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Afghanistan: Improved Roads Unlocks Access to Services and Opportunities
DAMAN DISTRICT, Kandahar Province – Like every other weekend, Mawlawi Abdul Rahman kick-starts his motorcycle for the two-hour journey back home. A cleric in Hakim Jan village in Daman district, 70 kilometers away from Kandahar’s provincial center, Abdul Rahman is riding home to Kandahar city. In 2013, when Abdul Rahman, 35, first started working in Hakim Jan village, the road connecting the village to Kandahar, the Spin-Boldak main road, was not paved. Rocky terrain and the long commute time meant that he could visit his family only once a month. “At that time, the road was too muddy and there was water-logging in many parts of the road,” he says. “It was normal to see a car stranded and muddied along the road.” The challenging road conditions delayed access to basic essential services, such as health centers, especially in cases of emergency like childbirth. “Cars used to break down often and commuting made life hard for people here,” says Abdul Rahman. However, the situation has changed significantly now that the Afghanistan Rural Access Project (ARAP) has asphalted the road between the village and the city. “When the road was paved, I bought a motorcycle to get home easily,” Abdul Rahman says.
How Can Trade Accelerate Afghanistan’s Growth?
With an average annual population growth rate of 3 percent and an estimated 400,000 individuals entering the labor market each year, Afghanistan needs much higher growth rate to improve per capita incomes and to provide quality employment opportunities for the expanding workforce. Growth has exceeded expectations over the last two years, but remains low because of ongoing insecurity, a decline in foreign aid, and the lack of domestic and foreign investment.  With the anticipated normalization of aid levels over the long term, Afghanistan needs to urgently explore new sources for revenue generation and foreign exchange earnings.   While trade and regional integration can help boost Afghanistan’s growth, a new World Bank report, Trade as a Vehicle for Growth in Afghanistan: Challenges and Opportunities, argues that a successful trade strategy needs to take into account the country context and assess risks and opportunities. Key findings:Afghanistan’s largest constraint to trade is insufficient production capacity. Lack of economic diversification and high product concentration further limits Afghanistan’s export potential. Improving competitiveness in high potential sectors such as agriculture will help meet domestic demand, substitute imports, and potentially promote exports in the short and medium-term.Poor logistics and trade infrastructure, rather than lack of market access, explain Afghanistan’s trade underperformance. In the short term, exports could be improved by 20 percent by tackling export delays related to customs and border procedures, or high risks during transportation. In the long run, improvements in trade facilitation and logistics coupled with productivity improvements could lead to a more than six-fold increase in exports.The potential for services trade is underappreciated. While the export of services is constrained by Afghanistan’s small domestic market size and low human capital endowment, promoting the import of services, and thereby reducing cost, could help overcome current gaps in service delivery.Given the security environment, the potential of commodities transit trade might be modest and slow to materialize. Moreover, it would require large investment and strong policy effort to reduce Afghanistan’s distance from the frontier in infrastructure and logistics services.  However, the drivers of the currently high transportation cost need to be better understood to design a successful transit trade strategy. Recommendations:Agricultural production growth is constrained by lack of adequate facilities, limited access to high-quality inputs, and insufficient use of research and technology. Irrigated lands can potentially be increased through rehabilitating irrigation systems and investing in new ones, and investing in strong institutions and policies to improve irrigation water management. Efforts should also focus on creating an effective regulatory system and strengthening the capacity of the Ministry of Agriculture, Irrigation and Livestock, as well the existing network of research stations.Private sector businesses lack elements of a supportive environment for their operations, new investments, and expansion. Actions to tackle these challenges include reforming the regulatory framework to expand the domestic agroprocessing industry and reduce the time and cost of exporting commodities; providing serviced land facilities in industrial parks and greater access to electricity; and implementing risk-sharing practices, particularly partial credit guarantees, to increase access to finance for the real economy.To meet domestic demand, substitute imports, and potentially promote exports, policies should focus on enhancing productivity and promoting investment to expand the scale and quality of agricultural production. Given that government resources are limited, intervention should prioritize development of selected value chains, including irrigated wheat, horticultural crops and livestock production, which have been identified as having the highest potential for development.
