,, J

ACKU CHAlLENGES AFTER 23 YEARS OF ClVll WAR

After decades of armed conflict in one of the Earth's Vast areas of the country are mined, making it even

poorest countries the interim government of President more difficult to rebuild the necessary economic and

Karsai today is facing a Herculean task. In the 1960s and social infrastructure. In addition, the security situation is 1970s was already among the poorest devel­ very unstable, particularly in the south and east. oping countries. Now the economic and social infra­

structure is almost completely destroyed after 23 years The deterioration of the state and social order, the

of civil war. Measured by the Human Development Index bad economic and social situation and the catastrophic (a yardstick for a country's development level) Afghanis­ drought of the past years have also aggravated the tan ranked 169th out of 174 countries in 1996. Since country's ecological problems. These include, in particu­

then the economic and social situation has again lar, excessive use of the already dwindling forests and

deteriorated substantially. Today large sections of the pastures, salinization of irrigated land and uncontrolled population are living in existential poverty and have no exploitation of mineral reserves, resulting in environ­ access to schooling, health facilities, clean drinking water mental damage. or other public services. Famine and malnutrition are

now widespread as a consequence of the drought of the

past years. According to and World Bank

estimates the costs of rebuilding the destroyed infra­ structure will amount to at least USD 14.5 billion in the next ten years.

23 years of civil war have completely destroyed ACKU many buildings in . Afghanistan - the History of a Bleeding Country .

With its strategic position between the Middle East, and the more traditional clans which considered the Central Asia and the Indian subcontinent along the Silk government's new direction to be ignoring their Islamic Road Afghanistan has always played a special political values. Clashes erupted within the wings of the govern­ and economic role in the region. Unfortunately the coun- ment between pro-Soviet factions and those aspiring for try has only seldom been able to use this role to its greater independence from Moscow. After the defeat of advantage; instead Afghanistan all too often became a the pro-Moscow party wing the Soviet Union marched puppet of geopolitical interests. Particularly in the 19th into Kabul in 1979 and installed a new government. century, when Great Britain and Russia both scuffled for influence in Central Asia, Afghanistan became an impor- The presence of the Soviet troops, however, fueled tant frontline state between the two empires. Great the resistance of the mujahedin against the Communist Britain's influence eventually prevailed and Afghanistan occupation even more, and a bloody civil war erupted became a de facto British protectorate in 1880; it did not that lasted for 10 years and cost the lives of over 1 mil­ regain independence until 1919. lion Afghans and 15,000 Soviet soldiers. During this time the mujahedin received substantial military and financial However, political continuity did not return until the support from abroad. Still, after the retreat of the Soviet crowning of Zahir Shah in 1933, who reigned over the troops in 1989 it took another three years for the muja­ country as a monarch for over four decades. After the end hedin to march into Kabul. The various mujahedin groups of World War One Afghanistan again became a frontline eventually agreed on a new government under the ethnic state between two superpowers vying for influence, this Tadjik Rabbani which, however, was unable to establish time the USA and the Soviet Union. Particularly after unity between the rivalling mujahedin groups. From 1992 World War Two Afghanistan increasingly leaned towards there were continuing military confrontations between the Soviet Union, among other reasons because of the the troops of Gulbuddin Hekmatyar und Rashid Dostum. stronger trade relations and the much higher develop- In the two years of fighting vast areas of Kabul were ment support which it receivedACKU from there. In 1973 the destroyed and 25,000 civilians were killed. From 1994 a king was overthrown and General Muhammad Daud pro- new group gained increasing influence: the , a claimed a republic which, however, lasted only a short faction of radicallslamist fighters dominated by Pashtuns time. His stronger orientation to the West triggered in- · (the term "Talib" stands for "student of theology" or creasing resistance by the communist factions. In 1978 "seeker of truth"). In only three years they managed to he was assassinated by the pro-Communist People's gain control of vast parts of the country but failed to gain Democratic Party which took over power and propagated recognition as Afghanistan's legitimate government by closer alignment with Moscow. This gave rise to the first the international community of nations with the excep­ armed conflicts between the new government in Kabul tion of Pakistan and .

