Report on Progress toward Security and Stability in Afghanistan

June 2008
Report to Congress in accordance with the 2008 National Defense Authorization Act (Section 1230, Public Law 110-181)

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Section 3: Economic and Social Development

3.1 Overview

The long-term comprehensive plan for economic and social development in Afghanistan is the Afghanistan National Development Strategy. This strategic document is the central framework for Afghanistan’s development, aiming to promote growth, support the development of democratic processes and institutions, and reduce poverty and vulnerability. The ANDS lays out the strategic priorities and mechanisms for achieving the government’s overall development vision and serves as the key document used by the World Bank and the International Monetary Fund in assessing the country’s poverty reduction strategy.

In addition, broad-based and sustainable economic growth is driven by private-sector, market-oriented initiatives. Key economic “enablers” such as roads, power, education, health care, rule of law, sound macroeconomic policy, and security are critical to creating conditions that allow such initiatives to occur.

3.1.1 Afghanistan National Development Strategy (ANDS)

The ANDS seeks to strengthen Afghanistan’s emerging private sector through improved economic governance, but it also heavily emphasizes key economic enablers such as security, governance, rule of law, and human rights. Within its sectoral strategies and cross-cutting issues, the ANDS addresses several key economic sectors, including infrastructure, natural resources, agricultural and rural development, and counter-narcotics. The Afghan government submitted the ANDS to the World Bank on 15 April 2008, as required for setting the conditions for debt relief under the IMF Poverty and Growth Facility.

Given the staggering challenges of developing Afghanistan from an extremely low level of economic and social development, effectively implementing the ANDS will require significant long-term donor financing and political support to ensure its benchmarks, indicators, and overall objectives are realized.

3.1.2 Interagency and International Cooperation

Development of the ANDS is being coordinated by the ANDS Secretariat and supervised by the ANDS Oversight Committee, comprised of seven cabinet ministers. The Joint Coordination and Monitoring Board (JCMB) is the high-level international body responsible for overseeing the implementation of the Afghanistan Compact and the ANDS.

The final ANDS comprises strategies for 18 sectors, divided into 8 pillars: 1) security, 2) governance, 3) infrastructure and natural resources, 4) education and culture, 5) health and nutrition, 6) agriculture and rural development, 7) social protection, and 8) economic governance and private sector development. It will also include strategies for 6 crosscutting themes: 1) capacity development, 2) gender equity, 3) counter-narcotics, 4) regional cooperation, 5) anti-corruption, and 6) environment.

The ANDS articulates both a policy framework and a road map for implementation, translating strategic priorities into effective programs that deliver both immediate and lasting results for the Afghan people. Through identifying a clear set of cost estimates and sequenced priorities, the full ANDS, together with the Afghanistan Compact, is expected to provide a coherent path to achieving Afghanistan’s Millennium Development Goals.

3.2 Reconstruction and Development

3.2.1 Communications

Afghanistan has experienced nearly 30 years of conflict and under-investment that has impeded the development of a national telecommunications network. Only 15,000 people had access to telecommunications services in 2001. Today, Afghanistan has approximately 4.5 million people that have access to telephones, and cell phone coverage is available in 150 towns and cities. Afghan Telecom has installed 86,000 fixed digital lines and 233,000 wireless lines using the most modern technology in all 34 provinces. It has also connected provincial capitals and district centers via a satellite network that provides voice, internet, and video conferencing services - the District Communication Network (DCN).

The Ministry of Communication and Information Technology (MOCIT) has issued 15 internet service provider licenses. These licensees are providing internet services in major cities in Afghanistan. The MOCIT is also in the process of constructing a 3,200-kilometer optical-fiber network connecting major provincial capitals with one another and also with neighboring countries. So far, 600 kilometers have been installed and the project is expected to be completed in mid-2009. The MOCIT has also extended basic communications services to government units at the ministry and provincial capital levels, and has improved international connectivity through a microwave link to Pakistan and an optical fiber link to Iran. Almost 220 of the 398 districts across the country are connected via voice, data and fax facilities.

3.2.2 Power

Commercial access to electricity is vital for economic development. In 2001, Afghanistan produced 430 Megawatts of electricity; today the country produces 754 megawatts. International statistics maintained by the World Bank indicate the ratio of Gross Domestic Product (GDP) growth to electrical production is approximately $1,000 to 300 kwh. The GIRoA’s current Power Plan sets a goal to deliver sufficient electricity to meet the needs of an economic growth rate of 9 percent per annum. Additionally, the GIRoA anticipates approximately 90 percent of urban businesses will have access to electrical power by the end of 2010. Finally, the plan’s objective is to provide access to electricity to 65 percent of urban and 25 percent of rural households by the end of 2010.

To achieve these goals, initiatives are underway to improve both electrical power production and transmission. These efforts include:

• Improvements underway on the North East Power System (NEPS), a GIRoA initiative with multi-donor funding designed to bring power to the northern and eastern regions of the country. NEPS will enable transmission of domestically produced power as well as imported power from Uzbekistan, Tajikistan, and Turkmenistan.

• Work to restore natural gas production at Sheberghan so that domestic resources can be used to produce electricity in northern Afghanistan and Kabul, reducing reliance on imported energy.

• Roll out of a rural renewable-energy project extending access to rural populations not covered by the regional grid.

• Purchase and installment of diesel-powered generators, intended to provide Kabul with 100MW of reliable power by March 2009.

• Improvements in the Southern Electrical Power System to increase generation capacity, enhance transmission efficiency, and utilize Kajaki dam hydropower.

• Installation of transmission lines from Kajaki to Lashkar Gah and Kandahar.

• Improvements to the Western Transmission System by strengthening transmission lines from Herat to Turkmenistan and Herat to Iran.

