Afghanistan, and in particular the Harakat Investment Climate Facility, has been a major client for BERF. Work has included three assignments under BERF’s technical support work stream: an organizational design review, a procurement manual, a diagnostic assessment; and also an evidence and learning note on gender in the context of Fragile and Conflict Affected States.
- Evidence and Learning Note Business Environment Reform and Womens Economic Empowerment in Afghanistan May 2017
- BERF Business Environment Reform Diagnostic for Harakat March 2017
- BERF Harakat Organisational Review and Design Report March 2017
As a land locked post conflict country (population 32 million), Afghanistan is a very difficult environment for business growth. Nevertheless the country achieved rapid economic growth from 2001 to 2012 according to World Bank data. However more recently economic growth has been less impressive.
Business and investor confidence has been eroded by uncertainty associated with an unpredictable political context, security transition from international forces and transition from an economy largely fueled by international aid flows.
DFID’s Operational Plan (2011-2016) for Afghanistan offers a vision for a more peaceful, viable, stable and prosperous Afghanistan through a focus on four key areas: (i) supporting peace, security and political stability, (ii) promoting economic stability, growth and jobs, (iii) helping the state deliver improved services and meet citizens’ demands and (iv) supporting women and girls. The country programme helps to tackle global poverty and supports the UK’s strategy to help Afghanistan fight extremism and achieve a permanent halt to the insurgency.
DFID is the fourth largest donor to Afghanistan after the United States, Japan, and the European Union. During the period from 2002 to 2013, DFID disbursed £1.3 billion to Afghanistan with 50% of funds channeled through the multi-donor Afghanistan Reconstruction Trust Fund (ARTF). The Government of the Islamic Republic of Afghanistan (GoIRA) has responsibility for all programmes, reflecting the UK’s commitment to direct at least half of its annual country budget through Afghan government systems that support the capacity of Afghans to plan and implement their development strategy effectively. DFID’s operational budget for 2105-2016 is £178m apportioned across 26 projects. The largest commitments are to projects for Wealth Creation (£94m) and Education (£39m).
Doing Business Rankings
The World Bank Doing Business 2016 ranks Afghanistan 183rd out of 190 countries on ‘ease of doing business’, unchanged from its 2015 ranking. Its Distance to Frontier (DTF) score fell from 40.65 in 2015 to 38.1 in 2017, placing it last in South Asia, well below the regional average of 50.37 and even further from the regional best ranked country Bhutan at 65.37. Afghanistan’s most significant reform in the past year is access Trading across borders Afghanistan made exporting and importing easier by introducing a number of technical, human resource and infrastructure improvements to ASYCUDA World, an electronic data interchange system.
For three years running, Afghanistan was ranked 189 in ‘protecting minority investors’. In 2016 it was ranked, 175 in ‘trading across borders’ and 180 in ‘enforcing contracts.’ It ranked 186 on dealing with construction permits and also on registering property.