Continued next page Even after the Taliban took over the capital in 1997 close connections with the AI-Oueda terror network. armed confrontations with estranged mujahedin groups After the Taliban refused to extradite leading AI-Oueda that had joined to form the so-called Northern Alliance operatives the USA and Great Britain proceeded to give continued. The Taliban concentrated entirely on estab­ military support to the Northern Alliance. In November lishing a strictly lslamist religious state and on the mili­ 2001 the Northern Alliance marched into Kabul, ending tary confrontation with the Northern Alliance. During the Taliban rule. this time the country's economic and social development was almost entirely neglected. Relations to foreign aid On December 5, 2001 the Petersburg conference in organizations were greatly scaled down. Religious minor­ Bonn laid the cornerstone for a new interim administra­ Hies were suppressed and women were excluded from tion for Afghanistan under the leadership of Hamid almost all public activity. The Taliban regime was gener­ Karsai. In June 2002 the Loya Jirga, a large consultative ally dismissed by the majority of Islamic countries and assembly of all clans, elected an interim administration came increasingly under international pressure after the headed by President Karsai . terrorist attacks of September 11, 2001 because of its

The institutional prerequisitesACKU for the market portion of the remaining administration, the justice economy-based system envisaged by the interim admin­ system and the statistical services need to be largely istration are almost completely lacking. For example, a built from scratch. Most of the recent experience will be formal banking system, a public budgeting system, the of no practical help because it is characterized primarily taxation, customs and levies system as well as a large by centralist statism and a wartime economy. Afghanistan at a Glance

Population 27.2 million Adult illiteracy rate

Population growth 2.6% p. a. - total 64% of all adults

Birth rate 6.8 births -women 78% of all women

Life expectancy 43 years

Child mortality 257 of 1,000 children Population with access to

(under the age of 5) clean drinking water 19% of the population

Share of undernourished children

(under the age of 5) 49.3% of the age group

0...., 0

) \

.. , ACKU ·.

Province Capital City Province Boundary

0 200km

Cartography: Waltraut seegers THE KFW DEVELOPMENT BANK lN AFGHANlSTAN - AN OVERVlEW

Even before the interim administration had offi­ Today the KfW Development Bank is supporting cially begun its work the KfW Development Bank was in projects in a volume of almost EUR 90 million on behalf the region at the end of November 2001 with a first of the German government and the European Union. In exploratory team together with the GTZ, the German accordance with the agreements concluded between the

Agency for Technical Cooperation, to identify the priori­ German and the Afghan government the KfW Develop­ ties for rebuilding the country. In early January 2002 the ment Bank is increasingly concentrating on the areas of KfW Development Bank then took up its work in Kabul. economic reforms I creation of a market economy, energy Local office space was rented on behalf of the German supply and urban water supply. During a transitional government and first agreements were concluded with period in the next years, ongoing projects in the health the interim administration on the most urgent projects. and education area will also continue to be implemented. To support the creation of a market economy measures

By mid-February the first schools which the will include the establishment of a micro finance bank in KfW Development Bank helped to build and renovate which the KfW Development Bank will participate with funds of the German Ministry for Economic Cooper­ together with the Aga Khan Foundation and the Inter­ ation and Development (BMZ) were inaugurated; for national Finance Corporation (IFC). many girls and boys this was an important step towards normality. Repairing street lights in Kabul to improve The KfW Development Bank's regional focus so far public safety was also one of the first measures. The first lies on the city of Kabul and the adjoining provinces street lights were delivered to Kabul and installed already because of the difficult security situation outside these in February. In the ensuing months the KfW Development areas. Further important locations for reconstruction Bank continued its work by supporting emergency repairs work are the provinces of , Badghis and Farah. on the broken-down power network in Kabul as well as Kunduz, a province 250 km north of Kabul, is also under repairs in the water supply network andACKU the streets. At consideration. the end of 2002 repair works on water supply facilities in Herat were also initiated. In addition, measures being carried out by the

