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CPS Final Review

Validation

Afghanistan Validation Report of the Country Partnership Strategy Final Review, 2009 to mid-2015

March 2017

Afghanistan: Validation Report of the Country Partnership Strategy Final Review, 2009 to mid-2015

Validation Report

This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

Reference Number: FRV: AFG 2017-02

Independent Evaluation: VR-24

NOTES

(i) The fiscal year (FY) of the Government of Afghanistan ends on 20 March. "FY" before a calendar year denotes the year in which the fiscal year ends, e.g., FY2009 ends on 20 March 2009. However, in 2012, the ending date of government’s fiscal year was changed from 20 March to 21 December to align with international practice.

(ii) In this report, “$” refers to US dollars.

(iii) For an explanation of rating descriptions used in ADB evaluation reports, see: ADB. 2015. 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations. March. Manila.

Director General M. Taylor-Dormond, Independent Evaluation Department (IED) Director N. Subramaniam, Independent Evaluation Division 2, IED Team leader P.V. Srinivasan, Evaluation Specialist, IED Team members C.J. Mongcopa, Associate Evaluation Officer, IED C. Regodon, Evaluation Assistant, IED

The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, IED does not intend to make any judgments as to the legal or other status of any territory or area.

Abbreviations

ADB – Asian Development Bank

ADF AFRM

– –

Asian Development Fund Afghanistan Resident Mission

AITF – Afghanistan Infrastructure Trust Fund

ANDS – Afghanistan National Development Strategy

ANR – agriculture and natural resources

APPF – Afghan Public Protection Force

ARTF – Afghanistan Reconstruction Trust Fund

CAPE – country assistance program evaluation

CAREC – Central Asia Regional Economic Cooperation

CDC – community development council

CPS – country partnership strategy

CPSFR – country partnership strategy final review

CSP – country strategy and program

DABS – Da Afghanistan Breshna Sherkat (Afghanistan Electricity Corporation) DMC EIRR

– –

developing member country economic internal rate of return

FCAS – fragile and conflict-affected situations

FIDIC – International Federation of Consulting Engineers

GDP – gross domestic product

IMF km

– –

International Monetary Fund kilometer

kWh MEW

– –

kilowatt-hour Ministry of Energy and Water

MFF – multitranche financing facility

MPW – Ministry of Public Works

O&M – operation and maintenance

PCR – project completion report

PMO – project management office

PSM – public sector management

RCI – regional cooperation and integration

TA – technical assistance

UNDP – United Nations Development Programme

USAID – United States Agency for International Development WUA – water user association

Currency Equivalents (as of 31 December 2016)

Currency unit – afghani/s (AF)

AF1.00 = $0.0149 $1.00 = AF66.9025

Contents Page

Acknowledgments vii

Executive Summary ix

Chapter 1: Introduction 1

A. Validation Purpose and Procedures 1

B. Country Development Context and Government Plans 1

C. Objectives of the Country Partnership Strategy, Coverage, Priorities, and the Roles of Major Development Partners 4

Chapter 2: Portfolio Overview 8

A. Agriculture and Natural Resources 9

B. Energy 9

C. Transport 10

D. Public Sector Management 11

Chapter 3: Validation of the Country Partnership Strategy Final Review 13

A. Relevance 13

B. Effectiveness 17

C. Efficiency 20

D. Sustainability 23

E. Development Impact 25

F. ADB and Borrower Performance 31

G. Overall Assessment 32

H. Assessment of Quality of Self-Evaluation 33

Chapter 4: Issues and Recommendations 34

A. Deteriorating Security Situation 34

B. Weak Government Capacity 35

C. Addressing Development Impact 36

Appendixes

1. ADB Country Portfolio for Islamic Republic of Afghanistan, 2009–June 2015 39

2. Linked Document 56

Acknowledgments The Independent Evaluation team, consisting of Srinivasan Palle Venkata (team leader), Caren Joy Mongcopa, and Charina Regodon, prepared this report. International consultant Arusha Stanislaus and national consultants Mir Aqa Dost and Imelda Baleta provided valuable inputs. Marvin Taylor-Dormond, Vйronique Salze-Lozac’h, and Nathan Subramaniam provided overall guidance. The team benefited from a review of the draft report by external peer reviewer Peter Darjes and internal peer reviewers Andrew Brubaker and Toshiyuki Yokota. The team is grateful to the Asian Development Bank’s staff at headquarters and the Afghanistan Resident Mission and to the Afghan government officials for useful discussions and inputs. The team is also grateful for comments received from Walter Kolkma, Eunkyung Kwon, Binh Nguyen, and Jose Antonio Tan III. The Independent Evaluation Department retains full responsibility for this report.

Executive Summary This report provides an independent assessment and validation of the Afghanistan 2009 to mid-2015 Country Partnership Strategy Final Review (CPSFR) prepared as a self-evaluation by the Central and West Asia Department of the Asian Development Bank (ADB). It reviews the performance of the country partnership strategy (CPS) and provides lessons and recommendations for the design and implementation of the next CPS for Afghanistan.

Country Context Afghanistan is a country in conflict. The withdrawal of international coalition troops in 2014 and a resurgence of the insurgency adversely affected prospects for peace and stability in the near future. With the fall of the Taliban and the large infusion of foreign aid, the country had averaged 9.0% annual growth during 2002–2013. However, due to the withdrawal of international security forces and the escalation in insurgency, economic growth fell to 1.3% in 2014 and was estimated at 0.8% in 2015. Growth prospects in the medium term are driven mainly by agriculture, services, and extractive industries. Agriculture accounts for about 21% of gross domestic product (GDP) and services account for about 50% of GDP. Extractive industries are a very small share of GDP but have significant potential considering deposits of copper, iron ore, and hydrocarbons. Realizing this potential will require progress in preparing a legislative framework, developing the infrastructure to access and operate the mines, and securing investments to exploit the mines. Agriculture requires investments in irrigation and extension as well as improvement in downstream agro-processing activities. Afghanistan is one of the poorest countries in the world. Inequality is on the rise with per capita consumption growth of the top quintile significantly higher than that of the bottom quintile. Poverty is particularly severe in rural areas, where about 80% of the population lives. Social development has been weak with gender disparities in health and education.

ADB Support Based on the Government of Afghanistan’s request, ADB focused its grant and technical assistance (TA) on transport, energy, and agriculture and natural resources (ANR) sectors. TA projects also covered governance and the finance sectors. The Interim CPS, 2014–2015 extended the validity of the CPS, 2009–2013 and its strategic focus. ANR operations aimed to improve food self-sufficiency and increase agriculture exports, energy operations aimed to improve access to affordable and reliable energy for most households, and transport operations aimed to lower cost and increase reliable transport connectivity for goods and people within Afghanistan and across its borders. Approved sovereign financing for Afghanistan from ADB during 2009–June 2015 was about $2.2 billion, distributed across transport (59%), energy (29%), and ANR (12%). The financing comprised 26 grants and 15 TA projects.

x Afghanistan: Validation Report of the Country Partnership Strategy Final Review, 2009 to mid-2015

Assessment The performance evaluation is based on the review of completed and active loans, grants, and TA projects during 2009–June 2015. Project completion reports or project completion report validation reports are used in the assessment of completed projects, and the likely success of ongoing projects is gauged by the progress seen so far. The CPSFR assessed ADB’s Afghanistan operations from 2009 to mid-2015 overall successful on the borderline. It assessed ADB’s program relevant and effective, but less than efficient and less than likely sustainable. It also assessed the development impact of ADB support less than satisfactory. The validation agrees with the CPSFR assessments on all the evaluation criteria. However, it rates the CPS design and implementation overall less than successful on the borderline. This difference in overall rating is mainly because the CPSFR rated the transport sector highly relevant, whereas the validation assessed it relevant. The validation also used equal weights for sector level and cross sector thematic contributions to CPS objectives in consolidating the relevance and development impact assessments. It considers sector level contributions, cross sector synergies and cross cutting thematic contributions equally important in achieving the country’s development objectives. The validation assessed the delivered program relevant. This was obtained by combining the relevance of sector programs and cross-sector thematic objectives, giving equal weights to both aspects, which were viewed relevant. Overall, the CPS objectives—accelerating economic growth and reducing poverty—were aligned with the country’s needs and the national development strategy. ADB sector support was based on good diagnostics of country constraints and prepared in coordination with other development partners. Most projects had provisions for security arrangements. However, the organizational arrangements with the government’s Afghan Public Protection Force, which was engaged to provide security, did not work well. Projects in the sectors aimed to achieve the objectives set forth in the CPS sector strategies and road maps. These were combined with support for improved sector policy and capacity. The CPS results framework, however, was lacking in baselines. Cross-sector thematic outcomes and indicators were articulated in the CPS results framework. Support for inclusive growth was programmed mainly through project contribution to overall economic growth. There was not much programming within sectors or complementary investments from other development partners that ensured inclusive growth. The regional cooperation and integration outcomes were addressed mostly through development of cross-border infrastructure in the energy and transport sectors. The validation assessed the program effective. The portfolio was broadly effective in delivering intended results. Projects completed during the CPS period have had positive results, though sustainability is an issue given the current institutional and policy environment. In the transport sector, completed projects were effective in delivering outcomes such as reduced transport costs and travel times. However, ongoing projects were severely affected by delays and had very little progress towards achieving outcomes. A major section of the strategic Ring Road could not be completed. Capacity utilization has been low in the railway project, as freight volumes dropped from about 4 million tons in 2012 to about 2.1 million tons in 2014. The energy sector had notable outcomes such as the institutionalization of Da Afghanistan Breshna Sherkat (Afghanistan Electricity Corporation), increased connections to the grid, and reduced system losses. Ongoing projects, however, suffered delays and cancellations. The ANR sector results were not as expected, having been impacted by a few cancellations. Some amount of progress is noted, however, in the ongoing ANR projects, such as rehabilitation of irrigation systems, formation of irrigation associations, and training of

Executive Summary xi

water user associations. There was minimal progress in the thematic areas of counter-narcotics, gender and development, and governance. Private sector development and regional cooperation were the exceptions. The validation agrees with the CPSFR’s less than efficient rating for the use of resources in ADB’s operations. Most projects across sectors experienced start up and implementation delays, and cost overruns. Some involved cancellations and underutilization of funds, delays in covenant compliance, and land acquisition and procurement problems. Apart from security problems, factors such as recruitment delays, contractor issues, lack of communication by all parties, and a host of other bureaucratic concerns contributed to inefficiencies. These problems are mostly due to weak government capacity and not to ADB processes. Contractors generally could not commence work in time because of weak project design and management capacity of the executing agencies. Implementation delays were also caused by poor specifications and unrealistic quantities and cost estimates. The design-build contract, as practiced by ADB in Afghanistan, also led to inefficiencies. Poor cost and quantity estimates by the employer frequently resulted in disputes. Though this is not unique to Afghanistan, the situation was aggravated by the executing agencies’ limited engineering skills. In the TA projects, delays mainly occurred in the recruitment of consultants and experts because of security reasons as well as weak capacity of executing agencies. The validation finds the sustainability of ADB support benefits less than likely given current policies, institutions, and practices. Sustainability of transport sector interventions was doubtful, primarily because of underdeveloped institutional capacity and the uncertainty of finances for operation and maintenance. However, ADB, in cooperation with other donors, began to address both issues during the CPS period. Outlook for sustainability is more favorable in the energy and ANR sectors. The electric utility Da Afghanistan Breshna Sherkat (Afghanistan Electricity Corporation) has greater autonomy than before and has a high collection rate. In the ANR sector, community participation and ownership are positive factors. The validation concurs with the CPSFR’s assessment that the development impact of ADB’s support was less than satisfactory. Assessment of development impact was based on ADB’s contributions to CPS objectives through its sector programs as well as implementation of cross-cutting agendas such as inclusive growth, regional integration, governance and gender, giving equal weights to both aspects. Although, at the sector level, completed projects produced some development outcomes, ongoing projects are all affected by delays without much progress on outcomes. Contribution to development outcomes through ADB energy and transport sector programs was found satisfactory and that through agriculture and natural resource sector interventions less than satisfactory. Development impact through implementation of cross-sector thematic agendas was less than satisfactory due to the limited contribution to CPS objectives of economic growth and poverty reduction. The regional cooperation theme was, however, an exception, as cross-border connectivity infrastructure in the transport and energy sectors produced positive outcomes. The validation found ADB’s performance overall satisfactory. The coordinated approach with development partners adopted by ADB was well suited to the country context. ADB’s project supervision effort in Afghanistan was higher compared to the average of all Asian Development Fund countries and those classified as fragile and conflict-affected situations. ADB could, however, have paid greater attention to sound project designs and operation and maintence of infrastructure. ADB’s continued use of design-build contracts had adverse consequences for transport outcome achievements. It

xii Afghanistan: Validation Report of the Country Partnership Strategy Final Review, 2009 to mid-2015

should have exercised greater caution in approving an unusually high advance payment on the civil works contract for the Qaisar to Laman Ring Road Project. Overall, government performance was also satisfactory, as the government provided broad strategic directions and mobilized support from several development partners. The Ministry of Finance played its donor coordination role well. However, its weak implementation capacity, coupled with governance issues, affected project performance. The government’s decision-making process was also noted to be slow for contract awards, disbursements, and contract variations. There is a need for streamlining bureaucratic processes to avoid corruption and resolve inefficiencies.

Recommendations Given the findings as well as issues such as the critical security situation, poor governance and weak government capacity, and the magnitude of the country’s development needs, the validation recommends the following to the Central and West Asia Department for consideration in formulating the next CPS. ADB should make adequate provisions for developing and implementing project security measures appropriate to the location and site conditions. The use of national contractors combined with mandatory engagement of security providers has proven to be an effective approach in addressing security risks. In this regard, ADB can undertake an assessment of national contractors to help identify a set of contractors to be used in ADB projects. Security providers should be made accountable to the contractors through a contract defining the obligations of each party. Bid documents should detail the security arrangements, where there are serious security problems. Community involvement and ownership of projects can help resolve security issues during implementation. This is somewhat demonstrated by the ANR sector projects, in which a high level of community involvement helped ensure the security of project infrastructure. Communication links with community members can also provide early warning of any security issue. The validation supports the CPSFR’s recommendation that risk assessment and management approaches be strengthened and, in particular, that conflict sensitivity be ensured throughout the project cycle. ADB has begun work on this through a TA project approved in 2015 that involves developing peacebuilding tools for managing risks in ADB-financed activities. ADB should enhance capacity development support to executing and implementing agencies for greater efficiency in implementation. ADB should pursue deeper and longer-term engagement in enhancing and developing human and institutional capacity. Through sustained capacity development efforts, it should help increase the number of technical and qualified line ministry staff to improve project implementation. Consultants who are recruited to build capacity must be situated in the ministries and have a long-term goal to enhance capacity and ensure results. Project implementation consultants need to work with the project management office staff to build their capacity. Government staff needs training in contract management, focusing on the International Federation of Consulting Engineers conditions of contract. Such training will lead to a greater awareness of the respective rights, obligations, and dispute settlement options available to clients and contractors and will thus mitigate the underlying causes of payment delays. Steps taken by ADB to embed consultants in the Ministry of Finance and train ANR sector officials are in the right direction.

Executive Summary xiii

ADB should increase support to the agriculture and natural resources sector to achieve inclusive and sustainable economic growth. Agriculture accounts for about 40% of the country’s labor force and is highly relevant for employment and poverty reduction. The next CPS, while continuing to focus on the three sectors (transport, energy, and ANR), should increase support to ANR considering its potential in contributing to inclusive growth and gender equality. However, it should go beyond providing irrigation infrastructure to improve productivity through value chain development and better access to markets. ADB could work in coordination with other donors such as the World Bank that have been active in rural development (rural roads) and support for development of horticulture and livestock sectors and rural enterprises. In this regard, the validation supports the CPSFR’s recommendation that increased efforts be made to develop better synergies with other development partners for greater development impact. While within-sector coordination seems to be effective, guided by sector road maps and investment plans, greater efforts are required for across-sector coordination among development partners.

Summary of Ratings

Evaluation Criteria CPSFR

Ratings Validation

Ratings Reasons for Rating Deviations Relevance Relevant Relevant Effectiveness Effective Effective Efficiency Less than efficient Less than efficient Sustainability Less than likely

sustainable Less than likely sustainable

Development impacts

Less than satisfactory


Overall rating Successful on the borderline

Less than successful on the borderline

The CPSFR rated the transport sector highly relevant, whereas this validation rated it relevant. Though the choice of weights does not affect the validation’s overall rating, it used equal weights for sector and crosscutting objectives to aggregate the scores on relevance and development impact criteria, whereas the CPSFR used 90% for sector and 10% for crosscutting objectives.

ADB performance Satisfactory Satisfactory Borrower performance


Satisfactory Although, there have been issues with governance and weak capacity, there are improvements in financial management, and the government was effective in donor coordination.

CPSFR Quality Highly satisfactory ADB = Asian Development Bank, CPSFR = country partnership strategy final review. Source: Asian Development Bank Independent Evaluation Department.

