Review of the Afghanistan Program - Overall Assessment and Conclusions

Table of Contents

• 5.0 Overall Assessment and Conclusions
  • 5.1 Program Management
  • 5.2 Progress on Building a Stable State
  • 5.3 Results at the Level of Initiatives
  • 5.4 Accountability Framework and Use of Funds

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5.0 Overall Assessment and Conclusions

Our assessment and comments are based on an examination of 12 of the 27 projects in CIDA's bilateral Afghanistan Program, for which disbursements cover roughly 73 percent of the $285 million spent during the period.

For most of the projects, CIDA is one of many donors (Annex 7), albeit an important one. As agreed in high level Consultative Group meetings between the Government of Afghanistan (GoA) and donor countries starting in 2001, CIDA has coordinated and "pooled" its funding with other donors in its programming to support the GoA's efforts. Consequently, in most cases, one can assume a proportion of the outcome is due to the Canadian contribution.

5.1 Program Management

Overall, the CIDA Program has demonstrated good flexibility in being able to adjust to the changing situation and needs of Afghanistan. More recently, the addition of the Kandahar component to the mix fills a gap at the provincial level that was not being addressed by the national programs. As the findings from previous evaluations show, project-based funding when used selectively can effectively complement and reach areas and groups of people that are "hard to reach" through national programs for reasons of remoteness or special needs. CIDA's efforts are intended to help support the roll out of the national program to Kandahar.

CIDA staff have, for the most part, made good investment decisions on the choice of initiatives and implementing partners in such a complex and demanding environment The Program represents a good mix of national multi-donor initiatives through the WB/UNDP, complemented with some smaller bilaterally-directed initiatives funded through Canadian and international non-state actors. Given the significant variation in the capabilities of the Afghan ministries to deliver development to the people, CIDA has invested most of its resources in projects involving the better performing ministries. In the cases where the investments were not performing, Program staff have taken the necessary corrective action such as stopping disbursement, and /or re-investing the funds in better performing initiatives.

The joint, "pooled" approach is an effective way of achieving results in Afghanistan, reflecting the shift in the approach of international development programs to building the institutional/organizational capacity of public, private and civil sector organizations to collectively deliver results as a best practice.

Given the high profile of Canada's involvement in Afghanistan, especially since the deployment of Canadian troops and the periodic reporting of troop fatalities, there has been a very high level of interest among Canadians. Commensurately, with the growth of funding through CIDA, staff on the CIDA Afghanistan Program have been spending a significant portion of their time focusing on meeting the demand for information from various sources. This has been a real challenge, resulting in less time devoted to the substance of development programming and monitoring of progress. With the recent acquisition of additional staff resources, this is an area where improvements can be made.

5.2 Progress on Building a Stable State

As mentioned in Section 2.2, the overall goal of the Afghanistan Program is to support the efforts of the Afghan government, the Afghan people and the international community in stabilizing Afghanistan through the consolidation of the GoA's authority and legitimacy across the nation, and through improvements in the people's well being.

About half of the twelve projects selected for this review were designed to quickly roll-out State's services in provincial and rural areas as the projects were developed to assure the population that the new central government was functioning and able to provide services. Since, historically, the state has never had a significant presence in rural areas, this goal is a profound challenge for the Afghanistan government.

The Review Team recognizes that Afghanistan is still in the very early stages of the process of building a democratic, functional and stable state, where the population has confidence and trust in the government and where the government, in turn, can provide the services needed by its people to improve their well being needed to uphold and sustain this confidence and trust. We are, however, seeing encouraging early signs of progress in this direction on several fronts.

Meaningful Advances

A 2006 national survey^{Footnote 39} of the views of Afghans about their country reveals a complex mix of both positive and pessimistic perceptions, some progress, some decline in progress, and overall a frankness that identifies challenges for both the government and donors.

Among Afghans surveyed, twice as many (44 percent) felt their country was heading in the right direction compared with those who felt the opposite (21 percent). For those who said the country was heading in the right direction, the main factors were: good security; peace/end of war, and disarmament. When asked to compare their current "prosperity" to that under the Taliban regime, 54 percent of respondents felt it had increased versus 26 percent who believed their family was less prosperous.

A big part of the credit has to go to the people and government of Afghanistan, whose ownership, leadership, and commitment to work with the international community to implement initiatives in a financially accountable and responsible manner. Credit also has to go to the assistance provided by the international community, which has provided roughly 90 percent of the development resources needed, with Canada contributing a significant part of these resources.

