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Launching the Reconstruction of Afghanistan
Remarks at the Working Session on the Reconstruction of Afghanistan held at the US State Department by
James D. Wolfensohn
President
The World Bank Group
Washington, D.C., November 20, 2001
I am here today to talk about Afghanistan's reconstruction and development. In contrast to the carnage, destruction, hunger, and displacement of today, Afghanistan needs a vision for tomorrow - of an
Afghanistan where people are safe and ethnic relations harmonious; where there is a government that represents and effectively promotes the will of the people; where men and women are free to pursue their way of life and improve their livelihoods; where the economy is growing and poverty is disappearing over time; where the entire population, including girls, can get educated; where everyone has access to basic medical services and clean water; and where good governance and non-intrusiveness of government authorities are the rule.
Helping the people of Afghanistan to rebuild and develop their country will be an enormous challenge and a grave responsibility for the international community. We must all work closely together, with the
Afghan people and their legitimate representatives, in this difficult yet exciting endeavor. The World Bank - for whom reconstruction lies at the core of its mandate - stands ready to join with Afghans and with all development partners to help create a better future for Afghanistan.
If ever a country deserved sustained large-scale support from the international community, it is Afghanistan. Two decades of conflict, aggravated by the recent three-year drought, have brought famine, destruction and despair upon a country which was already one of the poorest in the world.
•Infrastructure (ranging from a few modern highways to traditional underground irrigation channels and many people's homes) has been largely destroyed. Road trips that took hours twenty-five years ago now take days.
•The production base has been gravely weakened - land littered with mines, food production down by more than half, livestock herds lost, trees and vineyards gone, factories fallen into disuse, and the environment damaged (falling water tables, deforestation, unregulated mineral exploitation).
•Afghanistan's human resources have been gravely damaged, with about 5 million people scattered to other countries, whole generations of Afghan children getting virtually no education at all, women - half the population - being prevented from working, and large numbers of people

disabled by mine accidents and by diseases like polio which should no longer exist anywhere on this globe.
•And finally, decades of conflict have eroded Afghanistan's governance structures - the state, economic management institutions, public service delivery - and eroded social capital - the glue that holds society together - above the extended family and village level.
Yet there are grounds for hope. Many of Afghanistan's traditional communities remain strong. Agriculture has shown that it can rebound if conditions are right. A large proportion of the population has learned business, professional, or economic survival skills while taking refuge in other countries. If they return, they will make an invaluable contribution to Afghanistan's reconstruction.. And above all, Afghans everywhere are looking forward to an end of the violence and to a better future.
We don't yet know precisely how much Afghanistan's reconstruction will cost, but we do know that the price tag will be high - our first rough estimate is $1-2 billion a year for a decade of humanitarian and development assistance. Not only do two decades of physical, economic, and social damage need to be repaired, but in the case of Afghanistan, reconstruction will be inseparable from longer-term economic and social development.
Successful reconstruction and development over the longer term will reap dividends not only for Afghanistan but also for its neighboring countries and indeed for the world as a whole. The World Bank has prepared a discussion paper on a development framework for the neighboring states surrounding Afghanistan. This calls for country development programs to be intensified, especially in the poorer regions bordering on
Afghanistan, and for the foundations to be laid for future regional economic cooperation.
Even more important than the money is how to do reconstruction. The willingness, even eagerness, of many agencies to assist in the political, humanitarian, and economic reconstruction of Afghanistan is most welcome.
Afghanistan will need all the help that it can get. But the future legitimate government of Afghanistan must be in the driver's seat, and reconstruction assistance must be aligned with Afghanistan's nationallyowned strategy for reconstruction, development, and poverty reduction.
Reconstruction of Afghanistan can be likened to constructing a large, complex building. It will need an overall "architecture" and wellintegrated reconstruction management process. It will also need building blocks - programs and projects for reconstruction and development. And last but not least, it will need the builders who do the actual work of reconstruction. A building without a good design and sound processes of construction becomes senseless - something like unregulated urban sprawl.
However well-designed, a building without good building blocks will be a house of cards. And without builders, it will not get off the ground in the first place. First turning to the overall architecture, international experience demonstrates that effective aid management is critical for the success of any post-conflict reconstruction effort; otherwise aid can become part of the problem rather than part of the solution - something

