Government of Afghanistan and the World Bank Sign Grant Agreement to Improve Local Governance and Rural Infrastructure

August 10, 2010

KABUL, 10 August 2010 –The Afghanistan Ministry of Finance and the World Bank today signed a grant agreement worth $40 million from the World Bank’s International Development Association (IDA) to support the Third National Solidarity Program (NSP III).  NSP III builds upon the achievements of the first two phases of the NSP, widely recognized as one the most successful national development programs in Afghanistan.

Since the inception of the first NSP program in 2003, 17 million rural people in all 34 of Afghanistan’s provinces have benefitted from improved infrastructure such as access to water, electricity and roads.  22,000 Community Development Councils (CDCs) have been elected and over 41,000 village level projects have been completed.  Another 10,000 sub-projects are nearing completion.  To date, the program has disbursed over $720 million directly to communities.

“I have been involved with the NSP program since its beginnings and I have personally seen the gratitude of our people for the difference it has made,” said HE Dr.  Omar Zakhilwal, Minister of Finance (MoF).  “Villagers now have access to electricity, water and improved rural infrastructure such as roads, culverts and bridges. Maintaining these achievements and expanding NSP, which is a truly national program, is essential for building a prosperous and stable Afghanistan.”

Under NSP III, the roll out of elected CDCs to every rural community in Afghanistan will be completed.  These Councils, made up of both men and women, determine the use of small grants to build essential infrastructure depending on the particular needs of the village.  By channeling resources to democratically-elected CDCs, the program not only increases the access of rural communities to basic services and infrastructure, but also fosters participatory involvement and accountability in village level development.

“With additional funding for the third phase, this program will reach out to every rural community in the country making NSP a truly national program,” said HE Jarullah Mansoori, Minister of Rural Rehabilitation and Development. “Most importantly this phase enables the government to provide a second round of grants to support communities unmet priority needs.  Communities will also be encouraged to federate and cluster to engage with other government programs.”

Under NSP III, a number of innovations have been introduced to support the Government of Afghanistan’s vision for the CDCs as the sustainable institutions of village level government.  First, NSP III will support the completion of the roll out of initial block grants to the remaining 10,320 communities so that the program will cover all rural communities in Afghanistan. Second, in view of the immense developmental needs of the rural population, a second round of grants will be provided to 17,400 CDCs that have successfully used their initial grant.  Third, and most importantly, NSP III will focus on improving the institutional quality, sustainability and governance of CDCs and enhance their ability to engage with other institutions.

"Our analyses of NSP shows that the program empowers communities to make decisions and manage resources which in turn lay the foundation for a sustainable form of inclusive local governance and rural development which helps alleviate poverty," said Josephine Bassinette, World Bank Acting Country Director for Afghanistan.

The total NSP III program cost is $1.5 billion of which IDA financing of $40 million has been approved.  The remaining balance is expected to be met by other donors especially through the Afghanistan Reconstruction Trust Fund (ARTF). The ARTF Financing Strategy envisages $700 million of investment over the coming three year period for NSP. USAID – the largest of the ARTF donors contributing to NSP - has recently increased its total NSP investment from $265 million to $440 million to date.