Financing package underscores World Bank commitment to Afghan people in challenging times
WASHINGTON, June 13, 2017—The World Bank today announced a financing package for Afghanistan of more than $500 million to help the country through a difficult phase in its struggle to end poverty and to signal a long-term commitment to the country’s people.
The package will help Afghanistan with refugees, expand private-sector opportunities for the poor, boost the development of five cities, expand electrification, improve food security, and build rural roads. The financing includes grants from the International Development Association (IDA), the World Bank’s fund for the poorest countries, as well as contributions from the Afghanistan Reconstruction Trust Fund (ARTF – managed by the World Bank) and from other partners, including Denmark, Germany and Japan.
“Today’s approval of new grants confirms the World Bank Group’s strong commitment to the people of Afghanistan in helping them overcome the daunting development challenges facing the country,” said Shubham Chaudhuri, World Bank Country Director for Afghanistan. “Despite steady and encouraging progress by the government in several areas -- including institutional reforms, revenue generation, provision of basic services in health, education, and rural access sectors -- much more needs to be done to improve economic growth and prosperity.”
The new funding, approved by the Board of Executive Directors, aims to support efforts of the Government of Afghanistan to stimulate growth and ensure service delivery during a time of uncertainty when risks to the economy are significant. The international troop withdrawal, begun in 2011, coupled with political uncertainties, have resulted in a slowdown of economic growth, while government budget pressures are increasing as security threats mount and drive people from their homes.
The six grants of $520 million consist of:
- $205.45 million in additional financing from IDA, donors and the ARTF to the Citizens’ Charter Afghanistan Project to support communities with internally displaced persons and returnees from Pakistan;
- $100 million from IDA to the Inclusive Growth Development Policy Grant to support reforms that expand access to economic opportunities for the vulnerable and promote private sector development;
- $20 million from IDA to the Urban Development Support Project to strengthen urban policy-making in national agencies, and strengthen management and service delivery in five provincial capital cities;
- $60 million from IDA to the Herat Electrification Project to provide access to electricity to households, institutions and businesses in selected areas of Herat Province;
- $30 million from IDA and donors to the Afghanistan Strategic Grain Reserve Project to finance establishing strategic wheat reserves and improve the efficiency of grain storage management;
- The Board also approved restructuring the Afghanistan Rural Access Project, which aims to benefit rural communities through access to all-season roads. The approval made it possible for ARTF to provide $105 million in additional financing to the project.
ANNEX WITH DETAILS ON GRANTS:
The $127.7 million to the Citizens’ Charter Afghanistan Project (CCAP)- Additional Financing approved today will be provided by the IDA’s Emergency Regional Displacement Response Fund. It will extend the Citizens’ Charter service delivery package as well as provide emergency short-term employment opportunities through labor-intensive public works, as well as support for collective action activities beyond public works in communities where internally displaced persons are taking temporary shelter and/or returnees have been resettled by the government. It aims to foster greater social inclusion and protect the ultra-poor/vulnerable in both urban and rural communities. The $205.45 million project will be financed by the World Bank, a $44.3 million grant from donors to the Afghanistan Reconstruction Trust Fund (ARTF), $27.5 million from Germany’s Kreditanstalt fur Wiederaufbau (KFW), and $5.95 million from the Government of Denmark. The original CCAP, currently under implementation, is a $628 million project that has been financed with $100 million by the IDA grant, $128 million government co-financing, and a $400 million grant from donors through ARTF. The first phase of the project aims to bring infrastructure and social services (including universal drinking water access) for 8.5 million people, in all 34 provinces and four large municipalities.
The $100 million to the Inclusive Growth Development Policy Grant (DPG) will assist the government with meeting the development objectives articulated in the Afghanistan National Peace and Development Framework (ANPDF). Also known as budget support, the DPG will specifically support an ambitious government reform program that aims at expanding access to economic opportunities for the vulnerable and strengthening the policy and regulatory framework for private sector development. This includes reforms in areas such as the policy framework for internal displacement and returnees, land governance, business licensing, Information, Communication and Technology (ICT), e-money, and Public-Private Partnerships.
The $20 million to the Urban Development Support Project will enable the Ministry of Urban Development and Housing create an enabling policy framework and enhance urban policy-making capacity in relevant agencies at the national level and strengthen city planning, management, and service delivery capacity in five selected provincial capital cities. These cities are Herat, Mazar-i-Sharif, Kandahar, Jalalabad, and Khost.
The $60 million to the Herat Electrification Project aims to support Da Afghanistan Breshna Sherkat (DABS) to provide electricity to some 230,800 households, 1,600 institutions, and businesses in selected areas in Herat Province. More specifically, the project will support investments for (i) building a new 110 kV transmission line and four 110/20 kV substations, and medium and low voltage distribution networks in four districts of Herat Province; (ii) extension, intensification and upgrading the existing grid to provide access to new or improved electricity service to other parts of Herat Province; and piloted construction of solar mini-grids and solar-hybrid mini-grids in villages that are unlikely to obtain grid electricity in less than five years.
The $20.3 million to the Afghanistan Strategic Grain Reserve Project will enable the Ministry of Agriculture, Irrigation and Livestock to establish a strategic wheat reserve to be available to Afghan households to meet their needs following any unforeseen emergency situation and improve the efficiency of grain storage management. In addition to the World Bank support, $9.7 million will be provided by the Japan Policy and Human Resources Development Fund. In order to achieve its objective, the project will upgrade two existing storage facilities, build four new large facilities, and establish the required institutional infrastructure to manage the reserve. It is estimated that by end of this five-year project, the overall storage capacity reach 200,000 Metric Tons, that is sufficient for the consumption of two million Afghans for six months.
Under the restructuring of the Afghanistan Rural Access Project, the World Bank’s social safeguard policy for cultural heritage, OP 4.11 Physical Culture Resources, has been triggered and will include support to improve accessibility to the Bamyan cultural heritage site. The new component of Contingency Emergency Response will enable the project to scale up its benefits to a wider range. The project restructure will make it possible for ARTF to provide the additional $105 million grant. The original grant for ARAP was $332 million ($125 million by IDA and $207 million by ARTF). The project has been ongoing since August 2012.