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USAID | Afghanistan

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Economic Growth

Reducing poverty by promoting economic growth

Economic Growth

The primary goal of USAID/Afghanistan’s Economic Growth program is to promote a thriving economy led by the private sector, as stable political and economic conditions prevent terrorism from flourishing in fragile or failing states. In order to improve economic policy and the business environment, USAID aims to continue to promote macroeconomic reform, revenue collection, and privatization of state-owned enterprises. To continue to assist in the improvement of private sector competitiveness, USAID will continue to develop industrial business parks, assist Afghan firms to compete in the global market, and support SMEs.

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BACKGROUND

Poverty is widespread and deeply entrenched in Afghanistan. In some provinces, the poverty rate is more than 60 percent. From 2003 to 2007, economic growth was more than 10 percent, but fell with the economic slowdown in 2008 to 3.4 percent. Real GDP growth has since recovered to 20.4 percent during 2009-10 and 8.4 percent last year. The high poverty rate, poor security, and uneven growth rate challenge Afghans to double their efforts to establish an economy that encourages the trade and investment required to generate jobs. USAID’s economic growth program helps the Government of the Islamic Republic of Afghanistan (GIRoA) develop sound economic governance and works with the private sector to stimulate investment and business opportunities. USAID partners with Afghans and GIRoA to attract investment, generate sustainable employment, and expand market linkages.

PROGRAM OVERVIEW

DEVELOPING THE PRIVATE SECTOR

USAID support for building Afghanistan’s licit economy focuses on improving private sector productivity and the business environment to attract private-sector investment. USAID supported the development of industrial parks in Kabul and Mazar-i Sharif, and provides a wide range of business development services to encourage the establishment and growth of small and medium enterprises including management skills training, market information, and public-private alliance grants. To date, USAID has launched 50 public-private partnerships leveraging more than $95 million from private sector-partners in insurance, natural resource extraction, communications/media, apparel, information technology, and food processing.

STRENGTHENING BUSINESS ASSOCIATIONS

USAID support for business associations resulted in establishing Afghan Chamber of Commerce and Industry offices in Kandahar, Mazar-i Sharif, Hirat, Kunduz, and Jalalabad, and building the capacity of provincial and local business associations. USAID helped establish 125 business associations (including 27 women-owned) and supported more than 250 associations with grants for equipment, capacity building, and improving member services. 

TRADE AND INVESTMENT

USAID helps GIRoA and the private-sector maximize regional and global trade linkages and export-oriented business development through assistance in three categories: trade policy liberalization and World Trade Organization (WTO) accession, trade facilitation and customs reform, and public outreach on trade-related issues. USAID helped GIRoA negotiate the Afghanistan-Pakistan Trade and Transit Agreement, advised on the ratification of the South Asia Free Trade Agreement, and supported the successful initiation of the WTO accession process. USAID is now supporting implementation of these agreements, including significant reforms to promote transparency, reduce trade barriers, and increase customs revenue.

ECONOMIC REFORMS TO ENHANCE COMPETITIVENESS

USAID helps to strengthen institutional capacity, promote transparency, and establish a sustainable financial sector. Improvements to the business-enabling environment have resulted in more than $1.5 billion in telecom investment and created more than 100,000 jobs since 2003. Looking forward, USAID will focus on growth sectors such as mining, which have significant investment and employment opportunities.

LAND MANAGEMENT

Property rights are a complex issue for all Afghans, but especially for the millions moving into informal settlements around municipalities after decades of conflict. USAID is helping the Afghan Land Authority (Arazi) ensure the clear transfer and documentation of land ownership for Afghan citizens in informal settlements. Program activities also supported the National Land Law, approved in 2008; helped to streamline land registry offices in 21 provinces, and established a land survey/mapping curriculum at the Kabul Polytechnic University. Cooperation with the Supreme Court streamlined the registration of immovable property from 34 steps to just three for urban land, and four for rural land.