CHAPTER 1

Introduction

A. Validation Purpose and Procedures 1. The Asian Development Bank (ADB) formulated and implemented the Afghanistan Country Partnership Strategy (CPS), 2009–2013.1 ADB’s Central and West Asia Department (CWRD) prepared a CPS final review (CPSFR) to identify lessons and draw recommendations to inform the new CPS under preparation for the post-2013 period. The CPSFR covers projects approved from 2009 to mid-2015, as well as those approved prior to this period but either are ongoing or were closed during this period. 2. The purposes of this validation report are to (i) validate the Afghanistan CPSFR prepared by CWRD, (ii) assess the quality of the self-evaluation in terms of CPS progress and results, and (iii) identify lessons and recommendations for the design and implementation of the next CPS. The validation covers newly approved, active, and completed loans, grants, and technical assistance (TA) projects from 2009 to mid-2015. 3. Preparation of this validation report is based on (i) findings of the CPSFR; (ii) desk review of documents, including country planning and programming documents; (iii) consultations in Afghanistan by an independent evaluation mission to gather stakeholder feedback and confirmation on issues identified, and to collect additional information and data; and (iv) headquarters-based interviews with the country team and others familiar with Afghanistan operations. The report was prepared following ADB’s 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations.2

B. Country Development Context and Government Plans 4. Afghanistan averaged 9% economic growth during 2003–2012.3 Major drivers of economic growth have been external development assistance and expenditure on international security assistance force that allowed Afghans and Afghan firms to provide goods and services. Foreign aid was as large as 45% of gross domestic product (GDP) in 2013.4 The drawdown of international military forces, reduction in aid, political instability since the 2014 elections, and worsening security conditions are major factors affecting economic growth. The economic growth rate fell sharply to 1.3% in 2014 from an annual average of 9% during 2002–2013 and was estimated at 0.8% in 2015.5

1 ADB. 2008. Country Partnership Strategy: Afghanistan, 2009–2013. Manila. 2 ADB. 2015. Guidelines for the Preparation of Country Assistance Program Evaluations and Country

Partnership Strategy Final Review Validations. Manila. 3 World Bank. 2015. Afghanistan Economic Update, April 2015. Washington, DC. 4 World Bank. 2016. Afghanistan: Systematic Country Diagnostic, February 2016. Washington, DC. 5 ADB. 2016. Asian Development Outlook 2016. Asia’s Potential Growth. Manila.

2 Afghanistan: Validation Report of the Country Partnership Strategy Final Review, 2009 to mid-2015

5. Political uncertainty and the slow progress in reforms meant low investor and consumer confidence, resulting in a fall in manufacturing, construction, and service sector growth. New investment activity dropped, with the number of new firm registrations dropping by 26% in 2014, in addition to a 36% drop in 2013. The lack of security is perceived as the most important constraint for private investment. Raising investor confidence requires improving the security and business environment, especially for the extractive industry, and strengthening governance and the rule of law. 6. The agriculture sector performed well relative to other sectors because of an increase in irrigated area. The strong links between agriculture and the rest of the economy helped overall growth. Thanks to timely rainfall, the sector grew at an estimated rate of 1.9% in 2014, while the production of the staple crop, wheat, grew at nearly 4.0%. Afghanistan is, however, far from achieving self-sufficiency in cereals. 7. Ongoing conflict in Afghanistan poses severe challenges to its reconstruction and development efforts. The country’s economic recovery is hampered by widespread insecurity and the slow pace of reconstruction, resulting in unemployment, poverty, and weak social development. Security risks constrain private investment and pose challenges for public service delivery. Poor service delivery and unequal access to basic services adversely impacts growth and poverty by increasing social unrest and political instability. With the reduction of foreign troops and the gradual reduction in foreign support, Afghanistan will face additional security and budgetary challenges. 8. Though the country adopted basic market economy principles after the fall of the Taliban regime, moving from a centrally planned economy to a market economy has been a persistent challenge for the Government of Afghanistan and the private sector. The economic slowdown and weaknesses in tax administration have led to declining revenues, falling from 11.6% of GDP in 2011 to 8.4% in 2014. In 2015, an agreement was reached on a reform program monitored by the International Monetary Fund (IMF) to address macroeconomic vulnerabilities by mobilizing revenue, strengthening the financial sector, and improving growth prospects. The budget continues to be heavily dependent on external support, with 67% of national budget expenditures funded by grants in 2015. Public expenditures are rising mainly because of security and social benefit spending and higher outlays for operation and maintenance (O&M) as donors transfer completed projects to the government. 9. Slow economic growth has put pressure on the fiscal balances and required a tighter fiscal stance. Fiscal discipline is being restored through new tax measures and better tax collection. In 2015, the government doubled the tax on business receipts to 4% from 2%, introduced a 10% tax on mobile phone top-ups, increased the fuel fee from AF1 to AF2 per liter, and raised fees for international airlines overflying national air space. Nevertheless, the budget continues to be heavily dependent on international support.6 10. National poverty incidence remained unchanged at 36% between 2007–2008 and 2011–2012.7 However, while poverty declined in some regions, it increased in others. In the Northeast region, comprising Badakhshan, Baghlan, Kunduz, and Takhar provinces, the poverty headcount increased from 36.3% in 2007–2008 to 49.7% in

6 IMF. 2015. Article IV consultation and the first review under the staff-monitored program. IMF Country

Report. No. 15/324. https://www.imf.org/external/pubs/ft/scr/2015/cr15324.pdf 7 World Bank. 2015. Afghanistan: Poverty Status Update. Washington, DC.

Introduction 3

2011–2012. Over the same period, poverty declined from 39.0% to 33.0% in the North and from 34.0% to 30.0% in the West. Poverty stayed more or less unchanged in the remaining five regions. 11. Incidence of poverty is higher in rural areas with about 38% living below the poverty line compared to 28% in urban areas.8 The large majority of Afghan population is rural and about 80% of the poor live in rural areas. Average consumption expenditure in urban areas is twice that in rural areas. The nomadic Kuchi population had the highest risk of poverty, with 52% consuming below the poverty line. 12. Despite the lack of progress in poverty reduction, human development outcomes improved in 2007–2008 and 2011–2012. Literacy rates among those aged 15 years and above rose from 26% to 31%, the population with access to safe drinking water increased from 27% to 46%, and the population with access to electricity rose from 42% to 69%. For access to electricity, the gap between the poor and nonpoor, and that between rural and urban, decreased. However, the gap between the poor and nonpoor widened for education and access to safe drinking water and improved sanitation. 13. Creating productive employment opportunities for the youth and the poor is a formidable challenge. Gross primary school enrollment is 106%, but the quality of education is low.9 Gross secondary school enrollment is 54%, and the ratio of girls to boys in primary and secondary school enrollment is 65%. Weak governance, poor health services, and high gender inequality are among the serious issues faced by Afghanistan. The female labor force participation rate is about 16%. In a survey by The Asia Foundation, 21% of respondents cited domestic violence as one of the biggest problems women face.10 Only 39% of births are attended by skilled health workers. The under-5 mortality rate is 97 per 1,000 live births. Sixty-four percent of the population has access to improved water sources, and 29% has access to improved sanitation facilities. 14. Afghanistan’s development problems can mainly be attributed to its long history of military and political conflict that has damaged physical infrastructure and weakened institutions and government structures. It is also burdened by weak governance, illegal narcotics production and trade, and insecurity.11 This undermines investor confidence and private sector growth that can drive jobs and growth. 15. Afghanistan’s mountainous terrain and the remoteness of communities require greater efforts in connectivity. The rapid rate of urbanization requires improvements in urban services. The large proportion of youth requires strong and sustained job creation and growth. With the reduction in foreign troops, government expenditure on security will increase along with that on O&M costs for completed infrastructure projects. The government will continue to depend on international financial support

8 Central Statistics Organization. 2014. National Risk and Vulnerability Assessment 2011–2012. Afghanistan

Living Condition Survey. Kabul, CSO. http://www.af.undp.org/content/dam/afghanistan/docs/MDGs/NRVA%20REPORT-rev-5%202013.pdf 9 Gross primary enrollment rate is defined as the number of children enrolled in primary schools, regardless

of age, divided by the population of the official primary school age group. Hence, it is possible that this rate exceeds 100%.

10 The Asia Foundation. 2016. Afghanistan in 2016: A Survey of the Afghan People. http://asiafoundation.org/wp-content/uploads/2016/12/2016_Survey-of-the-Afghan-People_full-

survey.Dec192016.pdf 11 World Bank. 2016. Afghanistan: Systematic Country Diagnostic. Washington, DC.


until it can develop a stable revenue base, including from exploiting its mineral resources. 16. The National Unity government, formed in 2014, identified several challenges for Afghanistan—restoring private sector confidence, improving revenue mobilization to avert a fiscal crisis, strengthening the role for national government in managing and implementing policy reforms and development assistance, and strengthening institutions and regulations along with the required infrastructure to develop its natural resources. The government’s priorities are, therefore, improving security and political stability, controlling corruption, improving governance, restoring fiscal sustainability, reforming development planning and management, bolstering private sector confidence for growth and job creation, and ensuring citizens’ development rights. 17. The Afghanistan National Development Strategy (ANDS), approved in 2008, consisted of three mutually reinforcing pillars to reduce poverty and promote prosperity: (i) security; (ii) governance, rule of law, and human rights; and (iii) economic and social development. Priority sectors under the third pillar were infrastructure and natural resources, education and culture, health and nutrition, social protection, agriculture and rural development, economic governance, and private sector development. Crosscutting concerns encompassed regional cooperation, counter-narcotics, anticorruption, gender equity, capacity development, and environment.

C. Objectives of the Country Partnership Strategy, Coverage, Priorities, and the Roles of Major Development Partners

18. The overall objectives of the CPS, 2009–2013 were accelerated economic growth and poverty reduction, which were to be achieved through sector- and thematic-level interventions. The agriculture objectives were to improve food self-sufficiency and increase agriculture exports; energy objectives were to improve access to affordable and reliable energy for most households; and transport objectives were to improve low cost, reliable transport connectivity for goods and people within Afghanistan and across its borders. A results-based approach was adopted with specific expected results such as expansion in irrigated area and agricultural output, increase in access to power, and increase in road travel speeds. 19. In addition to the sector-level outcomes, the CPS expected to achieve various thematic outcomes. It aimed to mainstream counter-narcotics in the design and monitoring of programs and projects; ensure that women and men experience equal benefits from ADB interventions, including access to public service delivery; improve efficiency and accountability in public investment and expenditure; improve the business-enabling environment and increase private sector investments; improve cross-border connectivity infrastructure, harmonization of standards, and regulations and customs cooperation; and increase subregional and transit trade. 20. ADB is among the top five of Afghanistan’s development partners in terms of total support. It contributed 20% of the total committed support to Afghanistan from all donors during 2009–2015.12 It participated in the high-level international conferences that determined the level of total support to Afghanistan and the

12 The top five donors were Afghanistan Reconstruction Trust Fund (ARTF), 32%; ADB, 20%; the World Bank,

15%; and the United States Agency for International Development (USAID) and Japan, 8% each (computed with data from http://dadafghanistan.gov.af/dad).

http://dadafghanistan.gov.af/dad

Introduction 5

delineation of tasks among the different actors. Under the Afghanistan Compact, the international community providing assistance to Afghanistan is committed to improving aid effectiveness, and the Compact provides a strong foundation for donor coordination and support. The Joint Coordination and Monitoring Board monitors progress in Afghanistan Compact and ANDS implementation. A donor external advisory group meets regularly to discuss coordination and partnership issues in implementing the ANDS. 21. ADB’s support for the energy sector was complemented by assistance from United Nations Development Programme (UNDP), United Nations Environment Programme, and the World Bank, as well as bilateral support from Germany, India, and the United States Agency for International Development (USAID). More than 80% of the committed support for the energy sector during 2009–2015 came from the top two donors: ADB, 60%; and USAID, 21%.13 22. In the transport sector, apart from ADB, development partners included the European Commission, Islamic Development Bank, UNDP, and the World Bank, complemented by bilateral support from Germany, India, Japan, the Netherlands, Saudi Arabia, and USAID. About 75% of the committed support came from ADB (56%), Afghanistan Reconstruction Trust Fund (ARTF) (12%), and the World Bank (8%). 23. For the agriculture and natural resources (ANR) sector, the multilateral institutions involved were the European Commission, Food and Agriculture Organization of the United Nations, UNDP, United Nations Environment Programme, World Food Programme, and the World Bank; and bilaterals such as Canada, India, Department for International Development of the United Kingdom, and USAID. 24. The Interim CPS, 2014–2015 extended the validity of the CPS, 2009–2013 and its strategic focus. It continued the focus on the country’s energy, transport, agriculture, natural resources, and rural development. Support to these sectors was to include capacity and institutional development, as well as sector reform with an emphasis on public financial management, procurement, and anticorruption, in line with the Second Governance and Anticorruption Action Plan. Agreeing with national priority programs, ADB support focused on Pillar 3 (economic and social development) and Pillar 2 (governance, rule of law, and human rights) of the ANDS. 25. ADB’s country strategies for Afghanistan prior to 2009–2013 were articulated in the country strategy and program (CSP), 2002–2004 and in the CSP updates released in 2003–2005, 2004–2006, and 2006–2008. 26. The CSP, 2002–2004 was guided by Afghanistan’s reconstruction and rehabilitation needs. ADB’s operations during this period covered (i) agriculture and water resources, (ii) education, (iii) infrastructure (mainly roads), and (iv) environment. ADB also provided assistance in areas such as health, energy, finance and trade, and community development. Given the complexities and uncertainties that the country faced, ADB retained maximum flexibility in the program during the tenure of the Interim Administration of Afghanistan and the Transitional Authority with the possibility of revisions in the CSP update processes in the later years. CSP, 2002–2004 focused on capacity building, physical infrastructure rehabilitation, revitalizing

13 Government of Afghanistan development assistance database. http://dadafghanistan.gov.af/dad/


agriculture and rural development, private sector development, social development, and gender empowerment. 27. In the CSP Update, 2003–2005, based on the government’s request, ADB agreed to focus its lending and technical assistance (TA) support on transport (roads and civil aviation); energy (power, petroleum, and gas); and natural resource management (agriculture, irrigation, and environment). Its TA support, however, also covered governance and finance sectors. This was in line with ADB’s comparative advantage in these sectors and other donors’ interest in sectors such as education and health. For the CSP Update, 2004–2006, it was agreed that governance and the financial sector would also be supported through loan assistance and that ADB’s private sector interventions would also focus on banking and telecommunications. 28. Afghanistan is a Group A developing member country (DMC) with access to Asian Development Fund (ADF) grants and concessional loans. Afghanistan is the second-largest recipient (after Myanmar) of ADF XII country allocations. Its share in total net resource transfers of ADF loans and grants to DMCs from 2009 to 2015 varied between 7% and 56%, and averaged 18%. As Afghanistan is in high risk of debt distress, the ADF allocation to the country is 100% on a grant basis. The allocation is a sum of the performance-based allocation plus a post-conflict premium that was to be phased out by the end of 2018. Donors, however, agreed to suspend the phase out of the post-conflict premium for the ADF XII period (until 2020) (Table 1).

Table 1: Asian Development Fund Allocation to Afghanistan ($ million)

ADF VIII ADF IX ADF X ADF XI

Item 2001– 2002

2003– 2004

2005– 2006

2007– 2008

2009– 2010

2011– 2012

2013– 2014

2015– 2016

Post-conflict premium 0 320 400 400 446 409 NA NA Performance- based allocation 0 0 0 0 102 149 NA NA

Total 0 320 400 400 548 558 523 335 ADF = Asian Development Fund, NA = notavailable. Source: Independent Evaluation Department. 2012. Country Assistance Program Evaluation: Islamic Republic of Afghanistan. Manila: ADB.

29. Afghanistan has been an ADB member since 1966, although the program was suspended in the 1980s amid sustained conflict, and resumed again in 2002. Since resuming support to Afghanistan, ADB, along with other development actors, has worked in an extremely challenging environment. With the fall of the Taliban in 2001, it appeared that the conflict was diminishing in the mid-2000s. However, violence escalated substantially in 2009, and has continued in its intensity through 2015. 30. The Afghanistan country assistance program evaluation (CAPE) 2012 included several findings.14 The poor security environment led to weaknesses in project formulation and design; project inefficiencies such as implementation delays, cost increases, and insufficient supervision; and limited coordination with development partners. ADB’s investments in the transport and energy sectors were generally not linked to its own projects or projects of other development partners in sectors such as

14 Independent Evaluation Department (IED). 2012. Country Assistance Program Evaluation: Islamic Republic

of Afghanistan. Manila: ADB.

Introduction 7

industry, agriculture, and social services. In the transport sector, ADB resorted to design-build contracts, where a single-construction contractor is responsible for both the design of civil works and engineering tasks. This was done to expedite project implementation, but because of this the capacity of line agencies remained underdeveloped. Similarly, though the use of a multitranche financing facility (MFF) facilitated faster disbursement of funds, this modality may not have been suitable for a government with weak capacity to ensure accountability for use of funds and controlling cost overruns. Problems arose mostly because of the lack of a strong design or oversight component in the first tranche. ADB support to infrastructure investment did not systematically consider sustainability issues in the design of projects, to explore self-financing mechanisms for O&M and reduce dependence on foreign support for this purpose. Continuous long-term engagement is needed for developing government capacity to deal with risks arising from the security environment, political uncertainty, and weak governance. 31. The Afghanistan country report for the ADF evaluation identified security as the biggest issue and hence the need for systematic fragility and conflict analysis in designing ADB’s program. It expressed concern regarding the adequacy of financial aid to Afghanistan given the planned phase out of conflict premium and the likely decline in bilateral assistance, and stressed the importance of attracting additional donor funds for the Afghanistan Infrastructure Trust Fund (AITF). It also suggested that regional cooperation and integration (RCI) operations, by creating economic benefits to Afghanistan’s neighbors, give the neighbors incentive to support Afghanistan’s security. It pointed out that the government would like ADB to support the enabling environment and local capacity for private sector development, even though given the current conditions the private sector is unlikely in the near future to risk its capital in Afghanistan.15

15 IED. 2015. Corporate Evaluation Study: Asian Development Fund X and XI Operations: Opportunity Amid

Growing Challenges. Supplementary Appendix D.1. Manila: ADB.

CHAPTER 2

Portfolio Overview 32. ADB’s approved sovereign financing for Afghanistan during 2009–June 2015 was about $2.2 billion, distributed across three main sectors: transport (59%), energy (29%), and ANR (12%). This comprised 26 grants and 15 TA projects (Table A.1, Figures A.1 and A.2). 33. The validation reviewed projects approved during 2009–June 2015 as well as those that were approved before 2009 but were closed or ongoing during 2009–June 2015 (Table 2). These included 11 loans, 48 grants, and 29 TA projects with a total financing of $3.8 billion, mostly distributed between transport (51%), energy (24%), and ANR (13%) (Table A.2, Figures A.3 and A.4). Tables A.3–A.6 give the sector spread of the ADB-supported operations covered by the report.