The Da Afghanistan Breshna Moassesa (DABM) Corporation is responsible for both the operation and maintenance of national assets for the generation, transmission and distribution of electricity, as well as the sale of electricity, metering, loss control, and revenue collection. Presently, annual government subsidies estimated at $56 million are required to maintain power production and transmission. The IMF is pressing the GIRoA to restructure the DABM and reduce its level of subsidies. Reforms are proposed that include tariffs, installation of tamper-proof meters, and reduction of technical losses (presently as high as 44 percent) to boost cost recovery to 75 percent by 2010. However, it is anticipated that the proposed 730,000 new connections by 2010 will not be realized as a result of shortages in funding outlined in the National Energy Sector Plan of the ANDS.

Electricity distribution, rehabilitation, and infrastructure projects in all major urban centers are underway. Access of rural households to electricity has been increased by seven percent and a Renewable Energy Master Plan has been approved. However, the lack of electrical power significantly affects the pace of development in Afghanistan. There is some potential for private funding of power-generation initiatives and business ventures. An example is the Aynak Copper Mine, where the Chinese developers are expected to build a power plant to provide energy for mining and processing needs.

Afghanistan is envisioned as the corridor for the Central Asian-South Asian (CASA) Regional Energy Market, intended to bring electric power from Kyrgyzstan and Tajikistan through Afghanistan into Pakistan. Under CASA-1000, the first phase of the project, 1000MW will reach Peshawar in Pakistan and 300MW will reach Kabul. The North East Power System (NEPS) is used to import power to Kabul from three Central Asian neighbors. Other energy projects include: efforts to rehabilitate hydropower plants at Kajaki, Naghlu, and Darunta; the transmission line from Pul-e Khumri to Kabul to be built by India; the transmission lines from Naghlu to Jalalabad/Methar Lam; and the transmission lines from Kabul to Gardez (including a substation for Gardez) to be funded by the Asian Development Bank. The required 33 percent increase per year in electrical connections to meet 2010 goals will likely not be realized due to a $1.2 billion gap in funding the National Energy Sector Plan.

The electrical power system in Afghanistan remains rudimentary at best. It severely constrains the economic development of the country, primarily hindering the pace of industrial and manufacturing growth. Power shortages are forecasted to be heavy in 2008 which will likely have a destabilizing effect. Massive, resource-intensive reconstruction programs of the nation’s generation and transmission infrastructure are required. However, such large power projects take time, especially where there is limited physical infrastructure. An absence of a sufficient legal framework and protections for private investment in the sector and a lack of bilateral power purchase or sharing agreements hinder connection of power supplies to existing grids across borders. In the long term, Afghanistan’s dependence on imported power may be reduced if the Afghan government actively pursues increases in generation capacity, mainly through hydropower.

3.2.3 Agriculture

Afghanistan’s agricultural sector accounts for about 45 percent of the nation’s GDP and employs more than 70 percent of the work force. Accordingly, growth in this sector is particularly important. Unfortunately, most farmers producing licit crops have failed to advance beyond subsistence farming. Afghanistan urgently needs to improve the productivity of its agricultural sector, currently impeded by inadequate infrastructure, a lack of knowledge of modern practices, water scarcity, and soil degradation.

Under semi-arid conditions, community-based watershed management and infrastructure are critical starting points for improving agricultural productivity. Irrigated crop land is in short supply due to an irrigation infrastructure that has been destroyed or degraded. Afghanistan has few dams for harnessing rainwater and spring snowmelt for agricultural use or preventing the damaging seasonal floods which destroy cropland. Additionally, due to the lack of electrical power, transportation, and low-cost/low-technology storage facilities (both cold and silo) at the village and district level, there is little capacity to store, process, or market agricultural products. Lack of modern agricultural practices also contributes to severely limited crop yields.

A current drive for new, integrated initiatives is underway to increase productivity in this sector. USAID is supporting commercial agriculture though agricultural extension services and U.S. land-grant university programs, partnerships with the private sector, and access to capital for agribusiness using a loan-guarantee program. Promoting commercial agricultural growth at each step in the value chain is key to increasing employment opportunities, raising incomes of rural households and farmers, and contributing to the overall security of Afghanistan.

Progress in agriculture requires reforms of land tenure and improved access to finance. Currently, both land tenure and finance are dominated by poppy cultivation. Alternative development programs have expanded, but are not yet effective enough. A current drive for new integrated initiatives is underway to increase productivity in this sector. The first Agribusiness Development Team (ADT) from the Missouri Army National Guard deployed in Nangarhar in February 2008. The ADT provides a complete array of expertise in agriculture, horticulture, pest management, hydrology, soil science, agricultural processing, marketing, and veterinary science. The ADT also has an organic security force and is capable of sustained independent operations. In June 2008, the Texas Army National Guard will provide an ADT to Ghazni Province and the Nebraska Army National Guard will deploy an ADT to Parwan Province in November 2008.

USAID’s Alternative Development and Agriculture (ADAG) programs are creating licit alternatives to poppy production by promoting and accelerating rural economic development. ADAG programs are partnering with a variety of entities including GIRoA institutions, civil society organizations, the private sector, other donors, Provincial Reconstruction Teams (PRTs), and the U.S. Military to coordinate actions. The goals are to increase commercial agriculture opportunities, improve agricultural productivity, create rural employment, improve family incomes and well being, and help to ensure the sustainability and management of the natural resource base. Improved job opportunities and incomes provide significant alternatives to opium poppy production. Counternarcotics activities are active where poppy production is most prevalent. Moreover, a robust agriculture economy will play a major role in helping to eliminate poppy production and move the country to both economic and political stability.

