POVERTY TO PROSPERITY
PASSAGE
OF
AFGHANISTAN
Said Issaq Said
Presently there are three wars going on in Afghan theatre.
War against terrorism
Drugs war, and
War on poverty
No body can deny the fact the government of Afghanistan is losing in all these fronts.
Afghan government is not admitting the reality, that they are not addressing the nation’s economic problems as required. But instead they say to fix these problems requires time.
Yes !! in a country where bombs are carried by super sonic jets and donkeys are used to transport critically needed relief supplies to desperate men women and children flood victims, the economic development for sure takes a very long time. There is no need for diligence SATUATION HOPELESS BUT NOT SERIOUS.
POVERTY REDUCTION
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In Afghanistan (They are killing to make a living). This is due to extreme poverty and unemployment. It will be a gross injustice to poor Afghan people to shield the lack of competence or willingness of those in charge of war against poverty in the country.
A look into the biographies of the economic pundits in the government of Afghanistan will make somebody condemning Nobel Prize Committee for unfairly ignoring such qualifications in rewarding. On the other hand to see the tragic living conditions of the millions of Afghans destined to hardship and hunger as a result of inability on part of development team of the government a grade of D will be all they deserve.
This is an established fact that if an effective well thought strategy to fight poverty with the same devotion as the war against terrorism is conducted, there will be no need for the other wars. With elimination of poverty there will be no room for terrorists to recruit poor Afghans to destroy their own homeland.
Afghanistan with a per capita income of $293 ( That is what the government claims. The actual figure may be less.) is amongst the poorest countries on the globe. Afghanistan was ranked 173 out of 178 countries included in UNDP’s 2004 Human Development Index. In fiscal year 2005 gross domestic product of the country amounted to approximately $5.9 billion (excluding $2.7 billions from drugs money). As a matter of fact hand outs and drug money are the major building blocks of Afghan Economy.
As per Afghanistan Human Development Report (HDR), the country’s poverty is compounded by a lack of social services, poor health, education and nutrition and human displacement. The HDR puts emphasis on basic human needs, unemployment poor health and education.
At present Afghan Refugees constitute 23% of the global refugee population, meaning about one in every four refugee in the world is from Afghanistan. Most of these by now are economic migrants rather than political refugees. Pakistan and Iran host about 2 million Afghans. Both of these countries are wrapping up the welcome mat. UNHCR is trying very hard to convince the host countries not to force the refugees to get out. The occasional repatriation of some Afghan Refugees from Iran and Pakistan is not because of improvement of living conditions at home but due to force and coercion of the host countries. This is another factor contributing to the poverty in Afghanistan.
The Afghanistan Human Development Report, suggests that Afghanistan’s growth should be based on principles of poverty eradication and job creation. Due to lack of reliable statistics, the exact number of unemployed Afghans is not known , generally it is estimated to be around 40%. The government plans of job creation specially sustainable employment has not been materialized yet. Only very few temporary jobs under National Solidarity Program (NSP) are being created in some villages. This is of very short duration, normally not more than three months. Afghan government in “ Afghanistan Compact “ presented at London Conference On January 30-31, 2006, has indicated that 90 million man days of employment will be generated. Given the size of labor force in the country, this is just a drop in a bucket. Ninety million man days is equivalent to year round jobs for 60,000 persons for five years.
The prolonged quarter of a century of war in Afghanistan has severely affected the education system, thus creating a shortage of skilled workers and surplus of unskilled labor. As the education system requires time to recover, for the near future this situation will not change.
Oxfam, a British relief organization, on November 27, has released a report on the education condition of the country. The picture does not look good at all.
Seven million Afghan children are missing education. Just one of five girls attend primary school and one in 20 girls go to secondary. Poverty, distance to schools and crippling fees are major obstacles. Lack of qualified teachers is also a major problem.
