Document of The World Bank FOR OFFICIAL USE ONLY Report No. 136690 – AF INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK FOR THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR THE PERIOD FY17–FY20 June 24, 2019 Afghanistan Country Management Unit South Asia Region The International Finance Corporation Asia and Pacific The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Country Partnership Framework was October 2, 2016. CURRENCY EQUIVALENTS Currency Unit = Afghani (AFN) US$1 = AFN 80.7 (as of May 23,2019) FISCAL YEAR July 1–June 30 ABBREVIATIONS AND ACRONYMS A4I Advisory for Investment ACBRIP Afghanistan Central Business Registry and Intellectual Property ACReMAP Anti-Corruption and Results Monitoring Action Plan AESD Afghanistan Extractive Sector Development AF Additional Financing AFMIS Afghanistan Financial Management Information System ALASP Afghanistan Land Administration System Project AMD Afghanistan Meteorological Department ANPDF Afghanistan National Peace and Development Framework ARAP Afghanistan Rural Access Project ARD Afghanistan Revenue Department AREDP Afghanistan Rural Enterprise Development Program ARTF Afghanistan Reconstruction Trust Fund ASA Advisory Services and Analytics ASM Artisanal and Small-scale Mining BETF Bank-executed Trust Fund CASA Central Asia-South Asia CBR Capacity Building for Results CBS Core Banking System CCAP Citizens’ Charter Afghanistan Project CDC Community Development Council CIP Cities Investment Program COA Chart of Accounts CPF Country Partnership Framework CPPR Country Portfolio Performance Review DABS Da Afghanistan Breshna Sherkat (power utility company) DBA Afghanistan Central Bank (Da Afghanistan Bank) DFID U.K. Department for International Development DPG Development Policy Grant DRM Disaster Risk Management EITI Extractive Industries Transparency Initiative ELWIN Enhancing Learning/Capacity on Weather and Climate Information ESF Environmental and Social Framework ESSP Extractives Sector Support Project EQRA Education Quality Reform in Afghanistan EWS Early Warning System EZ-Kar Eshteghal Zaiee - Karmondena FAM Famine Action Mechanism FCS Fragile and Conflict-affected States FCV Fragility, Conflict, and Violence FPIP Fiscal Performance Improvement Support Plan FSP Fiscal Performance Improvement Support Project FSRRP Financial Sector Rapid Response Project FY Fiscal Year GAFSP Global Agriculture and Food Security Program GDP Gross Domestic Product GMCA Geneva Ministerial Conference on Afghanistan GoA Government of Afghanistan GRM Grievance Redress Mechanism HMIS Health Management Information System HPP Hydropower Project HRAIS High-Risk Areas Implementation Strategy HCI Human Capital Index IARCSC Independent Administration Reform and Civil Services Commission ICT Information and Communication Technology IDA International Development Association IDLG Independent Directorate of Local Governance IFC International Finance Corporation IMF International Monetary Fund IPF Investment Project Financing IPP Independent Power Project ISN Interim Strategy Note ISR Implementation Status and Results Report KMDP Kabul Municipal Development Program LTO Large Taxpayers Office MAIL Ministry of Agriculture, Irrigation, and Livestock MCCG Maintenance and Construction Cash Grant MEW Ministry of Energy and Water MFA Ministry of Foreign Affairs MFD Maximizing Financing for Development MGF MIGA Guarantee Facility MIGA Multilateral Investment Guarantee Agency MOCI Ministry of Commerce and Industries MoE Ministry of Education MoF Ministry of Finance MoMP Ministry of Mines and Petroleum MoPW Ministry of Public Works MRRD Ministry of Rural Rehabilitation and Development MSMEs Micro, Small, and Medium Enterprises MTO Medium Taxpayers Office NEPA National Environment Protection Agency NHLP National Horticultural and Livestock Project NGO Nongovernmental Organization NPA National Procurement Authority NRM National Resource Management NSP National Solidarity Program NTA Non-Technical Advisory O&M Operation and Maintenance OFWMP On-Farm Water Management Project OMAID Opportunity for Maximizing Agribusiness Investments and Development PACT Partnership Action Coordinating Team PAISA Payments Automation and Integration of Salaries in Afghanistan PBA Performance-Based Allocations PDO Project Development Objective PFFP Partnership Framework and Financing Program PFM Public Financial Management PLR Performance and Learning Review POSR Portfolio Operational Status Review PPA Power Purchase Agreement PPIAP Public-Private Partnerships and Public Investment Advisory Project PPP Public-Private Partnership PSW Private Sector Window RFP Request for Proposal SCD Systematic Country Diagnostic SEHAT System Enhancement for Health Action in Transition SIG Social Inclusion Grant SOE State-owned Enterprise SORT Systematic Operational Risk-rating Tool STO Small Taxpayers Office SWEEP Strengthening Women’s Economic Empowerment Project TAGHIR Tackling Afghanistan's Government HRM and Institutional Reforms TPM Third-Party Monitoring TVET Technical and Vocational Education and Training UN United Nations UNAMA United Nations Assistance Mission in Afghanistan UNHCR United Nations High Commissioner for Refugees USAID U.S. Agency for International Development WEE-NPP Women’s’ Economic Empowerment National Program WEE-RDP Women’s’ Economic Empowerment Rural Development Program World Bank IFC MIGA Vice President: Hartwig Schafer Nena Stoiljkovic Keiko Honda Director: Shubham Chaudhuri Nadeem Siddiqui Merli Baroudi Task Team Leader(s): Anastassia Alexandrova, Wagma Mohmand, Persephone Economou, Katie Blanchette, Abdullilah Qadeer, Kyoo-Won Oh Najibullah Ziar Bushra Mohammad AFGHANISTAN PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK FY17–FY20 Table of Contents I. INTRODUCTION........................................................................................................................................ 1 II. MAIN CHANGES IN THE COUNTRY CONTEXT........................................................................................... 1 A. Changes in Poverty and Shared Prosperity ........................................................................................ 1 B. Macroeconomic Changes ................................................................................................................... 3 C. Key Country Developments ................................................................................................................ 3 III. SUMMARY OF PROGRAM IMPLEMENTATION ......................................................................................... 5 A. Delivery and Portfolio Performance ................................................................................................... 5 B. Evolution of Partnerships and Leveraging .......................................................................................... 9 C. Progress toward CPF Objectives ....................................................................................................... 10 IV. EMERGING LESSONS .............................................................................................................................. 11 V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK ........................................................... 13 VI. RISKS TO THE CPF PROGRAM................................................................................................................. 15 ANNEX 1: REVISED RESULTS FRAMEWORK FOR THE AFGHANISTAN CPF .................................................. 17 ANNEX 2. MATRIX OF CHANGES TO THE ORIGINAL CPF RESULTS MATRIX ................................................ 27 ANNEX 3: PROGRESS TOWARD THE CPF OBJECTIVES ................................................................................. 35 ANNEX 4: HISTORIC AND PLANNED COMMITMENTS ................................................................................. 46 ANNEX 5: MAXIMIZING FINANCE FOR DEVELOPMENT IN AFGHANISTAN ................................................. 49 ANNEX 6. SERVICE PROVISION IN CONFLICT AREAS: KEY ENABLERS.......................................................... 53 ANNEX 7. ARTF PARTNERSHIP FRAMEWORK AND FINANCING PROGRAM ................................................ 55 I. INTRODUCTION 1. The Country Partnership Framework (CPF) for the Islamic Republic of Afghanistan (FY17–FY20) dated October 2, 2016, was the World Bank Group’s first full-fledged strategy for the country, after relying on a series of two-year Interim Strategy Notes (ISNs). It set out a medium-term framework intended to retain flexibility and responsiveness to the rapidly changing situation on the ground. 2. During the CPF implementation, the situation in Afghanistan continuously evolved. Gains were made in domestic revenue mobilization, maintaining a sound macroeconomic framework, improving the regulatory environment for business, or sustaining and improving people’s access to basic services. Hardest challenges remain: poverty and food insecurity increased sharply; the fiscal situation is most challenging, with one of the highest security expenditures to gross domestic product (GDP) ratios in the world, while 40 percent of GDP is covered by international grants; gender imbalances are stubborn; and vulnerability to climate change effects is one of the greatest globally. In 2018, economic growth is estimated to be only 1.8%, and Afghanistan ranks 133rd of 157 countries in the Human Capital Index, which is only 0.39. Political uncertainty is mounting and likely to linger in the context of contested 2018 parliamentary elections, unclear prospects for the presidential elections in 2019, and the ongoing peace negotiations with the Taliban. 3. This Performance and Learning Review (PLR) recognizes that the Afghanistan CPF remains a strong platform for World Bank Group engagement. It allows maintaining the balance between protecting the poor and laying the foundations for longer-term growth. The PLR proposes to continue selecting programs through a fragility and conflict lens—focusing on state capacity and service delivery, addressing displacement, empowering communities, and yet investing in longer-term economic transformation. The project- and country-level data suggest that the CPF pillars—Building Strong and Accountable Institutions, Supporting Inclusive Growth, and Deepening Social Inclusion—and the cross- cutting area of Gender/Empowering Women remain relevant, consistent with the Afghanistan National Peace and Development Framework (ANDPF) and aligned with the World Bank Group’s twin goals. 4. Progress in achieving the CPF objectives has been mixed, albeit overall stronger than what may be expected given the rising challenges in the country. The PLR proposes strengthening the results matrix by placing an increased emphasis on climate resilience, women’s empowerment, and private investment in Afghanistan. Two objectives and several results indicators are proposed to be added. 5. Considering the progress against the CPF objectives and the uncertainties ahead, the PLR also proposes (a) extending the Afghanistan CPF by two years to cover FY21–FY22 and (b) producing another agile PLR early in FY21 to account for any significant changes that could affect World Bank Group engagement. II. MAIN CHANGES IN THE COUNTRY CONTEXT A. Changes in Poverty and Shared Prosperity 6. The most recent Afghanistan Living Conditions Survey of 2016/17 shows that 54.5 percent of Afghans live below the national poverty line compared to 38.3 percent in 2011/12. Households relying on agriculture and livestock for their income experience higher poverty rates, 65 percent and 66 percent respectively. Food insecurity rose from 33 percent to more than 44 percent in the last three years. 1 7. While data are not available, poverty in 2018 has likely been exacerbated by drought conditions, slower growth, and continued displacement. Most poor Afghans —82 percent— continue to live in rural areas, relying heavily on agriculture for livelihoods. However, the 2016/17 poverty data also shows that the deterioration in welfare has become more widespread in both rural and urban areas throughout the country (Figure 1a). Figure 1. Poverty Has Increased While Consumption Has Declined for All Quintiles a. Poverty Rate (% of Population) b. Expenditure by Quintile (AFN) 70% 59% 6,000 60% 55% 5,000 50% 42% 36% 4,000 40% 42% 38% 3,000 30% 34% 25% 2,000 20% 26% 1,000 10% 0 0% Bottom 2 3 4 Top 20% 2007-08 2011-12 2016-17 20% 2007-08 total exp (in 2016 prices) National Urban Rural 2011-12 total exp (in 2016 prices) 2016-17 total exp Source: Afghanistan Development Update, May 2019. World Bank Group. 8. Relatively wealthier households tend to reap or lose more welfare gains from growth fluctuations. The welfare of the bottom 80 percent of the Afghan population appears to be relatively unresponsive to trends in economic growth, with real per capita expenditures in steady decline over the last decade (Figure 1b). On average, per capita expenditure fell by 18 percent across the distribution between 2011/12 and 2016/17 and fell by 11 percent among the poorest 20 percent of people. 9. The Afghanistan’s Human Capital Index (HCI) of 0.39 suggests that a child born in Afghanistan today will be only 39 percent as productive as an adult as s/he could be if s/he enjoyed complete education and full health. The stunting rate of 41% is a big contributor to the HCI ranking is a huge disadvantage for the country’s next generation. Quality of learning further aggravates prospects of Afghan youth: HCI informs that boys in Afghanistan can expect to complete 9.2 years of school but adjusted for actual learning this indicator is only 5.3 years; for girls it is much worse with only 3.8 learning-adjusted years of school. The HCI indicates that poverty challenges will likely remain significant for the next generations. 10. The Afghanistan CPF points out that poverty levels remained stubbornly high even in the period of rapid growth of 2002–2012. Among the critical constrains to poverty reduction, it notes, are fragility and conflict, high population growth rate, difficult geography, and declining aid. During the CPF implementation, these factors remained fully at play and were compounded by the massive drop in aggregate demand following the withdrawal of international troops, intensified forced displacement, and acute climate change effects (see Section II.C). As further noted in the CPF, without peace, opportunities to reduce poverty remain limited. 2 B. Macroeconomic Changes 11. Afghanistan has experienced slow growth since 2014, with the drawdown of international security forces, accompanying reductions in international grants, and a worsening security situation. From 1.5 percent in 2015, growth reached 2.3 percent in 2016 and 2.7 percent in 2017. Nascent recovery was led by the agriculture and services sectors, and it was supported by (a) strong progress with economic reforms, (b) sound macroeconomic management, and (c) a relatively stable political environment. Growing momentum, however, was lost in 2018 due to mounting political uncertainty and the severe impacts of drought. Although projected at 2.4 percent for 2018, growth is now estimated at 1.8 percent, the lowest rate since 2001. 