To accelerate sustainable economic development in regions most affected by poppy production, USAID provides access to materials, technology, and expertise necessary to produce and market high-value licit crops such as fruits, vegetables, and tree crops. Various programs dedicate significant resources to providing sources of credit, identifying and supporting value chains, developing new markets, improving productive infrastructure, and removing the administrative constraints that hinder business growth. The goal is to create a vibrant and diversified commercial agriculture sector that provides employment opportunities for rural Afghans. One example is the Mazar Foods Initiative, which will develop a commercial agriculture farm and processing center to create employment, increase sales of agricultural products, and demonstrate agricultural production and retail best practice techniques on a large scale (approximately 6,250 hectares, close to13,000 acres). Other programs facilitate trade opportunities by providing linkages between buyers and farmers.

Activities also seek to improve natural resource management by involving local communities and agricultural universities in problem identification and resolution, and by crafting and employing resource management policies in a manner that contributes to the sustainability of licit livelihoods. USAID also provides Air Services facilitating the ability of USG program managers and key implementing partner staff to move between field locations for program monitoring and management purposes.

To increase commercial agriculture opportunities, improve agricultural productivity, create rural employment, and improve family incomes and well being, USAID will build upon the successes of 2007. These successes included: 1) over 1,500 metric tons (MT) of fruit and vegetable exports shipped, valued at over $6 million in sales; 2) over 30,000 farmers under contract with local food processing firms and/or wholesalers to produce and sell licit agricultural products; 3) seven national and regional AgFairs hosted; 4) over 150 rural farm stores or AgDepots established; 5) national and regional market information systems launched; 6) over 3,200,000 forestry cuttings, saplings, and fruit trees planted; 7) 630 Animal Health Care providers attended the first-ever Afghan Veterinary Association Convention held in Kabul; 8) over 9,000,000 vaccines for livestock administered; 9) over 8,500 Afghans trained in business skills and over 75,000 farmers trained in agricultural practices; 10) 58 Kabul University staff members involved in masters degree programs via land-grant universities; and 11) cross-cutting activities that saw women and persons with disabilities incorporated into these programs.

There has been significant progress. Cereals production has nearly doubled since 2001, but this progress is dependent on favorable conditions during the growing season. Although Afghans have the ability to produce nearly enough agricultural products to sustain themselves, they lack the ability to store those products for extended periods. Instead, they sell excess produce to Pakistan at the end of the harvest season. Merchants in Pakistan, who have the ability to store these grains and other foods, will sell these products back to Afghans during off-harvest season at an increased cost.

To address these problems USAID’s Local Governance and Community Development (LGCD) program is providing small-scale community support for agriculture infrastructure improvement and village-level training and commodity support in coordination with the ACDI/VOCA program.

3.2.4 United States Department of Agriculture Efforts

The United States Department of Agriculture (USDA) continues to provide substantial contribution to the revitalization of Afghanistan’s agricultural sector. USDA activities are described in the following sections.

3.2.4.1 USDA Agricultural Advisors on Provincial Reconstruction Teams

USDA deploys, supports, and provides guidance to agricultural advisors on PRTs. Since 2003, USDA has deployed 38 advisors from nine different USDA agencies to work in Afghanistan. These advisors work with both U.S. military and civilian personnel, as well as with their Afghan counterparts. Agricultural advisors develop and implement projects to rehabilitate provincial-level agricultural systems and provide capacity-building assistance. For fiscal year 2008, USDA expects to deploy a total of 13 PRT advisors.

3.2.4.2 USDA Technical Assistance

USDA’s technical assistance programs in Afghanistan include livestock health, agricultural extension and the Afghan Conservation Corps. USDA administers several exchange programs including the Cochran Fellowship Program (Cochran), Norman E. Borlaug International Science and Technology Fellows Program (Borlaug) and the Faculty Exchange Program (FEP), all of which provide participants training to develop their technical skills on various agricultural topics and further the achievement of technical assistance goals.

To help build Afghanistan’s national capacity to detect and control animal diseases, USDA, with USAID funding, provides technical guidance and training to the Afghanistan Ministry of Agriculture, Irrigation, and Livestock (MAIL) and other partners, including veterinary and animal health faculty at Kabul University. USDA also provides technical experts, including a resident animal health advisor, to provide expertise and training to MAIL in animal disease surveillance, data analysis, field response, lab diagnostics, and national planning for disease control. Under an agreement with Fort Valley State University in Georgia, USDA will produce a technical guide of animal diseases in Afghanistan that will assist animal health officials and livestock producers in the detection and control of animal diseases.

To enable Afghanistan to achieve its goals in the livestock sector, USDA provides training for Afghan participants under the Cochran and Borlaug Programs. In 2008, USDA will host two participants from Afghanistan under the Cochran Program for training in livestock dairy production. In 2007, two Afghans participated in training on animal disease detection and control methods. Meanwhile, in 2007, four Afghans participated in the Borlaug Program and were trained in animal science and epidemiology.

USDA provides technical guidance to the Afghanistan Ministry of Higher Education on the use of USDA monetized food aid proceeds to build university teaching capacity in agricultural and veterinary sciences, including extension services. Similar assistance was given to MAIL in programming monetized food aid proceeds to develop and deliver extension services throughout Afghanistan. Efforts in agricultural extension led to the development of a prototype district-level agricultural extension facility and staffing model. Monetized food aid proceeds have also supported the construction of 17 provincial agricultural centers for extension and cultural activities. With the University of California-Davis, USDA is working to build MAIL’s capacity to produce agricultural extension materials for use by agricultural producers. Forthcoming activities will focus on agricultural extension services for horticultural products.

Training courses are provided to develop the technical skills for the participants to achieve the objectives of the agricultural extension program. In 2008, the Cochran Program will host eight participants from Afghanistan for agricultural extension-related training. Since initiating Cochran Program training activities for Afghanistan in 2004, 12 women have participated in a program on the role of women in small agricultural enterprise development. In 2007, three Afghans participated in the Borlaug Program in agricultural extension, economics, and rangeland management.

