ADB's Work in Afghanistan

Afghanistan was a founding member of ADB in 1966 and has since been supported by the bank over two periods.

View of downtown Mazar-e-Sharif Afghanistan

Resuming its partnership with the country after a hiatus from 1980 to 2001, ADB—in collaboration with other development partners—is supporting Afghanistan’s national development strategies and priority programs to establish a stronger foundation for sustainable economic growth and poverty reduction.

Despite marked improvements since the resumption of operations in 2002, Afghanistan still faces a severe infrastructure deficit. Under the country partnership strategy, 2017–2021 and the country operations business plan, 2020–2022, ADB focuses on developing infrastructure and directs its financial assistance mainly to improvements in agriculture and natural resources, energy, and transport.

Since 1966 until the end of December 2019, ADB has committed $4,911.86 million in grants and provided $107.5 million in technical assistance to Afghanistan. These amounts include ADB-administered cofinancing as well. Cumulative lending totals $967.1 million.

ADB is financing the rehabilitation of 233 km of the national ring road, supporting feasibility and design works for the new Salang Tunnel (as part of Central Asia Regional Economic Cooperation Corridors 5 and 6), and funding priority maintenance of Afghanistan’s regional highway from Kabul to Kandahar and from Kabul to Jalalabad. The bank is also helping train staff at the Ministry of Transport to implement a road asset management and maintenance system that will better manage the infrastructure.

ADB has helped rehabilitate four regional airports; supported the establishment of the Afghanistan Railway Authority; funded the first rail line between Uzbekistan and Afghanistan, which carried around 3 million tons of freight in 2019; and helped complete a feasibility study for 813 km of rail line to connect Afghanistan with Turkmenistan and Tajikistan. The bank approved a $12 million project readiness facility on a grant basis to finance feasibility and design works for the upcoming construction of various road networks and bridges across the country.

Afghanistan’s railway line linking Mazar-e-Sharif with Hairatan on the Uzbekistan border is bringing much needed goods, trade opportunities, and hope.

As the largest on-budget development partner to Afghanistan’s energy sector, ADB has helped deliver reliable electricity to more than 5 million Afghans. The bank has committed $1.77 billion in grants (including ADB-administered cofinancing) since 2002 for more than 13 key energy projects across Afghanistan. Projects include the construction of around 1,971 km of power transmission lines, 19 substations, and 163,000 power distribution connections. ADB has also supported rehabilitation of 10 gas wells. ADB plans to provide additional $742 million in grants (including ADB-administered cofinancing) for 2020–2022 to continue strengthening the Afghan power grid by building new power transmission and distribution facilities as well as supporting the regional power trade through a new interconnection line (with a capacity of 1,000 megawatts) from Uzbekistan to Afghanistan, which will supply reliable power to Kabul and the southern and eastern provinces.

Electric towers seen in the outskirt of Kabul, Afghanistan

ADB has committed more than $879 million in grants (including ADB-administered cofinancing) since 2002 for more than 16 key irrigation and agricultural infrastructure projects to increase farming productivity, improve food security, promote agribusiness, enhance water management, and more. About 350,000 hectares of irrigated land have been rehabilitated and upgraded, with work continuing on another 300,000 hectares. In 2019, ADB committed a $348 million grant to bolster water resources in Kandahar province by expanding Dahla Dam with an additional $40 million expected to be committed in 2020. In addition, ADB plans to provide around $315 million in grants (including ADB-administered cofinancing) for 2020-2022 to continue supporting agriculture, natural resources, and the urban sector in Afghanistan.

Afghan farmer packs harvested potatoes in Bamian city, Afghanistan

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Afghanistan in 1973. Since then, sovereign cofinancing commitments for Afghanistan have amounted to $978.10 million for 29 investment projects and $28.6 million for 18 technical assistance projects. Nonsovereign cofinancing for Afghanistan has amounted to $15.05 million for two investment projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

The precarious security situation and political uncertainty in Afghanistan continue to affect economic growth and the business environment, hampering the impact of development assistance.

Government institutions generally have limited technical and financial capacities, reducing their ability to deliver services and implement development projects.

To improve public sector efficiency and effectiveness, Afghanistan must address skills shortages and improve transparency and accountability. The government also needs to stimulate private sector investment to drive long-term growth and address persistent issues affecting the country’s economic prospects.

ADB remains committed to tackling Afghanistan’s poverty rate and establishing stronger foundations for more inclusive and sustainable growth.

Future Directions

In October 2019, ADB approved the country operations business plan, 2020–2022 for Afghanistan. The plan is consistent with Afghanistan’s national development strategies and reflects the government’s priority areas.

The Afghanistan Infrastructure Trust Fund is a cofinancing mechanism that provides an opportunity for bilateral, multilateral, and other contributors to partner with ADB to finance vital infrastructure in Afghanistan.

Under the operations business plan, ADB will continue to focus on agriculture and natural resources, energy, and transport, supporting technical capacity and institutional development as well as sector reform.

In line with the country partnership strategy, 2017–2021 for Afghanistan, ADB will work to expand access to economic opportunities, markets, and services; build stronger institutions and human capital through better governance and skills development; and increase Afghanistan’s environmental sustainability and resilience to climate change and disasters.

ADB and the government are committed to strengthening performance in project delivery, contract awards, and disbursements.