Regions and Countries

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p. 4 of 10 BACK | NEXT Executive Summary I. Current Development Trends and Issues II. The Government's Development Strategy III. ADB's Development Experience IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation

Afghanistan: Initial Country Strategy and Program 2002-2004

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III. ADB's Development Experience

A. Impact of Past Assistance

29. The ADB assessments carried out in the context of project and technical assistance (TA) reviews in the pre-1979 period suggest that ADB-funded projects in Afghanistan were poorly managed and executed. While ADB has not carried out any formal evaluations of its projects and programs in Afghanistan, it is evident that the impacts of its assistance were well below ADB-wide norms at the time that it suspended its operations in the country in 1979.

B. Portfolio Performance and Status

30. Afghanistan has been a member country of ADB since 1966. ADB operations began in 1969, and the first loan was approved in 1970. By the time of the Soviet occupation in 1979 and suspension of ADB operations, Afghanistan had received eight loans totaling $75 million on concessional terms from the Asian Development Fund (ADF), and TA totaling $2.5 million. The major emphasis of ADB's operations in Afghanistan was on small- and medium-sized agriculture and irrigation projects. Other interventions were in the areas of transportation and hydropower development, and vocational education. All projects faced serious implementation problems due primarily to weaknesses of the executing agencies and excessive concentration of authority at the center. A World Bank/ADB joint economic mission at that time concluded that, under the existing circumstances, the country would have had difficulty in sustaining momentum for economic development. Since ADB discontinued operations, Afghanistan fell into arrears. As of 31 October 2001, the principal outstanding was $29.1 million, and as of 31 January 2002, the total overdue loan service payments (arrears) amounted to $15.82 million (at ADB's exchange rates as of 31 January 2002). ADB, IMF and the World Bank are addressing the loan arrears issue in a coordinated way to pave the way for resumption of lending to Afghanistan.

C. Conclusions and Lessons for the Country Strategy and Program

31. There are no documented lessons from past ADB operations in Afghanistan up to 1979, that could be drawn upon in developing the country strategy and program. However, general lessons can be drawn from ADB assistance to developing member countries after suspended operations or at a postconflict stage. ADB may be facing in Afghanistan a number of problems already noted in Cambodia, and Viet Nam including fragmented aid coordination, slow implementation and disbursement of loan and TA proceeds due to cumbersome procedures, and an inappropriate policy or institutional framework. Since Afghanistan's new government will start with very limited skills in these areas, the implementation of loan projects and TAs will place a significant burden on staff in that government. Also, similar to the case of East Timor, the administration and Government of Afghanistan are starting with acute shortages of technical and experienced personnel for policy analysis and preparation, supervisory management, and senior line positions. Lessons from the resumption of ADB operations in Cambodia indicate that projects with poor performance are associated with an inappropriate policy or institutional framework. These experiences suggest that at the beginning there has to be heavy investment in capacity building. This provides the justification for a primarily advisory capacity-building TA as proposed by ADB for 2002.

32. A number of lessons learned from ADB's post-conflict operations in Cambodia, East Timor and Tajikistan are also relevant for Afghanistan: (i) assistance should not include components with complicated issues that require long-term preparation; (ii) assistance should adopt a "process approach" to allow flexible adjustment of project design during implementation; (iii) to ensure expeditious delivery of the assistance, it is necessary to (a) make intensive use of experienced consultants including drawing on the expertise of the expatriate Afghan diaspora, (b) field ADB review missions frequently; and (c) consider ADB financing for most (or even all) project costs including operation and maintenance at least in the early years; (iv) follow-up projects should be prepared in parallel with the implementation of program assistance and quick-impact pilot projects to provide supplementary support to address policy and institutional issues; (v) necessary support should be given to overcome government personnel's lack of experience and familiarity with ADB requirements and procedures; (vi) substantial TA is necessary to strengthen weak institutional capacity, and to ensure effective monitoring and evaluation of implementation and impact; and (vii) post-conflict lending is likely to require a higher level of ADB support and supervision than normal lending activities.

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