12. Growth in 2019 is expected to remain sluggish, as continued violence and political instability could further dampen confidence and investment. Over the medium term, growth is projected to gradually accelerate to around 3 percent by 2021, assuming a stable political transition and subsequent improvements in investor confidence. However, if political instability and weakened governance remain, revenue mobilization is expected to stall, and the fiscal deficit is expected to increase to 2.5 percent of GDP by 2022, despite strong performance in revenue collection. Grants are expected to decline, which, if drastic, would lead to serious fiscal and external adjustments and undermine the capacity of the government to maintain basic services. On the other hand, debt is expected to remain around 7 percent of GDP, with interest payments amounting to 0.2 percent of GDP. C. Key Country Developments 13. The security situation deteriorated significantly. Total civilian casualties reached 10,993 in 2018, higher than 10,459 in 2017, with civilian deaths reaching a record high of 3,804 (Figure 2a). Anti- government elements inflicted 64 percent of the casualties (59 percent of civilian deaths and 66 percent of injuries). Suicide, complex attacks and ground battles remained the leading causes of civilian casualties. 14. The displacement crisis intensified during the CPF implementation, with more than 1.7 million Afghans internally displaced and more than 2 million returning to Afghanistan—mostly from Pakistan and Iran—since 2015 (Figure 2b). 740,000 people were newly displaced from January 2018 to February 2019, and over 800,000 undocumented Afghans returned from Iran (mostly) and Pakistan in 2018 alone. Deterioration of rural livelihoods added to displacement: nearly 300,000 individuals were displaced by drought in 2018. The growing number of returning refugees and internally displaced people has been escalating pressure on services, limited employment opportunities, and available humanitarian assistance. 3 Figure 2: Growing Insecurity Poses Risks to Growth and Investment a. Civilian Casualities b. Conflict-induced Displacements 140 Hundreds 800 Thousands 120 700 100 600 80 500 60 400 300 40 200 20 100 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Civilian Deaths Civilian Injured Source: The United Nations Assistance Mission in Afghanistan (UNAMA) and the United Nations High Commissioner for Refugees (UNHCR). Note: Conflict-driven displacements in 2018 as of February 25, 2019. 15. Political uncertainties have mounted. In 2018, the moves by the President of Afghanistan toward a negotiated peace agreement with the Taliban, including an unprecedented mutual ceasefire over Eid al- Fitr in June, generated cautious optimism. However, the parliamentary elections held in October 2018 saw the election-related violence with significantly exceeding casualties over the four previous elections. The results of the elections remain contested as of early May 2019, and the situation is exacerbated by the unclear process for and outcomes of the 2019 presidential elections (rescheduled twice, currently expected in September 2019). 16. The peace dialogue with the Taliban could present opportunities and development challenges at the same time. Political uncertainties are compounded by the growing anxiety in the Afghan society about the continued level and duration of international security support, as well as the uncertain process and outcome of the ongoing peace dialogue with the Taliban. A political settlement with the Taliban could present opportunities for significant improvements in security, service delivery, and investor confidence. However, the outcomes will depend heavily on the sustainability of peace, the nature of any post- settlement government, and the broader post-peace institutional environment. Development challenges could spike in the event of peace as fiscal pressures (to finance demobilization, the reintegration of ex- combatants, and the expansion of services nationwide) could increase in the context of declining international aid, while a substantial movement of people and potential influx of returnees could happen along with property rights disputes and other intensified tensions. 17. Climate change effects have become stronger. Afghanistan is among the most vulnerable countries (ranked 8 of 170 in the next 30 years) to climate change effects. Droughts are more frequent, and snow is melting earlier than before, leading to recurrent and more intense spring floods and summer water shortages. The impact on agriculture is significant: 2017 rain-fed wheat production was the worst since 2005, and the 2018 drought is estimated to have reduced farmers’ income by 18 percent. Recent years have recorded high volatility of agricultural growth —including periods of sharply negative growth— driven by reliance on weather conditions. Farmers and the poor are highly exposed. 4 III. SUMMARY OF PROGRAM IMPLEMENTATION A. Delivery and Portfolio Performance 18. The CPF implementation in FY17–FY19 has been steady. The main source of financing continues to be the Afghanistan Reconstruction Trust Fund (ARTF) that provides grant support of US$700–900 million per year, based on a three-year financing strategy. The current strategy, known as the 2018–2020 ARTF Partnership Framework and Financing Program (PFFP, see Annex 6), endorsed the ARTF financing of US$2.485 billion. The ARTF finances investment projects (61 percent), policy-based budget support (36 percent), and World Bank-executed technical assistance activities (3 percent). 19. The International Development Association (IDA) has also been essential for the program delivery. In addition to the core IDA18 indicative allocation of SDR 560.2 million (over US$780 million)1, Afghanistan has been accessing the Regional Window and the Private Sector Window (PSW). IDA provides US$250–350 million annually, complementing the ARTF, with US$336 million in FY18 and US$360 million in FY19.2 Given the uncertainty caused by the elections and peace settlement discussions, IDA18 resources have been significantly front-loaded, so that nearly 90 percent of the performance-based allocation (PBA) will be used by the end of FY19. IDA windows have been instrumental in ensuring timely, tailored support to both short- and long-term needs of Afghanistan. 20. Linking IDA and ARTF financing and integrated management of the IDA and ARTF-financed portfolios provided a uniquely successful platform for pooling on-budget financing from multiple partners in support of Afghanistan’s development priorities, with increased impact and effectiveness improvements. Highlights of the joint IDA-ARTF programming include the first IDA Inclusive Growth Development Policy Grant (DPG) to Afghanistan (FY17), the innovative Incentive Program Development Policy Grant series (FY18–FY20, building on the ARTF Recurrent Cost Window), and the first use of the IDA PSW in South Asia for the Rikweda agribusiness transaction between the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) (FY18). 1 Actual PBA allocations are determined annually and depend on: (a) total IDA resources available; (b) the number of IDA- eligible countries; (c) the country’s performance rating, per capita GNI, and population; and (d) the performance and other allocation parameters for other IDA borrowers. 2 As of May 1, 2019, the expected total delivery for FY19 is US$460 million. This is reflected in Figure 3 under FY19*. 5 Figure 3. ARTF and IDA Delivery to Afghanistan ARTF and IDA ARTF and IDA Commitments, US$M Disbursements, US$M 1600.0 1200.0 1400.0 1000.0 1200.0 1000.0 800.0 800.0 600.0 600.0 400.0 400.0 200.0 200.0 0.0 0.0 FY16 FY17 FY18 FY19* FY16 FY17 FY18 FY19* IDA ARTF IDA ARTF Source: The World Bank Group 21. Portfolio management and performance have been strong. In FY17, seven underperforming operations were closed or restructured. Only one project remains in problem status—the Trans- Hindukush Road Connectivity project (US$200 million, IDA); its restructuring is planned for the midterm review in June 2019, to allow for an accelerated implementation after multiple procurement challenges. 22. The operational bottlenecks are being addressed quarterly through joint Government-World Bank portfolio operational status reviews (POSRs) and the annual country portfolio performance review (CPPRs), launched in January 2019 under the leadership of the Ministry of Finance (MoF). The CPPR confirmed that portfolio alignment and performance remain satisfactory but identified a series of systemic issues that are being addressed jointly with line ministries. These include the following: • Managing fiduciary challenges (procurement delays, information leakages, nonpayment of contractors, deficiencies in HR management, and so on). CPPR recommended to enhance the integrity of the procurement process and evaluation methodology; plan better and adequately resource the orderly closure, asset transfer, and document retention for ARTF- IDA-funded projects. • Operating in insecure and high-risk areas (personal risks, high development risks related to withdrawal or suspension of services delivery, difficulty in attracting qualified international consultants without duty of care). CPPR recommended to support the rollout of the High- Risk Areas Implementation Strategy (HRAIS) developed for the Citizens’ Charter Afghanistan Project (CCAP); add portfolio-wide duty of care framework for consultants. • Managing safeguards risks (managing environmental and social risks is difficult for multiple reasons, including capacity and supervision limits). CPPR recommended to establish a process to proactively manage safeguards risks and bottlenecks in the portfolio and pipeline using the new agreed mechanism and workflow to ensure systematic and comprehensive management of environmental and social risks across the portfolio. • Maximizing the impact of third-party monitoring (TPM) by strengthening follow-up. CPPR recommended to implement a workflow for comprehensive and systematic follow-up on the 6 TPM findings; greater involvement of the MoF and ARTF partners; and formal linkages to institutional monitoring tools, for example, the Implementation Status and Results Reports (ISRs), the CPPR, and the POSR. 23. Implementation support is being enhanced by the hands-on implementation support protocol and the use of innovative information and communication technology (ICT) and approaches, for example, community monitors. The 2018–2020 ARTF PFFP also promotes an increased use of results-based instruments and strengthening anti-corruption mechanisms and partnerships across sectors and in the entire Afghanistan portfolio. 24. IFC’s investment program has been advancing in the difficult operating environment. The current investment portfolio amounts to almost US$53 million, concentrated in the telecoms, financial markets, and agribusiness sectors. The portfolio is made up of loans (88 percent debt; 12 percent equity), concentrated in telecoms, financial markets, and agribusiness sectors. There is one nonperforming client, which has been adversely impacted due to repeated security incidents. IFC teams are actively engaged with the company to address the outstanding issues and also working with other clients to ensure satisfactory portfolio quality. Given the challenges of private investment in the current uncertainty, IFC in a baseline scenario will maintain the CPF target of $75–80 million by 2022, however expects to extend the baseline and scale up its activities, if the political and security environment does not deteriorate significantly. Going forward, IFC will support the government in its efforts to promote private sector and inclusive growth through mobilizing both domestic and foreign investment by leveraging new instruments, such as CMAW and IDA PSW. IDA PSW will be leveraged for Mazar IPP (Risk Mitigation) and Kardan University (Local currency facility/Blended finance facility). 25. MIGA’s guarantees are currently supporting four cross-border projects in Afghanistan. Afghanistan is a key country for MIGA for delivering on its focus areas of IDA and Fragile and Conflict- affected States (FCS), as outlined in MIGA’s Strategy and Business Outlook FY2018-FY20. As of end-May 2019, MIGA had a gross outstanding exposure of US$124 million in four projects spanning telecoms, agribusiness, and the manufacturing sectors. The largest project, a joint effort with IFC with a gross outstanding exposure of US$114 million, is in telecoms. In FY2018, MIGA issued guarantees for around US$5.2 million for the Rikweda Raisins project utilizing the MIGA Guarantee Facility (MGF) of the IDA 18 IFC-MIGA Private Sector Window for the first time in South Asia. In FY2019, an additional guarantee for around US$2.4 million was issued supporting the same project, and also utilizing the MGF. These guarantees were against the risk of War and Civil Disturbance for up to 10 years. Most of MIGA’s guarantees in Afghanistan have utilized MIGA’s Small Investment Program, which facilitates investments in small and medium-sized enterprises in finance, agribusiness, manufacturing, and service sectors. MIGA’s guarantees have utilized first-loss facilities, including the Conflict-Affected and Fragile Economies Facility and MGF. MIGA’s pipeline includes a number of projects in energy and agribusiness. 