Aid Program Performance

Report 2016-17

Afghanistan

September 2017

@DFAT

DFAT.GOV.AU

Key Messages

This report summarises the performance of Australia’s aid program in Afghanistan from July 2016 to June 2017 against the Afghanistan Aid Investment Plan (2015-18).

Overall performance of the aid program has improved, with two out of three objectives now rated on-track. However, this is against a context of worsening security which is affecting the aid program at all levels. At the investment level, Australia’s aid to Afghanistan remains highly relevant and effective, but security-driven constraints are having an impact on its efficiency and our ability to monitor and evaluate. Gender performance has improved but there is still scope for enhancement of gender equality measures.

Context

Afghanistan remains one of the poorest countries in the world, affected by widespread vulnerability to poverty, natural disasters and protracted conflict. Growth has slowed considerably in recent years (1.5 per cent in 2015[1]) and current IMF estimates of 3.1 per cent[2] growth are not sufficient to sustain poverty reduction in a population with 2.7 per cent growth[3]. Afghanistan is heavily dependent on international donors to finance its budget, including security costs, and to ensure progress and preserve fragile gains. This enduring fiscal gap is a defining challenge for Afghanistan’s ‘transition decade’.

Australia, alongside other international donors, contributes vital resources to Afghanistan’s rebuilding efforts, but Afghanistan is likely to remain aid dependent for some time. Afghanistan is one of the most difficult environments in which Australia delivers aid. Following a large truck bomb detonated in Kabul’s Semi-Secure Zone on 31 May 2017,security restriction on movements in Kabul and temporary reductions in international staff presence curtailed normal donor operations.

Nearly two thirds of the country’s 34 million people are aged 25 or under and life expectancy at birth is 60.4 years[4]. Literacy rates in Afghanistan remain among the lowest in the world, estimated at 31 per cent of the adult population[5].Female literacy rates average 17 per cent, but have been reported as low as 1.6 per cent in rural southern provinces[6]. Despite these statistics, progress has been made against key development indicators. Nearly nine million students now attend primary school, with girls comprising one third of the total, compared to just one million students in 2002, all of whom where boys[7]. The number of high school graduates is expected to double from 225,000 in 2014 to 451,000 in 2019[8].

Notwithstanding these gains, Afghanistan continues to rank near the bottom of UNDP’s Gender Inequality Index.[9] Violence against women is endemic and deeply ingrained in Afghan society. Girls, on average, attend school for less than half the number of years than boys[10]. The maternal mortality rate is one of the highest in the world[11], with some recent data suggesting it has increased as a result of conflict-related closure of health facilities. Slow economic growth is compounded by low women’s labour force participation[12], and this shows little prospect of improvement in the short term, limiting opportunity for women’s economic empowerment.

President Ashraf Ghani’s power-sharing National Unity Government (NUG) entered its third year, following its formation in September 2014 after tightly contested presidential elections. With international support through to 2020 confirmed at the 2016 Brussels MinisterialConference on Afghanistan and the NATO Leaders Summit in Warsaw, the NUG continued to make incremental progress on its reform agenda to provide basic yet sustainable security and other services to the Afghan people. However, its capacity to do so was severely limited by internal friction and the security environment, which significantly deteriorated in 201617. In September 2016, the NUG signed a peace with the political and paramilitary group Hezb-i-Islami (HIG) – Afghanistan’s first major peace agreement since 2001. Afghanistan has scheduled presidential elections in 2019, following parliamentary elections in June 2018. Given the difficulty of the 2014 elections political uncertainty will increase in the lead up to 2019.

In 2015, after more than a decade of military operations, the international community handed back the lead for security to the Afghan National Defence and Security Forces (ANDSF). The ANDSF continues to build its capacity to fight the insurgency and remains committed to working with the international community to strengthen its capability. Following our commitment at the 2016 NATO Summit in Warsaw to extend our troop presence to 2020, in May 2017 Australia announced it would increase our deployment in Afghanistan to around 300 personnel.