UNHCR and UNICEF to accommodate returning refugees and immunize children are also being supported through­

out the country. ••• ••••••• ••••••••••• .....••••• .. DEll KFW-GRUPPE

COOPERATlON WlTH DEVElOPlNG AND TRANSlTlON COUNTRlES: THE KFW GROUP

The KfW Group gives impetus to economic, politi­ to development in the partner countries. KfW is cur­ cal and social development on a global scale. As rently financing some 1,400 projects in 109 countries. bankers we work efficiently every day. As promoters The projects promoted via FC funds are selected we stand for the sense and sustainability of our jointly by the German federal government and the actions. The proceeds of our work flow back into our partner country according to development policy cri­ promotional activities and help to secure our promo­ teria. The local partners are responsible for the tional potential in the long term. The brand names preparation, implementation and operation of the KfW Promotional Bank, KfW SME Bank, KfW Develop­ projects. KfW Development Bank gives them profes­ ment Bank, DEG and also Export and Project Finance sional advice in planning and implementing and also come together under the umbrella of the KfW Group. in monitoring the projects. At the same time, it super­ On behalf of the German federal government KfW vises the proper use of the funds. Development Bank fin ances the expansion of the Within the KfW Group DEG improves private-sec­ economic and social infrastructure and enables the tor structures in developing and transition countries, introduction of protective measures for natural thereby making room for private business initiatives. resources and the environment. DEG supports the These initiatives form the basis for sustainable eco­ private sector through its investments. Their common nomic growth and a lasting improvement in people's goal is the sustainable development of the partner living conditions. countries. As a specialist for long-term project and corporate Financial Cooperation (FC) improves the economic finance, DEG advises private enterprises, structures and social situation of the people in developing and and finances their investments in Africa, Asia and transition countries and contributes to poverty Latin America as well as in Central, Eastern and South­ alleviation, resource conservation and the preserva­ eastern Europe, and in this way mobilises long-term tion of peace worldwide. investment capital, technical expertise, and manage­ On behalf of the German federal government KfW ment and marketing experience. Development Bank grants loans at favorable interest Together with its clients it develops solutions that rates with long terms and also financialACKU contributions. are adapted to the individual project and the spec ific To complement the funds provided from the federal risk situation of the relevant country. Additional fac­ budget, the KfW Group raises funds on the capital tors that determine the success of DEG's activities are market. It grants the funds it raises either in combi­ long-term financings and intensive, lasting support nation with budget funds as low-interest loans or in through partnership. the form of promotional loans at market conditions. DEG invests in profitable, environmentally and KfW Development Bank finances investments in socially sustainable projects in all economic sectors the economic and social infrastructure and also opening up to private entrepreneurial activity. reform programmes. It supports the buildup of effi­ Another main focus of its work is the development of cient financial systems that provide microfinance and the financial and capital markets. Local financing supply small and medium-sized enterprises with loans. institutions are given reinforcement and the spectrum It also contributes to improving agricultural produc­ of financial services on offer is being expanded. It is tion. The activities of KfW Development Bank look to through these financing institutions that small a~d the future: the aim is to go beyond the impacts of in­ medium-sized private enterprises gain access to dividual projects and to dismantle structural obstacles capital.

Is Assaults have repeatedly been perpetrated within Kabul with explosive devices hidden in potholes. It can ­ not be ruled out that this will continue to happen in the

in Kabul Phases I 8: II EUR 5.0 million future. To at least enable rough and ready road repairs the KfW Development Bank has been financing a road re­

When a delegation of the KfW Development Bank habilitation programme in Kabul on behalf of the German travelled to Kabul in December 2001 to prepare first co­ government since April 2002. This has also been intended operation projects the roads of Kabul were in a desolate as an immediately visible contribution to the economic condition. Vehicles were having to veer to avoid potholes reconstruction of the capital in advance of the Loya Jirga. of varying depth and broken-off shoulders, and traffic On the Afghan side the municipal administration of Kabul jams were commonplace. A safe street network, however, is responsible for the programme. Under this emergency is an important prerequisite for Kabul's economic programme, which is scheduled to run until the end of recovery. Ayyaz Khan, a 42 year-old food retailer in Kabul, 2003, the potholes will be closed and existing road expressed what thousands of business people in drainage facilities repaired. The construction measures Afghanistan are hoping for: "Businesses urgently need a will be carried out in a way that creates income oppor­ working infrastructure for safe and reliable production tunities for the local population. and to help get their products to markets."

ACKU

Road construction measures also create employment for women. The FC programme also involves other international donors: the KfW Development Bank received a commis­ sion by the Afghanistan Reconstruction Trust Fund (ARTF)

in a volume of USD 3 million to be able to expand the measures until the end of 2004.

The success of this project became quickly apparent. The KfW Development Bank is thereby helping the Karsai

administration to durably and tangibly improve the

people's living conditions.