USDA, with USAID funding, has provided technical guidance to assist MAIL in developing a pistachio forest management plan for rehabilitating degraded pistachio woodlands. In 2006, target villages realized a 65 percent increase in income from pistachio nuts, with 2007 also showing an increase above 2006. This project is being expanded to include other villages. USDA technical specialists have provided training and consultation on improving the management of tree nurseries and on improving seed collection and storage. In 2008, to support Afghanistan’s goals in forest management, USDA expects to host at least three FEP participants. The FEP brings Afghan participants from institutions of higher learning to the United States for training in a U.S. university. Since 2006, USDA has hosted four FEP participants, all from Kabul University. In 2007, five Afghans participated in the Borlaug Program in horticulture, agronomy and plant pathology.

3.2.4.3 Food Assistance

USDA has provided food assistance through Food for Progress (FFP) and the McGovern-Dole International Food for Education and Child Nutrition (FFE) Programs. In March 2008, USDA approved a government-to-government agreement with the Government of Afghanistan that will provide $10 million in vegetable oil and also will support agricultural development in Afghanistan.

In 2007, USDA signed an FFP agreement with the Government of Afghanistan to provide more than 8,000 metric tons of soybean oil valued at $9.5 million. The sale of the soybean oil in Afghanistan generated support for agricultural education, agricultural research and extension, plant and animal disease diagnostics and control, food safety, and natural resource management.

Since 2005, USDA implemented a total of six food assistance programs in Afghanistan, including two FFP agreements with the government and four FFP programs with U.S. private voluntary organizations.

3.2.5 Natural Resources

Afghanistan possesses hydrocarbon, mineral, and other natural resources estimated at amounts that represent significant commercial value. These resources include an unknown quantity of oil; an estimated 16 trillion cubic feet of natural gas; as much as two billion tons of copper; significant quantities of precious gemstones; substantial deposits of gold; large reserves of coal; and millions of tons of several other valuable minerals such as chromite, iron and uranium. Although many of these resources are currently unexploited, several (particularly gemstones and timber) are being illegally depleted at an alarming rate, robbing the country and its people of hopes for economic growth.

Since 1978, Afghan provinces have experienced 30 to 70 percent deforestation from uncontrolled logging following the disruption of traditional, sustainable, and locally managed logging practices. If current trends continue, Afghanistan could be virtually deforested in 25 years, destroying potential tourism and forestry industries. In addition to the long-term consequences, deforestation causes accelerating soil erosion, flooding, and mudslides which hinder Afghanistan’s immediate development.

Illicit gemstone and timber production primarily take raw materials from Afghanistan, effectively outsourcing to Pakistan most of the badly needed employment and income derived from processing and final sales. Funds derived from illicit gemstone and timber sales have become a source of revenue for insurgent operations, including the financing of IED cells and funding for attacks against Afghan and international forces. Therefore, it is crucial to integrate actions to counter the illegal trade in gemstones and timber along with other efforts to counter illicit activities and prosecute the counterinsurgency.

Developing Afghanistan’s natural resources will require significant working capital and infrastructure investment. Unfortunately, the security situation and lack of established civil law make the country an unattractive place to do business. Ill-defined and poorly enforced licensing and concession procedures in some sectors, combined with a weak regulatory environment, continue to dissuade potential investors. USAID is providing funding to the Afghan National Environmental Protection Agency to strengthen the country’s ability to enforce the regulatory framework. USAID also provides significant funding for reforestation and biodiversity protection. Yet, there remains great need in this area. Donor institutions and U.S. Government programs provide inadequate assistance in the natural resources sector. Moreover, such programs are long-term in nature, with progress often measured in years. Although significant potential exists for development of Afghanistan’s natural resources, critical building blocks related to the investment climate—commercial laws and the legal and regulatory environment—are only gradually beginning to take hold, thus the full economic potential in these natural resource deposits will remain untapped in the near to medium-term. Military solutions are not sufficient to address these large-scale problems, which will require civilian expertise and a long-term perspective.

3.2.6 Transportation

The primary activity of the international community in regards to transportation has been road improvement. Several in-depth studies have been completed, resulting in an overall ?master’ plan for the road network of the country. Additional modes of transportation, such as rail or air, have received limited attention and should be the subject of further in-depth studies and research.

The primary goal of road construction is to increase transport of goods, national and regional trade, and economic growth. The major ancillary benefit of the roads is freedom of movement for Afghan and international forces due to their anti-IED effect. The Afghan saying is, “Where the road ends, the Taliban begins.” The Road Development Master Plan provides the primary strategy to build a network of roads in the country. The basic design calls for roads to connect district centers to provincial centers, and then provincial centers to a central Ring Road connecting the major cities around the country. Thus, the population will be physically linked from the local to the national level, and from their district centers all the way to the capital in Kabul. The Road Development Master Plan will be a permanent legacy of a strong Afghan government providing jobs, linking the nation, and expanding commerce that no alternate organization can provide. Currently, Afghanistan’s road network includes 35,566 kilometers of roads (8,231 kilometers of which have been completed by the United States. and its allies since the inception of Operation Enduring Freedom). An additional 2,200 kilometers of roads are planned for completion over the course of 2008. Road construction projects have injected $71 million into the local economy since January 2007. One kilometer of road construction generates and average of 3,500 labor days.

The Ring Road will be approximately 2,200 kilometers long upon completion in December 2009. An estimated 73 percent (1,755 kilometers) of the planned length has been constructed to date. Over 60 percent of Afghans live within 50 kilometers of the Ring Road, making it critical to trade and transport. Afghans composed 75 percent of the workforce for the largest section of road, the Kabul-Kandahar-Herat Highway USAID, through the Louis Berger Group, will begin the reconstruction of the Khowst to Gardez Road. This road will connect two major provinces and increase economic stability in the region.

