Overview

  • Economy: Violence continues to affect the security of livelihoods and economic activity in the country. Civilian casualties increased by around 3 percent in 2016 over the previous year, reaching unprecedented levels. Business sentiment remains suppressed, with the number of new firm registrations being about the same level as in the previous year. Other proxy indicators, such as vehicle registration, do not indicate a strong pick-up in economic activity in the first three quarters of the year. The agriculture sector’s performance has also been mixed in 2016; cereals production recorded a decline of nearly 5 percent while fruit production has been higher.

    Real gross domestic product (GDP) growth is thus projected to have only marginally increased from 0.8 percent in 2015 to 1.2 percent in 2016. With a population growth of nearly 3 percent, such a level of economic growth implies a decline in per capita income.

    Inflation increased from -1.5 percent in 2015 to 4.4 percent in 2016, driven by lagged effects of currency depreciation and a recovery in global food prices. As most consumer goods in Afghanistan are imported, global prices and exchange rate movements tend to heavily drive domestic prices.

    Revenue collection has significantly improved in the past two years after the abrupt decline in revenues in 2014. Domestic revenues increased by nearly 15 percent in 2016, which exceeded the revenue target by around 5 percent. Both tax and non-tax revenues increased, while customs duties remained flat given weak imports. In proportion to GDP, however, revenue collection still remains relatively low at 10.7 percent. 

    With an increase in exports and slower growth for imports (due to weaker domestic demand), the trade deficit is estimated to have improved from -36.7 percent of GDP in 2015 to -35.0 percent in 2016. The large trade deficit continues to be financed by foreign aid, with the current account balance expected in a small surplus estimated at around 4 percent of GDP in 2016.

    Growth is expected to increase to 2.4 percent in 2017 and to reach 3.1 percent by 2019, predicated on political stability and absence of further deterioration in the security environment. With agriculture production projected at around the historical average in 2017, food prices are expected to remain moderate and consumer price index (CPI) inflation is forecast to reach 5.5 percent.

    Education: In 2001, no girls attended formal schools and boys’ enrollment was about 1 million. However, education is now one of Afghanistan’s success stories. In 2001, net enrollment was estimated at 43 percent for boys and a dismal 3 percent for girls. 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 trained teacher. School enrollment has increased from 1 million in 2002 to around 8.7 million for general education in 2016, with a girl population of 39 percent and teacher numbers at more than 185,000.

    In 2016 there were nearly 310,000 students (30 percent female) in public and private institutions of higher education from a low baseline of less than 10,000 students at the end of 2001. The majority of the teacher force has received 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.

    However, only about half of the total registered schools have proper buildings, while the rest operate in tents, houses and under trees. Only 55 percent of the teachers meet the minimum requirements while the rest get in-service training to upgrade their skills. National student learning assessments are yet to be mainstreamed and the quality of education and administration re-mains relatively weak.

    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 2015) show significant declines in maternal and child mortality.

    The under-five mortality rate and infant mortality rate dropped from 257 and 165 per 1,000 live births to 55 and 45, respectively. The number of functioning health facilities increased from 496 in 2002 to more than 2,400 in 2016, while the proportion of facilities with female staff increased. Births attended by skilled health personnel among the lowest income quintile increased to 50 percent from 15.6 percent. PENTA3 immunization coverage (a combination of five vaccines in one covering diphtheria, Pertussis, tetanus, haemophilus influenzae type b, and hepatitis B) more than doubled, from 29 percent to 72 percent, among children aged 12 to 23 months in the lowest income quintile. Contraceptive prevalence rate (using any modern method) increased to 30 percent from 19.5 percent.

    Despite significant improvements in the coverage and quality of health services, Afghan health indicators remain below average for low income countries, indicating the need for further action to overcome barriers for women accessing services. Afghanistan has one of the highest levels of child malnutrition in the world, with 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: Despite significant progress in developing the electricity grid, Afghanistan retains one of the lowest rates of access and usage of electricity in the world. Per capita consumption averages 176 kWh per capita per year, which is significantly less than the South Asia average of 707 kWh per year and the average electricity usage per person world-wide of 3,144 kWh (based on 2014 data).

