Afghanistan: Improving the Development Effectiveness of the Afghanistan Infrastructure Trust Fund

Sovereign Project | 54353-001

1. The proposed knowledge and support technical assistance (TA) will transform the Afghanistan Infrastructure Trust Fund (AITF) into a flagship vehicle for infrastructure investment to improve the Afghan people's economic development and livelihoods. The TA aims to increase the number of contributors and commitments to AITF, make it more financially sustainable, expand financial modalities, strengthen its management and administration, and improve its visibility. The enhanced AITF will help support the Asian Development Bank (ADB) implement its next country partnership strategy for Afghanistan, 2021-2025, which will be aligned with ADB's Strategy 2030 and the Government of Afghanistan's vision. It will provide crucial infrastructure financing needed to support the recovery from the coronavirus disease (COVID-19) pandemic, facilitate private sector development and private-public partnerships, and provide more economic opportunities for women and men.

Project Details

  • Project Officer
    ADB Disclosure
    Central and West Asia Department
    Request for information
  • Country/Economy
    Afghanistan
  • Sector
    • Public sector management
Project Name Improving the Development Effectiveness of the Afghanistan Infrastructure Trust Fund
Project Number 54353-001
Country / Economy Afghanistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 6679-AFG: Improving the development effectiveness of the Afghanistan Infrastructure Trust Fund
Technical Assistance Special Fund US$ 750,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Sector / Subsector

Public sector management / Public administration

Gender Equity and Mainstreaming Some gender elements
Description

1. The proposed knowledge and support technical assistance (TA) will transform the Afghanistan Infrastructure Trust Fund (AITF) into a flagship vehicle for infrastructure investment to improve the Afghan people's economic development and livelihoods. The TA aims to increase the number of contributors and commitments to AITF, make it more financially sustainable, expand financial modalities, strengthen its management and administration, and improve its visibility. The enhanced AITF will help support the Asian Development Bank (ADB) implement its next country partnership strategy for Afghanistan, 2021-2025, which will be aligned with ADB's Strategy 2030 and the Government of Afghanistan's vision. It will provide crucial infrastructure financing needed to support the recovery from the coronavirus disease (COVID-19) pandemic, facilitate private sector development and private-public partnerships, and provide more economic opportunities for women and men.

2. The proposed TA is aligned with ADB's country partnership strategy for Afghanistan, 2017-2021 and the fragile and conflict-affected situations (FCAS) approach. The TA is included in ADB's country operations business plan for Afghanistan, 2021-2023.

Project Rationale and Linkage to Country/Regional Strategy

1. Despite notable progress, Afghanistan still faces many challenges and is one of the poorest countries in the world. In addition to serious problems caused by violent conflict and political uncertainty, Afghanistan faces risks from disasters including earthquakes, droughts, and floods. The COVID-19 pandemic significantly affected Afghanistan's overall prospects. The government is developing the Afghanistan National Peace and Development Framework (ANPDF) II that will guide Afghanistan's development and post-COVID-19 recovery. Infrastructure development is a key to achieving the government's vision outlined in the ANPDF II and may also generate significant employment and inclusive growth, which will be critical to post-COVID-19 recovery and to providing more economic opportunities for all. As part of ANPDF II, the National Infrastructure Plan is also being revised for the period 2021-2025 to support the economic growth agenda. Several investments planned under the National Infrastructure Plan will be in partnership with the private sector, including public-private partnerships and other financing instruments and modalities.

2. Afghanistan's economy was significantly affected by the COVID-19 outbreak, with estimated gross domestic product contraction of 5.0% in 2020. Domestic fiscal revenue is projected to fall from 13.6% of gross domestic product in 2019 to 12.0% in 2020, as economic activity, trade, and customs revenues decline. The budget forecasts declining on-budget development partner support, which increases pressure to efficiently use and prioritize resources in both operating and development budgets. While the operating budget will be maintained at $3.9 billion, the development budget may decline from $1.7 billion to $1 billion until 2023, further limiting government's infrastructure development. The government is preparing for the Afghanistan Conference 2020 and expects that development partner commitments will decrease, after the significant increase in 2020 for the COVID-19 response. Afghanistan's security and political uncertainties influence the level of donor support; however, economic downturns in donor countries and increased global demands will also affect commitments for Afghanistan.

3. ADB is one of the few major development partners in the country focused on financing large infrastructure. During 2002-2020, ADB provided over $6.0 billion in assistance, focusing on agriculture and natural resources, energy, and transport and communications. ADB also administers AITF, which was established in 2010 in response to the need for a dedicated financing mechanism to support infrastructure development. It is the only multi-donor platform for bilateral, multilateral, and individual contributors to invest in infrastructure development projects that foster economic growth and improve the livelihood of the Afghan people. There are five AITF donor contributors. As of 30 June 2020, the total commitments to AITF reached $744.3 million, of which over $450.6 million was allocated to 10 investment and seven TA projects. As of 31 March 2020, contracts awarded totaled $394.5 million, of which $297.3 million was disbursed. The remaining funds in AITF will be used for projects that will be committed in 2020 and 2021.

4. ADB has been working with the government to strengthen AITF and attract more donor contributions; however, commitments were affected by the slow implementation of AITF-financed projects and the difficult operating context. ADB introduced a range of improvements following an impact assessment and an internal audit assessment of AITF. ADB delegated the AITF's administration to the Afghanistan Resident Mission to further streamline processes, strengthen the management, and ensure closer coordination with the donor partners at country level. To address portfolio performance issues, ADB developed the enhanced project delivery approach, which uses the FCAS framework to improve project preparation and management. However, the AITF urgently needs strengthening and new ways of bringing financing for infrastructure development in Afghanistan, including attracting new donors and more private sector investment.

Impact Improved access to better infrastructure and services in Afghanistan
Project Outcome
Description of Outcome AITF strengthened to more effectively support infrastructure development in Afghanistan
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Strategy for enhancing AITF developed and adopted

AITF management and reporting strengthened

Visibility of AITF increased

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The TA is expected to mobilize on an intermittent basis 39 person months of individual consultant services. The TA will also involve recruitment of to a consulting firm with 23.5 person per month to develop the AITF Strategy and Business Plan. International and national individual consultants will be recruited using the individual consultation selection method while a consulting firm will be recruited using the consultants' qualification selection method, following the ADB Procurement Policy (2017, as amended from time to time) and its associated staff instructions for ADB-administered projects
Responsible ADB Officer ADB Disclosure
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Afghanistan Resident Mission
Timetable
Concept Clearance 25 Sep 2020
Fact Finding 18 Nov 2020 to 18 Nov 2020
MRM -
Approval 07 Dec 2020
Last Review Mission -
Last PDS Update 14 Dec 2020

TA 6679-AFG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Dec 2020 15 Dec 2020 15 Dec 2020 30 Nov 2024 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
750,000.00 0.00 0.00 0.00 0.00 0.00 750,000.00 17 Jun 2022 52,409.38

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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