Afghanistan’s Ministry of Public Works intends to initiate a fiscally sustainable road maintenance system to effectively maintain 7,000 kilometers of roads. Roads, like any other structure or facility, require continuous maintenance. If these gravel or paved roads are maintained by Afghans, this activity will demonstrate the Afghan government’s ability to provide the sustained basic necessities for continued economic growth. It will also sustain the large monetary investment that the United States has made on behalf of the Afghan government. At the current rate of funding, U.S. agencies will increase the current number of improved roads by approximately 20 percent. Between 2002 and the end of 2008, a total of more than 21,000 kilometers of roads will have been completed by the United States and its allies.

3.3 Economic and Social Indicators of Progress

A key indicator of progress made in security, governance, and development in the context of a counterinsurgency campaign are the actions and perceptions of the general population. Popular perceptions are measured both quantitatively and qualitatively. Several organizations have sponsored public opinion surveys in Afghanistan since 2005. Combined Forces Command-Afghanistan commissioned a quarterly nationwide survey, the Afghanistan National Development Poll (ANDP), until August 2006. A follow-up ANDP was initiated by the CSTC-A in July 2007. ISAF is currently working to resume nationwide polling on a recurring basis. On a regional level, CJTF-82 has conducted monthly surveys of RC East since April 2007. Additionally, a number of U.S. and international organizations have commissioned nationwide perception surveys, including the Asia Foundation, the British Broadcasting Corporation, the U.S. State Department, and Charney Research.

According to polls conducted in 2007, perceptions among Afghans of their country’s economy are improving. In 2004, when asked what they thought was the biggest problem facing Afghanistan, 51 percent of individuals polled chose the economy. When asked the same question in 2007 only 32 percent answered that they believed the economy to be the biggest problem facing the country. Perceptions of the Taliban and security have also shown slight improvements. However, the same polls indicated that public perception of corruption as a major problem is increasing.

Organizations such as the World Bank, the Asian Development Bank, the United Nations Children’s Fund, and the Afghanistan Central Statistics Office research and publish annual indicators of economic growth and development. These fairly standardized indicators of social and economic development include GDP, GDP per capita, life expectancy, infant mortality, unemployment, the poverty rate, and rates of access to power, water, health, and education. The difficulty in gathering data in Afghanistan is evident in the diverging results; however, almost all development indicators show that progress is occurring.

Many development indicators are dependent on data from a relatively accurate census of the population, including size, geographic disparity, ethnicity, age and sex. Afghanistan has not conducted a full census since 1979; this was a sampling census that results in statistical estimates of the population size and demographics. Extrapolations of those census results have been conducted by many organizations since 1979, with each publishing their own estimates of the population size. The divergence of these estimates has been significant: the Central Intelligence Agency’s (CIA) World Fact Book states that Afghanistan has a population of 31,889,923; in 2007, the UN estimated the population at 27,145,000; while the Afghanistan Central Statistics Office—the lead GIRoA agency for population data—published a population estimate of 22,575,900, highlighting the difficulty that assistance and aid providers face in estimating and reporting development indicators in Afghanistan.

3.3.1 Unemployment

Although most analysts estimate that unemployment is high in Afghanistan, accurate statistical data is virtually non-existent. The CIA World Fact Book indicates that as of 2005, the official unemployment rate in Afghanistan was 40 percent. The Afghan Central Statistical Office also maintains an official unemployment rate of 40 percent for 2007. However, other estimates of the unemployment rate are as high as 60 percent, and unemployment could be even higher in some rural provinces and districts.

Defining unemployment is difficult in Afghanistan as many Afghans are employed on a temporary basis in the informal economy or on seasonal basis during the agricultural harvest. Regardless of the actual unemployment rate, the increase in international support activity since 2001, combined with the exponential growth of Afghan-owned businesses, has created more jobs. This growth has been consistent, even though the number of unemployed is still high. Though an accurate prediction of unemployment numbers may not be possible until the completion of the next Afghan census unemployment indicators remain a cause for concern.

3.3.2 Poverty Levels

Poverty remains a significant problem for Afghanistan. According to broad estimates of Afghanistan’s national income and population, per capita income is about $300. This makes Afghanistan one of the poorest nations in the world, despite recent economic growth.

Given the overall low level of national income, it is difficult to establish poverty measures in Afghanistan. However, the latest surveys of the National Risk and Vulnerability Assessment (NRVA) conducted in spring 2007 showed that approximately 50 percent of the Afghan population lives below the poverty line. An additional 20 percent of the population is concentrated close to the poverty line and is at risk of falling into poverty. The impact of rising diesel fuel prices and the doubling of wheat prices may be driving some of these families below the poverty line. Poverty may be even higher among rural and nomadic populations.

The latest poverty analyses identify the existence of a large number of working poor in Afghanistan. Low salaries place many who are employed at risk of falling below the poverty line, including government employees. The analysis also showed that poverty was unevenly spread throughout Afghanistan: the poverty rates of provinces vary from around 10 percent in some provinces to more than 70 percent in others. Poverty is more severe in the northeast, central highland, and parts of the southeast. Despite a significant increase in public spending in key sectors to support poverty reduction, scarce domestic resources and limited international assistance resulted in only limited assistance to the poorest of the poor.

The Afghan government and its international partners are committed to address the problem of widespread poverty. Poverty research was a vital part of the overall development of the ANDS. To improve poverty data, the Central Statistics Office and the Ministry of Rural Rehabilitation and Development (MRRD) launched two National Risk and Vulnerability Assessments in 2003 and 2005. Approximately 45,000 households from across the country were interviewed. This research led to the preparation of a comprehensive poverty analysis in 2007 which has been used as a basis for drafting the ANDS Poverty Profile and formulating the ANDS poverty reduction policies. The ANDS will also serve as Afghanistan’s Poverty Reduction Strategy Paper (PRSP); the PRSP will guide the efforts of the government, international donors, and the major international financial institutions (the IMF and World Bank) in their efforts to reduce poverty in Afghanistan.

