Remarks at International Donor Conference for Afghanistan

By
Praful Patel
Vice President, South Asia Region
The World Bank Group
Berlin, Germany, March 31, 2004

Excellencies, ladies and gentlemen, to our hosts the governments of Afghanistan and Germany, thank you.

When this high-level meeting was in the planning stages, our counterpart in the Afghanistan Government, Finance Minister Ashraf Ghani, had an important concern. How, he asked, would the world’s ministers get a real sense of what had happened in Afghanistan since the Tokyo meeting. How could we bring to a Western capital – an elegant meeting room such as this – a picture of the extraordinary achievements of two short years. And of the just as extraordinary challenges that lie ahead.

I hope you can find the time during this busy conference to spend with five ordinary Afghans from across the country. Their stories of the past two years were recorded for you on video.  I believe this is being screened on monitors around the building and in your rooms.  If I had my way I would much rather you listen to them than to me. For they must surely be the reason we meet here. And they must surely be our inspiration to do the right thing.

A solemn little girl from dirt-poor Badakshan province has moved to Kabul to get an education. She revels in her math and Koranic studies; she is sad for the children who miss out and must work to survive. Listening to her brought tears to my eyes: she has all the character and compassion of a future leader. She is but 12 years old.

A farmer delights in the first sprouts of wheat on his land in 20 years. His land was mined in the 1980s, his house leveled by the Taliban. Now he is like a “sparrow let out of a cage” he says. He needs water and seeds and fertilizer and much money must be spent, he says, to get this going. What he doesn’t need is spirit and hard work. He and his sons have that in abundance.

I could tell you about the doctor, the truck driver, the exile returned and now working in the Ministry of Commerce on women’s employment programs. “When they started,” she says of her charges, “they did not know in which hand they should hold a pen.” Her face lights up the screen as she talks of their progress.  Please see for yourself.

I draw your attention to these accounts not to divert you with “soft” human stories but to make a very hard point: in Afghanistan we are all privileged to have development partners at every level, from ministries to farmers and truck drivers and little girls, who want to get on with the business of rebuilding their country. The message from the five faces of the video was unanimous and one which echoes across the country. We need your help, we need your money but we will rebuild our lives. This has made Afghanistan rewarding indeed to work with.

Let me pause to bring you best wishes and apologies from Jim Wolfensohn, the President of the World Bank Group, who was unable to attend this conference.   He asked me to reiterate his support for Afghanistan. And he asked me to express his confidence that this conference will succeed in setting the stage for moving forward in one of the most challenging, demanding, and, as I have said, rewarding countries with which the World Bank is engaged.

We have before us today the Government of Afghanistan’s latest and best assessment of what it will take to rebuild this country that has suffered so much.  This is captured in the document Securing Afghanistan’s Future which was produced with the help of several international organizations including my own.  Headlines of the past week have been flagging the apparently enormous figure in this report of US$27.5 billion over the next seven years. Will they get it? Will they not?

But for the five representative faces of Afghanistan who have so eloquently expressed their country’s need for help on our video, this is no game, no gamble. So let me open that number up; let’s peel it like an onion and examine the layers.

Of the total amount, over $7 billion is targeted for security expenditures, both on the investment and recurrent side of the ledger; that’s $1 billion a year. Looking at investment proper, $13 billion is for infrastructure, $2 billion for social protection, $1 billion for health, $3 billion for education and about $2 billion for other expenditures.

Let’s peel further.  Consider this: the cost over the past two decades of lost growth, of humanitarian assistance and of military expenditures could be about $240 billion. Right now, the international community is spending more than $12 billion every year on security. Securing Afghanistan’s Future asks for one billion to be spent on Afghan security each year for the next seven years.

The $27.5 billion total presumes just $100 a year for each Afghan. What does that mean for the earnest little girl in our video: it means $200 a child to ensure 13 million children in school by 2015.

What does it mean for the doctor in our video: it means $9 a year for each Afghan to establish basic health services.

What does it mean for the truck driver in our video: it means $13 billion on infrastructure. And what does that mean: improving road coverage from 150m of road for each 1,000 Afghans to 460m for each 1,000 citizens; it means increasing paved roads from 16 to 23 percent of the current 21,000kms network; and it means increasing access to the electricity grid from the current 6 percent to 33 percent.

Our calculations show that had Afghanistan not been mired in conflict for the past 20 years, the country’s annual per capita GDP would be about $500.  In 2000 it was $186. And let’s compare that to other conflict-affected countries in South Asia. In Nepal, per capita GDP is about $240, in Sri Lanka it is about $850.  The report Securing Afghanistan’s Future is ambitious yes, as it should be. But its core ambition is to return Afghanistan in seven years to per capita GDP of $500.  Ladies and gentleman, can we be partners in this ambition with Afghanistan?  Partners for the goal of $500 a year for the average Afghan.

I’m sure the economists in my team could analyze this number even further but, having seen Afghanistan’s performance of the last two years for myself, I am happy to bet that a good part of this $500 goal will be driven by Afghanistan’s own entrepreneurial energy.