FINANCIAL SERVICES

USAID expands access to financial services by supporting the development of a sustainable and inclusive financial sector that serves the needs of micro, small, and medium enterprises throughout the country, with a special focus on the agricultural sector and the southern and eastern regions. By May 2011, USAID-funded credit unions disbursed more than 35,000 loans (14 percent to women) in 14 provinces, totaling $30.8 million, and created more than 52,000 jobs. USAID is encouraging the growth of mobile money as an innovative foundational investment to promote financial inclusion through technology.

MINING
Afghanistan is blessed with a rich base of natural resources, which, if exploited in a way that meets international standards, dramatically could improve equitable growth and increase government revenues. USAID-funded research, undertaken by the United States Geology Survey in partnership with the Ministry of Mines, has resulted in the identification of significant deposits of industrial and precious minerals across Afghanistan with a total estimated value exceeding $900 billion. USAID has supported the gemstone sector through training in stone-cutting and polishing. Assistance to the marble sector has resulted in the establishment of a sustainable marble association, three international marble conferences that took place in Afghanistan, introduction of modern marble quarrying techniques, and facilitation of marble exports exceeding $24 million annually.

Fact Sheet Economic Growth Sector May 2012

Project Implementing Partner(s)

Afghan Growth Finance (AGF)

Afghan New Beginning Program

Afghanistan Credit Support Program (ACSP)

Afghanistan National Innovation and Competitiveness Program

Afghanistan Renewal Fund

Afghanistan Small and Medium Enterprise Development (ASMED)

Afghanistan Workforce Development Program (AWDP)

Agriculture, Rural Investment, and Enterprise Strengthening (ARIES)

Aid Management and Coordination and Public Information

Air Traffic Controllers Training to the Ministry of Transportation and Civil Aviation (MoCAT) (Phase II)

Arazi (Afghan Land Authority) via MAIL (Ministry of Agriculture, Irrigation and Livestock) On-Budget Component

Assistance in Building Afghanistan by Developing Enterprises (ABADE)

Building Livelihoods and Trade by Turquoise Mountain Foundation (TMF)

Commercial Law Development Program (CLDP)

Development Credit Authority (DCA)

Economic Governance & Private Sector Strengthening (EGPSS)

Economic Governance in Afghanistan

Economic Growth and Governance Initiative (EGGI)

E-Governance Resource Center (EGRC)

English and Computer Basic Training for Afghanistan Geology Survey (AGS)

Establishment of National Payment System

Financial Access for Investing in the Development of Afghanistan (FAIDA)

Industrial Estates Development

Investment Climate Reform Program in Afghanistan (Doing Business Indicators)

Land Reform in Afghanistan (LARA)

Land Titling and Economic Restructuring Activity (LTERA)

Promoting Sustainable Private Sector Development

Provision of Technical Advisor to the Ministry of Finance/Treasury

Rural Finance and Cooperative Development (RUFCOD)

Strengthening Private Sector through Capacity Building

Trade and Accession Facilitation for Afghanistan (TAFA)

Women Enterprise Development (WED)

Economic Growth Snapshot

  • WIG program- provided government internships for over 300 women—with a 75% placement rate in a variety of jobs

  • 493,489 jobs created through EG programs

  • Introduced streamlined customs procedures at seven locations across Afghanistan, saving valuable time and millions of dollars of expenses

  • Afghanistan Small and Medium Enterprise Development programs have supported more than 11,000 Afghan businesses and helped create 1,300 new enterprises

  • 490 businesswomen from 15 provinces have participated in nine business and gender workshops

  • Facilitated $7.3 million private sector loans approved with $28.9 million in loan applications in the pipeline

  • In partnership with the Ministry of Commerce and Industry , expanded Central Business Registry to Mazar, Heart, Kunduz, and Jalalabad regions and registered 22,875 businesses

(Data as of January 2013)