Urban Water Supply A Major Focus The contrast between new and old

road surfaces is quite visible. • Improvement of the water supply in Kabul EUR 9.6 million

Improvement of the water supply in Herat and Provinces EUR 7.5 million

A total of EUR 5 million is being made available from Total EUR 17.1 million FC funds. This sum is being used to finance two inter­ national experts, the wage costs of approximately 170 After over 23 years of civil war Afghanistan's water workers, the procurement of building materials and other sector is in need of a fundamental reform. Shortly after inputs, the acquisition of building machines, tools, the transition government took office in June 2002 emer­ accessories and consumables as well as for the leasing of gency measures to repair the water supply systems in local transport capacities. Motorized traffic can now flow Kabul and Herat were agreed within the framework of freely again on 112 kilometres of rehabilitated roads. German Financial Cooperation (FC) with Afghanistan. The Besides, the local construction ACKUworkers earn an income. KfW Development Bank is able to draw on experience Women find work here as well: war widows clean the gathered in the 1970s, when the development of the road sections before they are reopened. This used to draw drinking water supply in Kabul was already being sup­ numerous curious onlookers particularly at the beginning ported under FC. The FC projects are designed not only to of the works because women working in public used to swiftly improve the inhabitants' living conditions but also be prohibited. to contribute towards long-term structural reform.

The programme benefits transport enterprises and vehicle operators alike, but also pedestrians and cyclists who profit from transport services and increased traffic safety.

I a THE WATER SUPPLY SITUATION IS DESOLATE power supply. Only around 30% of Kabul's inhabitants are currently being supplied with water, and they receive

Most of Kabul's inhabitants today hav~ to rely on only around 15 litres per person per day. A further reason open wells and hand pumps for their "drinking water': As for the water shortage is the population growth of 2.6% they have no orderly sewage disposal whatsoever the per year. groundwater is not safe from contamination. As it is often pumped up in the immediate proximity of cesspools of sanitary installations, water quality is poor. Water­ REBUILDING THE WATER SUPPLY SYSTEMS induced diseases, especially diarrhoea, are common. They IN KABUL AND HERAT are a particular threat to children, who often die from severe diarrhoea. Many wells have dried up as a result of Shortly after the interim government under Presi­ years of drought, or the water is often too salty. dent Karsai took office, repairs in Kabul's water supply system were initially financed as emergency measures

Kabul's central water supply system was heavily within the framework of German Financial Cooperation. damaged during the civil war. It was partly destroyed A total of approximately EUR 9.6 million was committed under the rule of the mujahedin and necessary repairs with the aim of swiftly improving the living conditions and replacement investments were neglected for years. and the health situation of the population. For example, Around 50% of the water is lost in the run-down distri­ the water supply of the Loya Jirga was restored in June bution network (beginning of 2002). Water is available 2002, the water supply, the sewerage system and the for only a few hours a day because of the inadequate sanitary installations for the University of Kabul were rehabilitated, and schools were connected to the water supply system. A follow-up project comprising further rehabilitation measures and the expansion of Kabul's water supply system is being prepared. In Herat the central supply system is also being improved in terms of water quality and supply rates (total cost EUR 7.5 mil­ lion). Further projects in other towns of the provinces of ACKUBadghis and Farah in the west of Afghanistan are to follow. The projects comprise measures to repair and improve the distribution network, the installations for water catchment and purification, to support the management of the water utility and to enable the digressive assumption of operating costs.

Children fetching water from

a repaired standpipe. The public water supply authority CAWSS (Central Focus on Health Care Authority for Water Supply and Sanitation) is in charge of operating and maintaining the systems. The staff of • Open Programme Health Care EUR 6.6 million CAWSS in Kabul and Herat is being trained in main­ Health Programme tenance, operation, financial accounting and tariff col­ Badghis Province EUR 3.0 million lection. Cooperation is planned with the GTZ and the Total EUR 9.6 million German Development Service (DED), which are currently preparing further support measures for CAWSS to im­ The health situation in Afghanistan is one of the prove operation and maintenance of the water supply worst in the world. A functioning health care system systems. practically does not exist. The infrastructure is largely destroyed, trained doctors and health workers are lack­ Once the emergency aid measures are concluded the ing an d the administration and political institutions are focus will lie on contributing to the conception and still being developed. A very high maternal and child implementation of structural reforms under the difficult mortality and a high incidence of tuberculosis, malaria political and economic conditions in coordina tion with and wa ter-borne infectious diseases are the grave con­ other donors. sequences of inadequate healthcare. Pre-natal health­ care is insufficient, and women and children are under­

nourished and suffer from respiratory diseases and diarrhoea. Traditional rules of conduct for women addi­

tionally hamper their access to medical services.