26. The World Bank Group’s collaboration has deepened during the CPF implementation, focused on applying the Maximizing Financing for Development (MFD) approach in key sectors, in the context of the CPF and IFC 3.0. Innovative de-risking tools, including the IDA PSW, have been instrumental in delivering the program and ensuring bankability and sustainability of investments. However, applying the MFD principles requires a longer time horizon than traditional investments. In a fragile and low-income country such as Afghanistan, long-term sustained collaboration among the different parts of the World Bank Group is key to achieving results, as demonstrated by the Rikweda raisin project (see Box 1). The agriculture/agribusiness, energy, ICT, and financial sectors continue to be priorities for collaboration, featuring such projects as the on-going Digital CASA that helps attract private investment in telecom 7 sector by updating the regulatory frameworks and preparation of feasibility studies, and the forthcoming Mazar IPP (gas to power, the first independent power producer, funded entirely by the private sector), the Kajaki IPP (hydropower) and the Scaling Solar projects. The Global Infrastructure Facility also supports the provision of IFC transaction advisory services for a solar farm of 50 MW. A recent World Bank Group deep dive on the key sectors helped further detail collaboration in Afghanistan: see Annex 5 for more details on applying the MFD approach. B ox 1. Wo r ld B an k Gr o u p Co ll ab or at ion H ig h l i g h t: Im p r ov in g Y ie ld s an d In com es for Ra is in Far m er s th r ou gh M ar ket s The World Bank Group is supporting a transformation in Afghanistan’s raisins sector to recapture its former status as a world-class producer and exporter. Interventions range from the farm level to facilitating private sector investments, developing modern processing, and strengthening global competitiveness. The Rikweda Raisin project has been more than three years in the making and was made possible through extensive client and upstream engagement, leveraging the World Bank Group to catalyze private sector participation in challenging sectors and facilitating long-term sustainability of the market. In the context of the MFD approach, the efforts began with support to farmers by establishing modern raisin drying houses and providing technical assistance under an IDA US$190 million National Horticulture and Livestock Project. IFC and MIGA collaborated in the amount of US$3 million in financing and US$7.5 million in guarantees, respectively, to catalyze private sector investments in the Rikweda Fruit Process Company to support a greenfield, modern, local, raisin processing project using the PSW of the Global Agriculture and Food Security Program (GAFSP) and the IDA18 PSW MGF. The investment, advisory interventions, and guarantees will lead to doubling the country’s raisi n processing capacity and improving quality by implementing modern processing technology and food safety practices. Local raisin farmers will gain access to global export markets, which will support sustainable livelihoods for close to 3,000 rural smallholder farmers. 27. World Bank Group advisory support has been increasingly programmatic and aligned to meet Afghanistan’s development needs by informing policy development, design and implementation of investment operations, and knowledge transfer. During the CPF implementation, the Advisory Services and Analytics (ASA) program has been consolidated from over 60 to 42 tasks structured programmatically around key engagement areas. 48 of the 50 ASAs included in the CPF were delivered, providing advisory services in the critical areas of (a) agribusiness value chain development and job creation, (b) human capital, (c) drivers of conflict in the extractives sector, (d) civil services reforms, and (e) poverty analysis program and support to the national statistics. This work has facilitated multiple policy and operational improvements, such as the approval of the new Irrigation Policy and a Dry Lands Agriculture Policy, the more advanced design of the ‘second generation’ model of service provision in health and education, or the improved institutional framework for public financial management. The World Bank also delivered analytical work on climate change and resilience, international labor migration, and women’s economic empowerment. IFC’s advisory services have also had significant results. The current IFC portfolio amounts to US$11.6 million in eight engagements across strengthening financial infrastructure (leasing, secured lending), agribusiness supply chain, off-grid energy solutions, and renewable IPPs. IFC’s Public-Private Partnership Transaction Advisory (C3P) is working to establish a solar energy project, while also collaborating with the Infra Investment team to provide upstream structuring services for the Mazar IPP project. 8 B. Evolution of Partnerships and Leveraging 28. Partnerships become stronger on the ARTF platform. The ARTF remains the main platform for pooled on-budget financing of civilian and development expenditures and coordinated implementation support to the government, 17 years after its establishment. Its governance structure convenes the government and donor partners around critical development issues, enhancing transparency and ownership of aid. The government, ARTF donors, and the World Bank collaborated to produce the 2018– 2020 PFFP (see Annex 6), a strategic planning and prioritization tool. 29. The partnership built around the PFFP went beyond coordination and planning of resources. The PFFP introduced six initiatives that reflect the partner vision and recommendations of the 2017 ARTF External Review.3 They are (a) enhancing alignment with the ANDPF through a more flexible and adaptable program; (b) an increased use of incentivized results-based financing instruments; (c) more hands-on extended technical assistance and implementation support; (d) ramping up monitoring and strengthening anti-corruption mechanisms; (e) implementing more effective arrangements for resolving operational bottlenecks and improving ARTF portfolio performance; and (f) improving collaboration, information sharing, and decision making in the ARTF partnership. Guided by the PFFP, and with support from the government, the World Bank Group is engaging donor partners more directly than at the beginning of the CPF period, by encouraging direct interaction with project teams and missions; sharing project preparation, correspondence, and implementation of review materials in a regular and structured manner; and inviting donors’ participation in the CPPR. Through the government-led mechanisms of the Partnership Action Coordinating Team (PACT) and the Geneva Mutual Accountability Framework, policy and programming priorities supported in the ARTF portfolio are reflected in, and aligned with, broader government-donor partnerships. 30. The World Bank Group is closely partnering with the United Nations (UN), the government, and key donors around two recently emerging priorities: planning for peace and bridging the humanitarian- development nexus: • The November 2018 joint communiqué of the Geneva Ministerial Conference on Afghanistan (GMCA) committed international partners to collaborating on the socioeconomic requirements for peace, including by developing an action plan in support of a broad-based program that would advance a “post-settlement return of Afghan capital; increased Afghan and foreign investment; job creation; and enhanced regional economic integration.” The World Bank leads a working group of development partners to provide details on post-settlement economic development priorities for social inclusion, regional economic integration, management of public expenditures, local-level service delivery, and reintegration of returnees. Additionally, the World Bank Group is supporting international partners on a broader agenda, including civil service reforms, human rights, and issues of youth and women. • Limited funding and the protracted nature of challenges such as drought, conflict, and displacement have increasingly focused development partners’ attention on collaboration across the humanitarian-development nexus. With the renewed peace-related dialogue, the focus has broadened to the ‘triple nexus’ of humanitarian-development-peacebuilding assistance. The World Bank Group is collaborating with the government, development and 3Taking Charge: Government Ownership in a Complex Context, an external review of the ARTF. http://www.artf.af/images/uploads/ARTF_External_Review_Final_Report_2017.pdf 9 humanitarian actors, and civil society, focusing on long-term food and water security, famine risk management, and developing both early actions and longer-term systems to support vulnerable communities. Coordination among ARTF and non-ARTF partners has been initiated by the World Bank Group on climate change. Afghanistan has also been identified as one of the ‘first-mover’ countries of the Famine Action Mechanism (FAM). 31. Partnerships evolve around the MFD agenda, helping leverage private sector participation. The donor community in Afghanistan acknowledges that with a possible further decline in aid, jobs and revenues need to be generated by the private sector. The World Bank Group and the private sector increasingly partner with the international community in the dialogue around economic development and challenges for doing business. The World Bank Group is executing a US$13 million trust fund with the U.S. Agency for International Development (USAID), focused on investment climate reforms, and it is exploring opportunities for partnerships with the European Commission on PPPs for renewable energy and with the U.K. Department for International Development (DFID) on a program to scale up agribusiness. To utilize and mobilize donor funding effectively, a programmatic approach is most feasible due to the flexibility in the use of funds and deployment of World Bank Group advisory instruments under strategic priorities. C. Progress toward CPF Objectives 32. The World Bank Group demonstrated steady progress in delivering the program envisaged in the CPF, especially in macro and fiscal management and provision of essential services (see Table 1 and Annex 3 for details). The strong focus of the government on institution building as a pathway to self- reliance led to surpassing several critical targets, especially improving the revenue-to-GDP ratio. Engagements in community development, citizen empowerment, health and education played a critical role in sustaining vital services to the population, even in conflict-affected areas (see Annex 6). Gender focus pays off, as the World Bank operations in Afghanistan remain 100 percent gender tagged in all sectors, while the Women’s’ Economic Empowerment Rural Development Program (WEE-RDP) is one of the stand-alone national projects focused on the women’s economic empowerment in the entire World Bank portfolio. IFC expands gender interventions including in transport and legal studies. Continuity is important for sustaining the gains, increasing ambitions, and working toward the desired outcomes in lagging areas. This is ensured by transitioning several operations to the ‘second generation’ that builds on the lessons from the first.4 33. The program implementation faced several challenges in building safety nets and safeguards implementation in energy and extractives. The dialogue on social safety nets and cash transfers targeting the poorest households has not taken off and the planned World Bank activities have not materialized. The engagement in extractives underwent several modifications, and the current Afghanistan Extractive Sector Development (AESD) pipeline project is facing significant difficulties in addressing safeguards risks. Several energy guarantee and Investment Project Financing (IPF) projects were significantly delayed for technical and safeguards reasons, so electricity generation from hydropower, gas, and renewables lags behind the CPF targets. 34. Some commitments remain difficult to meet. Grievance redress mechanisms (GRMs) for service delivery remain nascent. Addressing gender-based violence has not progressed beyond access to essential services and livelihood support for women. Private sector mobilization showed progress but scaling up for 4 For instance, the Tackling Afghanistan's Government HRM and Institutional Reforms (TAGHIR) Project builds on the Capacity Building for Results (CBR) (in governance and civil service reform), Sehatmandi on the System Enhancement for Health Action in Transition (SEHAT) Project (health and nutrition), CCAP, Digital CASA on the ICT project, and the Payments Automation and Integration of Salaries in Afghanistan (PAISA) Project on the Safety Nets and Pensions Support Project. 10 a broader impact requires significant time and effort to de-risk. Attention is also needed to attract the right talent for sustaining a robust presence on the ground. Table 1. Progress against the CPF Objectives Pillar 1. Building Strong • Most targets are well on track, some achieved already and Accountable • The World Bank Group support is crucial for revenue and budget execution Institutions targets, improved municipal infrastructure, and local service delivery • More remains to be done in municipal governance and confronting the inflation of the externally funded national technical assistance Pillar 2. Supporting • On track in road connectivity, grid connectivity, building capacity of the Inclusive Growth Central Bank as financial regulator, improving Doing Business and increasing agricultural productivity • Biggest lags are in ICT, extractives, and land management - to be addressed by recent and FY20 forthcoming deliverables5 Pillar 3. Deepening • Significant progress on health and education targets, aiming higher with the Social Inclusion second generation of projects • Little traction and no progress on safety nets • On track for capacity to manage and respond to natural disasters Cross-cutting area: • CPF targets need revision for a greater ambition and stronger impact Gender • 100 percent of gender tagging achieved in World Bank projects IV. EMERGING LESSONS 35. The fiscal realities of Afghanistan, strong partner demand, and portfolio legacies limit the World Bank Group’s selectivity scope. The country will remain reliant on international grant support in the medium-term. Given the World Bank Group’s essential role in providing international assistance and financing the recurrent budget expenditures (40 percent of civilian budget expenditures), social service provision, and infrastructure development of Afghanistan, the selectivity approach shaping the CPF will need to remain rather broad and inclusive. Unless security substantially deteriorates, the World Bank Group cannot scale down its support to the short-term needs, such as expanding the tax base, broadening revenue mobilization, sustaining delivery of basic services, and supporting prompt actions on food insecurity and displacement. Longer-term growth requires further steps along the same lines: (a) investing in high-potential areas (agriculture and agribusiness, human capital, especially of women, extractives, and regional connectivity); (b) crowding in private capital through reforms, PPPs, and innovative financial solutions; and (c) building resilience to climate and economic shocks at the level of households, communities, businesses, and nationwide. None of these steps would be possible without improvements in governance, which are also supported by the CPF. The ARTF/IDA’s large role and strong partner demand make disengagement from any area difficult, as was experienced, for example, by a prolonged process of exiting from the area of law and order, which is not the World Bank Group’s expertise area. The breadth of the engagement requires a broad bandwidth from the World Bank Group, which is also challenging given the footprint and other operational constraints. Given the strong demand from the government and development partners for the World Bank Group engagement in many areas, even continued efforts to consolidate operations and advisory portfolios will not make for disengagement from any areas but will 5 Digital CASA (delivered in FY18), Afghanistan Land Administration System Project (delivered FY19), AESD (Planned for FY20). 