Asian Development Bank Statement at the Kabul Conference - Xiaoyu Zhao

Speech | 20 July 2010

Statement by ADB Vice-President Xiaoyu Zhao at the Kabul Conference on July 20, 2010 Kabul, Afghanistan

Excellencies, Distinguished Co–Chairs, Delegates, Ladies and Gentlemen,

The Government has articulated a revised strategic platform for development, focused on job creation and broad–based economic growth, driven by national priority programs in agriculture and rural development, human resources development, and economic and infrastructure development, as agreed at the London Conference. We congratulate Minister Zakhilwal and his colleagues for their preparation of these cluster papers, which clearly state Afghanistan's priority sector needs and budgetary requirements. The Government has requested that development partners anchor their assistance to the national priority programs proposed in these papers. We believe this is a good idea.

Please allow me to make five observations on behalf of the Asian Development Bank:

First, we welcome the call for development partners to channel at least 50% of resources through the core budget, as committed at the London Conference, within two years. The ADB has channeled 100% of our assistance through the budget since 2002, in full alignment with priorities expressed in the Afghan National Development Strategy, and we encourage others to do the same.

Second, on investment priorities and aid coordination, our message is for international agencies to sharpen their strategic focus, move into areas where we are strong, get out of others where we are not, establish long term partnerships with one another and the Government, and be much less bureaucratic. Our own strategic stance is aligned with this message. We focus on building transport networks, energy security and efficiency, irrigation facilities, and private sector development. Flagship projects include (i) the construction of a railway line from Hairatan to Mazar–e–Sharif, to be completed by December; (ii) the completion of the "ring road" – works will resume soon to complete the final 250 km of this mega–project; (iii) improved supply of electricity to Kabul and other towns; (iv) the modernization of irrigation infrastructure; (v) the financing of Afghanistan's largest mobile telecommunications operator and first private, commercial bank; and finally, three new projects with DFID and Denmark in Helmand, including road, power and water activities, to get underway soon.

Third, the ADB has committed $2 billion to infrastructure development since 2002 and we will do another $1 billion over the next few years. These are visible and meaningful investments. They help people, and create businesses and jobs. Infrastructure projects are essential if Afghanistan will be able to exploit its vast mineral wealth and fulfill its ambition of becoming a transit corridor linking East and Southern Asia to Europe and the Middle East. According to the Economic and Infrastructure Development cluster paper, $3.8 billion is needed over the next 3 years to rehabilitate and expand transport and energy networks, to develop extractive industries, to upgrade urban services and e–communications, and to promote SME development. However, the current financing envelope covers a fraction of these expenditures. The Government has proposed therefore that an Infrastructure Trust Fund be established, managed by the ADB, to raise additional concessional funding in support of the Government's investment program, by leveraging more support for essential infrastructure projects provided by the ADB and others. Eligible investments might include roads, railways, airports, energy, irrigation, and/or basic urban services. These investments may be national in nature, but most have huge regional content. The ADB strongly supports the Government's proposal for an Infrastructure Trust Fund.

Fourth, the ADB will work with other donors to increase access to finance in rural Afghanistan, which can help farm and non–farm rural households seize opportunities to grow their businesses and improve their standards of living.

Finally, I would like to take this opportunity to thank ADF donors represented here today for agreeing to "freeze" the phase–out from the special premium that Afghanistan has received. This means Afghanistan will be eligible for the same funding level during 2011–2012 as it received during 2009–2010, or $548 million.

Allow me to conclude by emphasizing our unwavering commitment to Afghanistan's reconstruction and development.

Thank you.