Afghan Villagers Unite to Preserve Access to Water
DAND DISTRICT, Kandahar Province – Every year in the middle of March, villagers in Qalach-e-Abad village come together to clean the Nawai Pathaw canal to ensure they have enough water to irrigate their farms for the rest of the year. This what they have done this year—cleaning the canal to make sure all of them have access to enough water for irrigation on their farms for the rest of the year. Haji Abdul Wali, 51, head of the Community Development Council (CDC) for Qulchabad village, is monitoring the progress and supervising people. “As a matter of routine, the canal needs to be cleaned every year on account of mud and silt that accumulate and need to be removed for the water to flow smoothly,” he explains. Today, over 100 villagers are working together to clean the Nawai Pathaw irrigation canal. Haji Wali says it will take 20 days to clean the 10.5-kilometer long canal, which provides irrigation water to six villages in Dand district in Kandahar Province. It was common for villagers to spend 40 days or more to clean and fix all the leakages in the canal. Despite this annual restoration, in most years, villagers ran into water shortages due to recurring leaks. “In the past, a lot of water was wasted but this is not so now,” says Haji Wali. The canal, which was originally constructed nearly half a century ago, was rehabilitated by the Irrigation Restoration and Development Project (IRDP) in June 2014. The rehabilitation work, which took a year, included building sluice gates, a protection wall, flumes, and culverts along the length of the canal. As a result, agricultural output as well as productivity have improved. The canal now irrigates 2,748 hectares of farmlands compared to 2,320 hectares previously.
Thriving Local Businesses Provide Jobs to Thousands in Afghanistan
DEHDADI DISTRICT, Balkh Province – The automated machine turns every few seconds and fills the empty cartons with yoghurt in equally proportioned short bursts. The cartons turn around and are machine labelled with the logo of the Balkh Dairy Union (BDU). Two young men, wearing uniforms of the factory, organize the labeled cartons in a package and cart them outside. Every day, 5,000 liters of fresh milk come to BDU’s local pasteurization factory. The factory pasteurizes milk and produces yoghurt, cream, butter, buttermilk, and other dairy products, supplying markets in Mazar-e-Sharif city in Balkh Province. “Since we supply a whole range of pasteurized dairy products in Mazar-e-Sharif markets, we hope to compete with imported supplies and meet the needs of consumers,” says Qiyamuddin Qiam, head of Balkh Livestock Development Union (BLDU), which BDU is a part of. The dairy factory, located in Shirabad village in Dehdadi district, southwest of Mazar-e-Sharif city, was established through the joint efforts of the United States Agency for International Development (USAID), Food and Agriculture Organization (FAO), Ministry of Agriculture, Irrigation and Livestock (MAIL), and farmers of Balkh Province in June 2007. In its early days, the factory operated on a very small scale and was able to pasteurize only 2,000 liters of fresh milk daily. Production levels increased to 4,000 liters per day in 2013. “Although our production had increased, we faced many challenges,” says Qiyamuddin Qiam. “Our packaging was not systematic, the workers were not trained enough, and we had not figured out a market for our products.” 
Partnering to Improve Healthcare in Afghanistan
KANDAHAR CITY, Kandahar Province – The doctor gently places the diaphragm of his stethoscope on the child’s chest. The little girl looks at the stethoscope curiously but says nothing, while her mother, Sharifa, 50, holds her arm so that the doctor can easily examine her. He completes the check-up and writes a prescription, telling Sharifa to administer the medication periodically to lower her daughter’s fever. “Until recently, we did not visit a medical doctor and had always used home remedies,” says Sharifa. “But we switched to coming to the clinic when we learned that the doctors are from our community and their medications are good quality.” The doctor, Sayed Massoom Nabizada, is the director of Dr. Adam’s Clinic in the ninth district of Kandahar city, the capital of Kandahar Province. Along with 17 colleagues, Dr. Nabizada provides daily health care services in the clinic from 8 am to 4 pm, seven days a week. The clinic serves a local population of 32,000 people, offering general check-ups, gynecology and obstetrics services, laboratory facilities, vaccination, malnutrition treatment, and a pharmacy. An average of 200 patients visit the clinic every day. Dr. Adam’s Clinic is among a group of health centers that has come under the supervision of the Bu Ali Rehabilitation and Aid Network (BARAN) since July 1, 2015. BARAN provides health care services and monitoring oversight for 51 health centers in the 17 districts of Kandahar Province.  It is a non-governmental organization (NGO) that works in Kandahar to provide a basic package of health services, contracted by the Ministry of Public Health (MoPH) under the System Enhancement for Health Action in Transition (SEHAT) Program. The services are implemented through a performance-based partnership agreement between MoPH and BARAN. SEHAT aims to expand the scope, quality, and coverage of health services provided to the population, particularly for the poor and is supported by the International Development Association (IDA), the World Bank Group’s fund for the poorest countries, and the Afghanistan Reconstruction Trust Fund (ARTF), in partnership with multiple donors.