Due to unrealistic low payment ( $38/moth) it is impossible to have qualified teachers in classes. There are about 20,000 ghost teachers, whose names are on pay roll and they are not present on school grounds. There is an urgent need for 53,000 qualified teachers now and another 64,000 in coming five years.
2,000,000 students study under tents. There is a need for $563 millions for school buildings to build 7,800 schools across the country. Only $126 millions has been provided by USAID and World Bank. Text books are also badly needed and that requires $210 millions in the next five years.
The government under Millennium Development Goal I ( To Eradicate Extreme Poverty)
Has set two targets:
Target—1 Reduce by one half the proportion of people whose income is less than one
Dollar a day by 2015,
Target—2 Reduce by one half, the proportion of people who suffer from hunger.
These targets do not seem to be achievable, as there is not much efforts being made towards delivery. Additionally, it looks the projections are based on some unrealistic assumptions. In 2015 the population of Afghanistan ( 3% annual growth) will be about 41 millions. According to the figures given in Afghanistan Millennium Development Goals (MDG), in 2004 (i) the proportion of people whose income is less than $1 a day was 53%, and (ii) proportion of people who suffer from hunger was 48%. The assigned target (i) for 2015 is 26% and target(ii) is 24%. Assuming 2004 population of Afghanistan as 25 millions, there were about 13 million persons with less than a dollar a day income and 12 million were suffering from hunger. If these strategies are successfully carried there will be a reduction of 3 millions in the number of people with income of less than a dollar a day and 2 million less people will be facing hunger.
These targets are ambitious and not achievable. During the time period between now and 2015, it is expected that the remaining two million Afghan refugees will return. Plus, if there is no effective serious undertaking of alternative livelihoods programs there will be a considerable addition to the population of poor in Afghanistan.
SOME FACTS AND FIGURES
Afghanistan Government has adopted ENRON sort of policy of covering up the facts. It portrays very rosy pictures of the economy while the realities indicate that the road map is leading towards a disastrous destination.
On November 26, IMF issued a statement on Poverty Reduction and Growth Facility in Afghanistan. Due to the fact that the statement is based on the misleading information provided by the government, ground realities are completely ignored, thus making the statement erroneous.
IMF report says that growth has been sustained, inflation subsided and fiscal and monetary development remained favorable. THIS IS FALSE.
Further the report states “ Real GDP growth is expected to reach
8 percent, as continued activity in construction and services offset a
9 percent decline in cereal production….Year-on-year inflation, as
measured by the consumer price index for Kabul, declined to about 5.4
percent by September 2006, ….” National” year-on year inflation, which covers Kabul and other five cities was 5.2 percent in September.”
THIS IS ALSO FALSE.
The argument about the falsehood of the major points of this report are as following:
1--- There was no economic growth at all. As a matter of fact there was
a considerable decline. There was no mega projects launched
to contribute considerably to the growth. Whatever meager
development achievement there might have been was
counterbalanced by draught. The fact that no measures of mitigation
to deal with these natural adversaries were not being placed by the
government like having flood control structures and water shed
projects to conserve water is indication of negligence on part of the
government of Afghanistan.
2--- Afghan economy is leading on two pillars Drugs and Donation. There
is not of modern day factors of productions deployment to talk of
inflation control and fiscal and monetary discipline. The government
through Da Afghanistan Bank artificially controls Afghani price by
means of selling dollars to the exchange market. In other words
there is no Greenspanization to talk about the value of Afghani.
Whoever provided the data to the IMF was completely unaware of
Sky rocketing price hike in Afghanistan, otherwise IMF wouldn’t
have stated the inflation rate as 5.2% As a matter of fact the
the experts inn Kabul estimate the price hike of some of the items
between 50-100%. Even the CPI o shopping cart indicators of the
Central Statistics Office does not support this low figure of inflation.
3--- FAO has indicated Afghanistan cereal production shortfall in 2006 as
Total wheat production 2006 was 3.71 million tons 13% short of 4.27 million tons in 2005. The total production of cereal for 2006 is estimated at 4.8 million tons
Afghanistan requires 6 million tons of cereals in 2006. This gives a shortfall of 1.2 million tons (20%)
Where is the figure of 9% cereal shortfall?