Just yesterday, in Berlin, the World Bank co-hosted a private sector investment forum for Afghanistan with over 200 business people from over 20 countries. President Hamid Karzai described a country that for centuries has been the road for trade and business, the Silk Route itself. It’s our culture, it’s our history, he said.  And in his words: “My vision is less government, more society, more business.”  What better message for a private sector audience.  But think about it: what better commitment could a president make to his development partners.  Is that not a vision which accords totally with our very own messages?

The World Bank became actively re-engaged in Afghanistan in late 2001. We delivered the preliminary needs assessment with partners in the international community as the basis for the first major pledging conference in Tokyo.  Since then, our work has grown rapidly and always in lockstep with the Government’s own strategy and priorities. I dare say they would not have us any other way and that is as it should be.

Now, with Securing Afghanistan’s Future before us, we are moving beyond crisis mode to a clearly defined strategy with a longer time horizon and a realistic assessment of needs.  Securing Afghanistan’s Future is a sound and reasonable basis for all of us in the international community.  It is essential that we build on the momentum of achievements to date, align ourselves with this forward looking agenda – and with each other! – and work closely with our counterparts in the Government.

As you might well know, the World Bank’s work in Afghanistan focuses on an active and growing investment program of grants and credits, on advice and analysis in a number of key sectoral and policy areas, and on the administration of the multi-donor Afghanistan Reconstruction Trust Fund.  Many of you from 24 different countries are generous donors to this instrument which has been more effective than we had hoped with current pledged contributions of $610 million.  The willingness of some donors to use this instrument has made it the mainstay of the Government’s recurrent budget – funding essential items such as the salaries of teachers and health workers.  That willingness to pool resources and support government priorities is an example of how together we can ensure vital costs are covered, priority activities funded and the efficient and transparent use of funds ensured.  I do encourage others to embrace this mechanism which slashes multiple donor reporting requirements and focuses limited capacity on achieving results. 

To date, IDA resources support twelve projects totaling over US$500 million, of which $282 million is grant funding.  By the end of June, our total IDA allocation since re-engagement will be US$605 million, greater than our Tokyo pledge I’m happy to note. . We are also designing projects now with “bankability” in mind: currently I believe about $100 million is available for cofinancing.

One should not talk allocation without talking disbursement and by this measure Afghanistan shows a real hunger to move ahead. Our disbursement has reached US$130 million – impressive in any country; even more so when you consider the challenges in Afghanistan.  The pace of disbursement is also improving, demonstrating improved capacity to deliver.

Driven by the Government’s expression of its needs, the Bank’s investments support key reforms.   Public administration projects are ensuring reliable and transparent procurement, financial management and audit systems.  Infrastructure looks to transport, civil aviation and energy.  And customs and trade reform is a vital area of attention if revenue generation targets are to be met.  No less important are health, education, communications, and irrigation.  New programs will provide for urban reconstruction, more education and power sector support.  With a modest IDA contribution we are launching an Investment Guarantee Facility to attract private investment and, hopefully, the support of others in the international community.

Tough as the working environment is in Afghanistan, we are beginning to see results. Take two IDA funded projects, the National Emergency Employment Program and the National Solidarity Program.   Emergency employment programs have, in just one year, employed over 80,000 people generating 2.1 million person-days of employment.  To translate, that means direct benefits to about 250,000 family members.  It also means repairs to nearly 4,000 kms of rural roads.

The National Solidarity Program is now active in 950 communities in more than 20 provinces. But what is really meaningful about this program is that the communities themselves, through elected village councils, select the projects they want funded. So far elections have happened in 340 village communities. And we heard that in one province, of the 532 members elected to 48 village councils, 274 were women – over 50 percent.

Just as important is our advisory role to Government in Afghanistan.  We are helping ministries think through civil service and governance issues.  We are offering financial sector expertise, poverty and vulnerability monitoring advice, thoughts on oil and gas development, regional trade, and urban land management. Gender too is an area that none of us can ignore and we are working, sensitively I hope, with a “behind the scenes” posture to help build ownership of this issue among Afghans.   So too with the drugs issue which will take a broad attack, pooling all our efforts: we hope our analysis of economic and livelihood issues can continue to serve this battle.

Looking ahead, the World Bank remains committed to a long-term role in Afghanistan.  IDA commitments for the coming fiscal year, through June 2005, total about US$285 million  We anticipate one third of this would be in grants. IDA allocations in the two years ahead of that to June 2007 the three-year total will be about US$900 million, assuming of course an ongoing reform commitment and the success of IDA 14 negotiations.

This conference marks the return of Afghanistan to our world as a normal country. The government has told us it will be preparing a poverty reduction strategy paper which we, with other donor partners, are eager to support. The Finance Minister has also requested that an Afghanistan Development Forum – some of you  refer to such meetings as CGs – be held in March next year. The World Bank would be honored to co-host this meeting at its Paris office or another venue.

Ladies and Gentlemen we have traveled a tough two years but what good traveling companions we have had. The Afghanistan Government has made careful choices, demonstrated vision and exerted powerful ownership, all commanding the very best of us, the development partners. We have much to learn from Afghanistan as we face the challenges of a new age; an age of reconstruction and nation building that confronts us not just locally but as global citizens.
 
I thank you.