ADB's Work in Afghanistan

Afghanistan was a founding member of the Asian Development Bank (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 in 2002 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.

As one of Afghanistan’s largest on-budget partners in infrastructure development and regional cooperation, ADB provides in-depth experience in delivering projects for fragile and conflict-affected situations. The bank directs its financial assistance mainly to improvements in agriculture, natural resources, and rural development; energy; and transport.

Since 1966, ADB has committed almost $5.39 billion in grants and provided $120.4 million in technical assistance to Afghanistan. These amounts include ADB-administered cofinancing. Cumulative lending totals $977.1 million.

In transport, ADB has committed around $2.2 billion in grants (including ADB-administered cofinancing) for more than 20 key projects since 2002. With the bank’s support, 1,055 kilometers (km) of national and regional roads have been constructed and rehabilitated, with work continuing on an additional 465 km. The result is improved regional connectivity and better road safety, efficiency, and sustainability.

ADB has helped the Government of Afghanistan develop a comprehensive transport master plan to prioritize infrastructure until 2036. The bank has contributed to the rehabilitation of 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 2020; and helped complete a feasibility study for 813 km of rail line to connect Afghanistan with Turkmenistan and Tajikistan.

The ADB-funded Mazar-e-Sharif to Hairatan railway is an important link that helps to maximize the country’s trade and commerce with international markets.

ADB has also helped deliver reliable electricity to more than 5 million Afghans. The bank has committed $1.87 billion in grants (including ADB-administered cofinancing) for more than 14 key projects since 2002. These projects include the construction of around 2,165 km of power transmission lines, 19 substations, and 163,000 power distribution connections. The transmission line projects not only strengthened the national power grid but also enabled regional power trade with Tajikistan, Turkmenistan, and Uzbekistan. The bank also provides support to strengthen the capacity of Da Afghanistan Breshna Sherkat (the state-owned power utility) and implement ongoing reforms to improve the energy sector.

In the southwest of Kabul, the ADB-financed power distribution network is providing efficient and reliable electricity to around 23,000 households, who previously did not have access to electricity.

ADB has committed more than $900 million in grants (including ADB-administered cofinancing) since 2002 for more than 17 key irrigation and agricultural infrastructure projects. These have helped increase farming productivity, improve food security, promote agribusiness, enhance water resources management, and more. About 350,000 hectares of irrigated land have been rehabilitated and upgraded, with work continuing on another 300,000 hectares. The completed projects have generated around 2 million short- and long-term jobs and benefited more than 9 million people.

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 in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

In 2020, commitments from ADB’s own funds amounted to $10 million for the Mazar gas-fired power project in Afghanistan. Total outstanding balances and commitments of ADB’s nonsovereign transactions in the country as of 31 December 2020 was $13.6 million.

Financing Partnerships

Financing partnerships enable ADB’s financing 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 and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Afghanistan in 1973. Since then, sovereign cofinancing commitments for Afghanistan have amounted to $1.34 billion for 31 investment projects and $30.16 million for 19 technical assistance projects. Nonsovereign cofinancing for Afghanistan has amounted to $25.05 million for three investment projects and $0.23 million for one technical assistance project.

In 2020, Afghanistan received a total of $240 million grant cofinancing from the International Fund for Agricultural Development and the World Bank for the Arghandab Integrated Water Resources Development; and $118 million grant cofinancing from Afghanistan Infrastructure Trust Fund for the Energy Supply Improvement Investment Program – Tranche 7.

A summary of cofinanced projects is available at Afghanistan: Cofinancing.

Operational Challenges

Economic growth and the business environment in Afghanistan are impeded by the precarious security situation and political uncertainty. Technical and financial capacities of government institutions remain limited, resulting in slow delivery and implementation of services and development projects.

ADB and the government are committed to strengthening performance in project delivery, contract awards, and disbursements. Key areas for attention include capacity building and institutional reforms, stimulating private sector investment, and accelerating domestic revenue mobilization to help Afghanistan become more self-sufficient in financing public expenditure and reducing dependence on foreign assistance.

Future Directions

In September 2020, ADB approved the country operations business plan, 2021–2023 for Afghanistan, which is consistent with national development strategies and reflects the government’s priority areas. Under the plan, ADB will continue to assist with pandemic recovery while focusing on agriculture, natural resources, rural development, energy, and transport along with capacity building, institutional development, and sector reform.

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.

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 environmental sustainability and resilience to climate change and disasters

ADB remains committed to tackling Afghanistan’s poverty rate and establishing stronger foundations for more inclusive and sustainable growth. It is formulating a new country partnership strategy for 2021–2025.