South Asia Program on Hydromet, Climate Services and Resilience
Impact of Disasters and Climate Risks in South Asia South Asia is highly prone to weather and water-related disasters such as flooding, drought, thunderstorms and cyclones. In the past two decades, more than 50% of South Asians, or nearly 750 million people, have been affected by at least one natural disaster. The social and economic costs of such hazards is staggering and left almost 230,000 people dead and $45 billion in damages between 1970 and 2008. In India, direct losses incurred from natural disasters in 2003 equaled  2% of the country’s GDP and about 12% of its revenue. Pakistan has suffered $16 billion in losses since 2005. In Bhutan, damages caused by the 2009 Aila cyclone edged $17 million.
Afghanistan’s Public Procurement Racks Up Victories Against Corruption
KABUL – Afghanistan is making vast inroads to root out corruption, improve the management of its public finance, and make its procurement system more transparent, finds the 2016 Annual Performance Assessment Report, which evaluates the timeliness and quality of services provided by government personnel. The report named the National Procurement Authority (NPA) the top performer among 19 directorate generals and 63 teams, covering the Ministry of Finance (MoF) and two agencies, NPA and Afghanistan Extractives Industries Transparency (AEITI). The assessment pointed to the culture of performance emerging in NPA. “There is a good spirit in the workplace and all NPA teams work for a common vision to make the national procurement sector free of corruption,” says Mohamad Sohail Kaakar, Director for strategic communication and integrity at NPA. NPA has an energetic team with experience in working with many national and international organizations. This background has enabled them to establish a professional environment inside the authority. As Deputy Finance Minister Khalid Payenda says that “most NPA employees are experienced and highly educated young people. They have good coordination with each other, resulting in a professional environment and great teamwork.” He believes the NPA team is made up of valuable professionals working toward the government’s vision to improve public procurement and combat corruption. “Our focus is on results,” says Sohail Kaakar, “and as we have traveled a long way to reach where we are now, it keeps us motivated and gives us the diligence to work to institutionalize reforms.” The 2016 Annual Performance Assessment Report was conducted in two phases. First, teams conducted a self-assessment against 2016 activities from their Five-Year Fiscal Performance Improvement Plan, which supports the government in reaching its goals of sustainable government finances and self-reliance. Then, the self-assessments were validated by a team from the Performance Management and Public Expenditure Reforms Unit, formerly PM&PER, which operates under the MoF and works with MoF teams and agencies to develop five-year rolling plans that reflect international benchmarks. 
Afghan Farmers Learn to Grow More Crops
NAHR-E-SHAHI DISTRICT, Balkh Province – A gas lamp emits a dull glow in the otherwise dark, gray room. The room is humid and climate-controlled, heavy plastic bags hang from ropes dangling from the ceiling in neatly ordered, straight lines. Zakia, 24, wearing a special mask, is examining the bags and notices mushrooms sprouting in some of them. Carefully, she makes tiny holes in the plastic to take the mushrooms out. “This dark room has brought light to my life, it has given me the opportunity to earn a living,” Zakia says. She is one of thousands of beneficiaries of the kitchen gardening scheme under the National Horticulture and Livestock Project (NHLP). “I was without a job and dependent on others, but NHLP helped me and many other women in our village to become financially independent and self-sufficient,” says Zakia, who had recently established her mushroom production unit with NHLP support. Zakia, who supports her family of seven, lives in Ulmarab village, Nahr-e-Shahi district, in Balkh Province. She also maintains a kitchen garden in a micro-greenhouse, one of the other activities supported by NHLP, but that did not generate enough income to meet her financial needs. To set up the mushroom production unit, Zakia was given technical training as well as resources by the Ministry of Agriculture, Irrigation and Livestock (MAIL) under the NHLP. She has not only learnt the production process but has also mastered the art of developing and tapping the market. She sells mushrooms to her neighbors and nearby shops, and supplements these sales with vegetables from her kitchen garden, pitching herself as the one-stop supplier for garden produce.  She is the only woman in her village to own and manage an independent production unit, and is hailed as an example of economic empowerment by her community. Her life has changed and her dreams have grown. “I want to expand my work in the future, in addition to encouraging more women to start production or small businesses of their own,” she says. Najia, 45, another beneficiary from Ulmarab village, received training on how to cultivate vegetables and was given resources to build a micro-greenhouse. “I was a housewife before the kitchen gardening scheme,” says the mother of six, “I never had enough money to buy vegetables and did not know how to cultivate them in my yard.” Supplemented with grants of seasonal vegetable seeds, Najia quickly ensured nutritional and economic self-sufficiency for her 10 family members. “I cultivate leek, onion, cress, celery, carrot, and other vegetables. I used to buy vegetables from the shopkeepers, but now I produce for myself and also sell to them,” she says.  