The initial outline of a government health policy is currently being developed with World Bank support. During the Taliban rule around 80% of the few health

facilities that existed were operated by non-govern­ mental organizations (NGOs), which will continue to ACKUperform an important function. The health care system in Afghanistan cannot be developed and financed for a

measurable period of time without help from inter­

national development cooperation.

Defective diesel generator being disassembled with the help of German soldiers. Focus on improving educational facilities

Open Programme Primary

Education EUR 3.6 million

Support Programme EUR 3.0 million

Primary Education Programme

Badghis Province EUR 2.0 million

Winter Aid Programme EUR 0.7 million

Sub-Total FC Projects EUR 9.3 million

German Foreign Office

The orthopaedic ward of the assignment to rehabilitate

Indira Gandhi Hospital in Kabul is being supported secondary schools EUR 6.1 million

by emergency measures under FC. Total EUR 15.4 million

The situation of the education sector in Afghanistan

is characterized by serious deficits on all levels. The

illiteracy rate is very high at 64%, for women it is even

78%.

A total of approximately EUR 9.6 million was made

available for the health sector within the framework of Primary school buildings, facilities and learning

German Financial Cooperation. 14 basic health care material were largely destroyed by the war. With the facilities and hospitals in the region of Kabul so far have rapid rise in the number of pupils, which was estimated

been rehabilitated or newly built. The necessary consum­ to be as many as 5.8 million in 2003- more than 100,000 ables and the essential equipment have been procured. teachers are estimated to be lacking. Although access to

Various NGOs have been assisted in equipping an operat­ education has substantially improved for girls and ing the health facilities. Under a new project that will women since the end of the Taliban rule it has to be pro­ cost a total of around EUR 3 million, five health stations moted even more intensively because of the continuing and the district hospital in Qala I Nau are beingACKU rehabil­ difficult cultural conditions. itated and equipped since April 2003 and will be operated for the next three years in cooperation with the Malteser The situation at the universities is comparable. The

Hilfsdienst (German Association of the Order of Malta). country's 16 universities have 26,000 students, 6000 of

whom are, after all, women. Many buildings are de­

stroyed and qualified instructors as well as sophisticated

laboratory, workshop and information technology equip­

ment are lacking. Thus far it is only in Kabul that univer­

sity education could be appreciably stabilized through

the commitment of various donors.

,,, The KfW Development Bank has made a total of

EUR 15.4 million available for the educationa l sector. Around EUR 3.6 million will be used to finance the con­ struction, rehabilitation and equipment of around 35

schools until the end of 2003. Holding classes in several shifts enables an estimated 80,000 pupils to ·regularly

attend school again. The educational offer is being very

well received by the population. The share of girls is around 40%. In Badghis Province in West Afghanistan a further 17 schools are to be constructed and rehabilitated

with the Malteser Hilfsdienst by the beginning of 2005. EUR 2 million is available for these measures.

At the turn of the year 2002/2003 winter equipment Renovation work on the Soroubi School. for more than 10,000 pupils and students as well as the emergency renovation of students' accommodations and kitchens were financed under a winter aid programme.

The Afghan government hasACKU now begun long-term Construction measures will be continued on the stu­ planning for the educational sector with the support of dents' quarters, kitchens and lecture halls of the univer­ the donor countries. In the short term, restoring the most sities of Kabul and equipment will be procured until the urgent infrastructure and procuring teaching materials end of 2003. The universities in Jalalabad and will have priority. An improvement in teacher training and received support for emergency repairs and furniture. The in the quality of education is likely to set in only in the Teacher Training Institute in Parwan in Charikar Province medium and long term. Afghanistan itself is able to raise is being rebuilt in cooperation with the GTZ. The volume only a minor portion of the financial means required to of funds provided to support universities under German - this end. Financial Cooperation totals EUR 3.0 million.