3.3.4 Health

Since the fall of the Taliban in 2001, the health sector has seen significant progress in development, with reductions in morbidity (disease), and mortality (death). In 2001, 8 percent of the Afghan population had access to basic health care; today, 79 percent have access to basic health services. In 2001, Afghanistan was ranked the world's worst in infant mortality; in 2007 Afghanistan’s infant mortality rates are falling due to the efforts of the Ministry of Public Health (MoPH) and its international partners. Since 2006, Afghanistan has reduced child mortality (five years and under) by 25 percent, saving 89,000 children in 2007. In 2006, 23,000 Afghans died from tuberculosis. In 2007, due to improved access to basic health care, only 12,000 Afghans died from this disease. Immunization coverage has reached 83 percent of children under one year of age and additional progress has been made in updating routine immunizations for older children, adolescents, and adults. Finally, recent data showed that 70 percent of health facilities have at least one female provider on staff, compared to 45 percent during the Taliban era.

The MoPH developed the Basic Package of Health Services (BPHS), a program which includes maternal and newborn health, child health and immunization, public nutrition, communicable diseases, mental health, disability, and supply of essential drugs. The program has recently increased its coverage of the population from 77 to 82 percent.

There has been a marked increase in health infrastructure; the number of health facilities providing the BPHS has increased to 897 (from 746), the number of health facilities providing comprehensive emergency obstetric care has also increased to 89 (from 79), and the number of health facilities within the government’s program of Integrated Management of Childhood Illnesses reached the stands at 309 facilities located in eight provinces and 39 districts. Thirteen therapeutic feeding units have been established, and two additional midwifery schools were opened. Twelve mobile health facilities were established to provide basic health services to the nomadic Kuchi population. The number of health facilities providing direct observed treatment short courses (in the treatment of tuberculosis) increased to 55 percent (from 45 percent). Approximately 40,000 insecticide bed nets were distributed to control the spread of malaria. Provincial teams in eight provinces were established to track the prevalence of avian flu. In total, 670 health facilities have been renovated or constructed.

The GIRoA has clearly articulated its health sector objectives in the ANDS. The ANDS states the following strategic goal for health: "...to reduce the morbidity and mortality of the Afghan population by implementing a package of health and hospital services, special programs and human resource development” (see figure below).

The GIRoA ministry responsible for Afghan health programs is the Ministry of Public Health (MoPH) which published a series of progressive health sector strategies beginning in 2005. It also created two documents that lay out operating procedures for health facilities: first, the BPHS is the key document that describes the services provided for primary out-patient health care and outlines staffing, equipment, and medications required to operate a facility; second, the Essential Package of Hospital Services (EPHS) is the key document that describes in-patient facilities and identifies a standardized package of hospital services, provides a guide for private and public sector hospitalization, and promotes a referral system that integrates the BPHS with hospitals.

Key improvements are focusing less on the number of new health facilities and more on improving the standardization of care, coordination among all levels of care, refining referral services, increasing the available range of services, increasing hours of clinic operations, and fielding appropriate numbers and types of staff. In general, the focus is on increasing intellectual and human capacity as opposed to building facilities and developing infrastructure.

Additional improvements include an increased deployment of the Basic Package of Health Services through a nationwide network of linked primary care facilities. This has resulted in increased access to care, raising the numbers of people within a two-hour walk of a medical facility to 66 percent in 2007. Continued improvements are focused towards the long-term goal of achieving standardized, sustainable, and independent health services.

3.3.5 Education

Only 28.1 percent of adult Afghans are literate, according to the CIA World Factbook. Many of the literate people are only able to read and write at the second or third grade level. Most of the literate population is only able to read and write at the second or third-grade level. The majority of teachers in Afghanistan have education equivalent to the ninth- to twelfth- grade levels in the United States. They are able to teach basic reading and writing, plus reading (reciting) of Arabic text in the Quran. The Ministry of Education’s (MoE) National Education Strategy Plan in concert with the ANDS is making strides in the educational system. These strides will guarantee access to education to all Afghans.

Currently, there are more than five million children that are enrolled in schools today, nearly 38 percent female, compared to five years ago when a little more than one million students were enrolled with almost no females. The number of teachers has grown more than seven-fold, but only 22 percent meet the minimum MoE qualification of Grade 14. Only 28 percent of teachers are female, located primarily in urban areas. The emphasis on improving the curriculum over the last five years has been concentrated on the first six years of schooling. However, a secondary school curriculum is currently being developed. Although more than 3,500 schools have been established, only 40 percent of students have actual buildings in which to meet. Thousands of communities have no easy access to schools, causing parents to send their children to madrassas in Pakistan where Islamic fundamentalism is a focus. There are security concerns for Afghan schools: nearly six percent of schools have been burnt or closed down due to terrorism in the last 18 months. Finally, approximately 30,000 to 40,000 students graduate from high school every year, but only one third are admitted to universities due to a lack of university capacity.

In accordance with the ANDS, the Afghan government intends to guarantee access to primary education for all children by the year 2020 and provide for most to attend secondary school. Access to higher education will be readily available and the government will ensure that university graduates have a realistic hope of obtaining jobs. To achieve these goals, the United States and the international community must continue to support the ongoing development of the comprehensive national educational system. This effort requires constructing or rehabilitating schools, upgrading primary-school teacher skills through national teacher training programs, increasing the MoE’s capacity to provide in-service and pre-service support for teachers, and coordinating the printing of five to ten million books per year in 2008 through 2010. In the area of higher education, all 16 university faculty training and education programs must be prioritized. The Ministry of Education must coordinate and resource the printing of five to 10 million books per year in 2008 through 2010.