that Afghanistan and the world can ill-afford. Based on international experience, the key elements of good aid management include the following:
•An appropriate political umbrella (in the case of Afghanistan the UN's
Brahimi initiative and subsequent political dispensations).
•An overall strategy for reconstruction - a practical road map to development - that has a compelling, comprehensive vision and is owned by all development partners and stakeholders including first and foremost the Afghan people.
•An aid coordination process that is clear, transparent, and sensible, and is accepted and bought into by the entire assistance community. A formal consultative group of Afghan government representatives and their development partners, backed by regular local aid coordination meetings, has proven to be effective under reconstruction conditions elsewhere.
•Genuine partnerships among assistance partners, with a country rather than an agency focus and a team approach.
•A financial mechanism that promotes alignment between overall strategic objectives and priorities and the many individual reconstruction and development activities. We propose a trust fund to serve this purpose.
•An effective reconstruction institution in the government, run increasingly over time by Afghans, which has a "sunset" clause to prevent it from becoming a permanent, centralized, planning ministry.
Let me say a few words about the trust fund idea. Based on the lessons from experience, the trust fund should be broad in scope. Contributions to the trust fund should be untied and not earmarked for individual programs or activities, although the priority programs to be funded by the trust fund could be delineated.
Although it would not cover the costs of peace-keeping or a UN administration, the trust fund should cover the recurrent expenditures of the nascent Afghan government, until domestic revenues start covering a large proportion of these costs. The trust fund should also have flexibility to cover at least some capital costs of reconstruction.
However, some large, "lumpy" capital investment projects need not go through the trust fund, as long as they are consonant with the overall reconstruction strategy and priorities. Since NGOs will be playing an extremely important role in the overall reconstruction effort, they could get their funding for programs (in line with overall reconstruction priorities) through the trust fund as well. Given Afghanistan's large and urgent reconstruction needs, the trust fund's procedures should be clear, transparent, simple, and speedy, with accelerated procedures for smaller projects and programs below a specified funding level. And needless to say, the trust fund will work well only if the other elements of the aid management architecture are also working well.
What are the likely advantages of this trust fund proposal in the context of Afghanistan? There are a number. First, it will enhance the coherence and accountability of international assistance to Afghanistan. Second, it will be much easier for Afghans to understand and deal with than numerous fragmented, compartmentalized aid funds and programs, each with their own procurement, disbursement, and reporting arrangements. Third, it will not excessively tax limited government capacity in the early stages, while at the same time building government capacity over time. Fourth, the trust

fund mechanism will be more convenient for NGOs and other service providers, who at present need to go through complex, timely, and different (across donors) procedures to get funding. Fifth, it will be vehicle for gently promoting national unity and ensuring that the reconstruction/development needs of different regions and groups as well as women are meaningfully addressed.
Let me now turn to the building blocks of reconstruction - the programs and projects that will rebuild and expand Afghanistan's physical infrastructure, enhance its human capital, promote good governance, and create a conducive environment for private sector-led economic growth and poverty reduction.
Some of the programs that will need to be carried out earlier rather than later are fairly obvious - such as agricultural recovery and food security; generating livelihoods for returning refugees, displaced people, and demobilized combatants; expanding the existing de-mining program; rehabilitation of Afghanistan's main road network; and restarting key social services like education and health. It is also clear that community-driven development and NGO service delivery will play a very important role in Afghanistan's reconstruction.
Other programs will take more time to reach fruition and have an impact although they also need early attention, including among others establishment of sound economic management institutions; developing a lean, effective civil service and sound institutions of public accountability; education and health programs that reach the bulk of the population; urban management; energy development; environment and natural resource management; and the enabling environment for private sector development - particularly attracting back expatriate Afghans who can contribute to reconstruction in a major way.
These programs - the building blocks of Afghanistan's reconstruction - need to be identified, designed, prioritized, and costed. To initiate this process, the World Bank is co-hosting with UNDP and ADB a conference on "Preparing for Afghanistan's Reconstruction" to be held in Islamabad,
Pakistan during November 27-29. The conference will bring together the entire assistance community for Afghanistan - UN agencies, NGOs, bilateral donors, and multilaterals - for substantive discussions on reconstruction strategy, priorities, and programs.
But this process requires far more than a single conference. So I would like to propose that the assistance community partner with us in a joint comprehensive assessment of Afghanistan's reconstruction needs and the programs and projects that will be required for reconstruction and development. This needs assessment should start earlier rather than later, even if security conditions require that a preliminary assessment be conducted from outside Afghanistan. It will rely heavily on the information and experience in the field gained by the assistance community in recent years, as well as on the Bank's and partners' analytical work, and in some areas the new technology of satellite imagery, as well as archival material from when we and other partners last financed development investments in Afghanistan. A preliminary assessment conducted this winter will enable us to be ready for a more