The quality of this assistance and its contributions to the longer term objective of state building in Afghanistan, (the essential objective of CIDA, other donors and the GoA^{Footnote 40}), can be illustrated by the four major multi-donor projects in terms of their form, reach, results and relevance as indicated below:

• Form: most of the assistance has been provided in a form that allows the GoA to make good use of it in terms of strengthening the capacity of the national government machinery while providing the necessary services to its people. Operating Budget Support through the ARTF, NSP, MISFA and NABDP are all projects that are or were implemented by GoA ministries. The Ministry of Finance is centrally involved in all these projects, the MRRD currently implements NSP and NABDP, and originally implemented MISFA before it was set up as an independent company in mid 2006.
• Reach: most of the initiatives supported are national in scope, reaching many of the 34 provinces. They also reach the community level, where they engage the local people through the CDCs that decide and provide information upwards to higher levels of government about priority needs for funding, including the design of new initiatives. These projects are: Budgetary Support to the GoA (national and local levels); MISFA (national and local level financial institutions); NSP (community level); and NABDP (Provincial and district levels).
• Results: On the Governance side, strengthening institutions at the national (Parliament) and at lower levels (e.g. CDCs) etc are helping to lay the foundations for democratic institutions.
• Relevance: most of the assistance has been consistent with the needs of Afghanistan, as articulated in the ANDS and the Afghanistan Compact. Investments in areas such as elections support, micro finance, improved governance, community development and others are critical to help move Afghanistan towards a stable state.

Challenges Ahead

This is not to say that all is well. Afghanistan is a nascent democracy, and there are formidable challenges ahead. In the survey responses, Afghans identified the biggest problems at the national level as security (20 percent), unemployment (12 percent), the poor economy (12 percent), the presence of the Taliban (12 percent), and Warlords (10 percent). When asked about concerns of, 77 percent saw it as a major problem, 66 percent saw it as a problem in provincial government and 42 percent said corruption was a major problem in their daily lives. About 60 percent believed that corruption had increased at the national level in the last year while about 50 percent felt that it had increased at the provincial level.

In terms of state building, the long-term challenge of building local capacity is a cautionary note sounded in several of the reports as many of the ministries, including MRRD, are dependent on substantial expatriate technical assistance, including the returnee Afghan Diaspora. These collectively number in the hundreds in some ministries. Many of these persons will only come if there is a risk premium included in their fees. There is a rich literature and local commentary on the inequities and "fairness' of the salaries paid to foreign and Afghan returnees, compared to the salaries of average public servants, and concerns that in some cases performance does not match the cost. Initial intentions that foreign advisors would advise, coach or mentor their local counterparts. The reality is that there were few proficient Afghan public servants left at the middle and upper levels to be coached to establish an effective and functioning state. The advisors became implementers. Hence, ongoing capacity development and associated institutional Afghan leadership are at the core of the challenges in state building.

An important indicator of progress in state capacity would be the reduction over time of the number of foreign and expatriate Afghans on contract. However, there is little data on the total "map" of foreign and Afghan expatriate involvement in the many organizations and ministries, at the national, provincial and district levels of government. Mapping the current numbers and role of these personnel would provide a baseline for an indicator of dependence on outsiders―and indirectly a rough measure of progress in building local capacity.

5.3 Results at the Level of Initiatives

Although many of the investments of the CIDA Afghanistan Program are fairly recent and some are still in progress, the picture that emerges from our analysis is a favourable one: significant progress is being made towards the achievement of the their objectives.

For example, among the 8 largest projects, which accounted for $192 million, or 67 percent, of the $285 million disbursed by CIDA during the review period covered, 6 have significantly improved people's lives:

• The ARTF, as a mechanism for providing Operating Budget Support to the GoA, has emerged as one of the key instruments for financing the country's recurrent budget deficit until the GoA develops the capacity to do so. It supports the state at the national level in establishing its ability to fund public servant salaries down to the district level to deliver services and gradually develop associated management capacity. Results to date indicate that the GoA is headed in the right direction with an increasing capacity to meet its recurrent budget―revenue collection in 2006 was 55 percent above the previous year.
• The MISFA project, in which CIDA is the leading contributor among 5 donors with $37.0 million or 47.0 percent of the paid-in contributions, has established financially sustainable micro-finance institutions and provided credit and savings services to approximately 300,000 people, more than 72 percent of whom are women. This would appear to be on target to reach the GoA objective of 800,000 households by 2010. It may be worthwhile to recall that, historically, the formal financial sector was very limited outside of urban areas; and it hardly ever served the majority of citizens. MISFA has begun to substantially serve citizen and business savings and credit needs by developing a network of micro finance institutions (MFIs)―with emerging trends for some of them towards financial sustainability. While the reach of the MFIs is limited beyond Kabul and other urban areas, this program has been very successful in establishing independent financial institutions that are essential to livelihoods and effective governance.
• The NSP, in which CIDA is the second ranked contributor among donors, is the GoA's flagship program for strengthening community development, local governance, citizen participation and GoA legitimacy and credibility. It has created over 17,000 elected community development councils, which include women as members. It has reached more than 11.5 million people through community projects in 274 districts across most of the 34 provinces. NSP demonstrates that the state is actively involved in addressing needs at the community level through the establishment of democratically elected CDCs. The NSP is essentially grassroots democracy in action, fostering local empowerment and ownership. It starts with the local communities electing their leaders to form the CDCs, which provide a forum for community dialogue and ownership over development decisions at that level.
• The NABDP is beginning to develop the capacity at the provincial and district levels to serve broader regional needs, thus bridging the large gap between the central and community levels of governance. Some progress is reported at the district level; provincial level progress is much slower. District and Provincial level governance was the objective of the World Bank led Afghanistan Stabilization Program (ASP), which has essentially been suspended for poor performance as mentioned below.
• The Support to Elections project has helped to facilitate the participation of Afghan citizens and civil society in both Parliamentary and Provincial Council elections, witnessed by national and international observers. About 5,800 candidates (582 women) stood for election and 6.8 million persons voted. (51.5 percent turnout, 43 percent women)
• The Mine Action Project, which succeeded in removing and destroying significant amounts of anti-personnel mines and reducing the numbers of mine-related deaths, has also cleared significant areas of land which were previously unusable.
• One project (the ASP), designed to improve the operations of provincial and district government has been less successful. At CIDA's request, the Agency's disbursement for this project still rests in a World Bank trust account, and was reallocated to MISFA and NSP.
• Another project in Western Afghanistan, designed to rehabilitate irrigation systems for small farmers, was slow getting off the ground and is just starting.
• Among the remaining 19 smaller projects, some have had good results while others have had mixed results:
  • Projects with good results include: support to hold presidential elections, de-mining, Making Budgets Work, and collecting and containing heavy weapons in a safe location.
  • Those with weak results include the establishment of radio stations to provide literacy and educational services, and technical assistance to government ministries.
  • More complex and challenging projects such as judicial reform, reintegrating former combatants, and developing the capacity of parliament have been slow in showing results.

5.4 Accountability Framework and Use of Funds

An appropriate accountability and management framework is in place and being used to ensure funds are being properly used for the intended purpose.

Based on information received and documents examined during the Review, the Afghanistan Program/Desk adheres to CIDA's Policy and Regulations, and has a good Management and Accountability Framework. Appropriate oversight mechanisms for control exist, and the level and quality of information provided by partners is adequate, to enable CIDA to exercise its due diligence during implementation and ensuring that funds were used for the intended purposes. Program Staff are challenged.

The due diligence exercised by CIDA with regard to projects implemented by Canadian NGOs, is more direct than with the multilateral partners as there are no other parties to consult with or to influence in order to make any adjustments. In addition, the accountability expectations in terms of reporting and monitoring are between CIDA and the Canadian NGO partner, which are in line with CIDA's needs in terms of RBM. However, this type of approach is time consuming for CIDA since the monitor works under the supervision of CIDA.

With regard to multilateral partners (World Bank and UN organizations), CIDA has influence through the agreements signed, which include precise commitments. Concerning initiatives with the World Bank, there is specific provision that donors will receive on an annual basis the external auditors reports on performance and controls used by the organization to administer the funds. In addition, CIDA also has influence through its participation as a member of the Donors Committee, which is responsible for overseeing and supervising the performance of the World Bank Management Committee. The Donors Committee meets on a quarterly basis and provides guidance to the Management Committee on Grant Fund allocation strategies. With regard to UN organizations, CIDA is a member of project Steering Committees, which meets regularly to oversee progress and results achieved, and there is provision for CIDA to receive reports on progress achieved in relation to the project activities.

Our review of numerous reports from various independent sources and Partners confirmed that Program funds were used for intended purposes as outlined in the RRMAF. Indeed, based on the approved budget allocation, and our analysis of financial and activity reports submitted by the World Bank, United Nations Organizations, CIDA monitoring reports and Joint donors evaluation reports, we conclude that the Afghanistan funds were generally spent for intended purposes. Audit reports from the Auditor General of Afghanistan attested to the fairness of information presented in the financial statements produced by implementing partners.

Our analysis of the Program accountability framework confirmed the existence and the use of various oversight mechanisms (e.g. monitoring, audit, evaluation, financial audits, etc.). Most of them provide the required information for decision-making and for accountability purposes. CIDA independent corporate controls are in place and have been used.

Our review also confirmed that the Afghanistan Program management has been using its own internal oversight mechanisms such as monitoring missions of HQ staff, intelligence gathering from the field staff, due diligence exercise in the selection of Partners, etc.

In order to be more effective and efficient, most of the Donors decided to work together in the spirit of the Paris declaration and the Bonn international donors conference to support Afghanistan by using international multilateral organizations such as the World Banks and UN Organizations umbrella). These international organizations have their own oversight mechanisms. Our review confirmed the existence and the use of these independent and objective control mechanisms. In the case of the World Bank, we found that the oversight mechanisms were adequate and that the reporting was providing sufficient information to support CIDA's accountability vis-à-vis the Parliament and the Canadian public.