    Only about 30 percent of its population is connected to the grid, up from 6 percent in 2002. Afghanistan’s power utility DABS has grown its customer base steadily, increasing by an additional 6 percent every year.  In 2015, Afghanistan’s peak demand was 1,500 MW, and overall consumption was about 5,76 GWh.

    Afghanistan benefits from cheap imported power that in 2016 met about 77 percent of Afghanistan’s demand, with the remainder supplied from domestic hydropower and thermal plants. The reliability of the grid, particularly in Kabul, has improved significantly over the past few years. Nevertheless, load shedding and outages are still sufficiently common that few have given up their private generators. A large part of the population also owns small solar devices, such as solar lanterns, mainly for lighting and cell phone charging. The NRVA (2013/14) indicates that 46 per-cent of Afghan households own a solar device and 58 percent in rural areas.

    Low connectivity to the grid conceals a vast difference between rural and urban access. While over 89 percent of the population in large urban areas like Kabul, Kandahar, Herat, and Mazar-e-Sharif have access to grid electricity, less than 11 percent of the rural population has access to grid-connected power. About 77 percent of the Afghan population lives in rural areas. Large parts of Kabul, Mazar-e-Sharif, and Pul-e-Khumri have 24-hour power supply. These cities are part of the North East Power System (NEPS), which imports up to 300 MW from Uzbekistan throughout the year, supplemented by up to 300 MW from Tajikistan during the summer. Currently, the carrying capacity of total installed transmission lines is 326MW from Uzbekistan, 164 MW from Iran, 433 MW from Tajikistan, and 77 MW from Turkmenistan.

    Last Updated: May 07, 2017

  • 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 its office in Pakistan.

    Prior to 1979, the World Bank 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 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 $3.46 billion for development and emergency reconstruction projects, and five budget support operations in Afghanistan. This support comprises over $3.02 billion in grants and $436.4 million in no-interest loans. As of April 2017, the Bank has 15 active IDA projects in Afghanistan with net commitment value of over $1.1 billion.

    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’s committed investment portfolio in Afghanistan stands at about $54 million and includes one investment in the telecommunication sector (Roshan), one investment in the hotel sector (TPS), and two operations in financial markets (First Microfinance Bank, Afghanistan International Bank—trade facility). IFC’s investments have had a transformational impact in terms of access to finance and outreach, particularly in the microfinance and telecommunication sectors. IFC’s Advisory Services program has been supporting the Investment program in access to finance, Small and Medium Enterprises (SMEs) capacity development, horticulture/agribusiness, and investment climate.

    The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) has $154 million of gross exposure for three projects in Afghanistan. MTN is a joint effort with IFC in the country’s critical telecommunication sector. The other two projects support dairy and cashmere production.

    The Afghanistan Reconstruction Trust Fund (ARTF) was established in 2002 to provide a coordinated financing mechanism for the Government of Afghanistan’s budget and national investment projects. Since its inception, 34 donors have contributed over $9.5 billion to the ARTF, making it the largest single source of on-budget financing for Afghanistan’s development.  

    The ARTF has a three-tier governance framework (Steering Committee, Management Committee, and Administrator), plus three working groups. This sound framework has enabled the ARTF to adapt to changing circumstances and development priorities with consistency and consensus. The World Bank is the administrator of the trust fund. The Management Committee consists of the World Bank, Islamic Development Bank, Asian Development Bank, United Nations Development Programme (UNDP), Ministry of Finance (MoF), and the United Nations Assistance Mission in Afghanistan (UNAMA) as an observer.

    Last Updated: Apr 11, 2017

  • The World Bank Group’s current engagement with Afghanistan is determined by the Country Partnership Framework (CPF), which is closely aligned with the government’s Afghanistan National Peace and Development Framework (ANPDF). 

