This week, the European Union and the Afghan government will co-host the third in a series of conferences in Brussels that will convene Afghanistan’s partners to discuss future foreign assistance commitments. At the 2012 Conference in Tokyo seventy international donors promised to mobilize $16 billion for Afghanistan in total foreign assistance over the subsequent four years, with the United States expected to cover about half of the amount. In Brussels, Afghanistan is hoping for a re-commitment to similar funding levels through 2020.
The donor countries and Afghan policymakers gather at a time when the security situation has deteriorated in the wake of the reduction of Western military forces in Afghanistan, attracting much media attention and concern. Security is certainly vital for success, but economic and social progress alongside good governance is also needed. Afghanistan’s partners seek determined leadership in Kabul and a consensus based on a process for achieving measurable progress. Afghanistan’s government and its people in return need partners that understand that progress will require another decade of engagement.
A stable and sustainable Afghanistan is in the interest of the United States, other international partners and the region. The costs of allowing a friendly government to collapse would be very high in a region that is volatile and susceptible to inroads by extremist groups. The 2014 reduction in foreign military support allowed a resurgent Taliban to gain control of at least one-fifth of the country, and some say more. The Brussels Conference is an opportunity to acknowledge the key role of development assistance in building a stable Afghanistan, since July’s NATO Summit in Warsaw focused on providing security assistance commitments of about $1 billion a year to the country through 2020.
Afghanistan has a democratically elected government and is no longer a safe haven for extremists with international reach, as it was prior to 2001. Sadly, a sizable portion of the Afghan population remains under the control of the Taliban today. The group has failed to capture and hold major urban areas, but it has launched a series of attacks across the country straining Afghan government security capacities. And, safe havens for the insurgency continue to exist in Pakistan. The Afghan National Defense and Security Forces (ANDSF) have developed into a functioning military institution over the last decade and have managed to hold their own, and even take back lost ground against the Taliban under a “fight, hold, disrupt” campaign strategy. The ANDSF has suffered extensive casualties, but they are still a viable force, even while they lack capacity in key areas such as logistics, air support, and intelligence. President Obama decided to freeze the withdrawal of U.S. forces and allow the forces remaining to provide more active support for Afghan military operations, as well as to continue operations against the “Islamic State” and remnants of Al Qaeda. This decision has likely been critical in preventing the Taliban from taking control of important population centers. Even if the security situation remains threatening, however, the country can make social and economic progress.
Corruption remains a major deterrent to investment and economic growth, as well as in improving the effectiveness of the security forces. It is also a key constraint in establishing the legitimacy of the state in the eyes of the Afghan people. Afghanistan was ranked 166 out of 167 on Transparency International (TI)’s 2015 Corruption Perceptions Index. Funds allocated for development and reconstruction have too often taken a detour into the pockets of undeserving Afghans. Afghanistan’s government is working to address previous failures of anti-corruption efforts through a new anti-corruption strategy, which is evident in the creation of a new Anti-Corruption Justice Center and the removal of corrupt and unqualified officials.
Afghanistan continues to be a major source of the world’s illicit opium and heroin. It remains the largest producer of opium, with poppy cultivation increasing to a record 211,000 hectares in 2014, coincident with the shrinking of territory under clear government control. The Taliban has long influenced the drug trade; trafficking is now the Taliban’s steadiest source of revenue. Landowners and farmers under the influence of the Taliban have little power to resist orders to cultivate crops on its behalf. There are credible reports of official Afghan collusion in the drug trade as well. Official involvement in the drug trade creates a distrust of Afghan officials and seriously hinders economic development.
Afghanistan has made significant, although mixed, progress since 2001. Many of these gains rarely receive the publicity they deserve. Despite the ongoing insurgency, health indicators have seen impressive gains. Life expectancy has increased from forty-six years in 2001 to fifty years in 2015, for example. Under the World Bank’s Afghanistan Rural Access Project (ARAP) approved in 2012, more than 10,000 kilometers of rural roads and drainage systems will be repaired and upgraded by 2018. In 1999, Afghanistan produced 420 million kWh of electricity; the total rose to 884.1 million kWh in 2012.
Afghanistan will remain dependent on significant amounts of foreign assistance through 2030 according to the World Bank, but it is increasing its ability to generate and collect revenue and is moving toward an investment and trade driven economy. According to a 2016 World Bank Afghanistan Update, growth is projected to gradually increase from 1.9 percent in 2016 to 3.6 percent in 2018 if proper reforms are implemented. Official Development Assistance (ODA) dropped from around 50 percent of Afghanistan’s GNI in 2002 to a little more than 20 percent in 2014. The sharp fall in nominal aid that commenced in 2013 had a major negative impact on the economy and government revenue. While the fall in nominal aid was matched with some increases in on-budget aid, it was insufficient to avoid the negative economic consequences. Only now is the economy again moving in a positive direction.
The World Bank’s Ease of Doing Business in Afghanistan Report has shown minor improvements, but the country is still ranked at 177 out of 189 economies in 2016. The government recognizes the vital importance of strengthening the Afghan private sector and of increasing the return of Afghan private capital to Afghanistan. It has introduced new laws and regulations aimed at encouraging Afghan businesspersons who prospered by supplying the international presence in Afghanistan to invest in new types of production and job creation.
Since 2014, there has been improved revenue collection. DABS, an independent organization which handles generation and distribution of electric power in Afghanistan, has successfully collected $230 million in bills in 2015—a 40 percent increase in the last three years. Afghanistan experienced an encouraging 22 percent increase in tax revenue in 2015. Tax revenue remains at an inadequate, but improving, 10.4 percent of GDP.
The amount of mobile cell phones in the country has skyrocketed to 19.7 million in 2015, and with 2.7 million people with internet access in 2015. While nearly 85 percent of Afghan women are illiterate and some lack access to formal education, a survey by USAID found that 80 percent of Afghan women now have access to mobile technology. This means women now have the freedom to communicate and access information that could potentially enhance their standard of living and quality of life. Having cohorts of girls in schools is also going to be a major source of progress for Afghanistan. Under the Taliban, no girls were allowed in school, but in 2014, girls went to school for an average of eight years. Nearly nine million students are enrolled in school today, 40 percent of whom are girls.
Afghanistan has significant economic potential in energy, mining and agriculture. The government, supported by donors, need to focus programs and investment in developing that potential while not neglecting the near term needs to create jobs and support the parts of the population still at risk economically.
What Do the Government and Its International Partners Need to Do?
This is a daunting economic, social and governance agenda. To be successful in sustaining progress over the next decade, there needs to be a more effective set of partnerships between the Afghan government and international donors in which expectations and benchmarks are clearly defined and agreed. These partnerships must rest upon mutual accountability and realism for meeting benchmarks. Demands should stretch the Afghan government to work hard toward progress, but not be so unrealistic that they invite failure. Donor governments weighing the cost-benefit of funneling money into Afghanistan are experiencing “war weariness” and fatigue, and they must be able to justify continued assistance by pointing to clear signs of progress.
The Afghan government wants donors to put more funds through government channels and seeks enhanced flexibility for the projects. They argue that these moves will help build Afghan capacity and the government’s credibility with the Afghan people. Progress has been made to date on the flow of donor funds through the government, with over 50 percent of international donor assistance now “on budget.” Donors seek evidence that the government can effectively use increased funds spent via government channels, given past practices where ministries could not disperse funds and lost significant resources to corruption and inefficiencies.