11 be focused on reducing transaction costs and ensuring a programmatic approach. Additionally, experience of other countries affected by fragility, conflict, and violence (FCV) will be applied in screening projects from a peace perspective for potential ways that may inadvertently harm or, on the contrary, provide opportunities that may facilitate building peace and social cohesion. 36. The MFD approach might be challenging to implement in Afghanistan but is instrumental to leverage private resources for growth. Enabling and crowding-in private investment is critical to supplement scarce public and donor resources. There is evident investor interest in some sectors (e.g., energy, agribusiness, connectivity, extractives) notwithstanding the country conditions. However, the private sector in Afghanistan still faces many challenges, despite recent progress in the reform agenda of the government. Access to infrastructure (land, power), corruption and political uncertainty coupled with challenging security conditions are the key barriers to investing.6 The World Bank Group program continues to support policy and upstream work7 to address these key constraints. The MFD approach also needs to be heavily customized to the Afghanistan context because of: (i) the need to take into account and coordinate with bilateral off-budget initiatives; (ii) the need to respond to investors’ demand for greater-than-usual de-risking; (iii) the potentially transformative role that the IDA PSW could play to build investor confidence and allow MIGA and IFC to step up their engagements; (iv) the need to support capacity building at the firm level (e.g., through such IFC innovations as the ‘Advisory for Investment’ (A4I) pilot) and (v) unleashing innovative risk sharing instruments that provide banks and financial institutions adequate maneuvering space to mitigate risks and finance private sector growth. The World Bank Group continues scaling up efforts to apply the MFD approach with the WB and IFC jointly working to address the impediments to greater private sector participation in key sectors, while MIGA is working to help de- risk at the firm level in support of foreign direct investment into the country.8 See Annex 5 for more details. 37. The ‘how’ of the CPF implementation remains just as important as the ‘what’, as envisaged by the CPF. Anchoring the program and organizing the country team around development challenges (engagement areas) helps zooming in on the biggest country priorities, achieving clarity among development partners on the nature and causes of the challenge, and bringing out the comparative advantages of the World Bank Group. The importance of attracting the right talent to focus on the engagements from A to Z cannot be overestimated: the program needs (a) a varied mix of skills sets, (b) a continuous on-the-ground presence enabling structured and iterative dialogue, and (c) a mind-set that prioritizes collaboration and embraces the role of trusted and credible partners who are always available for the client counterparts and can provide smart, risk-based, and timely implementation support. To deliver the CPF program, the focus needs to be on implementation, continuity, and ensuring the programmatic engagement-focused approach. This approach, including the team-based budgeting – a tool that focuses the WPA discussion on the right team to deliver the program – is supported by the World Bank’s FCV pilot. 38. Despite capacity building efforts and civil service reforms, the government remains reliant on externally funded nontechnical advisory (NTA), which affects its own capacity and the effectiveness of the World Bank projects that experience high turnover and hiring difficulties. The 2019 CPPR discussed 6 Afghanistan Enterprise Survey 2014. 7 The upstream work focused on creating markets includes, inter alia, such operations as the PPIAP (to prepare a pipeline of feasible private and publicly funded projects), Digital CASA (on telecommunications regulations), and the Incentive Program (providing policy support across sectors). 8 Local investors may be eligible for MIGA coverage upon the joint application by the investors and GoA to extend eligibility for the proposed MIGA guarantee to the local investor, provided that the assets to be invested are transferred from outside the host country. 12 this challenge and recommended development of an updated NTA registry/database, initiation of a phaseout action plan based on a comprehensive NTA assessment, and utilization of project preparation, midterm review, and restructuring to explore opportunities for adopting ‘best practice’—with the use of country systems as the first resort. 39. The special themes of IDA18 help the World Bank Group focus on key development challenges for Afghanistan. Promoting job creation has been pursued through support to creating value chain in agriculture (Opportunity for Maximizing Agribusiness Investments and Development [OMAID], Jobs in Agriculture ASA) and enabling the environment for public and PPP investments (PPIAP, IFC). Displacement exacerbated by climate vulnerability and violence is addressed through support to vital services for refugees and host communities (Emergency AF to the CCAP, Eshteghal Zaiee - Karmondena [EZ-Kar]). Women’s inclusion has been the cornerstone of the Afghanistan program across the portfolio (the National Solidarity Program [NSP], the Afghanistan Rural Enterprise Development Program [AREDP], the National Horticultural and Livestock Project [NHLP], WEE-RDP, and Digital CASA, to name a few). Climate co-benefits grow as the World Bank Group program is shifting toward more hydropower, renewable energy, and building resilient landscapes and infrastructure with a focus on the critical role of water.9 IDA and the International Monetary Fund (IMF) stepped up dialogue with the government on debt management as Afghanistan remains at a high risk of debt distress and needs to maintain full concessionality of borrowing. Partnership with the ARTF leverages IDA way beyond its financial contribution. V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK 40. The PLR proposes extending the Afghanistan CPF by two years to FY22. This would help ensure stability and focus on implementation especially in the period of multiple transitions. The significant increase of poverty, sluggish growth, and worsening security and displacement suggest that a longer-term effort is needed to sustain the progress made to date and close the remaining gaps in outcomes. The proposed extension would also enable the next CPF to be aligned with the next strategic plan for achieving self-reliance,10 the IDA19 and potentially emerging IDA20 priorities, and the post-2020 pledging outcomes. To avoid ‘locking’ the program in case of major changes in the country requiring more adjustments than currently envisaged, it is proposed to conduct an additional agile PLR exercise early in FY21. This would allow introducing significant program adjustments paving the way to the new CPF in the event of a peace settlement, or just a fine-tuning of the framework under the scenario of continuity. If a peace settlement materializes in FY20–FY22, the extended CPF would facilitate an immediate scaling-up— without a framework revision— should enough resources be added to the ARTF and IDA. 41. The PLR proposes stepping up in lagging engagement areas within the CPF framework. For instance, the ALASP will focus on transparent land administration that would foster, in the long-term, a conducive environment for private sector investment and business development. TAGHIR continues to overcome weaknesses of its predecessor CBR by supporting reduction in the NTA and stronger budget execution and introducing new targets for civil service positions to be held by women. The ongoing WEE- RDP operation complemented by the Gender and Social Inclusion Platform and gender focus across the 9 Upstream, the Incentive Program Development Policy Grant provides an underpinning policy framework to broadly commit to more efficient use of water resources and water reuse, formulate a comprehensive investment program to furnish infrastructure, and establish climate-resilient agriculture practices. 10 The current strategic plan is the 2017–2021 ANPDF. 13 pipeline/portfolio create additional space to promote women’s economic empowerment. The PLR proposes changes in the results framework to reflect these intensified/strengthened engagements. 42. The PLR proposes adding a new cross-cutting theme with the objective of “Improved climate- resilient landscapes and infrastructure” to reflect an increased ambition in addressing climate change. This is not a new pillar, as the work on climate-resilient infrastructure, addressing water scarcity and improving food security, cuts across the growth, governance and accountability, and social inclusion agendas. Multiple instruments in support of the objective include programmatic ASA, an agro-water and climate resilience pipeline project, a community-focused disaster risk management (DRM) pilot and on- demand DRM support, climate change impact analysis, strengthening co-benefits in various sectors, and building institutional capacity of the Ministry of Agriculture, Irrigation, and Livestock (MAIL) and the National Environment Protection Agency (NEPA) on climate change. This work is critical for addressing water scarcity, food insecurity and poverty as well as for paving the way for stronger infrastructure and community resilience. 43. The PLR proposes building long-term impact in crucial areas of health, basic education, agriculture, energy, and connectivity; all within the CPF framework. Service delivery and community engagement targets remain largely valid under Pillars 1 and 3. The results framework is adjusted for a stronger focus on key challenges to human capital formation, e.g. stunting. Under Pillar 2, work is being significantly expanded toward opening up/creating markets, for example, through support to PPPs to leverage private infrastructure financing.11 Ambitions are increased to generate more hydropower electricity. Stronger connections to markets will be built in agriculture as the pipeline OMAID project comes in, in addition to the ongoing NHLP and the Afghanistan Rural Access Project (ARAP). 44. Program modifications reflect evolving government priorities or contextual changes. A shift from developing resource corridors to supporting PPPs for private sector development in a larger number of infrastructure and extractives sectors led to an overhaul of the planned resource corridors operation to the currently active Public-Private Partnerships and Public Investment Advisory Project (PPIAP). Similarly, Digital Central Asia-South Asia (CASA) followed the government priority of Internet connectivity while shifting away from access to voice/telephone services. Some modifications were of an emergency nature: the CCAP Additional Financing (AF) expanded the geographic coverage of the parent project to additional areas of high returnee and displaced population density and added emergency assistance through labor-intensive public works/maintenance cash grants for both displaced households and host communities. Others are longer-term, such as the new climate resilience engagement that is increasing the level of ambition envisaged in the CPF (see Annex 2 for the proposed new objective and activities). 45. Under different settlement scenarios, partners may call upon the World Bank Group to engage in some new themes. The degree of engagement and adjustments to the CPF, if needed, would be determined based on the World Bank Group’s comparative advantages, their fit within the Twin Goals, and counterpart capacity. 46. The financing envelope for FY20–FY22 beyond FY20 will be driven by IDA19 allocations and continued support from the ARTF. For planning purposes, the PLR assumes IDA19 PBA to be at the IDA18 levels (US$750–800 million) over FY21–FY2312 and assumes that Afghanistan will retain access to the non- core IDA19 resources, such as the Regional Window for regional projects and the PSW. The PLR also expects the ARTF to continue financing 60–80 percent of the Afghanistan program, despite the overall 11 A new CPF objective is proposed to be added under Pillar 2 (Growth) in this regard. 12 Indicative IDA19 allocations will be known in FY21] 14 gradual decline of grant assistance. In the event of a peace settlement, a short-term add-on to the ARTF envelope and additional opportunities for IFC and MIGA to engage are envisaged. VI. RISKS TO THE CPF PROGRAM 47. The overall risk to achieving the CPF objectives remains High. Afghanistan’s economy will remain vulnerable to political and security risks, which the CPF named the most important ones to the World Bank Group program. The PLR has reviewed the specific risks under each of the Systematic Operational Risk-rating Tool (SORT) categories and given the potential implications for program implementation and sustainability of portfolio outcomes, all risk ratings are proposed to be raised to High (see Table 2). Table 2. Original and Revised Risk Ratings to the CPF Objectives in Afghanistan Risk Category CPF Rating PLR Rating Political and governance High High Macroeconomics High High Sector strategies and policies Moderate High Technical design of projects Moderate High Institutional capacity for implementation High High and sustainability Fiduciary Substantial High Environment and social High High Stakeholders Moderate High Conflict and violence High High Overall High High 48. Political, macroeconomic, security, and governance risks might roll back some reforms and progress achieved to date. Gains in women’s empowerment could be threatened if the Taliban becomes an influential part of the government. Election-related disruptions to revenue collection and expenditure discipline could undermine fiscal management and confidence. Risks of increasing fiscal pressures come with a potential peace settlement (see para.15). Corruption and capacity constraints continue to threaten sustainability of program results and call for elevated stakeholder and technical design risks. 