South Asia Loses Growth Lead, Can Regain through Action
Countries should address growth constraints with policies and reforms WASHINGTON, October 8, 2017 –  After leading global growth for two years, South Asia has fallen to second place, after East Asia and the Pacific. The region’s slowdown is due to both temporary shocks and longer-term challenges. Regional economic growth is expected to slow to 6.9 percent in 2017 from 7.5 percent in 2016, but growth could rebound to 7.1 percent in 2018 with the right mix of policies and reforms.   The just released twice-a-year South Asia Economic Focus (SAEF) finds that the slowdown in South Asia has mostly been driven by internal factors, most notably in India, such as a decrease in private investment, and an increase in imports and government spending. This edition, Growth out of the Blue, explores the potential of night-time light satellite imagery to improve measurement and understanding of economic activities.                                  “While growth rates in South Asia largely remain robust given the economic shocks that some countries in the region have faced, countries should continue to actively address their growing trade and fiscal deficits,” said Annette Dixon, the World Bank South Asia Region Vice President. “With the right mix of policies to respond to challenges, we remain confident that South Asian countries can accelerate their growth to create more opportunities and prosperity for their people.” Given its weight in the region, India sets the pace for South Asia. Its Gross Domestic Product (GDP) growth is expected to slow down to 7.0 percent in 2017, due to surging imports and declining private investment along with the effects from withdrawing large amounts of banknotes and the introduction of the Goods and Services Tax (GST). However, India’s growth is expected to rebound to 7.3 percent in 2018. Pakistan continues its upward growth performance with economic activity expected to accelerate to more than 5 percent this and next year, if deficits are well-managed and external stability is maintained. Nepal has seen an economic rebound after the earthquake and trade disruption in 2015, but growth is moderating this year. In Bangladesh, industrial production continued to accelerate, export growth slowed, and fiscal deficits increased. Overall, South Asian economies stand to gain from continued recovery in advanced economies, which are their largest export markets.   The report also highlights that South Asia was once at the cutting edge in economic measurement and analysis, pioneering techniques such as the use of household surveys. With the rise of big data, traditional ways to measure economic phenomena like prices and GDP can be supplemented. To improve economic measurement in South Asia, a greater reliance on big data may help, but a clear agenda toward stronger statistical systems is a necessity. “We’re very excited about the potential of adopting new sources of data to improve our understanding of economic activity. Nightlight data, for instance, is easy to obtain, regularly updated, and very informative,” said World Bank South Asia Region Chief Economist Martin Rama. “In this report, it allows us to shed light on recent episodes and to provide a new perspective on how policies and shocks impacted the region, down to the local level.” Factsheet: Many South Asian Countries Have Potential to Accelerate GrowthAfghanistan’s economic recovery remains slow with continuing insecurity curbing private investment and consumer demand. Growth is projected to accelerate slightly from 2.6 percent in 2017 to 3.4 percent in 2018. However, with population growth of nearly 3 percent, such a level of economic growth means minimal income per capita growth. Sustained economic growth requires transforming the economy through better health and education, improved agriculture, and the development of the country’s mining resources. The economy in Bangladesh remains strong with accelerating industrial production and resilient services.  However, growth is expected to moderate this year. Deficits are widening as export growth and remittances have weakened, which should be monitored and addressed along with increasing stresses on the financial sector and uncertainties around the upcoming elections. Economic activity in Bhutan has kept growth strong with the economy expected to grow at 6.7 percent in 2017 and 6.9 percent in 2018. Hydropower projects, supportive policies combined with low inflation, a stable exchange rate and greater financial reserves have contributed to growth and poverty reduction. However, risks are emerging, including possible delays in hydropower construction and the slowdown in growth in India. India’s economic momentum has been affected from disruptions from the withdrawal of banknotes and uncertainties around the GST. Growth is expected to slow from 8.6 percent in 2015 to 7.0 percent in 2017. Sound policies around balancing public spending with private investment could accelerate growth to 7.3 percent by 2018. While sustained growth is expected to translate to continued poverty reduction, more focus could be made to help benefit the informal economy more.     