Civilians continue to bear the brunt of the conflict in Afghanistan, with the United Nations reporting record numbers of civilians being internally displaced (660,672), injured (7,920) and killed (3,498) due to conflict in 2016, including a record number of child casualties (3,512)[13]. Additionally, the return of over one million Afghans from Pakistan and other neighbouring countries overwhelmed the Afghan Government and humanitarian partner capacity. The United Nations predictscontinued significant numbers of returns in 2017. Almost one thirdof the national population, 9.3 million people, are now in need of humanitarian assistance – a 13 per cent increase from 2016.[14]

Australia remains committed to Afghanistan’s development. While we are a medium-sized donor in Afghanistan, we have provided more than $1.26 billion in official development assistance (ODA) to the country since 2001. A Memorandum of Understanding (MoU) on Development Cooperation between the Government of Australia and the Government of the Islamic Republic of Afghanistan 2017-2020 was signed during President Ghani’s state visit to Australia in April 2017.

The MoU establishes the shared vision of the Governments of Australia and Afghanistan to work together to build a stronger, stable and more self-reliant Afghanistan. The agreement reaffirms mutual commitments made at the 2016 Brussels Conference, including Australia’s commitment to maintain our $80 million annual aid program to 2020 and Afghanistan’s commitment to progress electoral and security reform, tackle corruption and uphold human rights, especially for women and children. The MoU reaffirms the objectives in the Aid Investment Plan for Afghanistan (2015-18), which retain their relevance:

–objective 1: supporting the Afghan Government to maintain economic growth and institute more effective and accountable governance;

–objective 2: empowering women and girls by addressing barriers to their social, political and economic participation; and

–objective 3: building resilience and supporting at-risk populations, including through the delivery of humanitarian assistance.

Australia, alongside other donors, supports the new Afghanistan National Peace and Development Framework (ANPDF) 2017-2021 as a five-year strategic plan.

Expenditure

In 2016-17 Australia provided $86.9 million in Official Development Assistance (ODA) to Afghanistan – making it Australia’s fourth largest bilateral aid program. This makes Australia a medium sized donor in the country, with the United States, Germany, United Kingdom, Japan and the European Union among the leading contributors (see Table 1 below for most recent comparison).

Table 1: Top ten donor expenditure in Afghanistan 2015 (USD)[15]

To maximise value for money in an exceptionally challenging environment, Australia’s funding is delivered through pooled funding mechanisms, in line with the New Deal for Engagement in Fragile States and aid effectiveness principles, and niche bilateral areas where we can add the most value.

Table 2: Total Australian ODA Expenditure in FY 2016-17 by AIP objective

Objective / $ million / % of total ODA
Bilateral*
Objective 1: supporting the Afghan Government to achieve economic growth and institute more effective and accountable governance / 47.07 / 54.2%
Objective 2: empowering women and girls by addressing barriers to their social, political and economic participation / 7.78 / 9.0%
Objective 3: building resilience and supporting at-risk populations / 29.14 / 33.5%
Other / 0.52 / 0.6%
Sub-Total Bilateral / 84.5 / 97.2%
Regional and Global / 0.9 / 1.0%
Other Government Departments / 1.5 / 1.7%
Total ODA Expenditure / 86.9 / 100.0%

*The bilateral expenditure breakdown is provided in Table 3 below.

Table 3: Bilateral Investment Expenditure in FY 2016-17 (total = $84.5 million)

Progress towards AIP Objectives

Objective 1

Supporting the Afghan Government to achieve economic growth and institute more effective and accountable governance

This objective is rated Amber .

The conflict in Afghanistan has implications for its state-building agenda in which Australia takes part. Government reform efforts have been slow to take hold and many large projects are seemingly only arresting decline. Consistent with good practice for fragile and conflict-affected states, about 60 per cent of Australian aid is delivered ‘on budget’, through multi donor trust funds. Australian contributions are a small part of a complex situation, and we have limits to our ability to influence economic growth and effective governance against this background.

