Audience of the Presentation Afghanistan is a fragile and conflict state (FCS). Its economy is suffering due to the political unrest. For the Economic Stability (SDGs # 8) of the country, people from every sphere of life have to do his role. General public have to be vigilant and abide by the rules & regulations of the country whereas politician and executive organs of the country have to develop policy to attract domestic and foreign resources to stabilize the economy.

1. Final Project
By
Hussain Ahmad Siraj
of
Financing for Development : Unlocking Investment
Opportunities
World Bank Group’s Massive Open Course (MOOC)

2. Afghanistan: Country Context
 The Islamic Republic of Afghanistan is a landlocked
country located within South Asia and Central Asia.
 Population of approximately 32 million - 42nd most
populous country in the world
 Bordered by Pakistan in the south and east; Iran in the
west; Turkmenistan, Uzbekistan, and Tajikistan in the
north; and China in the far northeast.
 Territory covers 652,000 km2
(252,000 sq mi) - 41st largest
country in the world.

3. Political History of the Country
 The political history of the modern state of Afghanistan began
with the Hotak and Durrani dynasties in the 18th century.
 In the late 19th century, Afghanistan became a buffer state in the
"Great Game" between British India and the Russian Empire.
 Following the Third Anglo-Afghan War in 1919, King Amanullah
unsuccessfully attempted to modernize the country.
 Remained peaceful during Zahir Shah's forty years of monarchy.
 A series of coups in the 1970s was followed by a series of civil
wars that devastated much of Afghanistan and continues to this
day.
 In December 2001, Taliban government was overthrown and the
new Afghan government under President Hamid Karzai was
formed.

4. Political History of the Country (Contd)
 International Security Assistance Force (ISAF) was established by the
UN Security Council to help assist the Karzai administration and
provide basic security.
 Shortly after their fall from power, the Taliban began an insurgency to
regain control of Afghanistan.
 In the decade following 2002, over five million Afghans were
repatriated, including some who were forcefully deported from
Western countries.
 After the May 2011 death of Osama bin Laden, many prominent Afghan
figures were assassinated.
 2014 presidential election, Ashraf Ghani became President.
 The US war in Afghanistan (America's longest war) officially ended on
28 December 2014. However, thousands of US-led NATO troops have
remained in the country to train and advise Afghan government forces.
 2001–present war has resulted in over 90,000 direct war-related deaths,
which includes insurgents, Afghan civilians and government forces.
Over 100,000 have been injured.

5. Fragile & Conflict State (FCS): Afghanistan
 Afghanistan, an impoverished least developed country, one
of the poorest countries in the world due to lack of foreign
investment, government corruption and the Taliban
insurgency.
 Attempts are being made, with the support of foreign
donor countries, to improve the country's economy,
healthcare, education, transport, and agriculture.
 Corruption by Western defense and development
contractors and associated Afghans reached
unprecedented levels in a country .
 Unemployment rate was reported in 2008 at about 35%.
 About 42% of the population lives on less than $1 a day.

6. Problem: SDG Goal 8 – Sustainable Economy
Afghanistan is facing a Non-Stable Economy due to
the decades long civil wars and political instability.
This results in non availability of necessary finances
for the development of the economy.
Solution:
Afghanistan needs to be stabilize politically to attract
domestic and foreign resource mobilization to make
available resource for the Sustainable Economy in the
country .

7. Complex Bottlenecks to Transparent Private Finance Flow to
Stabilize Economy
According to Development Finance Forum, complex barriers
inside and outside the resource extraction sector are varied
and not limited to the following:
Difficult for fragile countries to catch up once domestic
stability has returned, increasing the risk of falling
back into a destructive cycle of conflict
Diminishing growth and extreme poverty
Threaten stability and economic growth
Inadequate infrastructure
Narrow tax base - widespread exemptions, weak
capacity of tax administration
Hard-to-tax economic activity of informal sector
Migration and forced displacements

8. Complex Bottlenecks to Transparent Private Finance Flow to
Stabilize Economy (Contd)
International crime havens, which fuel illicit financial
flows around arms, narcotics and rare minerals.
Political processes more vulnerable to patronage and
corruption at the expense of transparency and
accountability.
Data deserts
Weak governance
Poor or no education
Poor health and nutrition
Adverse demographics and blatant opportunism and
patronage hindered much-needed private finance for
development and helped perpetuate a cycle of
“deprivation, destitution and oppression”.

