Afghanistan: Gov't questions effectiveness of foreign aid billions

KABUL, 7 May 2007 (IRIN) - Billions of dollars spent by the international community on war-ravaged Afghanistan's reconstruction and development have had a limited impact on the country's economic growth, Afghan officials said.

Since the ousting of the Taliban regime in late 2001, donors have spent some US$13 billion on various rebuilding and development activities in the country, of which only 12 percent has been channelled through the government, the country's Finance Ministry said.

Speaking in the wake of Afghanistan's Development Forum (ADF) held on 29-30 April in Kabul aimed at assessing development outcomes and the country's future needs, Finance Minister Anwar-ul-Haq Ahady said: "We are accountable for only US$3.7 billion of the US$12.8 billion of aid money that has been spent in the country in the last five years: the rest has been spent by donors themselves," said Ahady.

Foreign aid bypassing government systems

Some Afghan legislators have criticized the way aid money has been distributed through a cascade of foreign subcontractors which, they say, siphons off international funding to one of the world's least developed countries.

Mustafa Kazimi, chairman of the economy committee of the Afghan parliament's lower house, said: "Out of every US dollar spent by donors on Afghanistan 's reconstruction 80 cents finds its way out of the country".

"We have about 60 donors," said Ishaq Nadiri, senior economic adviser to Afghan President Hamid Karzai. "There is a need for the international aid money to be rationalised and made more meaningful to the citizens of Afghanistan".

Praful Patel, South Asia Regional Vice-President of the World Bank, said at the forum that the coordination of aid to Afghanistan had been poor. He confirmed that two-thirds of all development expenditure in Afghanistan bypassed the government's systems. "No wonder we ask ourselves why there is so little capacity built despite the fact that about $1.6 billion has been spent on technical assistance in the last five years".

"But then we get cases when a school is built but no teachers are available simply because the ministry did not know about it and did not staff it. Or infrastructure is provided that will deteriorate rapidly because the ministry is unaware of it and does not include maintenance costs in the budget," Patel said.

The EC allocates about 50 percent of its overall funding to Afghanistan to government-managed trust funds and programmes, an official in Kabul confirmed.

Lindy Cameron, a representative for Britain's Department for International Development in Kabul, told IRIN that the organisation spends 80 percent of its aid money through Afghan government channels.

The asymmetric expenditure of international aid money by the government of Afghanistan and some donors, will be fixed once public institutions start functioning efficiently and the capacity to implement and monitor development projects is established, added another donor who preferred to remain anonymous.

Aid effectiveness

At the ADF, "the government of Afghanistan conveyed a very convincing message to donors about aid effectiveness," Alastair J. Mckechnie, World Bank's director for Afghanistan, said.

The UN's top official for Afghanistan acknowledged some limitations which were affecting the issue of aid management by the Afghan government.

"Some donors' have constitutions that restrict aid money channelled through the recipient country's government," said Koenigs.

Acknowledging concerns about low capacity in Afghanistan's nascent public institutions, the Afghan government has called on donors to ensure sustainable effectiveness and better coherence in their engagements in Afghanistan.

"The Ministry of Finance itself acknowledged that there is a problem in the budget execution capacity of many ministries. Presenting the 1386 [2007] budget to the parliament, the minister showed how around 500 million dollars of resources are carry-over funds not yet spent in 1385," remarked Mario Ragazzi, a communications officer for the European Commission (EC) in Kabul.

Brain drain

Some Afghan officials challenge the current criticism of weak capacity in state bodies, saying it is an ineffective metaphor.

"Only in the last three months," said Ehsan Zia, Afghanistan's Minister of Rural Rehabilitation and Development (MRRD), "we have lost eight professional staff all of whom have been absorbed by international organisations offering attractive salaries."

"Donors and international organisations buy capacity in our modest human resource market at the cost of public institutions," she added.