In Maldives, GDP growth has rebounded to nearly 5 percent as the government embarks on several major infrastructure projects to help move Maldivians to the capital city Malé. Construction is expected to be a key driver of growth, with tourism also recovering. The country could better align economic activity with providing more employment opportunities, and better health as well as education services. In addition, it needs to prepare for the impacts of climate change. Nepal has seen an impressive economic recovery after disruptions from earthquakes and a trade blockade. Economic activity rebounded to 7.5 percent in 2017 through increasing government resources, spending, and remittances from abroad. Growth is expected to slow in 2018 due to the heaviest floods in decades, slow recovery of exports, and an increase in lending rates. In Pakistan, economic growth is expected to accelerate to more than 5 percent this and the next years if the country’s fiscal deficits are well managed and external stability is maintained. Efforts to reverse the trade and fiscal imbalances and continued implementation of reforms will be needed for sustaining and accelerating growth and improving welfare. Sri Lanka’s economic growth is projected to grow at 4.6 percent in 2017 and achieve 5 percent growth in the years ahead. Public finances and reserves have improved despite a high budget deficit and public debt. Frequent natural disasters continue to weaken economic performance and are likely to increase poverty. Accelerating reforms to promote competitiveness, better governance, and a more balanced budget are critical to ensure sustained growth and development.
World Bank: An Agenda for Inclusive Growth in Afghanistan
The presentation titled "Afghanistan: an agenda for catalyzing inclusive growth" highlighted a number of challenges for growth in the short-term, including conflict and fragility and limited fiscal space. The current economic downturn calls for a combination of fiscal and policy reforms supporting domestic aggregate demand to boost growth. Key recommendations include:improve budget execution and reorient budget expenditures toward labor-intensive and community-based programs that directly reach the population with the greatest needs and, most likely, the highest marginal propensity to consume;increase and improve quality of spending for basic service delivery;promote private investment and strengthen confidence of business community by forcefully implementing reforms and measures to reduce risks and costs of doing business;identify and selectively promote opportunities for import substitution (without deteriorating prices) and exports;move from narrowly focused revenue collection to broader revenue mobilization by expanding the tax base. At the same time, the World Bank underscored the importance of prioritizing investments in realizing Afghanistan’s long-term growth potential. It pointed out that:investments—in institutions and in high-potential areas—will be critical;agriculture and agri-business, human capital and extractives offer the greatest promise;public investments—particularly for connectivity and energy infrastructure—will have to be clearly prioritized and carefully selected; andgiven the financing constraints, crowding-in private capital—through reforms, private-public partnerships and innovative financial solutions—will be tremendously important. Harnessing growth potential from these areas, however, would require significant public investment—a difficult task under the tight financing constraint. This warrants heightened efforts to crowd-in private capital, particularly for infrastructure investment, and to improve the quality of investment through a more robust Public Investment Management process.  The presentation pointed out that fiscal and economic measures would only have limited impacts without continued efforts to enhance state effectiveness. The government needs to ramp up its reform to enhance its institutional capacity in planning, coordination, and implementation, and to strengthen anti-corruption efforts and civil service reform. The presentation also emphasized the importance of concerted efforts of international partners to support Afghanistan in navigating difficult fiscal challenges towards inclusive growth, by meeting Brussels aid commitments and delivering more aid on budget.
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