Tatsat Chronicle Magazine

Afghanistan :Aid and Reconstruction Agenda

September 30, 2021

Western politicians have pledged to assist Afghanistan in its recovery from two decades of war

Afghanistan’s economy is characterised by its vulnerability and reliance on foreign help. Employment in low-productivity agriculture is centred in the private sector, which is highly restricted (44 percent of the total workforce works in agriculture and 60 percent of households derive some income from agriculture). Insecurity, political instability, poor institutions, limited infrastructure, pervasive corruption, and a tough business environment stifle private sector growth and diversification (Afghanistan was ranked 173rd of 190 countries in the 2020 Doing Business Survey).

The World Bank Group’s support for the Afghanistan National Peace and Development Framework (ANPDF II), which was proposed by the Afghan government during the Geneva meeting, takes a programmatic approach. Macroeconomic policy and management; finance, private investment, and job creation; public sector governance and anti-corruption; human capital development and service delivery; citizen engagement and social inclusion; urban development and infrastructure, connectivity, and sustainability are all areas where advisory work and operations are concentrated.

International aid initiatives for the Balkans and the Palestinian Authority are two final possible models from the modern age. Per capita aid amounts have been even higher in each case, ranging from $200 to $300 per person per year. However, the development and reconstruction help has not yielded nearly as stunning outcomes to date, highlighting the fundamental fact that, while giving is vital, more aid is not always better.

Large amounts of aid for Afghanistan must be conditional on effective economic policies, just as they must be conditional on political collaboration among Afghan factions and the promotion of political stability in that nation. These latter difficulties may be the most challenging, given the country’s history, multitude of separate power centres, and the apparent fragility of its new coalition administration. The Islamic Bank of Afghanistan’s chief executive, Syed Moosa Kaleem Al-Falahi, told the BBC that Afghanistan’s financial industry is facing a “existential crisis” as customers panic following the Taliban’s takeover of the country last month, and Western nations and agencies respond by freezing the country’s funds.