49. Fiduciary risks are elevated per CPPR recommendation. A stronger focus on fiduciary aspects under the Anti-Corruption and Results Monitoring Action Plan (ACReMAP) includes (a) strengthening vigilance and rigor in results monitoring; (b) adopting multiple tools and approaches (including involving preventive services); (c) ramping up TPM to cover all projects, using a variety of methods and focus on construction quality, social and environmental safeguards and corrective actions, female participation, health facility performance, and so on; and (d) strengthening the safeguards system by addressing gaps between the Environmental and Social Framework (ESF) and country systems, supporting capacity development, and proactively managing risks and bottlenecks in the pipeline and portfolio. 50. Additional risks to the World Bank Group program are related to the external financing uncertainty. The current IDA and ARTF envelopes are fully programmed and largely committed, so any reallocation of resources would require portfolio adjustments until new envelopes are determined. Continued international assistance in security and development is critical to preserve development gains achieved under the current program and over the last 17 years. 51. Will progress be sustained under different settlement scenarios? As mentioned in paragraph 15, a peace settlement would affect the CPF implementation by presenting opportunities and risks. 15 Opportunities could emerge from increased investment, improved services, connectivity, and livelihoods (for example, by removing insecurity-related transport constraints to Afghanistan’s horticultural exports), and strengthened institutions (for example, for social protection, water, and land management). Risks are likely to be more immediate, including a substantial movement of people putting additional pressure on services and livelihoods, rapid reintegration needs of those previously involved in armed groups, property rights disputes, and increasing fiscal needs under tighter constraints of declining aid. There is also a scenario, under which a peace settlement may not materialize, and tensions worsen. As envisaged in the CPF, the World Bank Group needs to keep the right balance between (i) sustaining the gains and mitigating poverty increases and (ii) accelerating job creation and poverty reduction where possible. Under a worsening scenario, the World Bank Group will have to limit its activities to core service provision (which has been possible even in territories outside of the government control). Most likely, in the next year, the World Bank Group will run two parallel tracks to remain relevant: (a) helping partners plan for a peace settlement by leading a dialogue on economic initiatives that inform the post-peace planning, and (b) continuing the CPF implementation focused on inclusive growth, and governance. This also requires building internal and counterpart ‘readiness for peace’: capacity to scale up priority programs (for example, the CCAP, Sehatmandi, Agribusiness Charter, and Women’s Economic Empowerment). This is facilitated by a substantial increase of the Bank-executed Trust Fund (BETF) resources under the 2018– 2020 ARTF PFFP for mobilization and diversification of analytical and implementation support. 52. Despite multiple challenges and uncertainties, the CPF implementation demonstrated the World Bank Group’s ability to mitigate, deliver, leverage, and adjust in an insecure and high-risk environment, including in geographical areas not controlled by the government. The CPF requires the World Bank Group to be vigilant but enables readiness for the changes lying ahead. 16 ANNEX 1: REVISED RESULTS FRAMEWORK FOR THE AFGHANISTAN CPF World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) Pillar 1: Building Strong and Accountable Institutions CPF Objective 1.1: Improved public financial management and fiscal self-reliance 1.1.1 Number of institutional development Lending - ongoing recommendations on public financial management • ARTF Recurrent Cost Window implemented • Fiscal Performance Improvement Support Baseline (2018): 0 Project (FSP) Target (2022): 7 • AF Incentive Program DPG 1.1.2 Domestic revenue-to-GDP ratio • Public Private Partnership and Public Baseline (2016): 10.7 percent Investment Advisory Project (PPIAP) Progress (2019): 13 percent • Payments Automation and Integration of Target (2022): 14 percent Salaries in Afghanistan (PAISA) 1.1.3 Improved processes and efficiency in government Improved processes and efficiency in O&M expenditure. government O&M expenditure. Lending - pipeline Baseline (2019): Norms and guidelines to prepare O&M 13 Baseline (2019): Norms and guidelines to • 2019 Incentive Program Development Policy budget are not available to the line ministries. prepare O&M budget are not available Operation Target (2022): Ten largest spending line ministries prepare to the line ministries. ASA and execute the 2020 O&M budget for vehicles and Target (2020): Four large line ministries • Afghanistan Development Updates buildings applying the norms and guidelines for vehicles prepare and execute the 2020 O&M • Fiscal Performance Improvement Support Plan and buildings prepared by the MoF and in accordance with budget for vehicles and buildings (FPIP) Advisory Support the government’s new O&M policy approved by the applying the norms and guidelines for o FPIP Implementation: Macro-Fiscal Cabinet on November 14, 2018. vehicles and buildings prepared by the Management MoF and in accordance with the o FPIP Implementation: Tax Administration government’s new O&M policy approved o FPIP Implementation: Core Public Financial by the Cabinet on November 14, 2018. Management (PFM) 1.1.4 Unified biometric identification system for civil o FPIP Implementation: SOE servants and pensions is developed and rolled-out. o Advisory Facility to Support the Customs Baseline (2018) No Component of the FPIP Target (2022): Yes o FPIP Implementation: Public Pension Fund and Voluntary Defined Contribution Scheme for Private Sector Workers 13 Operations and maintenance. 17 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) • AFG Macroeconomic Analysis PA • Afghanistan: In-depth Fiduciary Reviews CPF Objective 1.2: Improved performance of key government institutions and independent agencies 1.2.1 Increased development budget execution rate 1.2.1.1 Civil servant positions held by Lending - ongoing Baseline (2017): 55 percent women • Fiscal Performance Improvement Support Progress (2018): 67 percent Baseline (2018): 7.5 percent Project (FSP) Target (2022): 75 percent Target (2022): 10 percent • Tackling Afghanistan’s Government HRM and 1.2.2 Priority line ministries and agencies that meet Institutional Reforms (TAGHIR) minimum benchmark targets related to reduction in • ARTF Recurrent and Capital Costs number of National Technical Advisors (NTAs). • Kabul Urban Transport Efficiency Improvement Baseline (2018): 0 Project Target (2022): 11 • Kabul Municipal Development Project 1.2.3 Selected municipalities demonstrating improved • Urban Development Support Project performance (in planning, PFM, revenues, and services in • Cities Investment Program informal settlements) ASA Baseline (2017): 0 • Afghanistan Public Administration Reform Progress (2019): 1 • FPIP Implementation: Institutional Target (2022): 5 municipalities (Herat, Jalalabad, Mazar, • Civil Service and HRM Planning Kandahar, and Kabul) CPF Objective 1.3: Improved service delivery through enhanced citizens’ engagement with the state 1.3.1 Number of CDCs14 that function as a whole-of- Lending - ongoing government development entity and benefiting from • Citizens’ Charter Afghanistan Project (CCAP) Citizens’ Charter Afghanistan Program inputs • Afghanistan: Eshteghal Zaiee - Karmondena (EZ- Baseline (2016): 0 Kar) Project Progress (2019): 5,239 • Women Economic Empowerment – Rural Target (2022): 11,750 (rural and urban) Development Program (WEE-RDP) 1.3.2 Number of beneficiaries with access to a basic package of services in rural/urban areas as a result of Citizens’ Charter Afghanistan Project interventions Baseline (2016): 0 Progress (2019): 5 million Target (2022): 10 million 14 CDC = Community Development Council. 18 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) 1.3.3 Percentage of CDC members in rural and urban areas who are women Baseline (2016): 0 Progress (2019): Rural 48 percent; Urban 49 percent Target (2022): Rural: 40 percent, Urban: 45 percent15 Pillar 2: Supporting Inclusive Growth CPF Objective 2.1: Improved business environment and access to finance 2.1.1(NEW INDICATOR) Increased outreach of SBs Lending - ongoing (measured by number of SBs clients served) • Access to Finance Project Baseline (2018):2.2 million • Financial Sector Rapid Response Project (AF) Target (2022): 2.7 million • Modernization of State-Owned Banks 2.1.2 Number of days required to obtain a construction 2.1.2.1 Average weeks required for land • Afghanistan Land Administration Support permit in Kabul City acquisition/resettlement process for Project (ALASP) Baseline (2016): 284 days development projects (cadastral survey, • Business Licensing and Registration Project (IFC) Progress (2018): 199 land clearance, implementation, and • Equity investment in Microfinance Bank of Target (2022): 160 days settlement) Afghanistan to support growth and outreach to Baseline (2016): 120 weeks micro, small, and medium enterprises (MSMEs) Progress (2019): 120 weeks (IFC) Target (2022): 60 weeks • Trade facility line to the Afghanistan 2.1.3 Number of active financial transactions accounts International Bank (IFC) (defined as the total number of active bank accounts, • Afghanistan Land Administration Support microfinance accounts, and m-money accounts) Project (ALASP) Baseline (2016): 2.89 million Progress (Dec 2018): 3.73 million Lending - pipeline Target (2022): 4.5 million • Investment Policy and Promotion Project (IFC) 2.1.4 Improved Financial Soundness of SBs (SBs meet the central bank's minimum capital requirements) ASA Baseline (2018): 33 percent of SBs • Financial Sector Development PA Target (2022): 90 percent (100% 2023) of SBs (all SBs) • Support to strengthen MUDL Medium-Term Capacity for Efficient Management of LAR&R • Promoting Women's Livelihoods and Opportunities in Select Value Chains 15 Target for female participation in the CDCs is kept below the current progress rate as the program expands to areas of higher risk where female participation in CDC is likely to be lower in the next several years 19 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) • Afghanistan: Gender and Social Inclusion Platform CPF Objective 2.2: Improved domestic and regional integration (transport, ICT connectivity, and trade) 2.2.1 Percentage of population with access to an all- 2.2.1.1 Kilometers of roads constructed Lending - ongoing season road or rehabilitated • Afghanistan Rural Access Project (ARAP) Baseline (2014): 58 percent Baseline (2016): 1,190 km • Trans-Hindu Kush Road Connectivity Project Progress (2019): 89 percent Progress (2018): 2,310 km • Kabul Urban Transport Efficiency project Target (2022): 90 percent Target (2022) 2,900 km • Afghanistan Digital CASA Project 2.2.2 Improved access to Internet and telephone services: 2.2.2.1 International Internet bandwidth • CASA Community Support Program Number of Internet subscribers per 100 people per capita (kilobytes per second, kbps) • Roshan: Telecommunications Development Baseline (2018): 22.5 Baseline (2015): 0.5 Company Afghanistan (IFC) Progress (2019): 39 Progress (2018): 1.2 • MIGA guarantee for MTN Afghanistan Target (2022): 50 Target (2022): 5.0 2.2.3 (NEW NUMBERING) Average retail price for 1 GB, ASA prepaid, mobile data package • Afghanistan Connectivity Study Baseline (2016): $1.40 • Technical Assistance to Afghanistan Transport Progress (2019): $1.40 Sector Target (2022): $0.5 • AF: Assessing Options to Improve Afghanistan's Telecommunications Sector CPF Objective 2.3: Increased power generation capacity and access to electricity 2.3.1 Generation of additional electricity through 2.3.1.1 System losses (percent) Lending - ongoing hydropower, gas, and renewable energy from domestic Baseline (2016): 40 percent • DABS18 —Capacity Support Project sources Progress (2019): 33 percent • Citizens’ Charter Afghanistan Project Baseline (2016): 210 MW Target (2020): 25 percent17 • CASA 1000 Electricity Transmission and Trade Progress (2018): 275 MW Project Target (2022): 723 MW16 • CASA 1000 Community Support Program 2.3.2 Increase in supply of grid connected electricity • Naghlu Hydropower Rehabilitation Project Baseline (2016): 1,085 MW 16 A number of projects in the energy sector are in the development/implementation phase as a result of which, an increase in the energy production (hydro and solar) is expected in the coming few years. 17 Target remains indicative. The World Bank is working with DABS to assess and segregate actual technical and commercial losses, which will take several months. Based on the results, a loss reduction plan and investment plan for loss reduction will be prepared and set targets for each year. 18 Da Afghanistan Breshna Sherkat (DABS) – Afghanistan’s Power Utility Company 20 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) Progress (2018): 1,750 MW • Herat Electrification Project Target (2022): 2,435 MW19 2.3.3 Increase in the number of households with access to Lending - pipeline on-grid electricity • Mazar-e-Sharif Gas to Power Guarantee Baseline (2016): 1.2 million • Sheberghan Gas to Power Guarantee Progress (2019): 1.59 million • Kajaki Hydroelectric Dam Addition Target (2022): 1.90 million • Scaling-up Solar in Afghanistan Guarantee 2.3.4 By the end of 2022, a total of 20 MW of renewable ASA off-grid systems to supply a minimum service standard of • Afghanistan Energy Study (Energy Demand 100 watts per household. Survey, Least Cost Distribution Expansion, Gender-Energy Linkages) • Climate Resilient Energy System in Afghanistan • IFC Lighting Afghanistan Program (affiliated with Lighting Global) • IFC PPP Transactions Advisory: Scaling Solar, Wind energy scoping CPF Objective 2.4: Increased agricultural productivity and value added 2.4.1 Increase in agricultural productivity (Irrigated wheat Lending - ongoing yields) tons/hectare (t/ha) • Agricultural Inputs Project Baseline (2017): 2.5 t/ha • Irrigation Restoration and Development Project Progress (2019): 3.4 t/ha (OFWMP) (IRDP) Target (2022): 3.4 t/ha (will be revised further during the • On-Farm Water Management Project (OFWMP) OMAID preparation) • National Horticulture and Livestock Project 2.4.2 Increase in the number of farmers with access to • MIGA Guarantees (Dairy Processing, Cashmere knowledge services and/or irrigation services (percent Scouring and Disinfecting, and Rikweda Fruit female) Processing Company) Baseline (2016): 0 • Strategic Grain Reserves project Progress (2018): 1 million (47 percent women) NHLP 233,324 (93,149) Lending - pipeline OFWMP 387,417 • Opportunity for Maximizing Agribusiness IRDP 407,889 (201,127) Investments and Development (OMAID) Target (2022): 1.3 million (at least 45 percent female) 19 The target is calculated based on substations/load centers capacity 21 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) NHLP 465,360 (176,320) • Agro-Water Management and Climate OFWM 590,000 (120,000) Resilience Project IRDP 385,000 (200,000)20 2.4.3 Area provided with irrigation and drainage service 2.4.4.1 Transboundary Waters Policy ASA (hectare, ha) adopted • Climate and Disaster Risk Resilience ASA Baseline (2015): 120,000 ha (IRDP) Baseline (2016): None • Strengthening Climate resilience PASA Beneficiaries (2015): 200,000 (IRDP) Progress ((2019): Policy developed and Progress (2019): 202,700 ha (IRDP) being reviewed Progress (2019): 54,000 ha (OFWMP) Target (2022): Policy adopted Target (2022): 215,000 ha (IRDP) Beneficiaries (2015): 407,000 ha (IRDP) Target (2022): 59,000 ha (OFWMP) CPF Objective 2.5: Sustainable development of extractive industries 2.5.1 Regulatory regime for extractive industries 2.5.3.1 EITI on track to be fully Lending - ongoing developed and being implemented by 2022 implemented by 2022 • Afghanistan Extractives for Development- Baseline (2016): In preparation Project Preparation Grant (Extractive Progress (2019): Hydrocarbon and mining laws approved Industries Transparency Initiative (EITI)) Target (2022): Hydrocarbon and mining Laws and • Public Private Partnership and Public Regulations agreed and operational Investment Advisory Project (PPIAP) 2.5.2 Number of feasibility studies that lead to tendered Lending - pipeline projects • Afghanistan Extractives Sector Development Baseline (2018): 0 Project (Afghanistan ESDP) Target (2022): 1 for projects in the extractive industries; ASA total including other industries will be 7 • Afghanistan: Advisory Support to the Ministry of Mines and Petroleum (MoMP) • FPIP Implementation: EITI CPF Objective 2.6: Support to public-private partnership to leverage private financing 2.6.1 Number of PPP projects tendered Lending – ongoing Baseline (2019): 0 Target (2022): 3 20 Target and progress are aggregate of three projects in the agriculture and irrigation sectors (Irrigation Restoration and Development Project (IRDP), On-Farm Water Management Project (OFWM) and National Horticulture and Livestock Productivity Project (NHLP). 