112 RECONSTRUCTION OF AMANI HIGH-SCHOOL Focus on Energy Supply

Three high schools in Kabul are being rehabilitated Reconstruction Programme on behalf of the German Foreign Office, among them the Energy EUR 6.2 million Amani High School, which was founded with German Rehabilitation of Kabul support in 1924. It has always been considered a cultural Municipal Power Network EUR 6.0 million bridge between the German and the Afghan people. In Rehabilitation of Mahipar addition to German, natural sciences were also taught and Sarobi Hydropower Plants EUR 15.0 million here in German from the beginning. This tradition is now Consultancy and Coordination to be resumed by assigning up to twelve German teachers for the Energy Sector EUR 0.3 million to the school. Before, however, the worst damage must Sub-total EUR 27.5 million be repaired. Roofs, windows and doors are being repaired, Immediate Reconstruction floors renewed and heating facilities installed. When the Programme for Energy Supply rehabilitation work is finished, 2500 boys and 3200 girls in Kabul will be able to attend the three schools again. (European Union assignment) EUR 9.0 million

Total EUR 36.5 million

AFGHANISTAN S ELECTRICITY SECTOR

The electricity system in Afghanistan consists of several isolated networks; there is no integrated net­ work. The most important region is the central region,

with Kabul as the centre, consuming a share of around

65% of all capacity installed in the country. Owing to the poor condition of the power plants, however, only around ACKU117 MW of the in stalled capacity of 278 MW is available. At present Kabul is being supplied mainly by electricity

from the three hydropower plants of Naghlu, Mahipar

and Sarobi. The connection from the hydropower plants

to the municipal network of Kabul is overloaded. There

Schoolgirls at the inauguration of their new school. are two 110-kV lines, one of which is largely destroyed

and not functioning and the other in poor condition and

overloaded. The transmission losses of around 10% are quite high. They reduce the already insufficient amount

of available electricity in Kabul. The distribution network

in Kabul itself is also largely destroyed; here too electric­ ity losses are high. Rationing is the order of the day, and

almost half the remaining connections receive electric­

ity only every other day. For decades young engineers and

113 technicians could not be trained. The few still functioning The activities to reduce electricity losses comprise plants are being maintained mostly by old techn icians the rehabilitation of the transmission line from the Sarobi who were trained over 40 years ago when the equipment hydropower plant to Kabul, the rebuilding of the Breshna went into operation and who are now keeping it running Kat sub-station and the supply of cables, transformers resourcefully and skilfully. and tools for the distribution network. The works were put out to international tender and awarded in early January 2003. ACTIVITIES OF THE KFW DEVELOPMENT BANK The next step is to stabilize the electricity gener­ In its activities in the energy sector the KfW Devel­ ating capacities. The Mahipar and Sarobi hydropower opment Bank has been able to draw on the experience plants, which were built in the 1960s and 1970s, will be which it gathered in the 1970s when energy projects completely rehabilitated. The original suppliers Voith and were already being supported in Afghanistan. In January Siemens will be contracted to speed up the works. 2002 a delegation of the KfW Development Bank identi­ fied priority emergency measures aimed at reducing the very high electricity losses and illuminating the streets. Cooperation with other Donors The first step was to repair the street lighting in order to quickly increase public safety in the streets and set an 's cooperation measures were the donor example of normality (see project example). community's first activities after the end of the war. Its work is being acknowledged internationally. At th e end of 2002 the European Union gave the KfW Developm ent Bank an assignment in a volume of EUR 9 million to expand the rehabilitation measures for the electricity supply of Kabul (including the sub-stations of Breshna Kot and Kabul-East as well as materials for the medium and low-voltage segment). Afghanistan's Minister of Finance proposed to give the KfW Development Bank a ACKUmandate of the Afghanistan Reconstruction Trust Fund - ARTF - to continue the activities initiated by the KfW Development Bank in the electricity sector. German funds will be used initially for one year to finance a Ger­ man expert in the Ministry of Water and Power (MWP) for the coordination of the measures and to support international donor coordination. This measure is closely agreed with the GTZ which will advise the government on

Transmission pylons without power lines. the electricity sector.

j14 FC PROJECT EXAMPLE . - Restoring street lighting in Kabul ·· - from emergency aid towards sustainability: ,: . ..-.-,

: ' • • • ~ "S I '

Shortly after sunset, absolute darkness settles down whom the usual salary of USD 2 to 3 per day secured their over Kabul. At the end of the war the street lights were own subsistence and that of their families. Besides, in the largely destroyed and their light bulbs shattered by winter the workers were also equipped with shoes and bullets, and the power lines were interrupted. To improve coats. Further funds for additional activities were made safety for people to walk the streets and to restore nor­ available. The consultant set up a separate repair work­ mality, the prime objective was to get the street lights shop for streetlights in the work yard of the municipal­

working again. ity.