detailed needs assessment on the ground, with full participation of the
Afghan authorities, early next year, should that become possible. The preliminary assessment of reconstruction needs should be followed by a meeting of the consultative group for Afghanistan as soon as there are legitimate representatives of the Afghan people to engage with.
Finally, let me turn to the "builders" of Afghanistan's reconstruction - the people who will be doing it. First and foremost, we are talking about
Afghans. A substantial number of Afghan professionals - including a number of Afghan women - will be participating fully in the November 27-
29 conference. We are also initiating development of an open database for
Afghans outside of Afghanistan who are willing and able to contribute to
Afghanistan's reconstruction. And we will be actively consulting with and seeking advice on reconstruction from Afghans outside of Afghanistan and later, when possible, Afghans inside Afghanistan.
Afghanistan in the new era has the opportunity to benefit from more than
50 years of development experience. Afghanistan's development partners should not inadvertently create an over-centralized government dependent on aid flows, where patronage and corruption flourishes. Beneficiaries and communities should be in the driving seat, and services should be delivered by NGOs and the private sector wherever possible, not by unaccountable public bureaucracies. International experience also demonstrates that national ownership is central to effective development.
Hence we must accept that the people of Afghanistan will determine the pace of reconstruction and the shape of their country's development.
Afghanistan's resilient communities should be a focus of the reconstruction effort. They need to be supported, strengthened, and empowered so that they in turn can be key "builders" of reconstruction. A number of NGOs and UN agencies have rich experience with community-driven development in Afghanistan, which can be tapped and built upon. An urgent priority is to scale up the better community driven programs so that they will reach a significant proportion of the total number of communities in
Afghanistan. NGOs also will be important builders of reconstruction. Many of them have been doing great work - on education, water supply, health, agriculture, and other key sectors - under extraordinarily difficult circumstances in Afghanistan. Expanding and (where necessary) improving the existing programs of NGOs will be the best and in some sectors the only way to get reconstruction started quickly. In closing, let me reiterate the centrality of all three aspects of Afghanistan's reconstruction that I have emphasized:
•The overall aid architecture and process. We are proposing a trust fund mechanism to promote better alignment of programs and funding with strategic priorities, but this will work only if there is a reconstruction strategy that has widespread ownership and an effective aid coordination process. It is impossible to keep aid coordination processes clear, simple, and country-oriented rather than agency-focused.
•The building blocks of reconstruction. In addition to the November 27-29 conference, we are proposing to conduct a preliminary assessment of
Afghanistan's reconstruction requirements in partnership with UNDP and
ADB.
•The builders of reconstruction. We are developing an information base on
Afghan professionals currently living outside of Afghanistan, and will be

initiating consultations with Afghans on reconstruction issues, which our assistance partners are most welcome to join. Communities and NGOs will be lynchpins of the reconstruction effort, and the aid mechanisms that we have proposed would need to be fully responsive to their needs.
Thank you very much for the opportunity to speak at this important meeting.