22 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) 2.6.2 Number of power IPPs that reach financial closure • Public Private Partnership and Public with WBG support Investment Advisory Project (PPIAP) Baseline (2019): 0 Lending - pipeline Target (2022): 2 • Mazar-e-Sharif Gas-to-Power Guarantee • Sheberghan Gas to Power Guarantee • Scaling-up Solar in Afghanistan Guarantee ASA • Afghanistan: Advisory Support to the Ministry of Mines and Petroleum (MoMP) Pillar 3: Deepening Social Inclusion CPF Objective 3.1: Improved human development 3.1.1 Primary school completion rate Lending - ongoing Baseline (2014): 50.2 percent (of whom 40.3 percent are • Afghanistan EQRA Project girls) • Higher Education Development Project II Progress (2018) 52.6 percent (of whom 43.8 percent are • Second Skills Development Project girls) • Afghanistan Sehatmandi Project Target (2022): 54.921 percent (of whom 47.4 percent are girls) ASA 3.1.2 Number of TVET22 Institutes implementing revised • Afghanistan General Education Programmatic Competency-Based Curriculum for Priority Trades ASA Baseline (2018): 0 • Engaging Youth for Social and Economic Target (2021): 12 Inclusion 3.1.3 Student enrollment in university education in priority • Afghanistan Health Programmatic ASA degree programs Baseline (2015): 64,200 (of whom 11,400 are female) Progress (2019): 81,900 (of whom 16,900 are female) Target (2022): 86,500 (of whom 18,500 are female) 3.1.4: Birth (deliveries) attended by skilled health care personnel (Number and percentage) 23 Baseline (2015): 58 percent 21 Baseline and target are slightly revised as this indicator is measured by the government through its National Education Strategic Plan (NESP) and they have revised their numbers. 22 TVET = technical and vocational education and training. 23 Measurement of the indicator is changed from numbers to percentage due to the change in the source of data within MoPH from MIS to regular surveys. 23 World Bank Group Programs (ongoing and CPF Outcomes and Indicators Supplementary Indicators planned) Progress (2018): 55 percent Target (2022): 66 percent 3.1.5 PENTA 3 (basic immunization) coverage among children aged between 12–23 months in lowest income quintile (5) Baseline (2015): 72 percent Progress (2018): 60 percent Target (2022): 80 percent 3.1.6 Percentage of children 0-3 months who received 3.1.6.1 Health care quality score growth monitoring and promotion services (Balanced Score Card) in health facilities Baseline (2018): 0 percent delivering Basic Package of Health Target (2022): 60 percent Services Baseline (2015): 60.4 percent Target (2022): 68 percent CPF Objective 3.2 Enhanced social protection for the poor and vulnerable 3.2.1: Number of vulnerable households receiving MCCG Lending - ongoing support • CCAP24 (Maintenance and Construction Cash Baseline (2017): 0 hh Grant [MCCG] and Social Inclusion Grant [SIG]) Progress (2019): 66,403 hh Target (2022): 115,000 hh ASA 3.2.2: Number of vulnerable households benefitting from • Targeting the Ultra-Poor Impact Evaluation social inclusion grant • Promoting Women's Livelihoods and Baseline (2017): 0 hh Opportunities in Select Value Chains Progress (2019): 6,293 hh • Afghanistan: Gender and Social Inclusion Target (2022): 20,000 hh Platform • Afghanistan Social Protection Programmatic ASA • Afghanistan Poverty and Equity Program FY19– 21 24 Citizen Charter Afghanistan Project (CCAP) has a component of cash for work grant as well as social inclusion grant that support the lowest segment of the society. 24 Cross-Cutting Issues: Gender CPF Objective 4: Contribute to women empowerment and their inclusion in the economic and social sphere of life 4.1 Women reached with financial services Lending - ongoing Baseline (2018): 42,294 • Fiscal Performance Improvement Support Target (2022): 280,760 Project (FSP) 4.2 Share of gender tagged projects (projects that will • Women Economic Empowerment – Rural close gaps between men and women) Development Program (WEE-RDP) Baseline (2015): 40 percent • Strengthening Women’s Economic Progress (2018): 100 percent Empowerment Project (SWEEP) Target (2022): 100 percent • Promoting Women's Livelihoods and 4.3 Women provided with assistance to engage in income Opportunities in Select Value Chains pilot generation Baseline (2018): 14849 ASA Target (2022): 36,660 • Gender and Social Inclusion Cross-Cutting Issues: Climate Change CPF Objective 5: Improved climate resilient landscapes and infrastructure 5.1 Adaptation and mitigation considerations and Lending - ongoing activities are integrated into project design. • On Farm Water Management (OFWM) Project Baseline (2018): 4 percent climate co-benefits • Irrigation Restoration and Development Project Target (2022): 35 percent climate co-benefits (IRDP) 5.2 A ‘climate cell’ is established in MAIL’s National • Afghanistan Agricultural Inputs Project Resource Management (NRM) General Directorate to train • Strategic Grain Reserves Project staff to integrate climate change considerations into projects Lending - pipeline Baseline (2019): climate change not mainstreamed into • Agro-water Management and Climate Resilience MAIL’s institutional structure Project Target (2022): entity established in MAIL to mainstream climate change into projects ASA 5.3 A capacity building and training program is established • Afghanistan Strengthening Climate Resilience in NEPA to support the integration of climate change Platform considerations in policy and operations • Support for Climate and Disaster Resilience in Baseline (2019): no mechanism or curriculum Afghanistan Target (2022): capacity building mechanism and training • AF Hydromet and Early Warning Services for curriculum developed Resilience - Enhancing Learning/Capacity on 5.4 Holistic humanitarian-development approach to Weather and climate Information (ELWIN) addressing water scarcity, food insecurity and famine risk Baseline (2018): no consensus 25 Target (2022): government led action plan to address • Climate change impacts on hydrology and water scarcity, food insecurity and famine risk agriculture in Afghanistan 5.5 Increased cooperation and support on climate change • Support for integrated and resilient landscape across ARTF/ non-ARTF partners. Number of coordination approach meetings. • Supporting NEPA to Develop a Medium-term Baseline (2018): 0 Capacity Strengthening Plan Target (2022): 8 • Afghanistan Policy Advice on Water 5.6 Community awareness and capacity of CDCs is 3.4.6.1 Agrometeorological advisories • Strengthening Safeguards Management of increased on DRM and early warning: developed and disseminated. Projects Metric 1: Number of communities where community- Baseline (2019): 0 based DRM initiatives have taken place through CCAP. Target (2022): 2 Baseline (2019): 0 Target (2022): 5 Metric 2: Number of CDC’s trained in DRM. Baseline (2016): 0 Target (2020): 3,000 CDCs receive training in DRM (25% of CDCs) 26 ANNEX 2. MATRIX OF CHANGES TO THE ORIGINAL CPF RESULTS MATRIX In addition to extending the end date of results targets from FY20 to FY22, this PLR proposes the following changes to the CPF results framework, including an addition of two new objectives. Outcome and Indicator Description of Proposed Changes Pillar 1: Building Strong and Accountable Institutions CPF Objective 1.1: Improved public financial management and fiscal self-reliance 1.1.1 (DELETED INDICATOR) Open Budget Index Score The indicator is dropped as it is not directly measured or contributed to by the Bank. 1.1.1 (NEW INDICATOR) Number of institutional development The indicator is newly added to reflect institutionalization, including accounting recommendations in support of PPPs implemented and budget treatment of PPPs and the necessary budgetary processes required to support multiyear government financial contributions to PPPs. 1.1.3 Ratio of operating and maintenance expenditures as a percentage The indicator is revised to reflect the World Bank’s increasing focus on the quality of total recurrent civilian expenditures is revised to read as follows: of O&M spending. Improved processes and efficiency in Government O&M 25 expenditure 1.1.4 Number of provinces where the Pension Management The indicator is revised to reflect changes from Safety Nets and Pension Information System is fully utilized, including the associated biometric Administration project to Payments Automation and Integration of Salaries in identification is revised to read as follows: Afghanistan (PAISA) as the earlier project is closed and the latter picked on its “Unified biometric identification system for civil servants and pensions activities. is developed and rolled-out”. CPF Objective 1.2: Improved performance of key government institutions and independent agencies 1.2.1 Selected line ministries development budget execution rate The indicator is revised to reflect the changes in the engagement from Capacity improved is revised to read as follows: Building for Result (CBR) Facility to Fiscal Performance Improvement Support Increased development budget execution rate Project (FSP) 1.2.1.1 (SUPPLEMENTARY INDICATOR) Civil service positions recruited The indicator is revised to reflect the changes in the engagement from Capacity by CBR (percent of which filled by women) is revised to read as follows: Building for Result (CBR) Facility to Tackling Afghanistan’s Government HRM and Civil servant positions held by women Institutional Reforms (TAGHIR) 1.2.2 Selected line ministry reliance on externally-funded national The indicator is revised to reflect the changes in the engagement from Capacity technical assistance reduced is revised to read as follows: Priority Line Building for Result (CBR) Facility to Tackling Afghanistan’s Government HRM and Ministries and Agencies that meet minimum benchmark targets related Institutional Reforms (TAGHIR) to reduction in number of National Technical Advisors (NTAs). 1.2.4 (DELETED INDICATOR) Number of beneficiaries in Kabul benefiting The indicator is dropped for streamlining purposes as the target is already from improved infrastructure achieved and the program focus goes beyond the city of Kabul. 25 Operations & Maintenance. 27 Outcome and Indicator Description of Proposed Changes CPF Objective 1.3: Improved Service Delivery Through Enhanced Citizen’s Engagement with the State 1.3.3 Percentage of CDC members in rural and urban areas who are Since progress was higher than expected, the target was revised. It is kept below women. Target for the indicator is revised from: the current progress rate as the program expands to areas of higher risk where Target (2022): Rural: 35 percent, Urban: 40 percent female participation is likely to be lower in the next several years. To: Target (2022): Rural: 40 percent, Urban: 45 percent Pillar 2: Supporting Inclusive Growth CPF Objective 2.1: Improved business environment and access to finance 2.1.1 (DELETED INDICATOR) Reduced number of days to register and The indicator is dropped as the Bank has been supporting the Afghanistan Central obtain a business license at the subnational level Business Registry (ACBR) in the past few years and the target is achieved. Even at the subnational level, licenses can be acquired in a few days. 2.1.1.1(DELETED SUPPLEMENTARY INDICATOR) MOCI, the Afghanistan The indicator is dropped as it was part of the Incentive Program DPG from 2017. Investment Support Agency, MoF, the Afghanistan Revenue The target is already achieved. Department, the Ministry of Interior, and the Passport Office create an electronic interface for unified business services is revised to read as follows: Ministry of Industry and Commerce, MoF, Afghanistan Revenue Department, Ministry of Interior and Passport Office create an electronic interface for unified business services 2.1.1 (NEW INDICATOR) Increased outreach of SBs (measured by The indicator is newly added to reflect the new engagement in the banking sector number of SBs clients served) (Modernizing State-Owned Banks Project). 