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Regions and Countries Country Partnership Strategy Document
Afghanistan: Initial Country Strategy and Program 2002-2004
Executive SummaryThe Asian Development Bank (ADB) has assumed a key role since September 2001 in the international community's efforts to plan for and assist in Afghanistan's reconstruction. In this effort ADB has especially drawn on its experience in providing postconflict assistance for rehabilitation and reconstruction to Cambodia, East Timor, and Tajikistan. The Afghan economy is one of the poorest in the world, and Afghanistan has been designated as a least developed country under the United Nations classification. More than 20 years of external aggression and civil war have devastated the economy and physical infrastructure, and have ravaged its social, political, and ethnic fabric. The destructive impacts of Soviet aggression, civil war, and the brutally repressive Taliban regime were aggravated by four years of drought, which continue to seriously affect agricultural, horticultural, and livestock production. The Interim Administration of Afghanistan (IAA) is endeavoring to revive an economy that for all practical purposes had come to a standstill, with production, consumption, trade, saving, investment, and capital accumulation either having collapsed or functioning at a very low level. The IAA has made significant progress on several fronts despite the daunting challenges and risks the country faces. This includes relief and humanitarian assistance for the affected population, establishment of the civil administration, and improvement of security in Kabul with massive support of the International Security Assistance Force. The progress made on the political front-bringing the Loya Jirga process on trade and moving steadily ahead with the smooth transition from the IAA to the Transitional Authority scheduled for establishment in the last week of June 2002, which will eventually lead to an elected government in June 2004. The task of rehabilitation and reconstruction is also coming to life, with the lead taken already by the Afghan people themselves. Houses are being rebuilt and children are returning to schools. The return of refugees from Iran and Pakistan has far exceeded expectations so far, with the pace accelerating in recent weeks. The IAA has prepared the first national recurrent budget of $460 million, mostly for wages and salaries of government employees and other expenses to be financed by both domestic revenue (18%) and external aid (88%). The country has also formulated a National Development Framework (NDF), which was reviewed at the first meeting of the Afghanistan Implementation Group in Kabul on 10-11 April 2002. It is vital that ADB assistance for the rehabilitation, reconstruction, and development of Afghanistan be put within a coherent strategic framework, taking into account the Government's priorities as contained in the NDF. In response to the request of the Afghanistan Reconstruction Steering Group, ADB, along with the United Nation's Development Programme (UNDP) and the World Bank, took the lead in preparing the preliminary needs assessment, on the basis of which the international community made its pledge of $4.5 billion in aid to Afghanistan at the Conference on the Reconstruction of Afghanistan in Tokyo in January 2002. Subsequently, ADB staff have been working with UNDP and the World Bank to complete the comprehensive needs assessment (CNA) in close cooperation with the IAA. ADB has taken the lead in four key sectors: agriculture, education, infrastructure, and environment. The CNA field missions articulated sector strategies and key policies and institutions, which, along with the Government's NDF, provided the ingredients for this Initial Country Strategy and Program (ICSP) for Afghanistan. Among the several important development challenges confronting the country, some of the most critical are to (i) promote security; build trust among people; and create a social consensus on human rights, dignity and the value of life through establishing the rule of law; (ii) generate employment for millions of unemployed, internally displaced persons, refugees and demobilized combatants; (iii) rehabilitate basic infrastructure and social services; (iv) end discrimination against women and promote their return to the socioeconomic mainstream; (v) employ a community-based decentralized approach to rehabilitation and reconstruction; and (vi) utilize the full potential of subregional cooperation with Iran, Pakistan, and the Central Asian republics. The objective of ADB's initial strategy and operations in Afghanistan is to assist the Government in the reconstruction and rehabilitation of the country to ensure a seamless transition from humanitarian to reconstruction and development assistance. This will take place under the overall vision of the NDF. The accent is on broad-based, pro-poor growth, which is also key to securing peace and stability. Poverty has led many young people to join the ranks of armed combatants. Pro-poor growth and a socially inclusive approach could effectively turn this around and make full use of the productive potential of the poor, including women, and make them an integral part of the growth process. To achieve this objective, ADB will work under the leadership of the Government, and closely with Afghan civil society, local communities, the private sector, and other development partners. Thematically, ADB's operations in Afghanistan during 2002-2004 will focus on capacity building, physical infrastructure rehabilitation, revitalizing agriculture and rural development, private sector development, social development, and gender empowerment. In Afghanistan's present early reconstruction stage, capacity building is of the essence. The capacity gap is serious, which hinders good governance and economic management. Inadequate capacity is not unique to the Central Government; it is equally applicable to the provincial, district, and other local authorities/bodies; nongovernment organizations (NGOs), and most importantly the private sector. ADB will provide assistance to strengthen the capacity of all actors involved directly or indirectly in governance and economic management. Transparency, participation, accountability, and the rule of law provide the basis for good governance. Substantial institutional support is needed for local communities and emerging government institutions to ensure their effectiveness and sustainability. This type of support will involve training and capacity building. This is an area in which ADB will need to draw upon the experience and expertise of bilateral agencies as well as NGOs and community-based organizations. ADB's past involvement in Afghanistan focused on projects in agriculture, irrigation, transport, and energy. ADB's specific sector assistance under the ICSP will cover operations mainly in the broad areas of agriculture and rural development (including irrigation); social sectors, especially education and health; physical infrastructure, especially roads and energy; and microfinance. In the transport and energy sectors, ADB will support rehabilitation of national roads, power transmission, and the gas subsector. The national economy cannot be revived quickly without addressing these critical infrastructure constraints. Equally, these operations, especially in the roads subsector, will generate large-scale employment, restore livelihood, and reduce poverty. The role of agriculture and rural development in reviving economic activity, enhancing food security, and reducing poverty is critical, with over 80% of the population dependent on it. ADB operations will cover rehabilitation of production, irrigation systems, and provision of import supplies. Interventions in agriculture will also address the issue of eliminating poppy cultivation. A demand-driven, participatory, and community-based approach will be taken in agriculture and rural development as well as in all other sectors of ADB operations. In social development, ADB will provide assistance to education, health, community and social mobilization, and awareness building. The purpose will be to deal with social constraints such as complete lack of trust between people; fragmentation of society along ethnic lines; loss of respect for human life; violation of basic human rights; high degree of illiteracy, low school participation, and high dropout, especially among girls; lack of skills; poor child and maternal health, and high degree of child malnutrition; high incidence of war-related disabilities; and gender discrimination. Women in Afghanistan should be involved at every stage. ADB's experience in other postconflict situations suggests that women will undoubtedly make many valuable contributions to the reconstruction efforts and to sustainable social development. ADB's operations will be selective in terms of location. Priority attention will be given to the 10 geographic areas selected by the IAA on the basis of vulnerability, potential numbers of returning internally displaced persons, and regional balance. These areas include the Shomali Plains, Darisuf Yak-aw-Lang in Central Bamiyan, Khawajaghart-Lazarbajh, Takhar-Badakhshan, Mazar region, Horat Ghur, Kandahar, Pakita-Pakita, Eastern Nighar, and Jalozal. Several locust-infected areas such as Baghlan, Samangan, Balkh, and Kunduz require emergency assistance and building up of capacity to meet future challenges of a similar nature. Finally, five regions (Ghor, Badghis, Faryab, Saripul, and Northern Badakhshan) are prioritized on the basis of setbacks suffered in agricultural production due to drought and mines. In addition, greater attention will be paid to the provinces affected by the recent earthquake. A number of risks and uncertainties are associated with ADB operations in Afghanistan. First, common to all external funding agencies, is the uncertainty of the security situation linked to ethnic tensions and the unfolding political process. Through quick impact projects, ADB will contribute to building confidence among people who will have a stake in helping to restore and maintain peace and security. Second, political stability after the emergency Loya Jirga and the new provisional government, and the capacity and accountability of its aid operations will be a key to the effectiveness of ADB assistance. Third is the potential complication of the government structure, which could make the implementation of investment projects and technical assistance difficult. ADB will remain prepared to adjust flexibly as the situation evolves. Fourth is the risk associated with weak aid coordination. In implementing ADB's operations, the absorptive, coordinating and executing capacity of the government agencies will be seriously tested since they are weak at all tiers. Besides, with so many aid agencies in a large number of areas, there are inherent dangers of overlap, incompatibility, and inconsistency of approach. The Implementation Group process has made a good start in the aid coordination. This will need to be strengthened as the process evolves and field-level representatives of the aid agencies will have to strengthen coordination under the government's leadership on a routine basis. ADB's program for 2002-2004 will be $500 million as committed at the Tokyo Conference in January 2002. ADB's assistance package for 2002 will amount to $200 million, comprising about $50 million in grant assistance and a loan component of about $150 million. The balance of $300 million is planned for provision in 2003 and 2004 depending on the review of this initial strategy through the CSP Update process in 2003. The actual assistance levels will also depend on the country's absorptive capacity. There is strong potential for subregional cooperation, given the pattern of trade flows between Afghanistan and its neighbors, including Iran, Pakistan, India, China, Tajikistan, Turkmenistan, and Uzbekistan. Regional trade will be fostered by such regional cooperation in trade, road transport and energy development in particular.
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