Australian aid under this objective is delivered mainly through the World-Bank administered Afghanistan Reconstruction Trust Fund (ARTF) and the UNDP-managed Law and Order Trust Fund for Afghanistan (LOTFA). We also supported critical reforms through the Institute for State Effectiveness (ISE).

Outcome 1: Key Ministries in the Afghan Government have improved capacity and incentives to deliver targeted government services

Australia’s investment against this outcome is primarily delivered through DFAT support to the ARTF, which provides on-budget financing to the Government of Afghanistan to deliver activities in line with National Unity Government (NUG) priorities. Through the ARTF, Australia is able to support government development priorities and programs throughout Afghanistan. While we are not directly implementing the programs, Australia actively participates in and influences Fund decisions in key governance forums. An independent review planned for this reporting period was delayed due to Bank timelines, so we rely on the Bank’s self-assessment which provides comprehensive output reporting but lacks an overall sense of performance of the ARTF as a whole. This contributes to the Amber rating for this objective.

»Benchmark: scorecard indicators for the ARTF improve or are maintained from 2015 ratings.

This benchmark was met as the ARTF continued to meet many indicators in the 2016 performance scorecard, both in terms of project and program level outputs, and operational effectiveness. Under Pillar III (ARTF Operational Effectiveness/Quality of Portfolio) seven indicators were assessed as being on track, three slightly off track and one lacked data. The World Bank exceeded the percentage of active projects implemented, and showed high rates of funding disbursement. While two of the off track indicators relate to gender mainstreaming in results monitoring, the World Bank has exceeded the percentage of portfolio projects with Gender Focal Point staff and the percentage of portfolio projects which include technical assistance on gender issues and gender supervision in implementation.

The ARTF made some progress under its results-based performance program, the Incentive Program. This provides additional incentive funding when reform targets are met. Reforms are in the areas of customs, fiscal reform, performance audit, tax, and salary payments. Recent reporting suggests the Incentive Programis an effective part of ARTF, although progress has been delayed by lack of government clarity over priority reforms.

»Benchmark: commence implementation of new activity for PFM support

This benchmark was partly achieved.A new program did not proceed as Australia consolidated engagement with fiscal reform through funding to the Institute of State Effectiveness (ISE). ISE is facilitating a program of national accountability for public finances and providing advisory input on strategic infrastructure to help deliver the Government’s reform agenda. The strength of this small investment is in providing flexible technical advice to the Afghan Government. It is, however, built on personal relationships, which could shift with changes to the political context.

Outcome 2: The Afghan Government is better able to deliver government services through its National Priority Programs (NPPs)

»Benchmark: The new 2015 Mutual Accountability Framework is monitoring progress against mutual commitments, supporting the Afghan Government’s reform efforts, and coordinating donor efforts is strengthened from Australia’s participation in the 5+3 group

This benchmark was met. Australia continued to deliver over 50 per cent of our aid through government systems and 80 per cent aligned to National Priority Programs (NPPs), as agreed in the SMAF, the successor mutual accountability framework for donor support to Afghanistan. Australia’s $25 million funding to ARTF in 2016-17 and $20 million contribution to a new Economic Infrastructure Preparation Facility established under the ARTF enabled us to provide 53 per cent of our bilateral funding on budget. Australia continued to marshal donor efforts towards better coordination through participation in the 5+3 group[16].

The ARTF supported the Afghan Government to deliver services in line with its NPPs. The ARTF 2016 Annual Scorecard reported that progress was achieved in mostsectors, including agriculture, health and education, and across most indicators, while other areas recorded slower gains than expected, or reversals in progress (education and employment, in particular). Eighty-eight per cent of ARTF projects were self-assessed to be performing at satisfactory levels (we are seeking additional validation), and the World Bank increased its disbursement rate to 47 per cent.

Key achievements reported in the 2016 ARTF Scorecard include[17]:

–ARTF benefited approximately 9.3 million people for all projects (excluding the National Solidarity Program), with 40 per cent female;

–In agriculture, 7.6 million people were provided access to irrigation (exceeding the target of 1.7 million by 2017), including 48 per cent female;

–In health, the System Enhancement for Health in Transition project increased number of births by skilled attendance to 732,248, well above the target of 566,683.