Table 2: ADB Loans, Grants, and Technical Assistance to Afghanistan Completed or Active during 2009–June 2015

Items Number Amount ($ million) Sharea (%) Loans (ADF) 11 741.70 19.47

Grants ADF 26 2,531.20 66.69 JFPR 11 134.50 3.53 AITF 5 256.60 6.74 Bilateral and Others 7 97.70 2.56 Subtotal 48b 3,029.00 79.52

Technical Assistance Capacity Development 4 5.95 0.16 Policy and Advisory 6 7.83 0.20 Project Preparatory 5 6.45 0.17 Advisory 14 18.15 0.48 Subtotal 29 38.38 1.01

Total Financing 88 3,809.08 100.00 ADB = Asian Development Bank, ADF = Asian Development Fund, AITF = Afghanistan Infrastructure Trust Fund, JFPR = Japan Fund for Poverty Reduction. a Numbers may not add up due to rounding. b Subtotal for number of grants does not add up correctly as one project is counted for both JFPR and

Bilateral and Others. Source: Asian Development Bank.

34. Of this portfolio reviewed, closed and rated projects amounted to $889 million (about 22%). Of the 25 completed loans and grants, 13 had project completion reports (PCRs), and 9 were rated successful or highly successful by the PCRs (Table A.7). Of these nine projects, the PCR validation reports validated five successful, two less than successful, and two projects were not validated. Of the 21 TA projects completed, 16 had completion reports, and 9 were rated successful or highly successful.

Portfolio Overview 9

A. Agriculture and Natural Resources 35. Agriculture in Afghanistan accounts for about 21% of GDP and employs about 40% of the national workforce. Only 12% of total land area is arable agricultural land, half of which is cultivated. Productivity levels of rain-fed and irrigated farming are low compared to regional standards. The sector, thus, has great potential to drive economic growth and generate foreign exchange and government revenue. It also has prospects for raising labor productivity; benefiting women and other disadvantaged groups (the poor, landless, and nomads); and reducing poverty and food insecurity in rural areas, where about 80% of the population lives. 36. Major constraints to agricultural productivity include the lack of reliable access to irrigation affecting investments in high-value crops and the limited participation of private sector enterprises. Effective water resource development and management are key factors for sustained growth. Accelerated growth in commercial agriculture is required to stimulate rural enterprises, growth in rural non-farm employment, and income generation. For this to occur, improvements are needed in rural infrastructure (irrigation, markets, roads, power, and telecommunications) and in the business-enabling environment. 37. Government priorities. In the 2002 National Development Framework, the government recognized the economic importance of agriculture and irrigation in improving food security, reducing vulnerability, and expanding livelihood opportunities for the rural population. As part of the ANDS, the Agriculture and Rural Development Sector Strategy aimed to establish essential institutional and infrastructural building blocks to increase agricultural production and productivity. The strategy was to be implemented through five thematic areas: (i) local governance (strengthening institutions such as community development councils [CDCs] and cooperatives), (ii) agricultural production (supporting farmers to shift from subsistence to commercial agriculture), (iii) agricultural and rural infrastructure (providing basic infrastructure such as irrigation, research and extension centers, storage, roads, and electricity), (iv) economic regeneration (promoting value-added agriculture and expansion of microfinance services and micro-, small-, and medium-sized private sector enterprises), and (v) disaster and emergency preparedness (providing early warning systems, disaster mitigation systems, and relief). 38. ADB’s program. The CPS, 2009–2013 focused on increasing area under irrigation and growth in agriculture output and exports, improving water sector legal and governance structures and institutions, and developing sustainable water resource management strategies and plans covering irrigation. ADB’s ANR assistance covered by the validation comprised 2 loans, 14 grants, and 4 TA projects with a funding allocation of $489.10 million. The loans and grants focused on rehabilitation of irrigation infrastructure and investment for water resource development. The TA projects prioritized government capacity development for land policy and administration reform and development of irrigation and water resources.

B. Energy 39. Afghanistan’s energy sector suffers from capacity deficits in its energy enterprises and ministries and is in need of substantial infrastructure rehabilitation and expansion. It has about 440 billion cubic meters of proven gas reserves, 73 million tons of coal reserves, and hydropower potential equivalent to 25,000 megawatts. However, nearly 80% of the power supply is imported from neighboring countries, mostly from


Uzbekistan, as well as from Iran, Tajikistan, and Turkmenistan. Exploitation of renewable energy and fossil fuel resources is still in its infancy. Access to electricity is low, although it increased from less than 5% of the population in 2001 to 69% in 2012.16

40. Afghanistan seeks to become a transit route for energy trade between Central and South Asia, providing it transit revenues and energy security (electricity trade between Afghanistan–Pakistan–Tajikistan–Turkmenistan–Uzbekistan, and gas imports from Turkmenistan into Afghanistan, India, and Pakistan). Major opportunities exist to link Afghanistan with regional power networks to boost agricultural and manufacturing and service sector output, and to create employment through industrial development along the energy corridors. 41. Government’s priorities. The ANDS strategic objective for the energy sector is to provide reliable, affordable energy, increasingly through market-based private sector investment and public sector oversight. The government aims to diversify its energy supplies, achieve energy security, and reduce dependence on imported electricity and fuels by developing domestic gas fields and investing in power generation. The priorities are (i) expansion of grid power operations and development of new transmission and generation projects; (ii) commercialization of power sector operations; (iii) improvement of sector governance, including consolidation of government energy functions and agencies; (iv) improvement of energy resource use and management, including identification and promotion of renewable energy and enhanced use of indigenous sources of energy; and (v) introduction and facilitation of the private sector into the Afghan energy sector. 42. ADB’s program. The CPS, 2009–2013 focused on power generation, transmission, and distribution; development of indigenous energy resources such as micro-, small-, and medium-sized hydropower plants; and regional energy trade. ADB’s energy assistance covered by the validation comprised 2 loans, 12 grants, and 10 TA projects with a funding allocation of $906.01 million. Apart from a few projects focusing on mini hydropower plant development, hydropower-generation infrastructure rehabilitation, and gas well rehabilitation, ADB’s assistance focused on power transmission, distribution, and interconnection. The TA projects focused on building the capacity of the electric utility and interministerial commission for the energy, gas, and power sector development master plan and for renewable energy development.

C. Transport 43. Afghanistan’s transportation system comprises roads, rails, airways, and limited inland waterways. Given the country’s geographical location, challenging terrain, and scattered population, roads are the primary means of transport. Roads and rail links are effective means of connecting landlocked Afghanistan to the outside world and connecting Asia’s different regions to each other. Regional cooperation is important in Afghanistan’s transport sector development, as three of the six identified Central Asia Regional Economic Cooperation (CAREC) corridors go through Afghanistan. The country’s trade competitiveness is weak because of the high cost of transport. The

16 This includes access to electricity from grid, generator, solar, and other sources, as revealed by the National

Risk and Vulnerability Assessment 2011–2012. Grid electricity access is only 30%.

Portfolio Overview 11

transport sector, thus, is crucial to economic development through its contribution to national and regional integration and trade. 44. Afghanistan’s estimated road density of 4 kilometer (km) per 1,000 square km is far below than that of its neighbors. About 7% of the roads are paved, and a key section of the Ring Road is not yet constructed. Four provincial capitals are not connected to the regional network and thus lack access to domestic and regional markets. Inadequate government funding for maintenance of the implemented works—leading to economic loss of capital investments—and inadequate sector regulation—leading to truck overloading, which reduces the engineering design life of constructed roads—are some of the major sector issues.17 45. Government’s priorities. As per the ANDS, the transport sector strategic goal is safe, low-cost, and reliable movement of people and goods domestically and across borders. The strategy targets included (i) fully upgrading the Ring Road and roads connecting the Ring Road to neighboring countries, and establishing a fiscally sustainable system for road maintenance; (ii) improving and building rural access to improve market access and opportunities for rural households; and (iii) ensuring full International Civil Aviation Organization compliance of Kabul and Herat airports, and upgrading Mazar-iSharif, Jalalabad, Kandahar, and seven other domestic airports. The ANDS gives increased priority to regional economic cooperation initiatives aimed at developing regional transportation and transit infrastructure, facilitating regional trade and investment flows, and developing Afghanistan as a regional business hub linking Central and East Asia with the Middle East and South Asia. 46. ADB’s program. The CPS, 2009–2013 focused on priority road improvement projects and the construction of a railway line. ADB included a railway network in Afghanistan under the CAREC Transport Sector Strategy 2008–2018. ADB assistance covered by the validation comprised 3 loans, 18 grants, and 5 TA projects with a funding allocation of $1.95 billion. Apart from one airport rehabilitation project and one railway project, the loans and grants were for road rehabilitation and road network development. Of the five TA projects, one was for the railway development study, and the rest were for roads.

D. Public Sector Management 47. Afghanistan is characterized by weak economic governance and underdeveloped institutions for implementing and enforcing laws and regulations. The public sector is marred with corruption, which raises the costs of doing business and discourages private investment. The quality of public administration is low, and the government’s capacity to manage its operations is also weak. Afghanistan scored low on country performance assessment indicators such as transparency accountability and corruption. Armed groups and illicit power lords control local administrative structures. The government recognizes that progress in security and economic development depends significantly on improved governance. It has made progress in setting up institutional infrastructure for public financial management, leading to improved budget planning including the adoption of a medium-term fiscal framework. However, progress is lacking in monitoring financial activities of state-owned enterprises and corporations. Many of these enterprises are run inefficiently and are not generating

17 ADB. 2014. Technical Assistance to Islamic Republic of Afghanistan for Transport Sector Master Plan

Update. Manila.


profits. Public expenditures are also hindered by weaknesses in procurement and inadequate coordination between ministries. The country is also in need of civil service reforms to attract and retain skilled staff, with recruitments based on merit and not on the patronage system. 48. Government priorities. Governance is one of the three pillars of Afghanistan’s national development strategy. The government’s aim is to improve the delivery of services through good governance, by strengthening public institutions at both local and central levels. It also aims to mainstream anticorruption efforts in the areas of public administration, fiscal management, and legal reform. 49. ADB’s program. ADB assistance during the period 2009–2015 focused on TA to the Ministry of Finance and other ministries, as well as mainstreaming public financial management, procurement, and anticorruption in project activities. ADB also collaborated with development partners such as the USAID on public financial management. ADB assistance for public sector management (PSM) covered by the validation comprised a loan and a grant for fiscal management and public administration reform and five TA projects with a total funding allocation of $65.14 million. The TA support focused on economic policy management, policy for infrastructure investments, statistical capacity building, and security planning for project implementation.

CHAPTER 3

Validation of the Country Partnership Strategy Final

Review 50. The CPSFR assessed ADB’s operations in Afghanistan from 2009 to mid-2015 overall successful on the borderline. It assessed ADB’s program relevant and effective but less than efficient and less than likely sustainable. It also assessed the development impact of ADB support less than satisfactory. Following ADB’s 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations, this chapter reviews the findings in the CPSFR and provides an overall assessment of the performance of the CPS and ADB’s operations from 2009 to mid-2015 based on the criteria of relevance, effectiveness, efficiency, sustainability, and development impacts.

A. Relevance 51. The validation agrees with the CPSFR’s assessment of the program as relevant. Relevance is assessed against three main subcriteria: (i) appropriateness of CPS objectives to meet the country’s needs, and alignment with the Long-Term Strategic Framework of the Asian Development Bank (Strategy 2020);18 (ii) strategic positioning, including focus and sector selectivity and coordination with development partners; and (iii) sector program relevance and design quality of the CPS results framework.

1. Appropriateness of Country Partnership Strategy Objectives 52. In general, the CPS, 2009–2013 objectives were responsive to country needs and aligned with national priorities. The objectives of accelerated economic growth and poverty reduction were aligned with the priorities identified in the ANDS. The ANDS, which is also the country’s poverty reduction strategy paper, has three strategic pillars to support reducing poverty and promoting prosperity: (i) security; (ii) governance, rule of law, and human rights; and (iii) economic and social development. The third pillar includes sectors such as agriculture and rural development; energy, water, and irrigation; mining; and private sector development. The ANDS also identified the importance of crosscutting areas such as anticorruption, capacity development, counter-narcotics, environment, gender equity, and regional cooperation in reducing poverty. By aiming to contribute to Afghanistan’s economic growth, ADB support will indirectly contribute to social development and poverty reduction. By focusing on transport, energy, and ANR, ADB support addressed Afghanistan’s critical infrastructure needs.

18 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank,

2008–2020. Manila.


53. In principle, the CPS aligns with ADB’s Strategy 2020. One of the CPS’s crosscutting themes is RCI, which is a core identified area and one of the three strategic pillars of Strategy 2020. The CPS’s sector and thematic focus had the potential to contribute to inclusive growth through expanded opportunities. There is, however, very little in the results framework to capture the contributions to inclusive growth. There is also no evidence of complementary projects by other development partners that can contribute to inclusive development.

2. Strategic Positioning 54. ADB’s country portfolio is consistent with the CPS’s strategic and sector priorities. Program outcomes are linked to sector results and CPS objectives. Although the narrow sector focus on transport, energy, and ANR is at the government’s request, it is in line with ADB’s strengths and Strategy 2020 core areas. Sector prioritization is appropriate given the links to the government’s priority needs. 55. Donor coordination. As noted in the CPSFR, coordination with development partners varied across sectors. The energy and transport sectors had mechanisms in place for the government and donors to meet regularly, define sector needs, and make joint decisions, whereas the ANR sector lacked such a mechanism. There was, however, good coordination among bilateral organizations and development partners in the ANR sector, with ADB and the World Bank as the main coordinators. In the energy sector, the establishment of an interministerial committee helped organize regular meetings between development partners. ADB was the primary player in electricity transmission and distribution; other partners focused on hydropower and other alternative sources of energy. The ADB-supported master plans for the power and gas sectors served as the base documents for all donors involved in energy. The government also convened water coordination meetings with development partners and government bodies. In the ANR sector, the World Bank focused more on productivity, and less on issues of irrigation infrastructure and agricultural storage. 56. In the transport sector, a sector road map helped in the planning of complementary support by partners. ADB developed the transport sector master plan, which was endorsed by the government and updated in 2016. While ADB focused mostly on road construction projects, USAID concentrated on capacity development and support for preparing regulatory and policy framework. USAID, along with ADB, is helping establish a Road Sector Sustainability Program, which includes the creation of a Road Authority, a Road Fund, and a Transport Institute to streamline sector institutions, make them more accountable, and rationalize O&M funding. USAID also worked on certain sections of the Ring Road, while the World Bank’s focus has been on rehabilitating and building rural roads. 57. ADB played a lead role in aid coordination in the infrastructure sector, whereas the World Bank played a greater role in other sectors. The World Bank–administered ARTF’s strategic framework covers five priority sectors: agriculture, rural development, infrastructure, human development, and governance and public sector capacity. Unlike the AITF, which funds only investment costs, the ARTF finances both government investment and recurrent expenditures, considering the government’s fiscal sustainability concerns arising from low revenue base. ADB serves on the ARTF management committee that approves all ARTF projects, thus facilitating coordination between the two funds. The government played its role well as the main aid coordinator through the many high-level donor meetings and conferences. The

Validation of the Country Partnership Strategy Final Review 15

ongoing TA on Support for Infrastructure Investments and Policy, among other things, aims to further improve the government’s capacity for donor coordination across sectors and to promote the AITF with the international community.19

3. Relevance of Country Partnership Strategy Program Design

58. The validation agrees with the CPSFR assessment that the quality of the CPS framework needed improvement, particularly given the lack of baselines for indicators. Some outcomes did not correlate with the indicators and were unrealistic given the adverse impacts of the political and security situation on project implementation. An example of an ambitious outcome was accelerated growth in commercial agriculture, resulting in a sharp increase in agricultural exports. 59. As noted in the CAPE, both the initial CSP in 2001 and the first CSP update in 2003 advocated an emergency approach to infrastructure provision since the situation called for quick actions. Simplified procedures were used to respond rapidly to a precarious situation. The CPS, 2009–2013 continued to use this emergency approach even during a relatively peaceful period, relaxing several due diligence principles. However, the security situation worsened, and has become a grave concern since 2014 and a challenge to efficient implementation. The Afghanistan Resident Mission (AFRM) staff and, in particular, portfolio managers found it difficult to undertake site visits and mostly relied on contractors and independent firms for monitoring. 60. Developed in 2007, ADB’s approach to engaging with weakly performing countries (in terms of low country performance assessment ranking and prevalence of conflict) was guided by two pillars: selectivity and focus, and strategic partnerships.20 The CPS’s narrow sector focus strongly aligned with this approach. The 2007 approach allowed for flexibility in business processes to suit the country situation. Taking into account the evaluation lessons from support to countries classified as fragile and

conflict-affected situations (FCAS), 21 ADB updated its approach in its 2013 operational

plan to improve the effectiveness of its operations in countries with FCAS.22 It emphasized (i) mainstreaming fragility and conflict-sensitive approaches in CPS and operations; (ii) adopting FCAS-sensitive internal processes; (iii) strengthening human resources—staff FCAS awareness, skills, and field presence; (iv) augmenting financial resources by partnering with other development partners, and reducing volatility of support; (v) adopting differentiated business processes for FCAS operations, and developing a more appropriate risk framework; and (vi) developing an institutional strengthening framework for FCAS DMCs. 61. Most of the ongoing projects had identified security issues and mitigation measures in the design. In energy projects, the design considered security risks, and security costs were included the project costs. In all transport projects, security risks were recognized in the design. From 2006 onwards, civil works contracts were required to provide an action plan for adequate security, and the associated cost was to be

19 ADB, 2013. Islamic Republic of Afghanistan: Support for Infrastructure Investments and Policy. Techincal

Assistance Report. Manila. 20 ADB. 2007. Achieving Development Effectiveness in Weakly Performing Countries: The Asian Development

Bank’s Approach to Engaging with Weakly Performing Countries. Manila. 21 IED. 2010. Special Evaluation Study: Asian Development Bank’s Support for Fragile and Conflict-Affected

Situations. Manila: ADB. 22 ADB. 2013. Operational Plan for Enhancing ADB’s Effectiveness in Fragile and Conflict-Affected Situations.