2.1.2 (NEW NUMBERING) Number of days required to obtain a The target for the indicator is revised to a more realistic target of 160 days as the construction permit in Kabul city. Target revised from: previously envisioned milestones were optimistic and could not be achieved so Target (2020): 60 days to far. Target (2022): 160 days 2.1.3 Number of active microfinance loan accounts indicator is revised The indicator is revised to better reflect desired development outcomes and the to read as follows: Number of active financial transactions accounts World Bank’s engagement: to track account ownership instead of loans (defined as the total number of active bank accounts, microfinance accounts, and m-money accounts) 2.1.4 (DELETED INDICATOR) Approved by Da Afghanistan Bank The indicator is dropped as the target is already achieved and the relevant (Afghanistan Central Bank) of financial sector regulations consistent engagement with the government will end soon. with international standards 2.1.4.1 (DELETED SUPPLEMENTARY INDICATOR) DAB to adopt IFRS, risk- The indicator is dropped for streamlining purposes as the target is already based internal audit and operationalize a new Core Banking System to achieved. minimize operational risks Baseline (2016): IFRS not adopted and use of outdated internal system 28 Outcome and Indicator Description of Proposed Changes Target (2020): adoption of IFRS and Da Afghanistan Bank’s Core Banking System is operational 2.1.4 (NEW INDICATOR) Improved Financial Soundness of SBs (SBs meet The indicator is newly added to reflect the new engagement in the banking sector the central bank's minimum capital requirements) (Modernizing State-Owned Banks Project). Baseline (2018): 33 percent of SBs Target (2022): 90 percent (100% in 2023) of SBs (all SBs) CPF Objective 2.2: Improved Domestic and Regional Integration (Transport, ICT Connectivity, and Trade) 2.2.1 Percentage of rural population with access to an all-season road As the target is achieved under the Afghanistan Rural Access Project (ARAP), indicator is revised to read as follows: Percentage of population with wording of the indicator and the target are revised to include additional access to an all-season road. Target revised from: engagements, beyond ARAP and reflect coverage of urban and rural populations. Target (2020): 70 percent to The target is increased from 70 percent in 2020 to 90 percent in 2022. Target (2022): 90 percent. 2.2.2 Improved access to Internet and telephone services: The focus, baseline and targets for the indicator are revised to better reflect the Number of Internet subscribers per 100 people. renewed engagement and government priorities in the area of connectivity. Baseline (2016): 20 Target (2020): 27 Baseline and target for this indicator are revised. Now it is: Baseline (2018): 22.5 Target (2022): 50 2.2.2.1 (SUPPLEMENTARY INDICATOR) International Internet bandwidth The target for the supplementary indicator is increased for a greater ambition per capita (kilobytes per second, kbps). Target revised from: and a longer period as part of the new operation in the sector. Target (2020): 1 Target (2022): 5 2.2.2.1 b) (DELETED SUPPLEMENTARY INDICATOR) Number of people The indicator is dropped as the World Bank Group support shifted focus from with access to telephone services telephone connectivity to Internet access pursuant to Government’s preference 2.2.3 (DELETED INDICATOR) New trade portal and single window Indicator is dropped as operation is closed and progress was off track. established 2.2.3 (NEW NUMBERING) Retail price of Internet services (per Mbit/s The indicator is revised to reflect change of focus with the renewed and per month in $) is revised to read as follows: Average retail price for enhanced support through the Digital CASA 1GB, prepaid, mobile data package. CPF Objective 2.3: Increased power generation capacity and access to electricity 2.3.1 Generation of additional electricity through hydropower, gas and Since a number of projects in the energy sector are in the renewable energy from domestic sources: Target for this indicator is development/implementation phase as a result of which, an increase in the revised. It is increased from: energy production (hydro and solar) is expected in the coming few years. Target (2020): 335 MW Target (2022): 723 MW 29 Outcome and Indicator Description of Proposed Changes 2.3.1.1 (SUPPLEMENTARY INDICATOR) Transmission losses (percent) is The supplementary indicator is revised to include not only losses in the revised to read as follows: System losses (percent) transmission line but also commercial and distribution losses. CPF Objective 2.4: Increased agricultural productivity and value added 2.4.1 Increase in agricultural productivity (irrigated wheat yields) The target is revised. The relevant operation will close by Dec 2019, but it is tons/hectare. Target for this indicator is revised. It is increased from: expected that the government will maintain the same level of progress by 2022. Target (2020): 3 ton/hectare to Target (2022): 3.4 ton/hectare 2.4.1.1 (DELETED SUPPLEMENTARY INDICATOR) Production of certified The supplementary indicator is dropped as the desired outcomes and the nature wheat seed of the World Bank Group engagement is better reflected by other indicators under this objective. 2.4.2 Increase in the number of farmers with access to knowledge The baseline, and targets for the indicator are revised to reflect the data from services and / or irrigation services (percent female) three relevant projects (OFWM, IRDP and NHLP) Baseline changed to 0 Target (2020): 1.8 million Target (2022): 1.3 million 2.4.2.1 (DELETED SUPPLEMENTARY INDICATOR) Percent target farmers The supplementary indicator is dropped for streamlining purposes. adopting key technology practices for horticulture and livestock, of which percent female farmers 2.4.3 Area provided with irrigation and drainage service (hectare, ha) The target and progress milestones for the On-Farm Water Management (OFWM) Project have been added to the targets and progress from the Irrigation Restoration and Development Project (IRDP) to ensure consistency and include information from both contributing projects. 2.4.3.2 (DELETED SUPPLEMENTARY INDICATOR) River basin disaster risk The supplementary indicator is dropped for streamlining purposes. management plans prepared CPF Objective 2.5: Sustainable development of extractive industries 2.5.2 (DELETED INDICATOR) Value of resource corridor related The indicator is revised as the focus of the World Bank Group support in the PPP/private investments transactions developed is revised to read as sector is changed from resource corridor to a broader agenda of PPPs follows: Number of feasibility studies that lead to tendered projects CPF Objective 2.6: Support to Public-Private Partnership to leverage New CPF objective added to reflect increasing focus on MFD and leveraging private financing private finance 2.6.1 Number of PPP projects tendered The indicator is newly added to track WB’s support on PPP projects 2.6.2 Number of power IPP that reach financial closure with WBG The indicator is newly added to track World Bank Group’s support to IPPs support 30 Outcome and Indicator Description of Proposed Changes Pillar 3: Deepening Social Inclusion CPF Objective 3.1: Improved human development 3.1.1 Primary school completion rate The baseline and target are slightly revised as this indicator is measured by the Baseline (2014): 50.2 percent (of whom 40.3 percent are girls) government through its National Education Strategic Plan (NESP) and they have Progress (2018) 52.6 percent (of whom 43.8 percent are girls) revised their numbers. Target (2022): 54.9 percent of whom 47.4 percent are girls) 3.1.1 (DELETED SUPPLEMENTARY INDICATOR) National Education The supplementary indicator is dropped for better consolidation of the result Strategic Plan (NESP) endorsed and being implemented framework. 3.1.2 Share of graduates from supported vocational institutions who The indicator is revised to better reflect the nature of the World Bank Group find employment within a year of graduation is revised to read as support follows: Number of TVET Institutes implementing revised Competency- Based Curriculum for Priority Trades 3.1.4: Birth (deliveries) attended by skilled health care personnel The methodology of measurement of the indicator is changed from numbers to (Number and percentage) percentage due to the change in the source of data within MoPH from MIS to Baseline (2015): 58 percent regular surveys. Progress (2018): 55 percent Target (2022): 66 percent 3.1.4.1 (DELETED SUPPLEMENTARY INDICATOR) Birth (deliveries) The supplementary indicator is dropped for better consolidation of the result attended by skilled health care personnel (percentage) framework. 3.1.5.1 (DELETED SUPPLEMENTARY INDICATOR) PENTA 3 (basic The supplementary indicator is dropped for better consolidation of the result immunization) coverage among children aged between 12-23 months framework. in lowest income quintile (5) 3.1.6 Proportion of children aged under five years with severe acute The indicator is revised to better reflect the nature of World Bank Group support malnutrition who are treated (percent) is revised to read as follows: as well as to capture progress on stunting rather than acute malnutrition, given percentage of children 0–23 months who received growth monitoring that stunting rate is very high in Afghanistan. and promotion services CPF Objective 3.2 Enhanced social protection for the poor and vulnerable 3.2.1 (DELETED INDICATOR) Number of families covered by targeted The indicator is dropped since the relevant operation is closed and given the little cash transfers paid on a regular basis traction with the government on the targeted cash transfers agenda. 3.2.1.1 (DELETED SUPPLEMENTARY INDICATOR) Percent of safety net The indicator is dropped as there are no safety nets supported by the World Bank beneficiaries coming from the poorest 40 percent of the population Group and no traction on this agenda with the government 31 Outcome and Indicator Description of Proposed Changes 3.2.1 (NEW NUMBERING) Number of vulnerable households receiving The indicator is newly added to reflect the World Bank Group’s focus on MCCG support26 channeling support to the most vulnerable households through the Citizen’s Charter Afghanistan Project via communities. 3.2.2 (NEW NUMBERING) Number of vulnerable households benefitting The indicator is newly added to reflect the World Bank Group’s focus on from social inclusion grant channeling support to the socially vulnerable households through the Citizen’s Charter Afghanistan Project via communities. CPF Objective 3.3 (DELETED OBJECTIVE) Improved government and This objective area is replaced with the newly added objective area under the community capacity to manage and respond to natural disasters cross-cutting issue: Climate Change. 3.3.1 (DELETED INDICATOR) Select line ministries, focusing on Citizens The indicator is dropped for better consolidation with the newly added cross- Charter ministries MRRD, MoE, MEW and MoPW,27 and key agencies, cutting issue: climate change. The target is achieved. particularly ANDMA28 and Afghanistan Meteorological Department, to The supplementary indicator is dropped for better consolidation of the result collect, analyze and use information on disaster risk and climate change framework. for evidence-based decision making 29 3.3.1.1 (DELETED SUPPLEMENTARY INDICATOR) National multi-hazard The supplementary indicator is dropped since the target is achieved and for risk assessment launched in online open data platform by January 2017 better consolidation with the newly added CPF objective: climate change. The National Risk Profile developed by June 2017 target is achieved. 3.3.2.1 (DELETED SUPPLEMENTARY INDICATOR) Early Warning System The supplementary indicator is dropped since the target is achieved and for (EWS) roadmap developed by January 2018 better consolidation with the newly added CPF objective: climate change. The Under the Citizens’ Charter Project, select CDCs in high risk areas target is achieved. develop community-based risk maps and DRM action plans by 2019 Cross-Cutting Issues: Gender CPF Objective 4 (NEW NUMBERING): Improved capacity of line CPF Objective 4(NEW NUMBERING): revised to reflect change in the focus of the ministries to collect and analyze gender data CPF: Increased social and economic empowerment of women 4.1 (NEW NUMBERING) Percentage of line ministries collecting, The indicator is revised to focus more on the outcomes of the World Bank analyzing, and reporting on gender data as part of their annual plans is Group’s programs aiming at economic and social empowerment of women revised to read as follows: Women reached with financial services 4.2 (NEW NUMBERING) Number of projects with gender tag (projects The indicator is revised to provide further clarity to the language and ambition that have integrated gender concerns) is revised to read as follows: behind it 26 The change is that the original indicator which was supposed to be tracked by Safety Nets and Pension project was dropped in 2017. Instead CCAP has made the progress recorded in this table. 32 Outcome and Indicator Description of Proposed Changes Share of gender tagged projects (that is, projects that will close gaps between men and women) 4.3 (NEW NUMBERING) Women provided with assistance to engage in The indicator is newly added to reflect more on women’s social and economic income generation empowerment 4.4 (DELETED INDICATOR) Percent of portfolio that collects gender- The indicator is dropped. No longer relevant as we have moved to gender tagging disaggregated data Cross-Cutting Issues: Climate Change Newly added engagement area CPF Objective 5: Improved climate resilient landscapes and Objective is to reflect World Bank Group’s work on climate -resilient landscape infrastructure and infrastructure 5.1 (NEW NUMBERING) Adaptation and mitigation considerations and The indicator is newly added to reflect WBG’s increased focus on supporting activities are integrated into project design climate resilience Baseline (2018): 4 percent climate co-benefits Target (2022): 35 percent climate co-benefits 5.2 (NEW NUMBERING) A ‘climate cell’ is established in MAIL’s NRM The indicator is newly added to reflect WBG’s increased focus on supporting General Directorate to train staff to integrate climate change climate resilience considerations into projects. Baseline (2019): climate change not mainstreamed into MAIL’s institutional structure Target (2022): entity established in MAIL to mainstream climate change into projects 5.3 (NEW NUMBERING) A capacity building and training program is The indicator is newly added to reflect WBG’s increased focus on sup porting established in NEPA to support the integration of climate change climate resilience considerations in policy and operations Baseline (2019): No mechanism or curriculum Target (2022): Capacity building mechanism and training curriculum developed 5.4 (NEW NUMBERING) Holistic humanitarian-development approach The indicator is newly added to reflect WBG’s increased focus on supporting to addressing water scarcity, food insecurity and famine risk climate resilience Baseline (2018): No consensus Target (2022): Government led action plan to address water scarcity, food insecurity and famine risk 5.5 (NEW NUMBERING) Increased cooperation and support on climate The indicator is newly added to reflect WBG’s increased focus on supporting change across ARTF/ non-ARTF partners. Number of coordination climate resilience meetings Baseline (2018): 0 Target (2022): 8 33 Outcome and Indicator Description of Proposed Changes 5.6 (NEW NUMBERING) Community awareness and capacity of CDCs is The indicator is newly with two metrics both to track progress on community’s increased on DRM and early warning: enhanced capacity to respond to early warning information Metric 1: Number of communities where community-based DRM initiatives have taken place through CCAP. Baseline (2019): 0 Target (2022): 5 Metric 2: Number of CDC’s trained in DRM. Baseline (2016): 0 Target (2020): 3,000 CDCs receive training in DRM (25% of CDCs) 5.6.1 (NEW SUPPLEMENTARY NUMBERING) Agrometeorological The indicator is newly added to reflect WBG’s increased focus on supporting advisories developed and disseminated climate resilience Baseline (2019): 0 Target (2022): 2 34 ANNEX 3: PROGRESS TOWARD THE CPF OBJECTIVES Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Pillar 1: Building Strong and Accountable Institutions CPF Objective 1.1: Improved public financial management and fiscal self-reliance 1.1.1 Open Budget Index Score 1.1.1 On track. According to the Open Budget Survey by the International Budget Baseline (2015): 42 Partnership, Afghanistan’s score for 2017 is 49. Score for 2018 is not released yet. Progress (2017): 49 Target (2020): 55 1.1.2 Domestic revenue-to-GDP ratio 1.1.2 Achieved. With the World Bank support, revenue-to-GDP ratio has improved Baseline (2016): 10.7 percent from 10.7 percent in 2016 to over 13 percent in 2018. Progress (2019): 13 percent Target (2020): 13 percent 1.1.3 Ratio of operating and maintenance expenditures as a 1.1.3 On track. The ratio of O&M expenditures slightly increased from almost 19 percentage of total recurrent civilian expenditures percent in 2015 to 19.5 in 2019. Baseline (2015): 18.8 percent Progress (2019): 19.5 percent Target (2020): no deterioration. 