Supporting Inclusive Growth in Afghanistan

October 17, 2019

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Continuing insecurity and severe drought resulted in deceleration of growth and increase in fiscal pressures growth slowing to 1.8 percent in 2018. However, Afghanistan has maintained macroeconomic stability, created conditions for a recovery and demonstrated significant progress in human development, for example, in 2017, approximately 8.5 million youth and children were enrolled in general education schools, representing a nine-fold growth since 2001, while the under-five mortality rate dropped from 257 to 50 per 1,000 live births from 2003 to 2018.

Challenge

Afghanistan is a deeply fragile and conflict-affected country, where the security situation remains precarious. Civilian casualties have reached unprecedented levels since 2016. The country’s humanitarian challenges worsened, with increasing numbers of returnees and persons internally displaced by growing violence. Insecurity continues to affect livelihoods and economic activity, curtailing private investment and consumer demand. At the same time, difficult topography, vulnerability to climate change, and growing population impose additional constraints on development.

Output growth has slowed to an estimated 1.8 percent in 2018, down from 2.7 percent in the previous year. The decline was because of: a severe drought that affected wheat production and livestock pasture and, heightened political uncertainty and election-related violence, which dampened business confidence. Despite the lower agriculture output, inflation remained moderate at 0.6 percent on average in 2018, due to lower regional food prices and appreciation of exchange rate against major trading partners. Afghanistan has the third highest youth bulge worldwide: more than one-fifth of its adult population is aged between 15 and 24. Yet 55 percent of Afghans live in poverty, nearly 70 percent of the working-age population are illiterate, and youth unemployment is at 28 percent. Poor nutrition, especially of children, threatens welfare and education gains. Despite a 2 percent annual reduction, 41 percent of Afghan children under the age of five are still stunted.

Revenue mobilization is expected to stall, reflecting: i) exhaustion of revenue potential from measures implemented in 2018, including amnesty programs; and ii) weakening customs revenues in the context of political instability and weakened governance. Afghanistan still remains highly reliant on aid, with domestic revenues sufficient to finance only around half of budgeted expenditures. Afghanistan faces a difficult adjustment as aid flows decline from current very-high levels over the medium-term. New sources of revenues and foreign exchange receipts will be required.


" It is five days that I am here in hospital and I have had a very good experience. I appreciate the hospital’s management system. There are so many patients, but the doctors are always doing their best. "

Amnuallah

resident, Kama district, Nangarhar

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Approach

, closely aligned with the government’s National Peace and Development Framework. The CPF aims at helping Afghanistan:

  • Build strong and accountable institutions to deliver services to citizens and encourage growth of the private sector;
  • Support inclusive growth, with a focus on lagging areas; and
  • Deepen social inclusion and reduce vulnerability, including among people displaced by conflict.

Over the CPF period the World Bank expects to provide $250-300 million annually to Afghanistan through International Development Association (IDA) grants.  Additionally, the Afghanistan Reconstruction Trust Fund (ARTF) could provide up to $800 million per year in grants, depending on donor commitments. The International Finance Corporation (IFC) aims to expand from the current $54 million portfolio to about $80 million. The Multilateral Investment Guarantee Agency (MIGA) stands ready to provide support with a focus on finance, manufacturing, agribusiness and infrastructure.


" Cars used to refuse to bring us down these streets. Before, we paid 200 afghanis to bring two sairs [14 kg] of flour from the shops to our home. If the car refused, we would have to carry everything on our backs from the main road. Now, every car will take us and we pay just 100 afghanis. "

Abdul Majid Jamili

a resident of Sarak Azam District 13 in Kabul city

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Results

The Citizens’ Charter Afghanistan Project (Citizens’ Charter) supports the first phase of the Government of Afghanistan’s 10-year Citizens’ Charter National Program and will target one-third of the country. The Citizens’ Charter aims to improve the delivery of core infrastructure and social services to participating communities through strengthened Community Development Councils (CDCs). These services are part of a minimum service standards package that the government is committed to delivering to the citizens of Afghanistan.

