The World Bank in Afghanistan Public Disclosure Authorized COUNTRY UPDATE JANUARY 2009 INTRODUCTION Despite extraordinarily difficult circumstances during 2008, Afghanistan has made remarkable achievements notably: more girls and boys are at school than at any time in Afghanistan’s history, child mortality has been reduced substantially, more Afghans especially women have access to health care and the government’s national community development program is bringing development to thousands of communities in every province in the country. In Public Disclosure Authorized addition, the budget process has been strengthened further, and there are improvements in public financial management and procurement. Concerns remain, however, about increased insecurity, drug production, and corruption that has put at risk further advances in state-building, as well as about other areas critical for growth and employment generation. A United Nations Security Council delegation visited Afghanistan in November 2008. The delegation met President Karzai, government leaders, parliamentarians, civil society representatives, and members of the international community, including NATO-led ISAF commanders. The delegation’s discussions covered several areas including governance, regional cooperation, elections, human rights and humanitarian issues, reconciliation, security, civilian Public Disclosure Authorized casualties, socio - economic development, media, the situation for women, and the UN’s role in assisting Afghanistan. A small child warms herself by a fire made from scraps of paper on a winter’s day in Kabul city. On December 20, President Karzai accepted the impeachment of the (Photo by: Pajhwok Afghan News) Minister of Commerce and Industry Dr Mohammad Farhang to honor the parliament’s decision. On October 20, the Wolesi Jirga gave votes of confidence to three newly nominated ministers. The new ministers were – Mohammad Hanif Atmar (Interior), Dr. Farooq Wardak (Education), “I recently visited Kabul to better understand and Mohammad Asif Rahimi (Agriculture, Irrigation, and Livestock). The the difficult challenges Afghanistan faces,” said Nicholas J. Krafft, the newly appointed nominees needed 106 votes of confidence from the 211 MPs present to World Bank Country Director for win approval. Minister Atmar received 132 votes in his favor and 68 Afghanistan. “Tackling widespread poverty, against; Dr. Farooq Wardak, 139 votes in favor and 62 against; and rebuilding institutions, and overcoming problems Mohammad Asif Rahimi, 156 votes in favor and 50 against. of security, narcotics, and corruption will require intensified and coordinated efforts for many On November 09 -10, 2008, the Organization for Security and Public Disclosure Authorized years. I look forward to lead the Bank’s work Cooperation in Europe (OSCE) was convened for the first time in here and will strive to put the highest emphasis Kabul to discuss regional issues in a two-day long annual summit. on making sure results are being delivered to Foreign Minister Dr. Rangin Dadfar Spanta said in the inauguration speech that cooperation of regional countries in fields of security the most poor and needy.” and counter-narcotics would be on top of the conference’s agenda. The minister said that OSCE representatives would monitor Afghanistan’s upcoming presidential and parliamentary elections, as they did in the previous polls. The Chairman of the OSCE’s The World Bank strategy for Afghanistan Permanent Council, Ambassador Antti Turunen, expressed the focuses on three areas of support: organization’s support for the upcoming Afghan elections and said they would not spare any effort in supporting the election process. • Building the capacity and Afghanistan joined OSCE as a partner in April 2003. With 56 accountability of the state, primarily countries from Europe, Central Asia and North America participating, to ensure the provision of services OSCE is the largest regional security organization in the world. that are affordable, accessible, and of adequate quality for citizens. WORLD BANK SUPPORT • Promoting growth of the rural Since April 2002, the World Bank has committed over US$1.69 billion for 41 development and emergency reconstruction projects economy and improving rural and three budget support operations in Afghanistan. This support livelihoods. • comprises over US$1.25 billion in grants and US$436.4 million in Supporting growth of a formal, no-interest loans -known as “credits.” Currently, the Bank has 27 modern, and competitive private active projects in Afghanistan with net commitments of over US$1.14 sector. billion. So far, a number of Bank-financed projects have been completed which include the rehabilitation of education, emergency public works, the reconstruction of infrastructure, emergency transport rehabilitation, and the first phase of a public administration project as well as three budget support operations. The Afghanistan Reconstruction Trust Fund (ARTF) is administered by the World Bank on behalf of 30 donors and managed in conjunction with the Asian Development Bank, Islamic Development Bank, United Nations Assistance Mission for Afghanistan, and the United Nations Development Program. It is the main mechanism for providing coordinated funding support to Afghanistan’s recurrent budget and investments, in line with the agreed budget priorities of the government. As of November 20, 2008, 30 donors had pledged over US$3 billion to ARTF, of which US$2.8 billion has been received so far. More than US$1.5 billion has been disbursed to the Government of Afghanistan to help cover recurrent costs, such as civil servants’ salaries, and US$980 million had been made available for investment projects. The Japan Social Development Fund (JSDF), administered by the World Bank, has provided a special window for Afghanistan which operates in a harmonized manner to support the national programs of the government. As of November 30, 2008, Japanese contributions to ongoing JSDF projects reached US$23.1 million. The World Bank has provided advice to help the government manage donor funds effectively and in a transparent way. The World Bank also supports the government by providing analytical work on the economy, public administration, gender, poverty, the opium economy, and public finance management (PFM). The Bank has actively supported key reforms, particularly in the fiscal and public administration spheres, and through its budget support operations. It has advocated building capacity and legitimacy of the State and channeling donor resources through the government to ensure investments are aligned with national priorities. To this end, the World Bank works closely with other multilateral and bilateral agencies across a number of sectors where aid coordination and government ownership are most critical. A school building is under construction through an STATUS OF ONGOING OPERATIONS NSP block grant in Baharak district of northeastern Emergency National Solidarity Project (NSP) (US$306 million Badakhshan Province. Grant, and US$330 million ARTF Grant): This is the Government of Afghanistan’s flagship program to support small-scale reconstruction and development activities identified by local Community Development Councils (CDCs) across the country. The World Bank is the main source of financing for the NSP. Other sources include the ARTF, the JSDF, and several bilateral contributors. Between early-May 2003 and December 2008, the NSP has reached over 19 million Afghans. Over 22,086 communities have been mobilized, while over 21,706 communities have successfully elected CDCs. These CDCs are established through the assistance of 29 NSP Facilitating Partners who mobilize the community, facilitate elections and community development planning through community consultation, assist in project preparation and implementation, and also provide capacity building to CDC members. Over 45,299 community projects had been partially or fully financed, of which more than 26,171 projects have been completed. About 80 percent of the community projects involve infrastructure such as irrigation, rural roads, electrification, and drinking water supply, all critical for the recovery of the rural economy, stability, and governance. The community projects financed under the NSP focus on social and economic infrastructure and are based on the priorities of the rural population. Of the current 45,299 funded community projects, over 24 percent are for dealing with water and sanitation, over 16 percent for the rehabilitation of irrigation systems, over 24 Students enter a primary school in Taiboti village in percent to improve transport infrastructure (roads, bridges), over 15 western Herat Province. The Taiboti CDC used their percent for the provision of energy (generators, micro-hydro, solar NSP block grant to build their village primary school. energy), over 5 percent to improve livelihoods and generation of income, over 14 percent for education infrastructure, and 2 percent for other investments. The NSP is active in 352 districts of the 364 districts in Afghanistan’s 34 provinces. As of December 20, 2008, over US$553 million of block grant installments had been disbursed. In addition to subproject implementation, NSP has effectively strengthened community-level governance in Afghanistan by establishing a network of CDCs. CDCs are the village-level representative body and form a basis for interaction within and between communities as well as with government bodies and other aid agencies. The CDCs are also