The literacy and productive skills of Afghans, especially woment, must be enhanced to meet the needs for skilled workers in a growing economy. The educational system must expand to provide more choices and more competition, such as private schools and American-style education opportunities for university students. This comprehensive plan for a national education system in turn will directly contribute to the long-term sustainable growth of the Afghan economy and hence an improved way of life for the Afghan people.

3.4 Economic Development Outlook

The GIRoA continues to make slow but measurable progress in the area of economic development. Afghanistan has met most of the targets on monetary and fiscal policy under its International Monetary Fund (IMF) economic program, but it has fallen short on benchmarks related to structural reforms. The national budget process has improved significantly, as noted by the IMF in its latest assessment, and the government adheres to a strict fiscal policy of no borrowing and no overdrafts with the banking system. Incremental improvements have been made in raising government revenue from customs duties and other sources, and budget deficit targets were met in the current fiscal year (March 21, 2007 though March 20, 2008).

The GIRoA’s challenges include increasing revenue, controlling the afghani exchange value, and increasing ministry capacity to plan and implement development programs. Afghanistan continues to have one of the world's lowest domestic revenue to GDP ratios, at about 8 percent. The afghani appreciated in real terms against the U.S. dollar in 2004-06, owing in part to large aid inflows and drug-related financial flows. In the first seven months of this fiscal year, however, the afghani remained steady despite rising inflation. The concern is that an overly strong afghani could inhibit the growth of a domestic industrial base (and the employment it would bring) by encouraging imports and discouraging exports.

Afghanistan's overall economic performance under the IMF Poverty Reduction and Growth Facility program has been strong. Since the beginning of the program, fiscal revenue has increased steadily and the monetary policy framework has been enhanced. The drought-induced decline in agricultural production held the real economic growth to an estimated seven percent in 2006 and 2007. Real GDP growth is expected to exceed 13 percent in the 2007-2008 fiscal year, which ended on March 20, 2008. GDP per capita has increased by around 53 percent in the last five years and grew from around US$200 to around US$306.

Inflation declined to five percent in 2007 but rose to double digits in 2008, owing mainly to sharp increases in the prices of imported fuel and foodstuffs. Some of this inflation is tied to instability in Pakistan as well as Pakistan’s increased dependency on imports in 2007 and early 2008. Pakistan is usually a large exporter of basics (food and fuel) to Afghanistan, but Pakistan’s difficulties in meeting internal demands due to drought significantly affected the Afghan economy. The underlying trends, however, signal that domestic inflationary pressures are being contained. Confidence in the domestic currency, which has remained broadly stable against the U.S. dollar, has been instrumental due largely to a sound monetary policy.

According to the IMF, the Afghan economy has grown by an average of 11.4 percent per year in real terms since 2002, albeit from a small base. This strong growth can be attributed largely to reconstruction efforts fuelled by development assistance, as well as to a recovering agriculture sector. In 2006-2007, real economic growth was at an estimated 7.5 percent, weaker than recent averages. The slowdown was the result of a return to drought conditions, which caused agricultural production to drop considerably that year. There has been better weather to date through 2007-2008, and agriculture is expected to rebound. Due to increased agricultural output, the IMF projects that economic growth in Afghanistan will rise to 13 percent in 2007-2008, but it expects GDP to begin to normalize and fall to around 9 percent in 2008-2009

A major challenge for the GIRoA is progress toward fiscal sustainability. While the GIRoA has increased it revenue collection, it cannot keep pace with increased expenditures, largely driven by the security sector. Increasing the number of ANSF and sufficient pay is clearly important for security, but it has fiscal implications for the GIRoA which will eventually have to pick up those substantial costs. It is estimated that the GIRoA will roughly cover less than 20 percent of its total recurrent expenditures, including the core and external budgets, in 2008-2009. Furthermore, the GIRoA has now begun to experience difficulty meeting its annual revenue target due in part to political interference and lack of capacity.

3.5 Provincial Reconstruction Teams

3.5.1 Strategy and Objectives

Provincial Reconstruction Teams (PRTs) consist of a combination of military and civilian personnel whose mission is to aid in the reconstruction and development of Afghanistan. PRTs are under military command. Military personnel provide a security envelope in which civilian experts can work on governance and development projects. U.S. PRTs operate under general guidance provided by ISAF. The stated mission of the PRTs is as follows:

“Provincial Reconstruction Teams will assist the Islamic Republic of Afghanistan to extend its authority, in order to facilitate the development of a stable and secure environment in the identified area of operations, and enable security sector reform and reconstruction efforts.”

While the specific activities of each PRT are determined by the needs in its respective area of operation, PRTs achieve their objectives by following four key lines of operation:

• increase effectiveness of legitimate authorities;

• decrease effectiveness of illegitimate authorities;

• increase legitimacy of legitimate authorities; and

• decrease legitimacy of illegitimate authorities.

The U.S.-led PRTs in RC-East play an integral role in the ground commanders’ counter-insurgency approach. They coach, train, and mentor sub-national government officials in order to implement good governance practices that are transparent, guarantee human rights, are free of abuse and corruption, and provide due regard to the rule of law.

Additionally, through the DoD-funded Commander’s Emergency Response Program (CERP) and USAID funding, U.S.-led PRTs fund construction projects that assist the local government in meeting the basic needs of the populace and provide the basic infrastructure to support economic growth and development. Although CERP funds are dispersed at the discretion of the U.S. military commanding officer, the program achieves the best results when planned and carried out in coordination other agencies (i.e., USAID) working in the same sectors and in many cases the same districts or villages. This is particularly true for USAID’s Local Governance and Community Development program, which provides technical assistance and training to provincial and district officials combined with community-level small infrastructure activities, as well as USAID’s Alternative Development programs that support the agriculture sector in many of the RC East provinces.