Manila.


included in the civil works budget. Initially (in 2004), ADB relied on the government to provide adequate security arrangements for smooth and uninterrupted project implementation. ADB also launched a TA for the Security of ADB-Financed Projects to provide advice on ensuring a safe work environment for on-site personnel assigned by the contractors, subcontractors, and consulting firms.23 Security issues were also discussed in all ANR projects, and resource requirements were identified. In many of these projects, local community participation was identified as a factor in minimizing security risks. In general, however, there is a need for tailoring security measures to specific project and site conditions. 62. Use of financing modalities. Considering the high risk of debt distress, ADB support to Afghanistan was entirely through ADF grants. Other sources of funding included AITF, Japan Fund for Poverty Reduction, Clean Energy Fund, and Water Financing Partnership Facility. The CPS recommended providing support through a MFF to enable predictable and flexible support for a planned sequence of projects and TA operations. However, prerequisites for the MFF include a sector roadmap that provides strategic direction to the investment programs and adequate institutional capacity for executing agencies to meet conditions of tranche releases, which were not always met (CAPE, Para. 81). The CPSFR also noted cases where tranche releases were used to augment financing of other projects outside of the MFF’s scope. 63. Relevance of sector programs. Project outcome indicators generally aligned with the sector results framework (sector milestones, tracking indicators, and interim indicators). However, as noted in the CPSFR, some of the outcome statements could have been used as indicators and vice versa, and there was lack of consistency between the CPS period and the target years for achieving outcomes. Many indicators in the CPS results framework, as well as in the project design and monitoring frameworks, lacked baselines. For transport, 5 out of 21 projects had baselines, and, for ANR, 5 out of 19 had baselines, whereas, for energy, 14 out of 18 had baselines. 64. Project designs were mostly in line with the government’s sector objectives, and with sector policies and ADB strategies. However, some design shortcomings were noted, such as unrealistic implementation timelines; and the plan for including road tolls, which was not compatible with the low capacity of Ministry of Public Works (MPW), had to be abandoned. For railways, project design did not reflect realistic estimates of demand or sustainable sources of funding for O&M. The use of design-build contracts in the transport sector was meant to speed up the approval and implementation processes. However, these were generally more expensive and failed to reduce the duration of implementation. Moreover, they prevented the government from building its capacity in planning, design, and contract management and construction oversight. The design-build approach requires a level of contractor expertise, specialization, and sophistication, which may not be applicable to many contractors in Afghanistan. The implications of using such contracts for efficiency are discussed further in paras. 96 and 97. The validation report assesed all the sector programs, including the transport sector, relevant (Table A.10). 65. Relevance of crosscutting objectives. Among the three strategic agendas of ADB’s Strategy 2020, regional cooperation has been most explicitly addressed in the energy and transport sectors through development of cross-border transport and

23 ADB. 2004. Techinical Assistance to the Islamic Republic of Afghanistan for the Security of ADB-Financed

Projects in Afghanistan. Technical Assistance Report. Manila.


energy transmission infrastructure. The support for inclusive growth is visible in most projects covering all sectors, but mainly through the contribution to overall growth and expansion of economic opportunities. The design of ANR projects, however, accounted for the increase in access to employment and income-earning opportunities, and to some extent the design of transport projects allowed for the increase in access to social services among vulnerable populations. There is no clear mention of environmentally sustainable growth in the CPS design. Contributions to this agenda were designed mainly as an outcome of support to the ANR sector, through better natural resources management and environmental legislation. Outcome indicators were articulated in the CPS results framework for themes such as gender, governance and capacity development. In all, crosscutting objectives of the CPS and the CPS overall are assessed relevant.

B. Effectiveness 66. The CPSFR assessed ADB’s completed and ongoing operations from 2009 to mid-2015 effective. Effectiveness was assessed based on the progress towards achieving the updated target outputs and outcomes outlined in the country operations business plan, 2013–2014 results framework.24 The validation also assessed ADB’s operations effective based on the overall evidence on achievements in outputs and outcomes of completed projects, and on the progress made in ongoing projects.25 The achievements, however, vary across the different sectors (Table A.9). 67. Transport. The objective of ADB operations in the transport sector is to provide low-cost, reliable transport connectivity for goods and people. The CPS sector-level outcome indicators included a fully upgraded and maintained Ring Road, increased number of villages connected by all-weather roads to national roads, and decreased travel times. 68. The CPSFR found transport sector operations effective. This assessment was based on the outcomes achieved in completed projects, such as a reduction in travel times, vehicle operating costs, and public transportation costs, and an increase in volumes of freight and passenger traffic through construction and rehabilitation of roads and railways; and on the progress made in capacity development and policy reform in ongoing projects. 69. Given the evidence on outcomes achieved so far, the validation also views ADB’s transport sector operations effective. All five completed projects with completion reports were rated effective by the PCRs or PCR validation reports (Table A.7). For the Andkhoy-Qaisar Road and the North-South Corridor projects, substantial reductions, greater than the targeted amounts, were achieved in vehicle operating costs and travel time, and in public transportation and freight transportation costs. For the North-South Corridor project, travel time per trip decreased on average by 75% compared to the expected 50% reduction. Freight rates reduced by 45% and passenger transport fares reduced by 80% compared to the expected 20% reduction in both. The railway project providing a cross-border railway link to Uzbekistan is of strategic importance to Afghanistan, as it opens an alternative supply route for trade and humanitarian relief. As part of the Transport Strategy and Action Plan agreed under the CAREC program, it

24 ADB. 2013. Afghanistan 2013–2014 Country Operations Business Plan. Manila. 25 Outputs and outcomes achieved in completed projects are listed in Appendix Table A5.2 of the CPSFR, and

progress towards achievement of outputs and outcomes in ongoing projects are listed in Appendix Table A6.2 of the CPSFR.


furthers the goals of RCI. However, capacity utilization of the railway has been low from the start. Freight transport volumes dropped from 4.1 million tons in 2012 to 2.3 million tons in 2013 and 2.1 million tons in 2014.26 70. Ongoing transport projects are severely affected by delays and have made very little progress in achieving outcomes. An important section (between Bala Murghab and Laman) of the strategic Ring Road is still awaiting completion. 71. Energy. The objective of ADB assistance in the energy sector is to improve access to affordable and reliable energy for most households. The CPS, 2009–2013 focused on the following outcomes: improved enabling environment for private sector investment in the energy sector, expanded access to grid electricity, better access to rural energy services, restructured energy sector governance, and commercialized operations. Sector outcome indicators included increased electricity access for urban and rural households and non-residential consumers, and improved sector governance. 72. The CPSFR found energy sector operations effective on the basis that the target electrification rate (connections to grid) of 30% was achieved well before the targeted timeline- 2017, the electricity supply increased more than fourfold in the North-East Power System, and the system losses reduced to 25%. 73. The validation agrees with the CPSFR’s effectiveness assessment for energy sector operations. The completed regional power transmission interconnection project successfully increased per capita power consumption, from 21 kilowatt-hours (kWh) per year at appraisal to 106 kWh per year by 2011, higher than the targeted 35 kWh per year. The completed power sector master plan TA project improved the Ministry of Energy and Water’s (MEW’s) planning capacity and its ability to assess investment alternatives, whereas the TA project support to the Inter-Ministerial Commission for Energy failed to fully achieve the expected capacity development outcomes. However, the Ministry of Finance requested a second phase of the Inter-Ministerial Commission for Energy and advised that such a forum may be replicated in other sectors. Investments in the energy sector primarily benefited urban areas. This exposes a large gap in rural energy services that ADB should consider in the design of the next CPS. 74. Working with other development partners, ADB supported the creation and the corporatizing of Da Afghanistan Breshna Sherkat (Afghanistan Electricity Corporation) (DABS), which is responsible for power generation, transmission, and distribution. Other positive outcomes are the government’s implementation of the energy sector road map, policy framework, and the envisaged investment plan, as confirmed in the ADB-assisted power sector master plan, 2012–2032 and the gas development master plan, 2015–2035, which have been integrated into the National Energy Supply Program. 75. In most ongoing energy projects, however, the achievement of outcomes was affected by implementation delays. Some progress was achieved, though, in the power transmission and distribution project and in the energy sector development investment project for outcomes such as an increase in new connections and a reduction in system and network losses.

26 IED. 2015. Validation Report: Afghanistan: Hairatan to Mazar-e-Sharif Railway Project. Manila: ADB.


76. Agriculture and natural resources. ADB assistance in the ANR sector aimed to improve food self-sufficiency and increase agricultural exports. The CPS, 2009–2013 focused on increasing area under irrigation, growing agriculture output, and improving water sector legal and governance structures and institutions. Targeted sector-level outcomes included increases in irrigation, agricultural growth rate, horticultural exports, and commercial livestock output. 77. The CPSFR found ANR sector operations less than effective. It based this assessment mainly on low effectiveness seen in completed projects as well as to the slow progress in institutional development for water resources management. It, however, recognized some of the positive outcomes of completed projects and that ongoing projects are likely to achieve expected outputs and outcomes. 78. The validation agrees with CPSFR’s assessment based on the extent to which outputs and outcomes were achieved compared to the targets. In the case of Balkh river basin water resources management project, for example, the expected outcome of developing institutional mechanism for water allocation and integrated water resources management was not achieved because of a lack of ownership by MEW. 79. Some positive outcomes from completed projects, however, need to be highlighted. For example, in the rural recovery through community-based irrigation rehabilitation project, several members of the CDCs, including women, were trained in agricultural management and watershed management and conservation. Community-based contracting through CDCs appeared to have resulted in better quality of irrigation structures compared to other contractors, as seen by the greater survival rates of these structures after the 2014 flood. The rural business support project developed the capacity of producer cooperatives and trained producers in production, processing, and marketing best practices. Value chain development, such as cold storage facilities for potatoes and market linkages, has resulted in an increase in farmers’ incomes, including poor farmers.27 80. ANR projects are spread among three ministries—Ministry of Agriculture, Irrigation and Livestock; Ministry of Rural Rehabilitation and Reconstruction; and MEW. The absence of a coordinating entity to provide overall focus and direction to ANR activities appears to have affected implementation and results. Furthermore, the AFRM’s capacity to service and liaise with all three ministries was limited. Given that about 80% of the population lives in rural areas, and that most people rely on agriculture as a means of livelihood, the next CPS should give greater emphasis to productivity-enhancing interventions in ANR, along with the rehabilitation of irrigation systems. 81. For ongoing projects, most are affected by administrative delays or delays in contract awards, resulting in slow progress towards outcomes. For example, there was a 3-year delay in starting the agriculture market infrastructure project, which aimed to increase exports of livestock products through constructing hygienic slaughterhouses. Partial achievement in outcomes were noted, however, such as the expansion in the area covered by irrigation rehabilitation and the establishment of water user associations (WUAs) and irrigation associations in the western basins water resources management project and the water resources development investment program.

27 ADB. 2012. Agriculture in Afghanistan: Cold Storage Increases Food Security. 6 July.

http://www.adb.org/results/agriculture-afghanistan-cold-storage-increases-food-security


82. The multisector, finance, and PSM projects, which accounted for less than 1% of the entire portfolio, were all assessed less than effective by the CPSFR, which the validation agrees with, because of the partial outcomes achieved. In PSM, for example, the two TA projects to improve security measures of project implementation, including for AFRM, achieved their objectives, whereas expected outcomes in the fiscal management and public administration program and in the macroeconomic statistical capacity-building TA project were not fully achieved. In the TA project supporting economic policy management, implementation delays caused a lack of progress in outcomes although advisory support provided to the Ministry of Finance enabled economic and fiscal decisions through better analysis. Overall, continued support for PSM is needed for the government to overcome capacity constraints, the potential impact of which is significant, as it can improve project implementation efficiency in all sectors. 83. Overall effectiveness rating. The CPSFR assessed the CPS overall effective. The validation concurs with the CPSFR’s overall assessment. Completed projects and programs during the CPS period achieved most of the CPS sector outcomes and outputs. However, ongoing projects and programs achieved limited results because of the ensuing delays.

C. Efficiency 84. The CPS’s efficiency is assessed based on the economic returns and cost effectiveness of delivered projects and programs, and on the implementation efficiency of loans, grants, and TA projects as reflected in the extent of delays, cost overruns, cancellations, and irregularities. 85. The CPSFR found ADB’s operations during the evaluation period less than efficient since many projects were affected by start-up and implementation delays, slow disbursements and cost adjustments, and underutilization of funds, as well as cancellations. Factors affecting implementation efficiency included poor security at project sites, a lack of capacity and initiative among executing and implementing agencies, design and recruitment issues, and harsh weather conditions. The validation concurs with this assessment. 86. Economic efficiency. There were 17 completed projects with PCRs for the evaluation period considered in this report. Economic internal rate of return (EIRR) estimates were available for six of these projects. With the exception of the regional airports rehabilitation project, which had an estimated EIRR of 11%, these projects had an EIRR above 12%. Most projects show high EIRRs at appraisal (above 18%). However, cost overruns and delays tend to lower these percentages when reassessed after project completion. 87. Process efficiency. Based on the data available on 47 projects (both completed and ongoing), the average delay in implementation was 2.2 years—28 projects experienced a delay of 2 or more years, 10 experienced a delay of 4 or more years, and 6 experienced a delay of 6 or more years (Table A.8). As noted in the CPSFR, process delays are mainly because of either security-related reasons or weak capacities of executing and implementing agencies. High-quality contractors and consultants are unwilling to participate due to security concerns, requiring repeated tendering. Requests for contract variations to cover additional security arrangements also lead to implementation delays. Weak capacities in line ministries resulted in lengthy


procurement processes and delays in compliance with safeguards requirements. Bureaucratic delays in the procurement of goods and land acquisition also caused delays. In the TA projects, delays occurred mainly in recruiting consultants and/or experts because of security and the weak capacity of executing agencies. 88. In the power sector master plan TA project, for example, implementation was delayed by the lack of qualified proposals and unsuccessful contract negotiation. Completion of the North-South corridor project was delayed due to poor security, harsh weather in the project area, and design changes. In the rural recovery through community-based irrigation rehabilitation project, start-up delays were caused by the worsening security situation and consultant recruitment challenges, resulting in a reduction of subprojects. 89. In the ongoing projects, delays have generally led to cost escalations and slow progress in achieving outcomes. In the power transmission and distribution project, for example, delays led to a reduction in scope, and the new household connections to the grid were below targeted levels. Slow implementation progress and cost increases led to the cancellation of the development of mini-hydropower in Badakhshan and Bamyan provinces project. For the energy sector development investment program, cost overruns up to 40% led to the cancellation of some subprojects. 90. Most ongoing transport projects are suffering from long delays because of security, capacity, and governance issues. In the transport network development investment program, for example, issues were noted in the quality of hired contractors and consultants and in bidding corruption. 91. Start-up and implementation delays were also noted in many ANR sector projects. In the water resources and development investment program, this was partly because of the limited capacity of implementing agencies in managing consultant and civil work contracts, and also because of the reluctance of good-quality consulting firms to bid, given the security risks. 92. Project managers cite the security situation as the primary reason for implementation problems. Oversight for portfolio performance and assessment of progress and impact was severely constrained by the difficulty of access to field operations. Discussions during the validation mission in Kabul in April 2016 revealed that this was especially the case for rural areas. Security risks depend on the project’s relative location, considering that the Taliban has infiltrated about 60% of the country. The general perception is that using local contractors can minimize security risks. Security in government-controlled areas is perceived riskier compared to Taliban-controlled areas, and local contractors did not view the Afghan Public Protection Force (APPF) favorably. They did not trust the APPF’s capability to provide security and would rather hire their own security personnel to protect their assets. The APPF is perceived to lack control, lack skills, and be corrupt. In ADB projects, community buy-in was viewed as an important way to reduce security risks. More recently, security arrangements in ADB projects have been made flexible to accommodate community approaches. 93. Difficulty in recruiting qualified contractors significantly impacts efficiency. This constraint is most visible in the transport sector, where delays, cost overruns, project extensions, cancellations, and security issues are most prominent. The lengthy procurement process and limited capacities of executing and implementing agencies also came up as important factors in discussions with portfolio managers. Government staff needs training in contract management. This will lead to a greater awareness of


the rights, obligations, and dispute settlement options available to clients and contractors and will thus mitigate the underlying causes of payment delays. 94. Weak government capacity is also responsible for implementation inefficiencies. The government was not fully capable of managing international construction companies and consulting firms that were inefficient in providing the required services, producing low quality assets, or recruiting poor quality experts. The government should be able to sign suitable agreements with international companies so they can contribute to raising capacity of the relevant government department and local companies. 95. The lack of full ownership also affects implementation efficiency. Some ministries at times refer to projects under their purview as “ADB projects.” Discussions during the validation mission revealed that there is some confusion on the part of the government regarding its roles. Although it was clear to the ministries at the project design stage that they are responsible for implementing specific capacity-development interventions, they often failed to do so. There is a need to ensure that line ministries understand that they ‘own’ the project and that the assigned project management office (PMO) works for the respective ministry. An added complication, however, is that the PMO, in its endeavor to remedy messy contracts, is at times working against the vested interest of high-level ministry staff. 96. Overall, the design-build contracts used in the transport sector have not worked well in Afghanistan. Rather than shortening implementation periods and realizing the envisaged savings, the use of such contracts caused delays and cost overruns. This is because the way in which ADB uses the design-build modality differs significantly from its original concept. The design-build contract used by ADB is covered by the International Federation of Consulting Engineers (FIDIC) Pink Book and is a hybrid between (i) the contract for construction and engineering works designed by the employer and (ii) the contract for such works designed by the contractor. The genuine design-build contract (governed by the FIDIC Yellow Book) is essentially a lump sum contract, in which the contractor carries out engineering and assumes the engineering risk precluding, to a large extent, contract variations. In contrast, the ADB hybrid contract is based on unit costs estimated by the employer and on quantities measured by the contractor.28 97. In short, the design-build contract practiced by ADB in the transport sector in Afghanistan is a measurement contract based on financial unit rates, with measurements to be carried out by the contractor as construction proceeds. Under this approach, contractors compete and bid on the basis of unit costs estimated by the employer. The quantities bid for are only preliminary quantities based on preliminary designs of feasibility studies, which have been weak in Afghanistan. The fluctuation of quantities during implementation is principally anticipated and does not require a contract variation, but creates opportunities for irregularities. Under this contract, the contractor—by controlling the quantities—de facto determines the contract value and thus the cost of a project. Poor cost and quantity estimates by the employer have frequently resulted in disputes and have added confusion to contract execution. Though this is not unique to Afghanistan, the situation is aggravated by the limited engineering skills of MPW, which affects initial cost and quantity estimates, and restricts MPW’s ability to assess the accuracy of quantities submitted by the contractor.