    The World Bank Group’s support to Afghanistan over 2017-2020 aims to help Afghanistan build strong and accountable institutions to deliver services to its citizens, and to encourage growth of the private sector. The CPF also aims at supporting economic growth that includes all members of society, with a focus on lagging areas, urban informal settlements, and people driven from their homes by conflict. 

    The World Bank Group strategy aims to help Afghanistan:

    • Build strong and accountable institutions to support the government’s state-building objectives and enable the state to fulfil its core mandate to deliver basic services to its citizens, and create an enabling environment for the private sector;
    • Support inclusive growth, with a focus on lagging areas and urban informal settlements; and
    • Deepen social inclusion through improved human development outcomes and reduced vulnerability among the most underprivileged sections of society, including the large numbers of internally displaced persons and returnees.

     Over the CPF period the World Bank expects to provide $250-$300 million in grants annually to Afghanistan through the World Bank Group’s International Development Association, the fund for the poorest countries.  Additionally, the Afghanistan Reconstruction Trust Fund could provide up to $800 million per year in grants, depending on donor commitments. The International Finance Corporation, the World Bank Group’s private sector arm, aims to expand from the current $54 million portfolio to about $80 million. The Multilateral Investment Guarantee Agency, the Bank Group’s political risk insurance arm, stands ready to provide support with a focus on finance, manufacturing, agribusiness, and infrastructure.

    Last Updated: Apr 11, 2017

  • 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), currently in its second phase, gives funds to communities to rehabilitate or construct school buildings and access teaching and learning materials. Funds are directed through School Management Shuras (councils), functioning in 14,432 schools. EQUIP II has supported the construction of 1,137 schools and six teacher training colleges (TTCs). Under EQUIP II, 16,588 schools have received Quality Enhancement Grants for purchase of school supplies, laboratory equipment, and other resources. Moreover, 11,436 women have received scholarships and graduated from TTCs.

    The Skills Development Program revived two key institutions in 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. Under the Afghanistan Second Skills Development Program, 100 national occupational skills standards (NOSS) have been benchmarked to an international level with the support of an international certification agency, and corresponding curricula developed for 15 trades.

    To date, over 35 institutes have benefited from two rounds of a Recognition Grant, while an additional eight institutes have been selected for a Development Grant, which supports reforms to improve academic management, school administration, linkages with local industries, and curriculum revision. In addition, over 520 Technical and Vocational Education and Training (TVET) graduates have been supported with scholarships through a voucher program, which facilitates further professional studies for meritorious students that graduate from TVET institutes. 

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

    Rural Development: The National Solidarity Programme (NSP), which closed in March, has been widely considered as one of the most successful government programs. The third phase of NSP, which began in June 2010, made remarkable progress in expanding the government’s development outreach nationally to 35,075 Community Development Councils (CDCs), covering an estimated 90 percent of villages in Afghanistan.  Overall, the project surpassed its targets and the Ministry of Rural Rehabilitation and Development (MRRD) and NSP management ensured the utilization and accounting of over $737 million worth of block grants from NSP I and II, and $831 million under NSP III, the reversal of $153.5 million unutilized funds from CDCs, and the full completion of all 88,519 community-demanded infrastructure schemes.

    Under MRRD leadership, the NSP management also smoothly handled the transfer of an estimated 740 key and field staff, assets, and systems from NSP to the new Citizens’ Charter of Afghanistan Project (CCAP). The CCAP came into effect on January 23, 2017. It is expected to be implemented over a period of four years. The project will support the first phase of the Government of Afghanistan’s 10-year Citizens’ Charter National Program, and will target one third of the country. The objective of the CCAP is to improve the delivery of core infrastructure and social services to participating communities through strengthened Community Development Councils. These services are part of a minimum service standards package that the government is committed to delivering to the citizens of Afghanistan.

    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 15,000 km of rural roads and related drainage structures have been upgraded or rehabilitated through four projects under these programs financed through IDA, ARTF, and other funds.