4--- IMF report says that the government performance “poverty reduction” was satisfactory.
The question is WHAT PERFORMANCE?
The world Bank, says that 36% of rural households face chronic or transit shortage of food. Has the government done any thing to reduce this percentage ?
The answer is NO. What constitutes satisfactory performance?
As a matter of fact this year another two million afghans were added to this class of poorest of the poor in the world.
If just during the last year Afghanistan lost $800,000,000 of the assistance due to lack of capacity, how will the government be able to handle more funds? The sad part is that there is no serious effort being made to resolve this problem.
Daily cement consumption in Afghanistan is about $2,000,000. Those in charge of economic planning should have foreseen this demand four years ago. And appropriate measures should have been taken to rehabilitate cement plants and establish new ones. Thus by now this money would have to stay within this country. In Pakistan, Cement
plants are expanding their production capacity due to demand for cement in Afghanistan, while here the half a century old cement plants are out of production due to neglect. The same is true with textiles. About a million dollars a day worth of textiles are imported into Afghanistan while the Afghan textile mills with annual production capacity about 120 million meters (1970 figures) are either discarded or producing at a very low minimum capacity. The textile mills ( at present public enterprises) in spite of presidential decree can not sell their products to the army and police procurement people because they do not bribe them.
In the past year Afghanistan had a trade deficit of $1,000,000,000 with Pakistan . there are not many things among these imported consumer goods from Pakistan which can not be domestically produced. How long shall this economy endure Pakistani dumping policy? It is not only Pakistan, Iran, China and other countries are also dumping their low quality goods into Afghanistan markets. Afghanistan trade deficit last year as per some sources was $4,000,000,000. This is financed by foreign donation and drug money. Has any body in Afghanistan government ever thought what happens if either the donor countries decide that they no longer support a parasite economy or the drug money is cut by any means ? Why there has no efforts being made at least to produce domestically some of consumer goods?
OPPORTUNITY COST;
Let’s turn the clock back to 2003. We put the import export data on the table plus projections of future demands for consumer goods. We obviously realize we need lots of things and we can produce them at home. If we do not make provisions to produce these things in future we have to spend billions of dollars to import them. Only the above two items of Cement and Textiles if domestically produced will save more than a billion dollars. This means if our STRATEGISTS had a proper plan to develop this land by now the projects launched at that time would be operative and every year more than a billion dollars saved. Tens of thousands of jobs created.
Employment:
No body can deny the fact that unemployment is the biggest problem of Afghanistan.
Total workforce of the country is estimated at 12millions. Due to lack of any statistics the unemployment could be any body’s guess. In Afghanistan Compact presented in London Conference Januuary30-31, it has been mentioned that 90 million man days will be provided. According to this only about 300,000 people will earn livings for only one year. Cash for work is good only for temporary employment ( Pain Killer, not a permanent remedy). What happens day after, week after or year after, the government has failed to generate sustainable employment opportunities for millions of poor Afghans. Taking into consideration the repatriation of refugees this 90 million man days will only be matching the labor force returning back. That’s all. There is a very strong correlation between employment and security and stability. Having this in mind, four years ago revival of two major institutions QWAI KAR ( labor corps) AND QWAI SABZ ( green forces) was suggested.
As opium production is labor intensive and provides substantial employment opportunities to the very poor rural population, (1.7 million Afghans are employed in this sector), the government has a dilemma in carrying a robust drug control campaign. The so called Alternative Livelihoods Programs have failed to provide alternatives to the people who are losing their jobs and income by not growing poppies. The reason of failure of these programs and subsequently wastage of aid money is due to lack of coordination and supervision by the government.
Launching major infrastructure projects create sustainable jobs both during construction and after completion. Construction jobs development could be stimulated by having a functional mortgage bank to provide credit for those who
need it.