28 FIDIC is the French acronym for the International Federation of Consulting Engineers.


98. Overall, the validation agrees with the CPSFR’s less than efficient assessment for ADB’s operations in Afghanistan during the evaluation period.

D. Sustainability 99. The CPSFR assessed sustainability on the likelihood of and risks to maintaining results over the long term. The assessment considered one or more of the following four subcriteria: (i) commitment and capacity of the government and other stakeholders to provide sufficient recurrent cost financing of key projects after completion, (ii) cost recovery or income-generating capacity of key projects after completion, (iii) O&M practices and capacity for project facilities in any key sectors, and (iv) government ownership of policy reforms. 100. Transport. The CPSFR noted that sustainability of transport sector outcomes is doubtful, primarily because of inadequate institutional and financial capacity. A shortage of O&M funding is noted for road maintenance. Even for the railway project, financial sustainability is in doubt since future freight demand is contingent on the further development of the railway network and the improvement in the country’s security situation.29 101. The government, through the newly created Afghanistan Railway Authority extended a 5-year operating concession, which grants exclusive rights to run commercial railway services. However, the government protects the concessionaire against the end-user risk posed by falling traffic and rising O&M cost. The O&M cost is financed from freight revenues with any potential deficit to be paid by the government. Even before the plunge in traffic since 2013, revenues did not cover all operating costs, and the government had to subsidize the railway’s operation. There is uncertainty about whether railway development will pass the threshold to attain economies of scale, cost-efficient operations with minimal dependence on government subsidies. Institutional arrangements such as build-operate-transfer concessions will be critical for efficient railway management and operation. 102. The arrival at Hairatan of the first freight train from the People’s Republic of China in September 2016 was a positive development, as it adds much-needed traffic to the underutilized facilities. Nonetheless, even an increase in service frequency would only insignificantly change the Afghanistan railway’s performance.30 The traffic is largely one-directional, relying on imports from Uzbekistan, which consist of bulk goods, such as fuel and construction materials. 103. For road transport sustainability, there is uncertainty in the formulation of laws and an authority to collect road user fees for maintenance. Revenue generated from fuel tax plus the funds allocated from the national budget for road maintenance amounts to a little more than 50% of the government’s O&M requirements. The USAID is supporting the government in the preparation of a regulatory framework for the Road Authority and helping it manage revenue collection and O&M spending. The government has been unable to set and enforce norms for road use and maintenance.

29 IED. 2015. Validation Report: Afghanistan: Hairatan to Mazar-e-Sharif Railway Project. Manila: ADB. 30 Even if the frequency of the People’s Republic of China–Afghanistan service is increased to weekly trains

carrying 84 containers per train, only about 0.13 million tons per year would be added to the current output of about 2.4 million tons.


Roads tend to get damaged because of high tonnage and truck overloading, and the lack of quality control for construction materials and works.31 104. Overall, maintenance expenditure continues to depend on donor assistance, which is clearly not a sustainable option. The validation, thus, agrees with CPSFR’s view that transport sector projects are less than likely sustainable. 105. Energy. The CPSFR viewed the energy sector likely sustainable. This was based mainly on the institutional strength of the electricity authority, DABS, which has financial autonomy and is able to impose tariffs to recover costs. The validation notes that DABS operates with independence, and has a high collection rate, which is not likely to change in the medium term. So far, there has not been much opposition to tariff increases. Ongoing projects have made progress in reducing system losses. However, load shedding persists because of system power shortages. 106. DABS continues to depend on substantial donor support and is also considered a high financial management risk.32 It faces exchange rate risk since it pays for electricity imports in US dollars but collects tariffs in Afghanis. However, tariffs are increased to match any exchange rate depreciation. Protection of DABS’ assets from security threats appears to be manageable since there has been just one attack on power infrastructure so far. In general, capacity remains an important issue in the sector. Techincal assistance for capacity development is effective only in the short term since retaining trained staff has been difficult. Another important issue is the heavy reliance on cross-border import of electricity (almost 80% of the total supply comes from Central Asia). However, supply risk is managed through diversification of import sources. Thus the validation is also of the view that energy sector operations are likely sustainable. 107. Agriculture and natural resources. The CPSFR assessed ANR sector operations likely sustainable. This was based on the assessment that the community-based nature of small irrigation projects ensured strong ownership, and that community and farmer groups had the capacity to undertake O&M activities on the rehabilitated irrigation infrastructure. The CPSFR also cited the establishment of river basin agencies and the drafting of the river basin master plan as signs of institutional strengthening in the western basins water resources management project. This project achieved much progress in training WUA officers and establishing WUAs. The WUAs were efficient and participatory.33 However, in an earlier completed project (Balkh River Basin Water Resources Management), sustainability was an issue since the pilot program for WUA development could not be completed and government agencies were too weak to enforce water allocation rules. 108. The validation agrees with CPSFR’s view that agriculture sector operations are likely sustainable. Three out of five completed projects with PCRs were rated likely sustainable, and, in the rural business support program, financial and organizational management capacity was developed for producer cooperatives indicating institutional and financial sustainability. In the agriculture support program, organizational

31 ADB approved in the third quarter of 2016 a dedicated O&M project for the transport sector that includes

an asset management inventory and planning methodology. 32 The program completion report (PCR) for the regional power transmission interconnection project

indicated that DABS remains institutionally weak and requires extensive external support in all aspects of the power business.

33 ADB. 2015. Country Partnership Strategy Final Review: Afghanistan, 2009 to mid-2015. Manila.


strengthening of ministries and institutions was noted, and the private sector was trained in business planning and management. The institutional strengthening occurring in ongoing projects, such as through establishing river basin agencies and irrigation associations, will also contribute to sustainability. Indications of sustainability are seen in community-oriented interventions in which the CDCs are able to undertake O&M. Irrigation system maintenance relies on community-based labor contributions and agreed in-kind payments for the mirab.34 109. Given that the multisector, finance, and PSM projects had partial achievement of outcomes and inefficiencies in implementation, the validation views the outcomes less than likely sustainable, as in the CPSFR. 110. Overall, weak human, institutional, and financial capacity adversely affected project sustainability. O&M costs are in general severely underfunded, with total civilian recurrent spending for O&M declining from 2.0% of GDP in 2009 to 1.4% in 2014. Taken together, the validation concurs with the CPSFR’s less than likely sustainable outlook for the outcomes of ADB operations.

E. Development Impact 111. Development impact is assessed against three main subcriteria: (i) ADB’s contribution to the country’s development results; (ii) unintended outcomes and impacts, including unintended safeguard impacts from ADB’s support, and unplanned institutional impacts, whether positive or negative; and (iii) sector-level impacts. The country development goals as articulated in the ANDS were to (i) increase economic growth, (ii) reduce poverty, and (iii) improve human development and achieve the Millennium Development Goals. 112. The CPSFR assessed overall contribution to development impact less than satisfactory based primarily on the inconclusive nature of the program’s contributions to development results, especially to the objectives of accelerating economic growth and reducing poverty, and on the mixed results in the crosscutting thematic areas. The validation agrees with this assessment. Although at the sector level completed projects produced some development outcomes, challenges with sustainability affect the potential for lasting impact. Moreover, the ongoing projects are all affected by delays without much progress on outcomes (paras. 118–122). Contribution to development outcomes through energy and transport interventions was viewed satisfactory. Development impact through cross-sector thematic interventions was, however, viewed less than satisfactory. Implementing crosscutting themes such as inclusive growth, and governance and capacity development provided limited contribution to the CPS objectives of economic growth and poverty reduction (paras. 124–133). The regional cooperation theme was, however, an exception, as cross-border connectivity infrastructure in the transport and energy sectors produced positive outcomes. 113. Impact on poverty and social objectives. ADB support for development of infrastructure such as roads and electricity is expected to have development outcomes such as better access to markets, education, and health facilities. However, social goals were not always explicitly incorporated in project designs. Given the insecure

34 Mirab refers to the traditional system in Afghanistan for managing irrigation water. Each village has at

least one mirab or water master who has the authority for the allocation of irrigation water to different fields and settles disputes over water rights and is also responsible for the operations and maintenance of the irrigation system.


implementation environment, inclusion of such goals was not viewed as an attractive option as it might add complexity to implementation. 114. The final review noted that the annual average economic growth rate of 8.2% observed during much of the CPS period (2008–2014), was not very different from the 8% observed during 2003–2008. The high growth did not result in much change in poverty incidence at the national level. The poverty headcount remained about 36% in the survey years 2007–2008 and 2011–2012. The rural poverty headcount stayed about 38%, while in urban Afghanistan it remained about 29%.35 Based on this data, ADB’s contribution to inclusive economic growth was limited. The lack of progress in poverty reduction despite economic growth can be attributed to rising inequality. Of Afghanistan’s total expenditure, 40% is made by the richest 20% of the population. Contributing factors to inequality are the disparities in asset ownership and access to services, and opportunities between the poor and non-poor, as well as the differences between rural and urban areas and between geographical regions. 115. The distribution of ADB support by region does not indicate a strong correlation with poverty levels or changes in these levels (Table 3). The highest amount of ADB support during the evaluation period went to the northeast and north regions, although poverty was not the highest in 2007–2008 in these regions compared to other regions. These two regions, along with west central, were identified as safe regions with low casualties.36 The east, west central, and south regions received much less support even though their poverty levels were higher.

Table 3: Distribution of ADB Assistance Across Regions

Area

Poverty Head Count Index 2007–2008

Poverty Head Count Index 2011–2012

ADB Assistance (Total Approved during

2009–June 2015) ($ million)

West 34.4 30.1 372.75

Southwest 29.7 27.7 137.70

West Central 46.3 46.1 173.66

Central 29.0 28.0 380.27

East 45.4 43.1 148.23

Northeast 36.3 49.7 554.68

North 39.3 32.7 441.97

South 41.4 38.4 66.66

ADB = Asian Development Bank. Sources: Afghanistan: Poverty status update, World Bank, October 2015; and Independent Evaluation Department.

116. Energy projects, given their reliance on cross-border coordination with Central Asian nations, are concentrated in the north and northeast regions. About 78% of ADB’s energy portfolio is concentrated in the central, northeast, and north regions; about 62% of its ANR portfolio is concentrated in the north and northeast regions; and about 71% of the transport portfolio is in the west, north, and northeast regions.

35 World Bank. 2015. Afghanistan: Poverty Status Update: An analysis based on National Risk and

Vulnerability Assessment 2007–2008 and 2011–2012. 36 World Bank. 2016. Afghanistan: Systemic Country Diagnostic. Washington, DC.


Overall, only about 12% of total ADB investments are in the less-safe regions: east, south, and southwest. 117. Access to basic services such as education, improved sanitation, and safe drinking water improved during 2007–2008 and 2011–2012. Although ADB has no direct interventions in these areas, its transport and energy support could indirectly contribute to these indicators, as better access to roads and electricity is likely to improve access to these services. The CPSFR noted that because of road construction, there has been an increase in access to health, primary education, and other essential services. However, a beneficiary survey undertaken by the 2012 CAPE (footnote 14) had indicated that despite appreciation for the improvement of roads, many people still had little access to basic public services and one of the lowest-rated responses was access to feeder roads. Overall, it appears that cross-sectoral synergies from ADB’s operations as well as through donor-coordinated efforts did not greatly impact the development indicators. Nevertheless, some impact can be observed at the individual sector level. 118. Sector-level impacts. Sector-level impact can be based on the assessment of project-level impacts. In the transport sector, completed projects resulted in greater access to roads and, in turn, to various services and business opportunities. This is likely to have development impact in the near and medium term, though sustainability issues are likely to affect the long-term impact. The impact of the north-south corridor project, for example, was a likely increase in production and trade around the project area. This is somewhat reflected in the drop in poverty from 39.3% to 32.7% in Afghanistan’s north region noted between the two survey periods 2007–2008 and 2011–2012 . Achievements in some road projects indicate that there is easier and faster access to social services. The road infrastructure’s contribution to socioeconomic development, however, is limited by security risks (fear of attacks by insurgents along the roads) and the government’s ability to control them. Overall development impact from transport sector interventions is satisfactory. 119. In general, ensuring inclusiveness in the distribution of benefits from rehabilitated roads is an issue. In particular, rural access roads connecting to the national roads will be needed to benefit the majority of the population. Based on the division of tasks among donors, the World Bank provides support for rural access roads. While the Road Employment Project for Settlement and Integration of Returning Refugees provided health services to 161,000 people, the transport projects have not shown much impact on social development. A perceptions index survey by the CAPE team demonstrated that there is much work to be done in ensuring social benefits are derived from the physical outcomes achieved. Most ongoing projects were affected by implementation delays, which in turn affected impact. 120. For ADB support to the energy sector, development impact can be expected from the increase in the percentage of population connected to the grid. Grid-connected households increased from 20% to 26% and access to electricity from all sources from 41.7% to 69.0% during 2011–2012 (footnote 8). The import of electricity from Tajikistan has improved supply reliability and household coverage. This is likely to have a positive impact on growth, as demonstrated by empirical studies that find positive relationships between energy consumption and GDP.37 Access to electricity is

37 Lee, Chian-Chiang. 2005. Energy consumption and GDP in developing countries: A cointegrated panel

analysis. Energy Economics, Vol. 27, Issue 3, May 2005.


heavily concentrated in the cities, which are naturally a priority for the government. Rural electrification, however, is crucial for inclusive economic growth and may require the development of mini-grids and off-grid systems. ADB is providing TA to increase the government’s readiness for developing renewable energy investments and an enabling environment for private sector participation.38 For ongoing projects, the likely development impact is weak because of implementation delays in most cases, and, in some cases, a reduction in scope or outright cancellation.39 Overall, development impact from energy sector interventions was assessed satisfactory. 121. The development impact of the private sector project, Roshan Telecom, is noted to be good. Increased competition led to a drop in mobile service prices and a rapid increase in mobile subscribers. M-paisa, a money transfer and payment system, helped bring financial transaction services to a wider population; and Malomat, a text messaging system, provided commodity-related information to farmers and rural businesses. Roshan Telecom took efforts to place women in corporate-level leadership roles and is increasingly including women in its salesforce in retail operations. The call-center operation was also set up to make it easier for rural women to use telephone facilities in a ‘safe space.’ 122. In general, benefits to the poor need to be better integrated into project designs. For example, in irrigation works, a typical ADB project design focuses on improved water distribution—a requirement for agricultural production—but not so much on assisting farmers to improve productivity from the water delivered. In the ongoing community-based irrigation rehabilitation and development project and western basins water resources management project, outcomes have included increased irrigated area, water use efficiency, and crop yields, which would contribute to the development impact. Among the four completed projects for which a development impact rating was available, one (rural business support project) was rated likely satisfactory, one unsatisfactory, and two less than satisfactory. The rural business support project helped improve productivity and incomes through potato, edible oil, and wool and carpet value chains, providing livelihood opportunities for rural families. Overall, development impact through ANR sector interventions was assessed less than satisfactory. 123. Crosscutting, thematic-level impacts. Contributions made to the goals of CPS thematic areas were limited, with the exception of RCI, and are considered less than satisfactory. 124. Counter-narcotics. The CPS aimed to mainstream counter-narcotics in the project and program design and monitoring frameworks. Mainstreaming implies that each program’s design and implementation maximizes its potential impact on containing the production, trade, and consumption of illicit drugs. 125. ANR sector operations somewhat contributed to raising farmers’ incomes through projects such as the rural business support program. However, this did not have much impact on reducing poppy cultivation. Lending and nonlending operations during 2009–2015 could not mainstream counter-narcotics in the design and monitoring of programs and projects. There was no indication that projects and

38 ADB. 2014. Technical Assistance to Islamic Republic of Afghanistan to Renewable Energy Development.

Manila. 39 The power transmission and distribution project (Loan 2165, Grant 0004), for instance, experienced delays

because of the worsening security situation, escalating costs which in turn led to a reduction in scope.


programs had activities that targeted areas in which opium poppy is grown or socioeconomic groups most dependent on opium poppy as a source of livelihood. High prices and strong demand make poppy cultivation attractive. Apart from the lawlessness that encourages production, opium value chains are known to be highly efficient. If farmers are to diversify away from opium, there is a need to develop equally efficient value chains for other high-value crops. 126. Private sector development. Through this crosscutting theme, ADB hoped to increase private sector investments, improve the business-enabling environment, and increase subregional trade. 127. The CPSFR considered nonsovereign operations successful based primarily on the highly successful ratings given to both Roshan Telecom and Afghanistan International Bank. The Roshan Telecom project’s success raised the confidence of financial institutions to support private sector and improved the business climate through better-quality telecommunication services. The potential for private sector development exists in agrobusiness, gas exploration, nonbanking finance, and insurance sectors. However, no private sector operations were initiated during the CPS, 2009–2015.40 Security risks and the uncertain political environment have been deterrants for potential firms. 128. The Afghanistan International Bank, with ADB’s support, has grown to be the largest bank and has catalyzed the financial sector’s growth.41 In the private sector and financial market development program, targeted outcomes such as access to bank credit and deposit mobilization were achieved, whereas data was not available for achievements in increasing registered private enterprises. Afghanistan Investment Guarantee Facility, through the issue of political risk guarantees, could increase foreign direct investment. ADB’s support to the Afghanistan International Bank paved the way for the entry of several new banks. 129. Although no private sector projects were processed during the CPS, Afghan firms involved in ADB projects benefited by being able to develop their capacities. The private sector theme was supported through the rural finance TA program, which aimed to increase access to rural finance through expanded provision of financial institution services in rural areas. However, the deteriorating security situation made it difficult to hire suitable consultants, and the TA scope was reduced to developing regulatory structure for Islamic finance, introducing Islamic finance products, and developing institutional capacity for Islamic finance. This narrowing of scope meant the program failed to achieve the broader objective of improving financial inclusion by making use of the microfinance industry. 130. Gender. The expected contribution from this theme was to ensure that ADB operations benefited women and men equally for employment opportunities or access to public services. In general, gender mainstreaming is difficult to implement in Afghanistan. Gender outcomes were, however, most evident in the ANR sector projects,

40 ADB’s initial CPSs (2002–2004 and 2005–2008) placed significance emphasis on private sector

development, including efforts to bolster a fledgling financial sector. There were no approvals of nonsovereign operations during CPS, 2009–2015. Nevertheless, the validation team met with members of two recipients of ADB support, Roshan Telecom and the Afghanistan Investment Bank, as these initiatives were mentioned in the CPSFR.