–Under the Second Education Quality Improvement Program, 9 million girls and boys were enrolled in basic education, with 39 per cent female.

LOTFA is the principal mechanism through which Australia provides the ODA-eligible portion of funding to meet its annual USD100 million commitment to sustainment of the Afghan National Security and Defense Forces. It is highly relevant as a contribution to providing basic security and stability. Since 2015, Australia’s USD20million annual contribution to LOTFAhas been earmarked to the Support for Payroll Management (SPM) program, which focusses on developing the capacity of the Ministry of Internal Affairs (MoIA) to independently manage payroll-related operations and functions. In addition to funding police salaries, the SPM component of LOTFA aims to restructure and improve the payroll systems for the Afghan National Police. Results over the reporting period show the SPM project has continued to make some progress but there remainserious questions over whether the goal of full transition to Afghanistan’s Ministry of Internal Affairs (MoIA) can be achieved by the end of 2017.

LOTFA’s 2016 Aid Quality Check showed unsatisfactory effectiveness due to poor disbursement and implementation progress and lack of evidence for achievements. Australian funding was earmarked against SPM butas LOTFA is a pooled mechanism our contribution is judged by performance of the overall program. Improvements in the coverage of Electronic Fund Transfer of police salaries in 2016 (to 89 per cent), while steady, were below the performance benchmark target of 100 per cent for the year. A capacity assessment at the end of 2016 revealed that MoIA did not meet donor conditions for full transition of payroll management. This was a critical milestone for LOTFA and the Afghan Government and donors agreed to extend the SPM project by another 12 months to December 2017, to allow more time before handing over management of salary payments to the MoIA. Australia has increased efforts to engage with funding partners in Kabul and through capitals to improve performance of LOTFA.

LOTFA is also the only active investment in Afghanistan that is unsatisfactory on gender. While the SPM program has a small number of gender-related activities, reporting is poor and UNDP lacks capacity to explore further options. In 2016, the SPM program continued to update Web-Based Electronic Payment System data to enable capture of gender-disaggregated data, which helps to show how many male and female police are paid during each pay cycle. The SPM project also supported the MOIA in modifying attendance books and leave request forms, which now include gender-based leave considerations (including for maternity leave). Under SPM, the UNDP is working with MoIA to encourage more training for women in payroll management. Our efforts to improve LOTFA’s performance on gender include advocacy for thorough gender analysis to be done in 2017-18, to inform a more strategic and effective approach as LOTFA expands support to the broader justice sector.

objective 2

Empowering women and girls by addressing barriers to their social, political and economic participation

This objective is rated Green. The situation for women in Afghanistan continues to be precarious. Against this backdrop, Australia continues to prioritise gender equality, adapting programming to respond to security and other challenges. This objective’s Green rating is a reflection of satisfactory performance of DFAT’s investmentsdespite the deteriorating environment throughout Afghanistan. It is an improvement from the Amber rating in 2015-16, based on good investment performance and strong progress in mainstreaming. Australia remains committed to pursuing better outcomes for women and girls in Afghanistan, while acknowledging that the context is one of the most challenging in whichwe deliver aid, and is declining. We will monitor the sector and context closely to manage the risks of working on sensitive gender issues in Afghanistan.

Outcome 1: Women and girls in target districts access social services specific to their needs

Australia’s Ending Violence Against Women (EVAW) program supports national efforts to reduce the number of women who experience violence and better meet the needs of survivors. The program is delivered through five key partners: the Afghan Women’s Network (AWN); United Nations Population Fund (UNFPA); Afghanistan Independent Human Rights Commission (AIHRC); United Nations Women (UN Women); and The Asia Foundation (TAF). A midterm review[18] confirmed that, despite some setbacks, the program has continued to make progress towards its goal of a sustained reduction in violence against women (VAW). The review recommended discontinuing a reporting hotline, which has been reflectedin the design of a second phase of the program.