Implementation progress includes: In rural areas: ; and more than 10,900 sub-project proposals prepared.

In urban areas: . A total of 836 CPs completed; 836 CDCs elected; 813 CDPs completed; and 834 sub-project proposals approved.

Results expected under the first phase of the Citizens’ Charter include: 1) 10 million Afghans reached; 2) 3.4 million people gaining access to clean drinking water; 3) improvements to quality of service delivery in health, education, rural roads, and electrification; 4) increase in citizen satisfaction and trust in government; and 5) 35 percent return on investment for infrastructure projects.

Bringing most of the efforts in public health service delivery under one umbrella in Afghanistan, the Sehatmandi (Health) Project aims to increase the utilization and quality of health, nutrition, and family planning services across Afghanistan. The project supports implementation of a Basic Package of Health Services and Essential Package of Hospital Services through contracting arrangements across the country. Sehatmandi 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.

Health indicators saw an improvement with the support of the System Enhancement for Health Action in Transition Program, the precursor of the Sehatmandi Project. For example, the newborn mortality rate fell from 53 to 23 per 1,000 live births from 2003 to 2015; the number of functioning health facilities increased from 496 in 2002 to more than 2,800 in 2018, while the proportion of facilities with female staff increased; and .

The National Rural Access Project focuses on year-round rural access to basic social services. through projects financed by IDA, ARTF, and other funds. The program also established the new Geographical Information System based network planning and rolled out the first nationwide inventory and condition survey of rural roads.

The ARTF supported the National Horticulture and Livestock Project to promote the adoption of improved technologies by target farmers. . In addition, over 32,000 ha of existing orchards have been rehabilitated and some 143,000 kitchen gardening schemes established.

Financed by IDA and the ARTF, the Irrigation Restoration and Development Project helped rehabilitate 192 irrigation schemes, benefiting 216,500 hectares and 425,000 farmer households. Regular data collection is now occurring from 127 hydrological and 56 meteorological stations. In addition, 40 cableway stations for flow measurement at selected hydrology stations have been installed.

Financed by IDA and the ARTF, the Women's Economic Empowerment–Rural Development Project is a follow-on project to the Afghanistan Rural Enterprise Development Project (AREDP) that aims to increase social and economic empowerment of poor rural women in selected communities. Through the project, around 4000 women self-help groups (SHGs) are receiving their initial training.


" My farming was near zero. We faced a shortage of irrigation water and our land had no value thanks to our government and the NHLP for improving our farming work. "

Haji Mirza

a beneficiary, National Horticulture and Livestock Project, Balkh Province

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Bank Group Contribution

and continues to engage in rigorous analytical work underpinning policy dialogue. 

The ARTF, administered by the World Bank, is a partnership between the international community and the Government of Afghanistan to improve effectiveness of the reconstruction effort. The ARTF’s support for National Priority Programs, operating costs of government operations, and the policy reform agenda is contributing to the achievement of the Afghanistan National Peace and Development Framework goals. 

The Bank has actively supported key reforms, particularly in the fiscal and public administration spheres, while the non-lending activities have played a crucial role in informing the government of its strategic choices. 

. IFC’s investments have had a transformational impact in terms of access to finance and outreach. 

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Partners

The ARTF is a partnership between the international community and the Afghan government for the improved effectiveness of the reconstruction effort. As of March 2019,

Moving Forward

Afghanistan’s achievements in the last recent years have been impressive in many ways. The coming years will be critical to strengthening Afghan institutions’ ability to deliver basic services nationally and consolidate and expand the economic development gains made to date. IDA’s role during this period—beyond the provision of its own resources—must be to continue to make the case for these principles, and to help the government effectively prioritize and utilize its own resources.

Last Updated: Oct 17, 2019


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8.5 million
students now attend school, 42% of them being girls, compared to 1 million in 2002.