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Afghanistan: Improving Customs for a Stronger Government

Last Updated: Sept 2009
Afghanistan: Improving Customs Performance for a Stronger Government

Challenge

Afghanistan is a poor, landlocked country at the crossroads between east and west. As it emerges from a difficult generation defined by conflict and foreign intervention, this country of about 30 million remains profoundly dependent on international aid. Afghanistan’s domestic-revenue-to-GDP ratio is among the lowest in the world—in 2007, it was just 7 percent. By itself, therefore, the Government can provide few services, which limits its capacity to grow its authority and legitimacy throughout the country. Not surprisingly, one of the Government’s highest priorities is to generate more revenue. Traditionally, a substantial lost opportunity has been in customs collections. In 2007, these ports of entry accounted for about 55 percent of total Government revenue, but were widely considered to be rife with corruption and notoriously ineffective.

Approach

The IDA-financed Emergency Customs Modernization and Trade Facilitation Project was launched in 2004 to modernize the customs administration by improving its transparency and professionalism, and thereby increase revenue collection and decrease wait times. The aim was to computerize the customs process at the country’s four major border crossings for a wide variety of essential goods—wheat, rice, sugar, tea, vegetable oil, cement, scrap iron, and motor vehicles—which are all imported into Afghanistan.

Results

Afghanistan’s customs revenues soared from US$50 million in 2004 to more than US$399 million in 2008, an increase of more than 700 percent in just five years.

Highlights:
- System improvements. The introduction of an Automated System for Customs Data at these ports of entry has minimized the human interface in customs transactions. This has tightened controls, reduced corruption, and increased speed, and

- Time is money. The waiting time for trucks at the major border crossings has also decreased. For example, at the eastern border with Pakistan at Torkham, over 90 percent of trucks are now cleared in less than 1.5 hours, down from an average of 18 hours in 2003. At the Kabul Inland Clearance Depot, the average waiting time for trucks is a quarter of what it used to be before computerization.

Contribution

The Emergency Customs Modernization and Trade Facilitation Project was launched in 2004 with an IDA contribution of US$31.2 million. In addition, IDA provided extra financing US$6.8 million to extend computerization to additional customs check posts at all the trade corridors in the country.

Partners

During the past five years, international donors have come together to support the Afghanistan Government’s goals. An Informal Customs Network is coordinating the work. This is made up of the Border Management Task Force of the United States, the US Agency for International Development, the European Commission, the Canadian Government, the United Nations Assistance Mission in Afghanistan, and the World Bank Group. Each has separate responsibilities to avoid duplication and maximize results. The World Bank Group has focused on automation, legal, HR, and infrastructure development.

Next Steps

A new US$36.5 million project is being prepared to consolidate the customs modernization, specifically focused on anticorruption. The aim is to ensure customs performance that is affordable, accessible, and of adequate quality.

Learn More

Emergency Customs Modernization and Trade Facilitation Project, 2004-2009
Project documents


For more information, please visit the Projects website.



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