41 Per discussion with ADB staff during the validation mission, Afghanistan now has about 10 banking institutions, although their quality with respect to international banking practices varies greatly.


and the sector appears to be best suited to work on gender and development issues. For example, in the rural business support project, women benefitted from the support for wool and carpet value chains. In the enhanced agricultural value chains for sustainable livelihoods project, 70% of participants were women. In the western basin water resources management project, female farmers were trained on horticultural crops, and poor women were trained in income-generating activities. The Roshan Telecom sector project contributed to women’s employment, as 20% of Roshan’s staff is women. Overall, tracking gender-related results is difficult, as most projects lack gender-disaggregated targets. 131. Governance and capacity development. Through this theme, ADB aimed to improve accountability and efficiency in public investment and expenditures. Governance improvements in the energy and transport sectors were the enhanced planning capacities of government agencies. Institutional strengthening and governance in the agriculture sector was achieved through the establishment of river basin authorities, and of irrigation associations and WUAs. The fiscal management and public administration reform program only partly achieved its objective of building capacity for improved public finances. As noted in the CPSFR, most PSM operations were characterized by extensions and cancellations, with partial achievement of outcomes indicating the continued need for capacity development for public financial management. Improving the government staff’s skills for implementing reforms and retaining trained staff have been a challenge. Given that assistance to Afghanistan is almost all in grants, ensuring government ownership and good governance has added importance. 132. Regional cooperation and integration. The CPS objectives under this theme were improved cross-border connectivity infrastructure, harmonized standards and regulations and improved customs cooperation, and increased subregional and transit trade. 133. Positive outcomes were achieved through cross-border infrastructure, including the railway and energy transmission lines. There are also some pending programs, such as cross-border gas pipelines. Through its engagement with the CAREC program, ADB leveraged regional cooperation for Afghanistan’s benefit, especially in the energy and transport sectors. The power transmission interconnection project helped Tajikistan earn foreign exchange through the export of electricity while increasing energy security in Afghanistan. The Hairatan to Mazar-e-Sharif railway line will complement CAREC Corridors 3 and 6, which connect Central Asia to South Asia, the Caucasus, and the Middle East. Afghanistan received 10% by number and 12% by volume of all ADB’s RCI loans and grants during 2003–2014.42 The CPSFR noted good progress in RCI through road and rail connectivity with neighboring countries and the import of electricity from Uzbekistan and Tajikistan through cross-border transmission lines, as well as progress on trade facilitation through the CAREC Customs Cooperation Committee. 134. Overall, the validation agrees with the CPSFR’s less than satisfactory rating for the development impact of ADB support.

42 IED. 2015. Thematic Evaluation Study: Asian Development Bank Support for Regional Cooperation and

Integration. Manila: ADB.


F. ADB and Borrower Performance 135. ADB performance. The CPSFR considered ADB’s performance satisfactory based on its assessment of ADB’s role in building government ownership and leadership, responsiveness to client needs, effectiveness of working with development partners, and quality of project supervision. 136. ADB aligned its program with government priorities, and coordinated well with other development partners, particularly the USAID and the World Bank, as both also focused on infrastructure. Working through CAREC, ADB ensured reliable electricity supply to Afghanistan through imports from Tajikistan, Turkmenistan, and Uzbekistan. 137. ADB promoted government ownership with its fully on-budget support, and it gave adequate attention to capacity development in the CPS. However, the capacity of line ministries has been highly inadequate, impacting the sustainability of projects. While individual staff, especially those trained overseas, provided some technical and procurement skills, building wider institutional capacity is needed. 138. The government and other development partners, overall, had great appreciation for ADB’s role in Afghanistan as one of the largest donors.43 However, process issues were observed such as delays in contract approvals, consultant recruitment, and contract variation, resulting in start-up delays. Monitoring and evaluation was inadequate, partly because of the prevailing security situation and partly due to under-staffing of the AFRM for portfolio management. It was perhaps also impacted by the nature of employing contract-based local staff. The CAPE had also noted that the limited size and skills mix of the AFRM staff fell short of the demands of ADB’s portfolio in the country. ADB did not compensate for the shortage of international staff in the resident mission by more frequent missions from headquarters. Security hazards not only made it difficult to recruit staff for the AFRM but also restricted staff travel to Afghanistan and the length of time staff members spent there. However, supervision intensity measured in terms of staff days per project was much higher for Afghanistan (27) compared to the average for all FCAS countries (18.3) and the average for all ADF countries (20.3) in 2011–2014. Since mid-2015, ADB has been able to increase its national and international staff in AFRM. 139. ADB’s performance, in some cases, was affected by designs that were too ambitious in scale and time, given the country’s conflict situation. The delays, security risks, and recruitment issues that took place were sometimes not adequately analyzed or accounted for. 140. In the transport sector, ADB used design-build contracts to meet the corporate goal of reducing processing time between project inception and first disbursement. However, this had adverse consequences for outcome achievements. The overly generous advance payment (about 25% of the contract amount) made on a civil works contract for the Qaisar-Laman Ring Road Project was not in line with international best practices and likely resulted in many other problems, which still await resolution.

43 Discussions with donors (World Bank, USAID, and KfW) revealed that there was excellent cooperation

between them and ADB, both at the senior management and the portfolio manager level. The overwhelming majority of government staff (mostly at the deputy minister level), including from the Ministry of Finance, similarly acknowledged good cooperation with ADB.


141. Overall, however, the validation considers ADB’s performance satisfactory. 142. Borrower performance. The CPSFR assessed borrower performance less than satisfactory because of ongoing concerns of certain ministries’ governance, weak capacity, and lack of strong ownership, and the government’s occasional failure to comply with project covenants and counterpart financing requirements. However, the CPSFR also noted some improvements in government capacity in financial and project management, and in coordinating with donors. 143. The validation considers borrower performance satisfactory. The government provided broad strategic direction and mobilized support from several development partners. It established an effective mechanism for donors to meet, define sector needs and priorities, and make joint decisions. The Ministry of Finance played its donor coordination role well. However, weak institutional capacity, particularly in having to manage a large portfolio, appears to have affected government performance. Although individual staff, especially those trained overseas, could provide technical and procurement skills, more specialists are needed in the government to deal with contract and resettlement issues and resolve design problems. There have been frequent changes in leadership in ministry departments, and the government’s decision-making process was noted to be slow for contract awards, disbursements, and contract variations. There is a need for streamlining bureaucratic processes to avoid corruption and to resolve inefficiencies and bottlenecks.

G. Overall Assessment 144. The CPSFR rated the overall performance of ADB operations from 2009 to mid-2015 successful on the borderline (with a score of 1.64). The validation, using equal weights for the sector and crosscutting objectives as stated in the guidelines, assessed the overall performance less than successful on the borderline with a score of 1.53 (Table A.10).44 The sector-level impacts as well as the cross-sector impacts- such as inclusive growth, RCI, and governance and capacity development- are equally important in meeting CPS objectives of growth and poverty reduction, which justifies the use of equal weights. Paras. 65 and 124–133 discuss using crosscutting objectives for the relevance and development impact assessments. 145. The CPS provided a concise assessment of development challenges facing the country and a good explanation of sector backgrounds. The CPS was relevant to the Afghanistan country context, although the results framework lacked baselines and appropriate outcome indicators. ADB worked well with development partners (particularly the World Bank and USAID), and with certain line ministries. Despite the difficult situation, outcomes were somewhat achieved in completed projects in all three sectors. However, ongoing projects were severely affected by implementation delays and lacked progress in achieving outcomes. Overall impact on development results was weak. There was little evidence on contributions to inclusive growth, and very little on outcomes under thematic focus areas, with the exception of regional cooperation. A summary of assessment with ratings on individual criteria is given in Table 4.

44 Para. 57 of the 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and

Country Partnership Strategy Final Review Validations.


Table 4: Ratings Comparison between Country Partnership Strategy Final Review and Independent Evaluation Department Validation Report

Evaluation Criteria CPSFR

Ratings Validation

Ratings Reasons for Rating

Deviations Relevance Relevant Relevant Effectiveness Effective Effective Efficiency Less than efficient Less than efficient Sustainability Less than likely

sustainable Less than likely sustainable

Development impacts Less than satisfactory


Overall rating Successful on the borderline

Less than successful on the borderline

The CPSFR rated the transport sector highly relevant, whereas this validation rated it relevant. Though the choice of weights does not affect the validation’s overall rating, it used equal weights for sector and crosscutting objectives to aggregate the scores on relevance and development impact criteria, whereas the CPSFR used 90% for sector and 10% for crosscutting objectives.

ADB performance Satisfactory Satisfactory Borrower performance Less than

satisfactory Satisfactory Although there have been

issues with governance and weak capacity, there are improvements in financial management, and the government was effective in donor coordination.

CPSFR Quality Highly satisfactory ADB = Asian Development Bank, CPSFR = country partnership strategy final review.

Source: Independent Evaluation Department, CPSFR Validation Team.

H. Assessment of Quality of Self-Evaluation

146. Overall, the validation found the quality of CPSFR highly satisfactory. The CPSFR is candid, coherent, and concise, and is based on facts drawn from various evaluation documents and stakeholder discussions. It meticulously documented both at the sector and thematic level the comparison of expected results with actual achievements for completed projects, and the progress made in ongoing projects. It also clearly identified the shortcomings in implementation efficiency.

147. The CPSFR’s evaluation was, in general, evidence-based and followed Independent Evaluation Department guidelines in applying evaluation criteria, with the exception that, to arrive at the overall rating, it did not use the weights prescribed in the guidelines (footnote 2). The CPSFR was candid about the shortcomings in the results framework. Its lessons and recommendations were well linked with the report findings.

CHAPTER 4

Issues and Recommendations 148. This validation supports the CPSFR’s recommendations that the next CPS place greater focus on inclusive economic growth, pay more attention to crosscutting themes, continue with the sector focus (transport, energy, and ANR), develop an enabling environment for the private sector, strengthen risk assessment and risk management approaches in ADB projects, and enhance results orientation and measurement. In addition, the validation highlights some issues and, based on these, makes some recommendations for the next CPS.

A. Deteriorating Security Situation 149. Afghanistan remains in conflict after the withdrawal of troops in 2014. There is a resurgence of the insurgency, with 60% of the country infiltrated by insurgents. Prospects for peace and stability in the near future look bleak. This has grave implications for the cost of projects and for procuring quality contractors and consultants. As such, the validation agrees with the lessons identified by the CPSFR, namely, that risk assessment and management needs to be central to project design to avoid implementation delays; and that better quality at entry, increased supervision, and realistic timeframes can improve implementation efficiency. 150. ADB operations encountered difficulties in ensuring adequate security because of the government’s insistence that all projects be protected by the APPF. The APPF did not render the required services even though it was well paid. Problems included the lack of adequate personnel, delays in payments to security personnel, and the contractors and consultants’ lack of control over the APPF. Of late, however, there has been greater flexibility in security arrangements, as ADB insisted that the APPF be phased out. 151. Security issues not only affected project efficiency through implementation delays but also monitoring of progress. Gathering data and first-hand knowledge on projects was made difficult by security constraints. Projects were affected by difficulties in recruiting consultants, and monitoring results and progress; and by the inability of visiting international missions, consultants, or local portfolio managers to assess project progress and undertake field visits. This compromised the final project reports’ verification and conclusions on issues of effectiveness and development impacts. Although project designs mostly account for cost implications of security arrangements, it is also important to make project-specific risk assessments and tailor appropriate measures (para. 61). ADB has recently begun developing peacebuilding

Issues and Recommendations 35

tools for use by project management units to bring conflict sensitivity into ADB-financed projects.45 152. Recommendation: Adequate provisions should be made for developing and implementing project security measures appropriate to the location and site conditions. Greater use of national contractors combined with mandatory engagement of security providers has proven to be an effective approach in addressing security risks. In this regard, ADB can undertake an assessment of national contractors to help identify a set of contractors that can be used in ADB projects. Security providers should be made accountable to the contractors through a contract defining each party’s obligations. Bid documents should outline the security arrangements, where there are serious security problems. Community involvement and project ownership can also help resolve security issues during implementation. This was demonstrated by the ANR sector projects, where a high level of community involvement assured the security of project infrastructure. Communication links with community members can also provide early warning of any security issues. The validation supports the CPSFR’s recommendation that risk assessment and management approaches be strengthened, and in particular that conflict sensitivity be ensured throughout the project cycle.

B. Weak Government Capacity 153. Government capacity is low, and sustaining capacity improvement is a challenge in a conflict-ridden state such as Afghanistan. Frequent changes of leadership in ministries make it difficult to build capacity in the executing agencies, and retaining qualified staff has also been a challenge as trained people tend to leave for better-paid opportunities. Capacity development and its sustainability are major issues to consider in project design and TA, as low government capacity continues to affect project performance. One common refrain by the government has been the lack of adequate capacity development, with training exercises taking place in an ad hoc manner rather than being built into the project designs. The TA support for capacity development has proven to be a short-term measure and inadequate in building capacity. ADB’s advisory support to the Ministry of Finance in economic and public financial management helped in the ministry’s decision making. Continuation of such support with a longer-term capacity-building element can help build the ministry’s broader capacity. The slow progress in developing institutional capacity for O&M and the difficulties in retaining trained staff are important factors affecting sustainability of sector results (paras. 101, 103, and 106). 154. The weak government capacity that affected implementation efficiency is also because of a lack of good governance. Further impediments included the insufficient transparency and integrity in contract procurement. Patronage and clientelism affected accountability, as managerial positions were not always based on merit. Afghanistan scored the lowest in governance ratings in the country performance assessment ratings of 2014 and 2015 (2.7 in a rating scale of 1 to 6) and scored 2.0 in the indicator that measures public sector transparency, accountability, and corruption.46 The lack of transparency and accountability and the lengthy procurement processes are reasons why some donors preferred off-budget financing. The lack of good governance affects projects’ sustainability if user charges and other revenues collected are not used on

45 ADB. 2015. Technical Assistance to the Islamic Republic of Afghanistan: Building Resilience to Fragility in

ADB-Supported Projects. Manila. 46 ADB. 2016. Annual Report on the 2015 Country Performance Assessment Exercise. February. Manila; ADB.

2015. Annual Report on the 2014 Country Performance Assessment Exercise. March. Manila.


O&M. A recent survey by The Asia Foundation revealed that the proportion of Afghans who say the national government is doing a good job fell sharply, from 75.3% in 2014 to 57.8% in 2015, and satisfaction with provincial government decreased from a high of 80.4% in 2012 to 57.1% in 2015.47 155. As referred to by some contractors, the MPW’s weak project design and management capacity typically manifests itself in poor specifications, unrealistic quantities and cost estimates, and poor quality bid documents and bid evaluation reports, as well as implementation delays. Poor engineering designs prevent contractors from the timely commencement of works, and frequently result in the need for a joint survey by the employer and contractor to take corrective action. This delays beginning the work by 2 to 3 months. Other difficulties relate to getting timely access to the site, land acquisition, resettlement of project-affected persons, and relocation of utilities. 156. Recommendation: Capacity development support to executing agencies and implementing agencies should be enhanced for greater implementation efficiency. ADB should pursue deeper and longer-term engagement in enhancing and developing human and institutional capacity. Through sustained capacity development efforts, it should help increase the number of technical and qualified staff within line ministries to improve project implementation. Consultants recruited to build capacity must be situated in the ministries and have a long-term goal to enhance capacity and ensure results. Project implementation consultants need to work with the PMO staff to build their capacity. The World Bank, for example, includes a capacity-building component in each of its projects, and consultants work alongside ministry staff, helping build government capacity. Government staff needs training in contract management focusing on the FIDIC conditions of contract. This will lead to greater awareness of the rights, obligations, and dispute settlement options available to clients and contractors, and will thus mitigate the underlying causes of payment delays.