    Horticulture and Livestock: Building on the 5,300 hectares (ha) of fruit orchards established since 2009 through its predecessor, the National Horticulture and Livestock Project (NHLP) has financed the establishment of 14,224 ha of new pistachio and fruit orchards, reaching over 70 percent of its total target of new orchard establishment. In addition, over 70,000 ha of existing orchards have been rehabilitated, against the project’s accumulative target of 106,422 ha.

    The project has also supported construction of 1,036 small water harvesting structures, improving farmers’ resilience to weather changes by allowing harvest and storage of water during the rainy season and gradual release in the growing period based on crop needs. A total of 966 raisin drying houses has been constructed on a cost-sharing basis to reduce post-harvest losses of grapes and improve the quality of raisins produced.

    Regarding livestock activities, NHLP continues to focus on key activities, including poultry production and animal health and extension services, while expanding work programs to other areas such as fishery and dairy. As of March 2017, the project supported 89,755 farmers (57,405 women and 32,350 men), forging them into 4,159 producer groups (2,861 female and 1,298 male groups), including poultry producer groups, to benefit from animal production and health services.

    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) envisages support to rehabilitate irrigation systems serving some 215,000 hectares of land and design of a limited number of small multi-purpose dams and related works, while establishing hydro-meteorological facilities and services. In the irrigation component, a total of 135 irrigation schemes has been rehabilitated, covering over 142,000 hectares of irrigation command area (compared to the end project target of 215,000 hectares).

    In the small dam component, a prefeasibility review of 22 small dams resulted in a feasibility study being conducted on the six best ranked dams in the northern river basin (which is not on international rivers). A detailed social and environmental study will be carried out. In the hydro-met component, installation of 127 hydrological stations and 56 snow and meteorological stations located in various locations on the five river basins in the country is ongoing. In addition, 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 5,500 Savings Groups with a membership of some 60,700 rural poor (52 percent women) in 694 villages. The SGs have saved over $4.7 million and members have accessed more than 41,900 internal loans (64 percent by female members) for productive and emergency purposes with a repayment rate of 95 percent.

    To generate economies of scale, 521 Village Savings and Loan Associations (VSLAs) have been established as federations of the SGs. The VSLAs maintain accurate and up-to-date records of accounts with a good governance structure in place. On average, each VSLA has $5,780 as loanable 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 toward strengthening market linkages and value chains for rural enterprises by providing technical support to 1,424 Enterprise Groups (63 percent female) and 617 (15 percent female) small and medium enterprises that have been selected for their potential as key drivers of rural employment and income generation.

    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. It received 1,051 applications from SMEs, and signed cost-sharing grant contracts worth over $10 million with 424 firms and associations. Moreover, FNMD has processed 66 additional first amendments and five second amendments with the SMEs that successfully completed their first cycle of grant agreements. Through FNMD, over 1,500 jobs have been created across the country, including more than 30 percent for women, with 184 new or improved products introduced in either domestic or export markets.

    Building Institutions: The Capacity Building for Results (CBR) Facility is a capacity building, institutional development, and public administration reform project to strengthen capacity of selected line ministries to better plan and execute their development budget, simplify business processes, and provide faster and quality services to Afghan citizens. CBR promotes accountability in line ministries by introducing results-based reform and services improvement programs. CBR is also one of the key tools for the government to reduce reliance on external technical assistance and parallel structures. It provides support across all line ministries and independent government agencies, enabling them to recruit a substantial number of skilled civil servants to implement their respective CBR reform programs.

    Recruitment of senior-level civil servants funded through CBR is progressing; a total of 931 senior and mid-level management group positions has been selected, including 511 (55 percent) for the subnational level. Of the selected CBR positions, 328 have been contracted to date, 54 of whom are women (6 percent of selected positions), with the remainder at various stages of quality review and approval. A total of 800 contracts are expected to be signed by end April 2017. CBR is also assisting salary harmonization for donor-funded consultants embedded in or working in support of the government.

    Last Updated: Apr 11, 2017

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LENDING

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

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

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infoafghanistan@worldbank.org