Most important of all Rural job creation require agro-based industries to develop. This requires energy. Since Rural Afghanistan is many years away from electrification, I have submitted a project proposal “RURAL DEVELOPMENT THROUGH BIOPOWER TECHNOLOGY IN AFGHANISTAN.
Private Sector:
In order for Afghan economy to function without massive foreign inflow of donor assistance ( Opportunity not Charity), private sector –led economic growth is critical to provide Afghanistan with the employment and revenue.
Economists at Kabul University are in the opinion that the government could generate about one billion dollars of revenue annually from this sector only if they effectively privatize the existing money losing public sector enterprises.
But so far nothing concrete has been done to promote foreign and domestic private investment in the country. On September 1st 2004, a high level meeting chaired by the vice president, including 6ministers was held to resolve the problems of private investors. Among the resolutions, it was stated that, Land issues must be resolved, electric power shall be provided to industrial plants, tariffs shall be revised. So far these points are not implemented. At that meeting the high participants were mentioning the fact that presidential orders to return lands to the industrialist were ignored. This was an admission of weakness on their part. But they did were short to say that if no bribes are paid nothing could be accomplished In 1976 Industrial Development Bank of Afghanistan had drafted the industrial tariff. That can be used with certain necessary modifications now too. Operations of NGOs without any responsibilities like taxation etc. is it another draw back in private sector development.
Lack of development financial institutions, such as industrial development , agricultural development and mortgage and construction banks are other major obstacles in private sector development.
The widespread corruption is the biggest problem in the country. Only lately by appointment of the new attorney general there seems to be some hope in this area.
Afghan government should give a serious consideration to how to turn the economy from a consumer one to that of a production and take some practical steps to resolve the problems. The government all the times with the help of its world class spin doctors boast of its achievements but it does not tell the truth what it has not done.
This is what matters most.
With these realities in mind, it will be very difficult if not impossible for the government of Afghanistan to be able to deliver its commitments in Fighting ;
Terrorism
Poverty
And drugs
Based on these facts as presented, the current deteriorating conditions in Afghanistan are due to lack of the governments firm commitment to serve Afghan People.
This being the case, it is the responsibility of the parliament to address the issue of violations of three articles of Afghan Constitution ( 10,11,&13) by the government.
Article 10 ( Private Investment)
The state encourages and protects private capital investments and enterprises based on the market economy and guarantees their protections in accordance with the provisions of law.
Article 11 ( Trade )
Affairs related to the domestic and external trade shall be regulated by law in accordance with the needs of the national economy and public interests.
Article 13 ( Economy )
The state shall formulate and implement effective programs for development of industries growth of production, increasing of public living standards and support to craftsmanship.
John Pilger in his book Freedom Next Time writes “ Through all the humanitarian crisis in living memory no country has been abused and suffered more and none has been helped less than Afghanistan.”
With this in mind it would be appropriate to draw the attention of the supporters of Afghanistan that unless the poverty is eliminated in that country victory against terrorism, regardless of the number of troops and sophistication of the arsenal would be an illusion.
Before it gets too late the issues have got to be addressed duly. This would be a WIN WIN situation. And the cost of not doing much as it has been proven in the past will be extensive and unbearable. Though it is late still Afghanistan can be salvaged, provided there is a firm commitment on part of all the stakeholders.
Thirty years ago for my master’s thesis in Industrial Engineering at Asian Institute of Technology, I had developed “A SYSTEMS DYNAMICS MODEL TO STUDY THE PROCESS OF INDUSTRIAL DEVELOPMENT IN AFGHANISTAN”.
This was a computer simulation model analyzing policy implications of different sectors of Afghan economy for twenty years.
With that plus years of professional engagement in activities directly related to economic development of Afghanistan on record, I respectfully present this to draw your attention to the fact that challenges posed there will not be met without much difficulty . And it requires a strong professional backup. My love to that country makes me write this so proper measures are taken to avoid missing the opportunity available.