C. Addressing Development Impact 157. Given Afghanistan’s bleak economic outlook, achieving development goals will be highly dependent on foreign aid. Prospects are dim for sustainable private sector growth and increased foreign direct investment because of the prevailing security, political, and regulatory environment. Donor assistance, however, is far from guaranteed, particularly if the poor governance culture continues, and may gradually decrease, as donors reduce their presence in the country. The 2014 withdrawal of troops has already had negative economic and security implications, and has impacted local employment. Under these circumstances, cooperation among development partners is even more critical and requires serious discussion in designing the next CPS. It will also be important to ensure complementarity in activities, pooling of resources (e.g., the AITF), and more efficient implementation. 158. Due to the post-conflict premium, Afghanistan received a much higher ADF allocation than what it would receive as determined by the performance-based allocation (para. 28). The post-conflict assistance was supposed to be gradually phased out between 2017 and 2020. However, recognizing the importance of ADB’s presence in Afghanistan, donors agreed to suspend the phase-out of Afghanistan’s post-conflict

47 The Asia Foundation. 2015. Afghanistan in 2015: A Survey of the Afghan People.

http://asiafoundation.org/resources/pdfs/Afghanistanin2015.pdf

Issues and Recommendations 37

assistance for the ADF XII period (2017–2020). For ADB, it is important to ensure government commitment and ownership, and a sound institutional framework for public financial management, given that all financing is in the form of grants. 159. The development community needs to remain committed to Afghanistan, stay the course of pursuing good governance, and identify areas of cooperation to have a measurable impact on human development and inclusive growth. 160. Recommendation: Support for agriculture and natural resources sector should be increased to achieve inclusive and sustainable economic growth. The next CPS, while continuing its focus on the three sectors (transport, energy, and ANR), should increase its support for ANR considering its potential in contributing to inclusive growth and gender equality. However, the interventions should go beyond providing irrigation infrastructure to improve productivity through value chain development and better market access. Since Afghanistan’s trade with Central Asia is skewed towards imports, boosting the country’s prospects for exports is important. Revitalizing growth in horticulture and livestock sectors can help in this process. The importance of ANR sector for development impact is clear from the fact that agriculture accounts for about 21% of GDP and 40% of the country’s labor force. ADB could work in coordination with other donors such as the World Bank that have been active in rural development (rural roads) and the development of horticulture and livestock sectors and rural enterprises. In this regard, the validation supports the CPSFR’s recommendation that greater efforts be made to develop cross-sectoral synergies with other development partners for improved development impact. While within-sector coordination seems to be effective, guided by sector road maps and investment plans, increased efforts are required for across-sector coordination among development partners.

Appendixes

APPENDIX 1: ADB COUNTRY PORTFOLIO FOR ISLAMIC REPUBLIC OF AFGHANISTAN, 2009–JUNE 2015

Table 1.1: Program Funding Allocation by Sector

(Approved Projects during 2009–June 2015)

Sector

Loans Grants TA Total

(Number) ($ million) (Number) ($ million) (Number) ($ million) ($ million) ANR 0 0.00 7 275.00 1 1.50 276.50 Energy 0 0.00 9 634.00 7 7.65 641.65 Finance 0 0.00 0 0.00 1 1.50 1.50 Health 0 0.00 0 0.00 0 0.00 0.00 Industry and Trade

0 0.00 0 0.00 0 0.00 0.00

Multisector 0 0.00 0 0.00 1 1.95 1.95 PSM 0 0.00 0 0.00 2 1.20 1.20 Transport 0 0.00 10 1,343.00 3 3.13 1,346.13 Water and Other 0 0.00 0 0 0.00 0.00 All Sectors 0 0.00 26 2,252.06 15 16.93 2,268.93

ANR = agriculture and natural resources, PSM = public sector management, TA = technical assistance. Sources: Reports and recommendations of the President; Asian Development Bank Listing of Loan, TA, Grant, and Equity Approvals database.

Table 1.2: Program Funding Allocation by Sector

(Completed or Ongoing Projects during 2009–June 2015)

Sector Loans Grants TA Total

(Number) ($ million) (Number) ($ million) (Number) ($ million) ($ million) ANR 2 115.50 14 368.70 4 4.90 489.10 Energy 2 61.50 12 833.50 10 11.01 906.01 Finance 1 5.00 2 60.00 1 1.50 66.50 Health 0 0.00 1 3.00 0 0.00 3.00 Industry and Trade 0 0.00 0 0.00 2 1.60 1.60 Multisector 2 323.50 0 0.00 2 2.40 325.90 PSM 1 48.00 1 7.00 5 10.14 65.14 Transport 3 188.20 18 1,756.80 5 6.83 1,951.83 Water and Other 0 0.00 0 0.00 0 0.00 0.00 All Sectors 11 741.70 48 3,029.00 29 38.38 3,809.08

ANR = agriculture and natural resources, PSM = public sector management, TA = technical assistance. Sources: Reports and recommendations of the President; Asian Development Bank Listing of Loan, TA, Grant, and Equity Approvals database.

40 Appendix 1

Figure 1.1: Grants and Technical Asssistance Projects Approved during 2009–June 2015

ANR = agriculture and natural resources, PSM = public sector management. Source: Asian Development Bank.

Figure 1.2: Technical Asssistance Projects Approved during 2009–June 2015


ANR 12.19%

Energy 28.28%

Finance 0.07%

Health 0.00%

Industry and Trade 0.00% Multisector

0.08%

PSM 0.05%

Transport 59.33%

Water and Other 0.00%

ANR 9%

Energy 45%

Finance 9%

Health 0%

Industry and Trade 0%

Multisector 12%

PSM 7%

Transport 18%

Water and Other 0%

ADB Country Portfolio for Islamic Republic of Afghanistan, 2009—June 2015 41

Figure 1.3: Grants, Loans, and Technical Assistance Projects Completed and Ongoing during 2009–June 2015


Figure 1.4: Technical Assistance Projects Ongoing and Completed during 2009–June 2015


ANR 13%

Energy 24%

Finance 2%

Health 0%


Multisector 8%

PSM 2%

Transport 51%

Water and Other 0%

ANR 13%

Energy 29%

Finance 4%

Health 0%


Multisector 6%

PSM 26%

Transport 18%

Water and Other 0%

42

Appendix 1

Table 1.3: ADB Loans Completed or Active during 2009–June 2015

Loan No. Project Name

Date Approved

Financial

Completion Date

ADB Funding Cofinancing Total

Financing ($ million)

Government Counterpart ($ million)

Total Project Cost

($ million) Fund Type

Amount ($ million)

Other Source

Amount ($ million)

Agriculture and Natural Resources 2083 Agriculture Sector Program 4 May 04 16 Apr 14 ADF 55.0 0.0 55.0 0.0 55.0 2227 Western Basins Water Resources

Management 20 Dec 05 31 Dec 15 ADF 60.5 Project

Participants 7.8 68.3 4.8 73.1

Energy 2165 Power Transmission and

Distribution Project 14 Apr 05 31 Dec 15 ADF 26.5 0.0 26.5 0.0 26.5

2304 Regional Power Transmission Interconnection Project

19 Dec 06 5 Mar 14 ADF 35.0 ARTF 16.5 51.5 4.0 55.5

Finance 2091 Afghanistan Investment Guarantee

Facility Project (Component 1) 24 Sep 04 28 Sep 10 ADF 5.0 IDA 5.0 10.0 0.0 10.0

Multisector 1954 Postconflict Multisector Program 4 Dec 02 1 Oct 12 ADF 173.5 0.0 173.5 8.2 181.7 1997 Emergency Infrastructure

Rehabilitation and Reconstruction Project

3 Jun 03 1 Jul 13 ADF 150.0 JFPR 20.0 170.0 0.0 170.0

Public Sector Management 2215 Fiscal Management and Public

Administration Reform Program 14 Dec 05 31 Dec 15 ADF 48.0 0.0 48.0 0.0 48.0

Transport 2140 Andkhoy-Qaisar Road Project 15 Dec 04 30 Jun 14 ADF 80.0 0.0 80.0 0.0 80.0 2257 North-South Corridor Project 26 Sep 06 30 Jun 17 ADF 78.2 0.0 78.2 2.7 80.9 2105 Regional Airports Rehabilitation

Project Phase I 23 Nov 04 18 Dec 14 ADF 30.0 UN Office of

Project Services

2.0 32.0 0.1 32.1

ADB = Asian Development Bank, ADF = Asian Development Fund, ARTF = Afghanistan Reconstruction Trust Fund, IDA = International Development Association, JFPR = Japan Fund for Poverty Reduction, UN = United Nations. Note: Numbers may not sum precisely because of rounding. Sources: Reports and recommendations of the President; ADB Listing of Loan, Technical Assistance, Grant, and Equity Approvals database.

AD

B C

ountry Portfolio for Islam

ic Republic of A

fghanistan, 2009—June 2015 4

3

Table 1.4: ADB Grants Completed or Active during 2009–June 2015

Grant No. Project Name

Date Approved

Financial Completion

Date

ADB Funding Cofinancing Total Financing

($ million)


Total Project Cost


Amount ($ million)

Other Source

Amount ($ million)

Agriculture and Natural Resources 9038 Integrated Community

Development in Northern Afghanistan

26 Dec 03 5 Mar 13 0.0 JFPR 3.0 3.0 0.0 3.0

9039 Rural Recovery Through Community-Based Irrigation Rehabilitation

26 Dec 03 12 Apr 12 0.0 JFPR 5.0 5.0 0.0 5.0

9060 Balkh River Basin Water Resources Management

15 Dec 04 10 Jul 12 0.0 JFPR 10.0 10.0 0.0 10.0

0033 Western Basins Water Resources Management

20 Dec 05 ADF 14.5 0.0 14.5 0.0 14.5


25 Aug 06 0.0 Canada 13.2 13.2 0.0 13.2

9100 Rural Business Support 12 Dec 06 30 Aug 13 0.0 JFPR 18.0 18.0 0.0 18.0 0126 Agriculture Market

Infrastructure Project 21 Nov 08 ADF 30.0 0.0 30.0 1.0 31.0

0167 MFF: Water Resources Development Investment Program—Tranche 1

6 Oct 09 ADF 86.6 0.0 86.6 0.0 86.6


6 Oct 09 0.0 UK and Northern Ireland

3.3 3.3 0.0 3.3

9165 Community-Based Irrigation Rehabilitation and Development

6 Jul 12 0.0 JFPR 10.0 10.0 0.0 10.0

9167 Enhanced Agricultural Value Chains for Sustainable Livelihoods

19 Sep 12 0.0 JFPR 18.5 18.5 0.0 18.5


8 Oct 13 ADF 100.0 0.0 100.0 0.0 100.0

0411 Northern Flood-Damaged Infrastructure Emergency Rehabilitation

16 Oct 14 ADF 40.0 0.0 40.0 0.0 40.0

0412 Northern Flood-Damaged Infrastructure Emergency Rehabilitation

16 Oct 14 AITF 16.6 16.6 0.0 16.6

44 A

ppendix 1


Date Approved


Date


($ million)


Total Project Cost


Amount ($ million)

Other Source

Amount ($ million)

Energy 0004 Power Transmission and

Distribution 14 Apr 05 31 Jul 14 ADF 23.5 0.0 23.5 0.0 23.5

9128 Development of Mini Hydropower Plants in Badakshan and Bamyan Provinces

28 Nov 08 30 Oct 14 0.0 JFPR 12.0 12.0 0.0 12.0

0134 MFF: Energy Sector Development Investment Program—Tranche 1

2 Dec 08 ADF 164.0 0.0 164.0 0.0 164.0


3 Dec 09 ADF 81.5 0.0 81.5 0.0 81.5

0230 Regional Power Transmission Interconnection

18 Nov 10 29 Oct 13 ADF 12.0 0.0 12.0 0.0 12.0

0280 MFF: Energy Sector Development Investment Program—Tranche 3 (ADF)

22 Dec 11 ADF 43.0 0.0 43.0 0.0 43.0

0281 MFF: Energy Sector Development Investment Program—Tranche 3 (UK-DFID)

0.0 UK-DFID 20.0 20.0 0.0 20.0

0282 MFF: Energy Sector Development Investment Program—Tranche 3 (Denmark)

0.0 Denmark 12.4 12.4 0.0 12.4


18 Dec 12 ADF 200.0 0.0 200.0 0.0 200.0

0374 North-South Power Transmission Enhancement Project

25 Nov 13 ADF 99.0 0.0 99.0 4.0 103.0

0375 North-South Power Transmission Enhancement Project

0.0 AITF 117.0 117.0 0.0 117.0


4 Dec 13 ADF 49.1 0.0 49.1 3.9 53.0

Finance 0067 Private Sector and Financial

Market Development 14 Dec 06 13 Apr 09 ADF 56.0 0.0 56.0 0.0 56.0

AD

B C


ic Republic of A


5


Date Approved


Date


($ million)


Total Project Cost


Amount ($ million)

Other Source

Amount ($ million)

Program—Program Grant 0068 Supporting Private Sector and

Financial Market Reforms Capacity Building Grant

14 Dec 06 28 Jan 11 ADF 4.0 0.0 4.0 0.0 4.0

Health 9030 Primary Health Care

Partnership for the Poor 19 Dec 02 20 Nov 11 0.0 JFPR 3.0 3.0 0.0 3.0

Public Sector Management 0030 Fiscal Management and Public

Administration Reform 14 Dec 05 31 Dec 10 ADF 7.0 0.0 7.0 0.3 7.3

Transport 9037 Emergency Road Rehabilitation 19 Dec 03 29 Apr 11 0.0 JFPR 20.0 20.0 0.0 20.0 0012 Qaisar-Bala Murghab Road 12 Jul 05 ADF 55.0 0.0 55.0 0.0 55.0 9097 North-South Corridor 26 Sep 06 25 Jun 10 0.0 JFPR 20.0 20.0 0.0 20.0 0054 North-South Corridor Project 19 Aug 13 ADF 40.0 0.0 40.0 0.0 40.0 0076 Road Employment Project for

Settlement and Integration of Returning Refugees and Displaced Persons

(Supplementary)

28 Mar 07 30 Jun 11 0.0 Canada 12.8 12.8 0.0 12.8

0081 Road Network Development Project 1

28 Sep 07 ADF 176.0 0.0 176.0 4.0 180.0

0135 Road Network Development Investment Program—Tranche 1

2 Dec 08 4 Sep 13 ADF 60.0 0.0 60.0 0.0 60.0

0161 Hairatan to Mazar-E-Sharif Railway

30 Sep 09 5 Apr 13 ADF 165.0 0.0 165.0 5.0 170.0

0244 MFF: Road Network Development Investment Program—Tranche 2

21 Dec 10 ADF 340.0 0.0 340.0 0.0 340.0

0261 MFF: Transport Network Development Investment Program—Tranche 1

12 Oct 11 ADF 189.0 0.0 189.0 0.0 189.0

0262 0.0 AITF 33.0 33.0 0.0 33.0

0291 MFF: Road Network Development Investment Program—Tranche 2

29 May 12 25 Sep 13 0.0 AITF 30.0 30.0 0.0 30.0


10 Dec 12 ADF 176.0 0.0 176.0 0.0 176.0 0328 0.0 AITF 60.0 60.0 0.0 60.0

46 A

ppendix 1


Date Approved


Date


($ million)


Total Project Cost


Amount ($ million)

Other Source

Amount ($ million)


11 Dec 13 ADF 220.0 0.0 220.0 0.0 220.0

0422 Transport Network Development Investment Program Tranche 4

15 Dec 14

ADF 109.0 0.0 109.0 0.0 109.0

0423 Transport Network Development Investment Program Tranche 4

15 Dec 14

0.0 EU 21.0 21.0 0.0 21.0

9024 Road Employment Project for Settlement and Integration of Returning Refugees and Displaced Persons

3 Oct 02 16 Nov 09 0.0 JFPR 15.0 15.0 0.0 15.0 26 May 03

16 Nov 09

0.0

Kuwait

15.0

15.0

0.0

15.0

ADB = Asian Development Bank, ADF = Asian Development Fund, AITF = Afghanistan Infrastructure Trust Fund, DFID = Department for International Development, JFPR = Japan Fund for Poverty Reduction, MFF = multitranche financing facility, UK = United Kingdom. Note: Numbers may not sum precisely because of rounding. For Grant 0327 the amount was $176 million but was later reduced to $149 million, as approved by the President in 2013. Sources: Reports and recommendations of the President; ADB Listing of Loan, Technical Assistance, Grant, and Equity Approvals database.