The first mission of January 2002 roughly identified This got the programme moving again. In spite of the number of street lights, illuminants and cables the cold winter more than 1300 street lights were needed. In an abbreviated international tender suppliers burning at the end of March 2003 . Since th at time pedes­ of street lights were invited to submit bids. trians are able to walk the streets in the evenings without fear for their safety. The first street lights were in place and burning as early as April 2002. Then, however, the first technical Yet not all problems are solved : not all lights are problems occurred. The project-executing agency had burning because the voltage is too low (often there is not problems organizing the works. The flow of international enough electricity available in the early evening hours) . funds firmly scheduled for the project-executing agency Besides, the lights also burn out sooner because of to finance the assembly works ran more scantily and voltage fluctuations and must then be replaced . This eventually ran dry. Additional cables and equipment were shows how important it is for the rehabilitation work in needed for connecting the lights. All these difficulties the power distribution and generation to be completed threatened to frustrate the implementationACKU of the pro- quickly. gramme.

This programme clearly illustrates the general As a result, the project conception was modified. The problems that are encountered in the reconstruction of German consultant who was initially assigned only to Afghanistan. Only during the course of the measures does supervise the construction work took over the project it become apparent that much of the initial information organization and implementation. One of the consulting on the partners' capacities and the condition of equip­ firm's engineers was permanently assigned to the site; he ment is inaccurate. To achieve success in a project it is organized and paid gangs of workers from project funds necessary to make an above-average commitment,

and conducted the necessary coordination with the respond with great flexibility and possess sufficient municipal of administration. As many as 200 workers financial reserves for unforeseen additional measures. were employed, most of whom were unskilled workers for

1 1s ELECTRICITY: THE BASIS FOR ECONOMIC If the security situation outside Kabul improves the

DEVELOPMENT activities are also to be expanded to other parts of the country. Plans include the rehabilitation of old hydro­

A reliable electricity supply is the basis for expand­ power plants from German production which used to be ing activities of economic and social development. The an essential element of the country's electricity supply. rehabilitation measures secure the supply and substan­

tially reduce electricity losses, resulting in fewer power cuts. This measure primarily benefits social and economic consumers (schools, hospitals, administration, busines­

ses), which are given preference under the policy of the electricity utility. Nevertheless, extensive measures to

improve the performance of the electricity utility are still

required. This also includes a new tariff structure.

ACKU

A destroyed sub-station near Kabul. )GRAMMES BY DEUTSCHE lNVESTlTlONS- 0 ENTWlCKlUNGSGESEllSCHAFT (DEG)

Equity Assistance Programme 2003. 48 founders of new businesses (three of whom were women and two of whom had returned from Ger­

Deutsche lnvestitions- und Entwicklungsgesell­ many) were supported on their way to self-employment

schaft (DEG) finances private-sector investments in in 2002. The projects are mostly in the traditional pro­

developing countries. Building up a private enterprise ducing sector (such as tailoring, shoemaking, carpe t sector as a basis for sustainable economic growth is an weaving, joinery) but also in brickmaking, chicken

essential element of poverty reduction -and thus of the fa rming, printing, apiculture, etc.). To finance their busi­

objective of the 2015 Action Plan. In countries like nesses these micro enterprises have mobilized a total of

Afghanistan, where the conditions fo r private investors over EUR 1.3 million from their own resources or from are not yet given, DEG offers equity assis tan ce pro­ loa ns from their families and have created over 2000 jobs.

grammes for business start-ups on behalf of the BMZ. The BMZ made EUR 500,000 available for this within the They support start-ups and young entrepreneurs- some framewo rk of the Anti-Terror Package in 2002. Provided of whom were trained in Germany - who wish to build the jobs are sustainable, the creation or safeguarding of

up a solid business basis for themselves and their fami­ a job thus cost EUR 250. For 2003 the BMZ has made lies in their home country. EUR 1 million available for the programme. This is suffi­ cient to support the creation of over 100 new businesses.