9. Doing-Business index of Afghanistan is not improved in 2017 as compared
to 2016, Its all because of the bottlenecks described in the previous slides.
Complex Bottlenecks to Transparent Private Finance Flow to
Stabilize Economy (Contd)
Source: Doing Business Index- 2016, 2017 WBG

10. Ratio of ODA/GNI of Afghanistan-38.3
ODA per capita of Afghanistan-$103
Complex Bottlenecks to Transparent Private Finance Flow to
Stabilize Economy (Contd)

11. Private Sector Window of IDA
 According to Development Finance Form, scaling up private finance in
FCS to support sustainable development and job creation is urgently
needed and will significantly contribute to achieve the goals of the
Addis Ababa Action Agenda (AAAA) and the 2030-Agenda.
 By 2030, 62% of global poor will live in fragile-conflicted situation.
 As mention by Axel Van Trotsenburg, IDA replenishment for FY 18 to
20 is US$ 75 Billion financing package offers exceptional value for
money, with every one dollar in partnership contributions generating
about three dollars in spending authority.
Focus:
It focuses on following main areas:
 Increasing productivity
 Supporting Innovation
 Reducing Risks
Types of Financings:
 Long term and Short term Loans
 Equity Capital
 First Loss Cover
 Advisory Service

12. World Bank Strategy for Afghanistan
The World Bank strategy for Afghanistan focuses on
following three areas of support:
Building the capacity and accountability of the
state, primarily to ensure the provision of services
that are affordable, accessible, and of adequate
quality for citizens
Promoting growth of the rural economy and
improving rural livelihoods
Supporting growth of a formal, modern, and
competitive private

13. Solution: Sustainable Economy - Business
Environment Reforms (BER) for Domestic & Foreign
Private Resource Mobilization
Provision of finances is the pivotal factor in the National Development
Plan (NDP) for country’s Sustainable Economy transformation.
Afghanistan is lacking the huge level of resources readily available for
investment. Therefore, Afghanistan needs to take necessary Business
Environment Reforms (BER) to develop investment climate in the country
to attract the investors - domestic and foreign.
 Political stability
 Transparency & Rule of Law
 Fair trade and Equal Access
 Assessment of economic and political risks
 Tax System Reform as Smart Tax Administration
 Use the Multilateral Development Banks (MDBs) and International
Monetary Fund (IMF) to mobilize and crowd in public and private
resources to fund the development projects (Multiplier Effect).
 Develop a strategy to attract Public Private Partnership (PPP)

14. Business Environment Reforms (BER) for Domestic &
Foreign Private Resource Mobilization (Contd)
 Blended Finance
 Diaspora Bond could be used to attract the foreign remittance
as lots of Afghanis are living as emigrants in other countries
 Scale-up the use of guarantees by international financial
institutions.
 Consider opening up Multilateral Investment Guarantee
Agency (MIGA) to cover domestic investors
 Reduce the first loss risk of pioneer investors
 Unbundle, or ‘top-slice’, risk
 Standardize
 ‘Reset’ investment authorities and ‘commercial’ diplomacy
 Invest in the enabling environment for technology adoption
 Provide local currency loans
 Invest in skills and jobs for young people
 Above all, stay committed

15. Photo Log of Project Funded by different
Organizations:
Villagers work on a community project,
which has been financed under NSP in a
village in Farah Province
A cross drainage structure and bridge have
been built under NEEPRA project in Kapisa
Province
A view of Salang Pass, being rehabilitated
under the World Bank-financed Transport
Project

16. Photo Log of Project Funded by different
Organizations:
A teacher dictates to a student at a primary
school in Balkh Province
A doctor examines a female patient in a
health clinic in Sar-e-Pul Province
Customs officials in Herat Province use
ASYCUDA system

17. References:
 Afghanistan https://en.wikipedia.org/wiki/Afghanistan
 Axel Van Trotsenburg, The Role of IDA in Development Finance.
 Joaquim Levy, Unlocking investment opportunities in fragile-markets,
2016.
 https://www.youtube.com/watch?v=Symgtay13Dw.
 “From Billions to Trillions: Transforming Development-Finance Post-
2015 Financing for Development: MDF”, 2015 Development Committee.
 International Fianance Institution and Development through the
Private Sector, Joint Report.
 Private Sector Window http://www.gafspfund.org/content/private-
sector-window
 Strengthening Public Financial Management in Post-conflict
Countries, WBG, Economic-Premise, 2011.
 The World Bank in Afghanistan, Country Update, April 2017
 Unlocking Opportunities in fragile-markets, Development Finance
Forum, Dublin, 2016.