AD

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ic Republic of A


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Table A.5: ADB Nonlending Assistance Completed or Ongoing during 2009–June 2015

TA No. TA Name

TA

Type Date

Approved


Date

ADB Funding ($ million) Other

Sources

Total Financing ($ million) TASF JSF Others

Agriculture and Natural Resources 4483 Capacity Building for Land Policy and

Administration Reform AD 15 Dec 04 31 Jan 09 0.250 0.600 0.175 1.025

4716 Capacity Development for Irrigation and Water Resources

AD 7 Dec 05 18 Jun 09 0.755 0.060 0.815

7088 Water Resources Development PP 10 Jun 08 31 Aug 10 1.800 0.075 1.875 7994 Supporting Natural Resources

Operations CD 14 Dec 11 1.500 1.500

Energy 4909 Improving the Capacity of Da

Afghanistan Breshna Moassessa AD 19 Dec 06 25 May 10 1.200 1.200

4918 Support to the Interministerial Commission for Energy

AD 31 Jan 07 31 Dec 09 2.000 0.300 2.300

7168 Development of Wind Energy AD (SS) 6 Nov 08 31 May 10 0.160 0.160 7289 Kabul Distribution Network

Rehabilitation PP (SS) 27 May 09 25 Feb 10 0.225 0.225

7637 Power Sector Master Plan PA 6 Nov 10 31 Jan 14 1.500 1.500 8328 Support to the Interministerial

Commission for Energy PA 22 Feb 13 1.500 0.100 1.600

8401 Gas Development Master Plan PA 11 Jul 13 0.700 0.800 1.500 8 Jun 15 0.200 0.200

8475 Addendum to the Afghanistan Power Sector Master Plan

PA (SS) 4 Oct 13 28 Feb 15 0.225 0.225

8509 Energy Development 2014–2023 PP 19 Nov 13 1.500 1.500 8808 Renewable Energy Development CD 12 Dec 14 1.000 1.000 Finance 7983 Rural Finance Expansion CD 14 Dec 11 26 Aug 15 1.500 1.500 Industry and Trade 4699 Building the Capacity of the Ministry

of Commerce for Trade and Transit Facilitation

AD 24 Nov 05 31 Jan 09 0.400 0.050 0.450

4906 Capacity Building for Customs and Trade Facilitation

AD 18 Dec 06 13 May 09 1.200 0.150 1.350

Multisector 4415 Kabul Air Quality Management AD 15 Oct 04 31 Jul 09 0.450 0.450 8470 Support for Infrastructure

Investments and Policy

CD 1 Oct 13 1.200 0.100 1.300 25 Mar 14 0.750 0.750

48 A

ppendix 1

TA No. TA Name

TA

Type Date

Approved


Date

ADB Funding ($ million) Other

Sources

Total Financing ($ million) TASF JSF Others

Public Sector Management 4313 Poverty Assessment and

Socioeconomic and Macroeconomic Statistical Capacity Building

AD 26 Dec 03 31 Oct 12 1.750 0.310 2.060

4345 Security of ADB-Financed Projects in Afghanistan

AD 1 Jun 04 31 May 10 0.990 0.990

4897 Support to the Afghanistan National Development Strategy

AD 14 Dec 06 28 Sep 12 1.700 1.000 1.540 4.240

4964 Support for Economic Policy Management

AD 4 Sep 07 2.500 1.980 4.480 15 Apr 14 0.225 0.225

7090 Security Plan for Project Implementation

AD 24 Jun 08 17 Dec 14 0.995 0.995 16 Sep 10 17 Dec 14 0.225 0.225 2 May 12 17 Dec 14 0.750 0.750

Transport 4675 Capacity Building for Road Sector

Institutions AD 31 Oct 05 30 Apr 10 1.000 0.040 1.040

4828 Road Rehabilitation and Capacity Building Cluster

PP 21 Oct 06 31 Mar 09 2.700 0.120 2.820

7259 Railway Development Study PA 27 Oct 09 12 Aug 11 1.200 0.060 1.260 Railway Development Study (Supplementary)

16 Jun 10 12 Aug 11 0.700 0.700

8069 MFF for Transport Network Development Investment Program— Tranche 2

PP (SS) 2 Apr 12 15 Jan 13 0.225 0.225

8687 Transport Sector Master Plan Update PA 22 Jul 14 1.000 1.000

AD = advisory, ADB = Asian Development Bank, CD = capacity development, JSF = Japan Special Funds, MFF = multitranche financing facility, PA = policy and advisory, PP = project preparatory, SS = small-scale, TA = technical assistance, TASF = Technical Assistance Special Fund. Note: Numbers may not sum precisely because of rounding. Sources: Reports and recommendations of the President; ADB Listing of Loan, TA, Grant, and Equity Approvals database.

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Table A.6: ADB Approved Nonsovereign Loans and Equity, 2009–June 2015

Investment Number Project Name

Modality

Sector

Date Approved

Financial Completion Date

Amount ($ million)

7307 Sungas LLC Energy 25 Mar 10 Cancelled 0.000 7199 Afghanistan International Bank Equity Facility Finance 13 May 04 2.602 7201 Afghanistan Investment Guarantee Facility Guarantee Finance 24 Sep 04 10.000 2431 Roshan Cellular Telecommunications (Phase

III) Loan Multisector 28 Jul 08 18 Feb 10 60.000

ADB = Asian Development Bank. Note: Numbers may not sum precisely because of rounding. Sources: Reports and recommendations of the President; ADB Listing of Loan, Technical Assistance, Grant, and Equity Approvals database.

Table A.7: Performance Ratings for Completed Projects

Loan/ Grant No. Project Name Closing Date PCR Date PCR Ratings PVR Date PVR Ratings Agriculture and Natural Resources Loan 2083 Agriculture Sector Program Apr 14 Dec 09 S (R, LE, LEf, Su) Nov 10 LS (R, LE, LEf, LSu) Energy Loan 2304 Regional Power Transmission

Interconnection Project Mar 14 Jun 14 S (R, E, Ef, LLSu) Nov 14 S (R, E, Ef, LLSu)

Finance Grant 0067, Grant 0068

Private Sector and Financial Market Development Program-Program Grant

Apr 09 Dec 11 LS (R, LE, LEf, LLSu) Apr 14 LS (R, LE, LEf, LLSu)

Multisector (Energy, Finance, Transport) Loan 1954 Post-Conflict Multisector Program Oct 12 Dec 09 S (HR, E, Ef, LSu) Dec 11 S (R, E, Ef, LSu) Loan 2091 Afghanistan Investment Guarantee Facility

Project (Component1) Sep 09 Dec 11 S (R, E, Ef, LLSu)

Public Sector Management Loan 2215, Grant 0030

Fiscal Management and Public Administration Reform Program

Dec 15 Dec 11 LS (R, LE, LEf, LLSu) Dec 13 LS (LR, LE, LEf, LLSu)

Transport Loan 1997 Emergency Infrastructure Rehabilitation

and Reconstruction Project Jun 13 Oct 09 S (R, LE, NR, NR) Dec 12 S (R, E, Ef, LLSu)

Loan 2140 Andkhoy-Qaisar Road Project Jun 14 Dec 10 S (HR, E, HEf, NR) Dec 12 S (R, E, Ef, LLSu) Loan 2257 North-South Corridor Project Aug 13 Sep 13 S (HR, HE, LEf, LLSu) Loan 2105 Regional Airports Rehabilitation Project

Phase I Dec 14 Dec 11 S (R, E, LEf, LSu) Dec 12 S (R, E, LEf, LLSu)

Grant 0161 Hairatan to Mazar-e-Sharif Railway Project Apr 13 Jun 13 HS (HR, HE, HEf, LSu) Dec 15 LS (R, E, LEf, LLSu) E = effective, Ef = efficient, HE = highly effective, HEf = highly efficient, HR = highly relevant, HS = highly successful, LE = less than effective, LEf = less than efficient, LLSu = less than likely sustainable, LR = less than relevant, LS = less than successful, LSu = likely sustainable, NR = not rated, PCR = project completion report, PVR = PCR validation report, R = relevant, S = successful, Su = sustainable. Source: Asian Development Bank.

50

Appendix 1

Table A.8: ADB Grant and Loan Implementation Delays

Loan/ Grant No. Project Title Sector

Approval Date

Closing Date Delay

(Years) Number of Extensions Expected

Actual/ Revised

0067 Private Sector and Financial Market Development Program-Program Grant

Finance 14 Dec 06 30 Jun 10 13 Apr 09 (1) 0

9024 Road Employment Project for Settlement and Integration of Returning Refugees and Displaced Persons

Water and other urban infrastructure and services

3 Oct 02 31 May 06 16 Nov 09 3 2

9024 Road Employment Project for Settlement and Integration of Returning Refugees and Displaced Persons (Supplementary)

Water and other urban infrastructure and services

26 May 03 31 May 06 16 Nov 09 3 2

9097 North-South Corridor Transport 26 Sep 06 31 Dec 10 25 Jun 10 0 0

2091 Afghanistan Investment Guarantee Facility Project (Component1)

Multisector 24 Sep 04 30 Sep 09 28 Sep 10 1 1

2091 Afghanistan Investment Guarantee Facility Project (Component2)

Multisector 24 Sep 04 30 Sep 09 28 Sep 10 1 1

0030 Fiscal Management and Public Administration Reform

Public sector management

14 Dec 05 30 Jun 09 31 Dec 10 1 0

0068 Supporting Private Sector and Financial Market Reforms-Capacity Building Grant

Finance 14 Dec 06 30 Jun10 28 Jan 11 1 1

9037 Emergency Road Rehabilitation Transport 19 Dec 03 31 Dec 06 29 Apr 11 5 2

0076 Road Employment Project for Settlement and Integration of Returning Refugees and Displaced Persons (Supplementary)

Transport 28 Mar 07 30 Apr 09 30 Jun 11 2 1

9030 Primary Health Care Partnership for the Poor

Health 19 Dec 02 31 Dec 03 20 Nov 11 8 2

9039 Rural Recovery Through Community-Based Irrigation Rehabilitation

Agriculture, natural resources, and rural development

26 Dec 03 30 Jun 06 12 Apr 12 6 2

9060 Balkh River Basin Water Resources Management


15 Dec 04 31 Mar 08 10 Jul 12 4 2

1954 Post-Conflict Multisector Program Multisector 4 Dec 02 25 Aug 04 1 Oct 12 8 0

9038 Integrated Community Development in Northern Afghanistan


26 Dec 03 31 Dec 07 5 Mar 13 6 2

0161 Hairatan to Mazar-e-Sharif Railway

Transport 30 Sep 09 31 Dec 11 5 Apr 13 2 2

1997 Emergency Infrastructure Rehabilitation and Reconstruction Project

Transport 3 Jun 03 30 Jun 13 1 Jul 13 0 0

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Approval Date

Closing Date Delay


Actual/ Revised

0054 North-South Corridor Project Transport 26 Sep 06 30 Jun 11 19 Aug 13 2 2

9100 Rural Business Support Agriculture, natural resources, and rural development

12 Dec 06 31 Dec 10 30 Aug 13 3 2

0135 Road Network Development Investment Program (Tranche 1)

Transport 2 Dec 08 30 Jun 12 4 Sep 13 1 2

0291 MFF: Road Network Development Investment Program-Tranche 2

Transport 29 May 12 31 Dec 16 25 Sep 13 (3)

0230 Regional Power Transmission Interconnection

Energy 18 Nov 10 31 Dec 11 29 Oct 13 2 2

2304 Regional Power Transmission Interconnection Project

Energy 19 Dec 06 30 Sep 09 5 Mar 14 5 6

2083 Agriculture Sector Program Agriculture, natural resources, and rural development

4 May 04 30 Apr 14 16 Apr 14 0 0

2140 Andkhoy-Qaisar Road Project Transport 15 Dec 04 30 Jun 14 30 Jun 14 0 0

0004 Power Transmission and Distribution Energy 14 Apr 05 31 Dec 08 31 Jul 14 6 2

9128 Development of Mini Hydropower Plants in Badakshan and Bamyan Provinces

Energy 28 Nov 08 29 Feb 12 30 Oct 14 2 2

2105 Regional Airports Rehabilitation Project Phase I

Transport 23 Nov 04 31 Dec 14 18 Dec 14 0 0

2165 Power Transmission and Distribution Project Energy 14 Apr 05 31 Dec 15 31 Dec 15 0 0

2215 Fiscal Management and Public Administration Reform Program

Public sector management

14 Dec 05 31 Dec 15 31 Dec 15 0 0



20 Dec 05 30 Sep 13 31 Dec 15 2 1



20 Dec 05 30 Sep 13 31 Dec 15 2 1

0281 MFF: Energy Sector Development Investment Program-Tranche 3

Energy 22 Dec 11 31 Mar 15 31 Dec 15 0 1




Energy 2 Dec 08 30 Jun 14 30 Jun 16 2 1


Energy 3 Dec 09 30 Jun 14 30 Jun 16 2 1

52 A

ppendix 1


Approval Date

Closing Date Delay


Actual/ Revised

0012 Qaisar-Bala Murghab Road Transport 12 Jul 05 31 Dec 08 31 Dec 16 8 1

0081 Road Network Development Project 1 Transport 28 Sep 07 30 Jun 13 31 Dec 16 3 1



2257 North-South Corridor Project Transport 26 Sep 06 30 Jun 17 30 Jun 17 0 0



25 Aug 06 30 Sep 13 31 Dec 17 4 1

0126 Agriculture Market Infrastructure Project Agriculture, natural resources, and rural development

21 Nov 08 30 Jun 14 31 Dec 17 3 1

0167 MFF: Water Resources Development Investment Program-Tranche 1


6 Oct 09 30 Jun 15 30 Jun 18 3 1


Energy 18 Dec 12 30 Jun 17 28 Nov 18 1 1

0327 MFF: Transport Network Development Investment Program-Tranche 2

Transport 10 Dec 12 30 Jun 17 30 Jun 19 2 1


Transport 10 Dec 12 30 Jun 17 30 Jun 19 2 1


Transport 11 Sep 13 31 Dec 17 31 Dec 19 2 1

( ) = negative, ADB = Asian Development Bank, MFF = multitranche financing facility. Source: Asian Development Bank.

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ic Republic of A


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Table A.9: Sector Results: Target Indicators and Achievements

Target Outcome Indicator Progress in Achievement Transport

Percentage of project areas connected to the regional highway network by paved roads increased to 90% by 2017 from 70% in 2010.

Average intercity travel speed increased. On national highway

network, average speed increased from 35 km/h in 2010 to at least 50 km/h in program areas by 2017.

Availability of intercity freight and passenger services increased;

volumes of traffic along project roads increased by 30% from 2011.

Travel time to the nearest primary school, health care facility, or

other essential services in target areas decreased by 25% or 15 minutes from the 1-hour average in 2011.

Freight transported by railway increased to 6.5 million tons per year

by 2017.

72% connected in 2014; 642.65 km of road constructed, improved or rehabilitated; additional 707 km in progress.

Increased to 40 km/h in 2014; 65%–75% decrease in travel time. Traffic volume increased fourfold by 2012 compared to 2005; taxi and bus

fares decreased 40%-49%; vehicle operating cost savings were between 25% and 41%.

No clear data, but reports of reduced travel time to nearest health care

facility, primary school, and other essential services. Increased to 6,500 tons per day (2012) or 2.4 million tons per year; freight

transport fares reduced by 45%; travel time reduced to about 1 hour. Other achievements:

- 50% increase in flights and passengers in rehabilitated airports. - At least 10,000 refugees and displaced persons obtained opportunities for livelihood. - Capacities of Ministry of Public Works, Ministry of Tourism, and Ministry of Transport and Civil Aviation enhanced.

Energy Grid-connected electrification ratio increased from less than 10% in

2007 to 30% in 2017. North East Power System capable of supplying 150 MW in 2009

increased to 1,000 MW of connected load in 2017. System losses reduced from 50% in 2007 to 30% by 2017. Electricity Law enacted, giving full financial and operational

autonomy to DABS by 2014.

Electrification rate increased to 30% in 2015.

Power supply increased to 658 MW in 2014.

According to DABS, systems loss reduced to 25% in 2015.

Electricity law approved by cabinet and passed by Parliament in 2015.

54 A

ppendix 1

Target Outcome Indicator Progress in Achievement Agriculture and Natural Resources

Rehabilitated and upgraded irrigation systems serving at least 50,000 ha by 2019.

At least 15,000 ha of new irrigated area. Water user associations and river basin agencies in project area by

investment program managing irrigation and water resources according to the National Water Law, and (with minimal external assistance) providing O&M through sustainable financial arrangements, ongoing through 2019.

By December 2015, the total area irrigated by rehabilitated systems

increased by 20% compared to 2012 baseline.

By December 2015, the crop area and yields irrigated by each

rehabilitated system increased by at least 10% compared to 2012 baseline.

Command area serving 60,389 ha. Not available during review. 74 community development councils able to undertake small-scale

operations and maintenance; 51 subprojects handed over to their respective community development councils; 4 water user associations trained and registered. River Basin Authority established but still required to organize a council; technical expertise yet to be enhanced.

Not all subprojects have measured command areas, but available

information shows irrigated areas increased by more than 100% by project completion (compared to pre-project condition); 750,000 ha irrigated in 2014.

Project information available shows wheat yield increased by 45%

(compared to 2009 baseline).

DABS = Da Afghanistan Breshna Sherkat (Afghanistan Electricity Corporation), ha = hectare, km = kilometer, km/h = kilometer per hour, MW = megawatt, O&M = operation and maintenance. Sources: Adapted from Appendix 7 of the Country Partnership Strategy Final Review; target indicators are from the Country Operations Business Plan, 2013–2014; achievement data for 2014 is from the Country Operations Business Plan, 2015–2017.

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Table A.10: Scoring of Sector Programs and Country Partnership Strategy Crosscutting Objectives

Sector Sector Shares

(%) Relevance Effectiveness Efficiency Sustainability Development

Impacts Overall Agriculture and Natural Resources 12.50 2.00 1.00 1.00 2.00 1.00 1.40 Energy 24.30 2.00 2.00 1.00 2.00 2.00 1.60 Transport 51.19 2.00 2.00 1.00 1.00 2.00 1.60 Finance 1.76 2.00 1.00 1.00 1.00 1.00 1.20 Multisector 8.50 2.00 1.00 2.00 1.00 2.00 1.60 Public Sector Management 1.75 2.00 1.00 1.00 1.00 1.00 1.20 A. Overall Sector Score (weighted by sector share)

2.00 1.75 1.09 1.37 1.84 1.61

B. Crosscutting Objectives 2.00 1.00 Weighted Score (0.5*A +0.5*B) 2.00 1.75 1.09 1.37 1.42 1.53

Note: Overall rating: less than successful on the borderline (since the score falls between 1.45 and 1.59, see para. 50 of the Independent Evaluation Department guidelines). This validation gives a score of 2.00 to the transport sector relevance as opposed to the score of 3.00 given in the Country Partnership Strategy Final Review because of design deficiencies noted in the transport projects (para. 64). The discussion on relevance for crosscutting themes is in para. 65, and that for sector programs is in paras. 63 and 64. The development impacts rating is summarized in para. 112. Paras. 118–122 discuss impacts because of sector-level interventions, and paras. 124–133 discuss impacts through crosscutting themes. Source: Independent Evaluation Department.

APPENDIX 2: LINKED DOCUMENT

Afghanistan Country Partnership Strategy Final Review, 2009 to mid-2015 https://www.adb.org/sites/default/files/linked-documents/AFG-CPS-Final-Review.pdf

https://www.adb.org/sites/default/files/linked-documents/AFG-CPS-Final-Review.pdf

cps final afghanistan review validation partnership strategy final review, 2009 … ·...

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