002, a total of 1,347 schools have been constructed. In addition, 16,588 schools have received a total of $37.2 million in Quality Enhancement Grants under EQUIP I and II for the purchase of school supplies, laboratory equipment, and other materials that help strengthen the learning environment.

The Skills Development Program revived two key institutionsin Kabul: the National Institute of Management and Administration (NIMA) 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. Moreover, 15 Technical and Vocational Education and Training (TVET) schools and institutes selected nationwide received a recognition grant of $30,000 to scale up and/or replicate good practices in delivering skills. Subsequently, these beneficiaries received supplementary technical assistance for the preparation and implementation of Business Development Plans and five-year business plan for their institutes. In partnership with the International Labor Organization and an international certification agency, TVET graduates will receive internationally recognized certification of their skills. To date, 1,545 NIMA graduates have received an International Certificate from the University of Jyvyskala, Finland, and Ball State University, USA.

Health: Over the past decade, Afghanistan has made steady progress in the health sector. 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 to 74 percent today. 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. Births attended by skilled health personnel among the lowest income quintile increased to 35 percent from 15.6 percent. Contraceptive prevalence rate (using any modern method) increased to 30 percent from 19.5 percent.

Bringing most of the efforts in public health servicedelivery under one umbrella in Afghanistan, the World Bank’s System Enhancement for Health Action in Transition (SEHAT) Project aims to support the implementation of the Basic Package of Health Services (BPHS) and Essential Package of Hospital Services (EPHS) through contracting arrangements across the country. SEHAT also supports efforts in strengthening the capacity of the Ministry of Public Health at central and provincial levels to effectively carry out its stewardship functions.

Rural Development: National Solidarity Program (NSP) is government’s flagship program is in its third phase and aims at generating a strong sense of ownership and social stability while enhancing service delivery and security through empowerment and development activities that communities identify, plan, manage, and monitor on their own. Since 2003, NSP has successfully established Community Development Councils (CDCs) in over 34,600 communities, and supported subsequent rounds of CDC elections in over 11,400 of these communities. To date, over 25,700 community development plans have been prepared, and more than 41,200 sub-project proposals designed. Over 40,800 of these proposals have been financed with block grants totaling $922 million, and of these, some 24,600 have been closed while others are ongoing. The financed sub-projects include transportation (30 percent), water supply and sanitation (25 percent), irrigation (26 percent) power (5 percent) and other small-scale infrastructure schemes (14 percent).

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. To date, more than 13,000 km of rural roads and related drainage structures have been upgraded or rehabilitated under these programs through four projects financed through IDA, ARTF, and other funds.

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. Substantial progress has been made in preparation of a Customs Modernization Action Plan, Post Clearance Audit (PCA) implementation plan, Risk Management policy and procedure, and Customs Strategic Plan. A Customs-to-Customs Cooperation Agreement between Tajikistan and Afghanistan was signed on March 26, 2014, and real time data exchange commenced from July 2015. A Customs-to-Customs Cooperation Agreement between Afghanistan and Iran is expected to be signed soon. ACD has also started negotiations with United Arab Emirates and Turkey for signing similar cooperation agreements.

Horticulture and Livestock: Building on the 5,300 hectares of fruit orchards established since 2009 through its predecessor, the National Horticulture and Livestock Project (NHLP) has financed the establishment of another 7,800 hectares of new orchards, about 34 percent of which are in new provinces. In addition, demand from target beneficiaries for kitchen gardening support has been very high, and the entire annual program was amply exceeded. Through this project, 40 percent of the young cattle and young sheep and goat population have already been vaccinated. On the production side, the delivery so far of extension messages has been carried out along with distribution of improved technology packages to 31,540 beneficiaries in 138 districts of 19 provinces.

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. In the irrigation component a total of 98 irrigation schemes have been rehabilitated, benefiting 100,000 hectares of irrigation command area and 63,000 farmers. In the small dam component, the completed pre-feasibility study had selected seven dam sites in the northern provinces.  A feasibility study of the six best-ranked small dams in the northern river basin (which are not on international rivers), selected from a pre-feasibility study of 22 small dams, has been completed. In the hydro-met component, 40 cableway stations for flow measurement at selected hydrology stations have been installed.

Rural Enterprise: Since its inception, the Afghanistan Rural Enterprise Development Project (AREDP) has established 5,561 Savings Groups with a membership of some 68,000 rural poor (52 percent women) in 747 villages. The SGs have saved over $3.37 million and members have accessed more than 27,000 internal loans for productive and emergency purposes with a repayment rate of 95 percent

On average each VSLA has $6,500 as loan-able capital, which is further boosted with a seed grant injection. This improves access to finance for group members who would like to increase productivity or engage in entrepreneurial activities but 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 1,238 Enterprise Groups (65 percent female) and 563 (13 percent female) Small Medium Enterprises that have been selected for their potential as key drivers of rural employment and income generation. Six Provincial Situation Analysis (PSA) have been completed and 10 PSAs are underway. Support was given to 113 Kochies (nomads) and 143 disabled people to enhance their enterprise development skills and productivity. 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 is piloting 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 project 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. The Facility for New Market Development (FNMD), created under the project, was officially launched on March 12, 2013. Since then it has received 1,051 applications from small and medium enterprises (SMEs), and signed cost-sharing grant contracts worth $10 million with 434 firms and associations. Moreover, FNMD has processed 67 additional grant agreements with the SMEs that successfully completed their first cycles of agreements. Also through FNMD, 1,385 jobs have been created across the country, including more than 30 percent for women, with 155 new or improved products introduced in either domestic or export markets.

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. To date, major milestones under the project include progress in construction of optical fiber cable, completion of about 440 kilometers of ducting, and operationalization of the four nodes on the northeast segment. A total of 1,500 Afghans have been trained under the IT skills development program and another round of specially designed job-oriented training programs will run in 2016. Two rounds of the Innovation Support Program awarded 15 local innovators for their ideas on how mobile technologies could help address challenges in various sectors including agriculture, education, and health. The ICT business incubator complex has been constructed in the ICT Institute area of MCIT and eight start-up business entities have undergone training programs in the complex to date.

Last Updated: Oct 20, 2015


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

*Amounts include IBRD and IDA commitments