KABUL, July 12, 2017—The Afghanistan’s Ministry of Finance today signed a financing package of $482.3 million in grants with the World Bank to help the country through a difficult phase in its struggle to end poverty. It signals a long-term commitment by both parties to the country’s development and people.
The package will help Afghanistan support communities 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 on behalf of 34 donors.
“This package of assistance is a reaffirmation of our joint commitment to address development and economic challenges faced by our people. Better service delivery, improved living conditions and more job opportunities will be created. Our people in both rural and urban areas will be the main beneficiaries of this assistance," said HE Eklil Hakimi, Finance Minister of the Islamic Republic of Afghanistan. “All this assistance will be channeled through the national budget and will be spent with full transparency and effectiveness.”
The new funding package 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.
“Today’s signing of the new financing reaffirms the World Bank Group’s commitment to the Afghan people as they strive to overcome daunting development challenges compounded by a difficult security environment,” said Shubham Chaudhuri, World Bank Country Director for Afghanistan. “We are encouraged by the government’s determination to build upon progress to date in several areas, including institutional reforms, revenue generation, and provision of basic services in health, education, and rural access sectors.”
The $482.3 million financing package consists of seven grants:
- $172 million in additional financing from IDA ($127.7 million) and the ARTF ($44.3 million) 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 reinforce urban 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;
- $20.3 million from IDA to the Afghanistan Strategic Grain Reserve Project to finance establishing strategic wheat reserves and improve the efficiency of grain storage management;
- $105 million in additional financing from the ARTF to the Afghanistan Rural Access Project, which aims to benefit rural communities through access to all-season roads.
- $5 million project preparation grant from the ARTF to support the establishment of a Women’s Economic Empowerment National Priority Programme (WEE-NPP) Support Project, which aims to advance women’s access to economic assets and opportunities.
ANNEX WITH DETAILS ON GRANTS:
The IDA grant of $127.7 million of the $172 million to the Citizens’ Charter Afghanistan Project (CCAP) - Additional Financing signed today will be provided by the IDA’s Emergency Regional Displacement Response Fund. It will extend the Citizens’ Charter service delivery package and 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 project, which will cost a total of $205.45 million, will be financed by the World Bank, $44.3 million from donors to the ARTF, signed today, $27.5 million from Germany’s Kreditanstalt fur Wiederaufbau, and $5.95 million from the Government of Denmark. The first phase of the CCAP aims to bring infrastructure and social services (including universal drinking water access) to 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). 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, e-money, and public-private partnerships.
The $20 million to the Urban Development Support Project will support the Ministry of Urban Development and Housing establish an enabling urban policy framework and enhance the urban policy-making capacity of relevant agencies at the national level and strengthen city planning, urban management, and service delivery capacity in five selected provincial capital cities. These consist of 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 people, and 1,600 institutions and businesses in selected areas in Herat Province. More specifically, the project will support investments to (i) build 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) extend, intensify and upgrade the existing grid to provide access to new or improved electricity service to other parts of Herat Province; and (iii) pilot 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 project also finances assistance to the implementing agency, DABS, for procurement and project management, as well as assistance to the Ministry of Energy and Water in developing the legal and regulatory framework for grid integration.
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 emergencies and improve the efficiency of grain storage management. It is a $30 million project and in addition to the World Bank support, signed today, $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 will reach 200,000 metric tons, sufficient to supply two million Afghans for six months.
The $105 million ARTF grant to the Afghanistan Rural Access Project will enable it to scale up its benefits to a wider range of beneficiaries. The original grant for ARAP was $332 million ($125 million from IDA and $207 million from the ARTF). The project has been ongoing since August 2012.
The $5 million project preparation grant (PPG) from the ARTF will support the Women’s Economic Empowerment National Priority Programme (WEE-NPP) Support Project. The objective of the grant is to support the government establish a WEE-NPP Support Project that will advance women’s access to economic assets and opportunities. The grant will assist the Ministry of Labor, Social Affairs, Martyrs and Disabled (MoLSAMD) in mobilizing a core coordination team and establishing an umbrella program that will finance technical assistance, capacity building and analytical work at the ministry and in all the key line ministries and institutions that fall under the WEE-NPP.