Conducting these disparate activities independently of one another would achieve only minor effects; however, by integrating the right combination of governance and development activities with complementing security capabilities, PRTs have the potential to make significant contributions to the reconstruction and development progress in non-permissive environments. The PRTs are in essence synthesizing agents that apply the right combination of governance capacity building and development assistance in concert with the commanders’ security component in order to achieve the greater overall desired outcomes. PRT command teams meet with provincial governors, district officials, and ministry officials in their areas of responsibility several times during each week. The PRTs work closely with Provincial Councils, Provincial Development Committees and the local representatives of other organizations and aid agencies. In their role as coaches, mentors and trainers, the PRTs work closely with all these provincial-level officials and agencies to assist them in providing for the populace.

3.5.2 Composition and Laydown

The table below indicates U.S.-led PRT staffing levels. Current shortages in U.S. civilian agency personnel (primarily USAID advisors and USDA representatives) are currently being addressed by Embassy Kabul and the relevant agencies in Washington.

The U.S.-led PRTs are positioned in the following locations:

3.5.3 Coordination and Chain of Command

Each U.S.-led PRT in RC East is under military command, subordinate to a U.S. brigade task force. The PRTs receive instructions and guidance from their brigade headquarters. They coordinate their actions through the brigade headquarters and laterally with the battalions and civil affairs teams occupying the same area. PRT actions are synchronized by their commands with U.S. and ISAF campaign objectives.

The U.S.-led PRTs have an integrated command group structure combining the military and civilian elements (e.g., USAID, DoS, and USDA) to ensure effective execution of security, development and governance programs and policies. Coordination among the PRTs is conducted laterally as well, through USAID and USDA representatives in their respective organizations. CJTF-82 provides liaison officers to ISAF, USAID, UNAMA and CSTC-A to coordinate efforts. USAID and DoS provide advisors at the CJTF-82 HQ, each brigade task force headquarters and each U.S.-led PRT. USAID and DoS also provide advisors to many of the PRTs led by other international partners active in Afghanistan. CJTF-82 hosts quarterly development conferences with USAID and UNAMA which include representatives from the brigades and PRTs. CJTF-82 also sponsors quarterly interagency conferences that include wide representation from CSTC-A, the U.S. Embassy and USAID. These conferences address the salient issues that pertain to all U.S. Government agencies executing governance and development support in Afghanistan and are supported by day-to-day coordination between CJTF-82 development related staff and USAID technical officers on development and governance issues. CJTF-82 also sponsors quarterly stakeholder conferences that include UNAMA, most UN agencies, and multiple non-governmental organizations operating in Afghanistan. These conferences are conducted for the same reasons as the interagency conferences mentioned above.

Recurring meetings and conferences at ISAF serve as the unifying agent across Afghan and international forces as with the CJTF-82 interagency and stakeholder’s conferences. These meetings and conferences help to establish and maintain good working relationships among the respective functional staff sections of the various agencies. It is through these meetings and conferences, as well as the day-to-day coordination and cooperation between the agencies, that U.S. and international organizations drive toward unity of effort

3.5.4 Provincial Reconstruction Team Funding

The U.S.-led PRT efforts are funded through CERP under the Department of Defense, complemented by USAID-funded development programs. CERP funds are not used to cover PRT operating costs. The CERP funds available in FY2007 were $206 million. The amount earmarked for FY2008 is $208 million. The following table indicates the amount distributed to each of the PRTs for FY2007.

Although the CERP funding is shared with the maneuver units, the PRTs execute a majority of the CERP-funded projects. Each month, the PRTs receive a monthly CERP allocation which provides them funding for quick-impact projects, calculated on a per capita basis. Additionally, this monthly amount is not a spending limit. PRTs nominate projects identified as being needed within their areas of responsibility that are above and beyond their monthly allocation. A CERP Review Board meets weekly to evaluate the project nominations and funds projects that are deemed technically and legally sufficient and meet the commander’s intent as stated in the current development guidance and operations order. The following table indicates the amount distributed monthly to each of the PRTs.

Across the command, CJTF-82, USAID, and DoS work to partner with GIRoA officials at all levels. The primary objective is to help connect the Afghan populace to the government, help build trust and confidence in government institutions and to solidify popular support for the government. The CJTF-82 Commanding General and Deputy Commanding Generals meet regularly with ministers and deputy ministers to ensure that CJTF-82 objectives are in line with GIRoA ministerial strategies. CJTF-82 staff officers meet with and correspond regularly with ministerial officials to work common solutions to issues.

3.6 Reconstruction and Development Oversight

Through capacity building programs with Afghan ministries and provincial governments, the United States is working to eliminate inefficiencies and corruption in the delivery of assistance to the Afghan people. U.S. foreign assistance programs work with ministries – focusing on the most important service providers, like the ministries of health, education, finance, and agriculture – to put more responsibility for service delivery at the local levels and ensure funds reach the provinces. This will also allow ministry representatives working at the provincial levels to do planning, decision-making, delivery, and monitoring activities, ensuring assistance reaches the Afghan people. Advisors will mentor and support capacity building for Afghan government employees in areas such as financial management, budgeting, procurement, human resources management, strategic planning, project planning, and project implementation, and information and communications systems.

In addition, the U.S. Government has made progress over the past seven years streamlining our disbursement of funds to program implementers. The U.S. Government has disbursed 69 percent of the $26.3 billion in U.S. Assistance to Afghanistan from Fiscal Year 2001 to Fiscal Year 2008 (this is not including the Fiscal Year 2008 Supplemental), which is higher than the Ministry of Finance’s reported international average of 62 percent, and almost 20 percent higher than where the U.S. Government was two years ago. Efforts to put more control of funding decisions into the hands of Provincial Reconstruction Teams have improved the PRTs’ ability to quickly follow security gains with development efforts that address locally-identified priorities.

The Office of the Inspector General in Afghanistan has spent $2.7 million on oversight activities. As of December 2007, they had completed 18 performance and 23 financial audits. Not a single one of these audits revealed significant findings of waste, fraud, or abuse.