DEG started the programme in 2002; it is initially

scheduled to run for three years. Business start-ups and From the perspective of the DEG promoting young entrepreneurs are being supported with non­ founders of new businesses with equity is an efficient

repayable equity assistance in a maximum amount of in strument of the BMZ for making the following devel­

EUR 10,000 in cooperation with the Arbeitsgruppe fUr opmentally important contributions: Entwicklung und Fachkrafte GmbH (AGEF) (Working create private-sector structures, particularly for

Group for Development and Experts). The programmeACKU is small and medium-sized enterprises, available to Afghans returning from Germany and to all improve the professional qualifications of founders

Afghan founders of new businesses who are able to of new businesses and young entrepreneurs,

document their personal and professional qualification. promote employment and thereby secure permanent

Therefore they must first participate in seminars for incom e, founders of new businesses that were conducted by AGEF integ rate refugees (including returnees from

in Kabul in 2002 and in other cities as well from the year Germany).

117 DEG PROJECT EXAMPLE

Ghulam Farooq Behrooz is 47 years old and a which he has set up north of Kabul. Today he employs graduate of literary sciences. For 23 years he lived in over 100 men, all of whom are former soldiers. He wants as a refugee, surviving there on a variety of different jobs. to use the equity assistance to buy land on which to build Over many years he worked in a brickyard and so he has further buildings and machines for his business. the necessary practical know-how for his own business,

ACKU Public-Private Partnership (PPP) RECONSTRUCTION OF A SUGAR FACTORY Programme A feasibility study is being financed in cooperation

PPP is a flexible financing programme for private­ with KWS Saat AG for the rehabilitation of a sugar fac­

sector involvement in developing countries. PPP funds tory that was built in Baghlan (200 kilometres north of amounting to as much as 50% of the project costs but Kabul) in 1940. It was shut down because of the war in not more than EUR 200,000 can be added to private 1990 and many small peasants lost their basis of sub­ capital for projects to complement or prepare invest­ sistence. Besides analyzing technical and agricultural

ments in the areas of environmental protection, training, aspects (and implementing trial and demonstration plan­

qualification, know-how transfer, safety at the work­ tations) the study aims at demonstrating to fore ign place, and others. A precondition is that such projects investors the po ssibilities for financing the enterprise,

achieve sustainable development impacts that extend which is set for privatization. KWS has signalled a general beyond the boundaries of the enterprise. Two PPP pro­ interest in investing if the results turn out pos itive. jects were co-financed in Afghanistan in 2002.

TRAINING OF MOTOR MECHANICS

As part of the establishment of a motor garage in Kabul, a training centre and the training of initially 45

motor mechanics were co-financed in cooperation with DaimlerChrysler AG. These activities are scheduled to be expanded to other towns (Jallalabad, Kandahar, Herat and Mazar-e-Sharif). The enterprise is training more

mechanics than it needs for its own operation; trained mechanics can set up an own business or move to other garages. ACKU

1 19 DEG KfW Belvederestrasse 40 Palmengartenstrasse 5-9 50933 Cologne, Germany 60325 Frankfurt am Main, Germany

Postfach 45 03 40 Postfach 11 11 41 50878 Cologne, Germany 60046 Frankfurt am Main, Germany

Telephone +49 221 4986-0 Telephone +49 69 7431-0 Fax +49 221 4986-290 Fax +49 69 7431-2944 Internet www.deginvest.de Press Department Telephone +49 69 7431-4400

Information Centre Telephone +49 180 1 335577 Internet www.kfw.de

• Contact DEG • Contact KfW Sonja Hoos Christian Haas Telephone +49 22 1 4986-158 Telephone +49 69 7431-2128 Fax +49 221 4986-176 Fax +49 69 7431-3609 [email protected] ch ristian.haas@ kfw.de

. 1M PR lN.T . \ '

Published by: KfW Group, Group Communication

Edited by : ACKU Regional departments of KfW Development Bank and DEG

Photos: GAUFF Consultants, Frankfurt, pp. 7, 8; RRI Beller Consultants, Freiburg, pp. 9, 10; URF Architects, Bad Homburg, p. 12; DECON Consults, pp. 14, 16; DEG (Sonja Hoos, p. 18) KfW photo data base: p. 1 (Hans-Joachim Maak), p. 11 (Wolfgang Bichmann). p. 13;

Cartography: Waltraut Seegers, p. 4.

Frankfurt am Main, October 2003