1.1.4 Number of provinces where the Pension Management 1.1.4 Off track. With support from the Safety Nets and Pensions Support Project Information System is fully utilized, including the associated (closed in December 2017), the Pension Management Information System was biometric identification developed and rolled out in 4 provinces. Rollout of the Pension Management Baseline (2016): 0 Information System to an additional 6 provinces was funded through the national Progress (2018): 10 budget as the relevant project was closed. Further support will be provided through Target (2020): 25 (out of 34) the PAISA project. CPF Objective 1.2: Improved performance of key government institutions and independent agencies Ministries 1.2.1 Selected line ministries development budget execution rate 1.2.1 On track. The priority Capacity Building for Result (CBR) Facility Line Ministries & improved Agencies development budget execution rate reached an average of 74.6 percent by Baseline (2015): 55 percent end 2017 (1,396). Development budget execution rate at project closing (1,397) will be Progress (2017): 74.6 percent updated once available. Target (2020): 80 percent 1.2.1.1 (SUPPLEMENTARY INDICATOR) Civil Service positions 1.2.1.1 Off track. This target has been underachieved with CBR only able to recruit 76 recruited by CBR (percent of which filled by women) women (7.2 percent) out of 1,053 contracted civil servant positions. This deficiency is Baseline (2016): 210 (2 percent) planned to be partially rectified by TAGHIR. Progress (2017): 1,500 (7.2 percent) Target (2020): 2,400 (30 percent) 35 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones 1.2.2 Selected line ministry reliance on externally-funded national 1.2.2 Off track. It is difficult to report on this target, as an accurate baseline of on- technical assistance reduced budget NTAs has not been established, for example, CBR has data for around 13,000 Baseline (2016): 10,000 contract staff on-budget NTAs whereas the 2017 Budget Document estimates 20,141 NTAs. The Target (2020): 5,000 proportion of NTAs that are 'contracted' (project implementation) staff versus consultants and advisers is also unclear. Both baseline and target can be revised moving forward with the Independent Administration Reform and Civil Services Commission (IARCSC) and MoF planning (as part of TAGHIR) to develop a database on existing parallel structures, capturing information on donor assistance (including off- budget). Municipalities 1.2.3 Selected municipalities demonstrating improved 1.2.3 On track. Despite delays in procurement and staffing issues under the Kabul performance (in planning, PFM, revenues, and services in informal Municipal Development Program (KMDP), this indicator is on track — settlements) Afghanistan Financial Management Information System (AFMIS) is being rolled out in Baseline (2017): 0 the Kabul Municipality. Plans to roll out AFMIS in 4 additional municipalities (Herat, Progress (2019): 1 Mazar, Kandahar, and Jalalabad) are under way, which will be funded through the Target (2020): 5 municipalities (Herat, Jalalabad, Mazar, Kandahar, Cities Investment Program (CIP). For the Kabul Municipality, a Chart of Accounts (COA) and Kabul) has been prepared based on the new COA categories by the MoF, and preparatory work has been done to establish the capacity of the MoF treasury to lead the AFMIS rollout in the 4 provincial municipalities as well. 1.2.4 Number of beneficiaries in Kabul benefiting from improved 1.2.4 Achieved. With the support of KMDP, as of February 2019, the total number of infrastructure people who benefited from improved infrastructure is 1,360,000. Baseline (2016): 209,000 Progress (2019): 1,360,000 (73 percent are women/children) Target (2021): 1,052,660 CPF Objective 1.3: Improved service delivery through enhanced citizens’ engagement with the state 1.3.1 Number of CDCs that function as a whole-of-government 1.3.1 On track. As of March 2019, more than 46 percent (5,238) of CDCs function as a development entity and benefiting from Citizens Charter program whole of government development entities (with subprojects financed). However, as inputs of March 2019, 11,226 CDCs are elected, out of which 11,185 have developed their Baseline (2016): 0 CDCs. Progress (2019): 5239 Target (2020): 10,500 (rural and urban) 1.3.2 Number of beneficiaries with access to a basic package of 1.3.2 On track. With the support from the CCAP, as of March 2019, around 10.5 million services in rural/urban areas as a result of Citizens Charter beneficiaries have gained access to a basic package of services in both urban and rural interventions areas. Baseline (2016): 0 Note: This includes beneficiaries for all CCAP components (urban and rural), the Progress (2019): 5 million majority of MCCG and SIG beneficiaries as part of the AF for the CCAP in 2017. 36 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Target (2020): 8.5 million 1.3.3 Percentage of CDC members in rural and urban areas who 1.3.3 Achieved. The target is already surpassed. With the support from the CCAP, as of are women August 2018, around 5 million beneficiaries have gained access to a basic package of Baseline (2016): 0 services in both urban and rural areas. Progress (2019): Rural 48 percent; Urban 49 percent Target: Rural: 35 percent, Urban: 40 percent Pillar 2: Supporting Inclusive Growth CPF Objective 2.1: Improved business environment and access to finance 2.1.1 Reduced number of days to register and obtain a business 2.1.1 Achieved. As per the Subnational Doing Business report 2017 on major Afghan license at the subnational level cities, it takes less than 10 days to obtain a business license in these provinces: Baseline (2016): 45 days Balkh: 8 days Progress (2017): 9 days Kandahar: 8 days Target (2020): 20 days Herat: 9 days Nangarhar: 9 days 2.1.1.1 (SUPPLEMENTARY INDICATOR) MOCI, the Afghanistan 2.1.1.1 On track. As of December 2017, electronic kiosk interfaces for unified business Investment Support Agency, MoF, the Afghanistan Revenue services have been established between the MOCI/Afghanistan Central Business Department, the Ministry of Interior, and the Passport Office Registry and Intellectual Property (ACBRIP) and all three central tax payer offices of create an electronic interface for unified business services MoF/Afghanistan Revenue Department (ARD) (STO, MTO, and LTO)30; four regional Baseline (2016): None ARD offices/mustofiats: Herat, Nangharhar, Mazar-e-Sharif and Kandahar; as well as Progress (2017): Yes the MoI Central Passport Of Target (2020): Interface created and operational 2.1.2 Number of days required to obtain a construction permit in 2.1.2 On track. Good progress has been made since 2016, but the target has not been Kabul City achieved as of 2019 and 60 days seems unrealistic. As per the Doing Business report Baseline: (2016): 284 days 2019, the number of days required to obtain a construction permit in Kabul has been Progress (2018): 199 days reduced to 199 days, owing to reforms. Target (2020): 60 days 2.1.2.1 (SUPPLEMENTARY INDICATOR) Average weeks required for 2.1.2.1 Off track. No progress; will be targeted through the ALASP and Support to land acquisition/resettlement process for development projects strengthen MUDL Medium-Term Capacity for efficient management of LAR&R ASA. (cadastral survey, land clearance, implementation, and settlement) Baseline (2016): 120 weeks Target (2020): 60 weeks 2.1.3 Number of active microfinance loan accounts: 2.1.3 Off track. Baseline numbers are higher than the current progress. In contrast, the Baseline (2016): 228,563 number of accounts in commercial banks has been increasing. 30 STO = Small Taxpayers Office, MTO = Medium Taxpayers Office, LTO = Large Taxpayers Office. 37 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Target (2020): 450,000 (of which percent of women) Baseline (2016): 25 percent Progress (2019): 156,267 (percent of women: 36 percent) World Bank Progress (2019): 66,260 (female: 13,166) IFC Target (2020): 40 percent 2.1.4 Approval by Da Afghanistan Bank (Afghanistan Central Bank) 2.1.4 Achieved. With the support of the FSRRP through direct technical assistance as of financial sector regulations consistent with international well as building regulatory capacity of DAB staff, a new banking law and Anti-Money standards Laundering and Countering Financing of Terrorism regulations have been approved in Baseline (2016): No regulation addition to 25 regulations that were developed and enacted since January 2016, Progress (2019): 25 regulations issued and enacted contributing to the resilience and stability of the sector. Target (2020): regulations issued and under implementation 2.1.4.1 (SUPPLEMENTARY INDICATOR) DAB to adopt IFRS, risk- 2.1.4.1 On track. IFRS is not adopted yet by the banking system. However, under the based internal audit and operationalize a new Core Banking Financial Sector Rapid Response Project (FSRRP), the procurement process for the System to minimize operational risks adoption of the IFRS is under way. It is expected that it will be achieved by 2020. The Baseline (2016): IFRS not adopted and use of outdated internal Request for Proposal (RFP) for the core banking system (CBS) of the central bank is system currently being finalized at the National Procurement Authority (NPA), and it is Target (2020): adoption of IFRS and Da Afghanistan Bank’s Core expected to be issued by early May 2019. The CBS is expected to be operational by Banking System is operational 2021. CPF Objective 2.2: Improved domestic and regional integration (transport, ICT connectivity, and trade) 2.2.1 Percentage rural population with access to an all-season 2.2.1 Achieved. As of June 2018, 89 percent of the rural population has access to an all- road season road. Baseline (2014): 58 percent Progress (2019): 89 percent Target (2020): 70 percent 2.2.1.1 (SUPPLEMENTARY INDICATOR) Kilometers of roads 2.2.1.1 On track. Additionally, 12,493 km of road constructed or rehabilitated under constructed or rehabilitated NSP. Baseline (2016): 1,190 km Progress (2018): 2,310 km Target (2020) 2,900 km 2.2.2 Improved access to Internet and telephone services: 2.2.2a) Achieved. Good progress made under the ICT Sector Development Project (now a) Number of Internet subscribers per 100 people closed). The follow-on project (Digital CASA) has picked this as a Project Development Baseline (2016): 20 Objective (PDO) indicator. Progress (2018) 22.5 Target (2020): 27 38 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones b) Number of people with access to telephone services b) Off track. Progress is not being monitored. The government has changed its focus Baseline (2016): 85 percent from voice access to Internet access. Progress (2017): 85 percent Target (2020): 90 percent 2.2.2.1 (SUPPLEMENTARY INDICATOR) International Internet 2.2.2.1 Off track. This is a PDO Indicator for Digital CASA and progress is expected bandwidth per capita (kilobytes per second, kbps) under Digital CASA as it enters implementation phase. Baseline (2015): 0.5 Progress (2018): 1.2 Target (2020): 1.0 2.2.2.2 (SUPPLEMENTARY INDICATOR) Retail price of Internet 2.2.2.2 Off track. Indicator is revised as part of the Digital CASA. services (per Mbit/s per month in US$) Baseline (2016): US$37 Target (2020): US$25 2.2.3 New trade portal and single window established 2.2.3 Off track. Baseline (2016): None Target (2020): New trade portal and single window established and operational CPF Objective 2.3: Increased power generation capacity and access to electricity 2.3.1 Generation of additional electricity through hydropower, 2.3.1 Off track. Little progress has been made on this yet. As of September 2018, gas, and renewable energy from domestic sources capacity to generate from domestic sources is 275 MW, which includes both hydro and Baseline (2016): 210 MW from the Tarakhail thermal power plant. Progress (2018): 275 MW Target (2020): 335 MW 2.3.1.1 (SUPPLEMENTARY INDICATOR) Transmission losses 2.3.1.1 On track. (percent) Baseline (2016): 30-40 percent Progress (2019): 33 percent Target (2022): 25 percent 2.3.2 Increase in supply of grid connected electricity 2.3.2 On track. Current supply capacity of the grid, as of September 2018 is 1,750 MW, Baseline (2016): 1,085 MW which includes both domestic production and imported electricity. Progress (2018): 1,750 MW Target (2020): 1,800 MW (65 percent) 2.3.3 Increase in number of households with access to on-grid 2.3.3 On track. Current number of connections to the national grid, as of September electricity 2018 is 1.5 million households. Baseline (2016): 1.2 million Progress (2019): 1.59 million 39 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Target (2020): 1.68 million. 2.3.4 By the end of 2020, a total of 20 MW of renewable off-grid 2.3.4 Off track. As of April 2019, through the Citizens’ Charter Afghan istan Project, a systems to supply a minimum service standard of 100 watts per total of 11.2 MW of renewable off-grid electricity has been generated. household. Year 1 baseline: 3MW CPF Objective 2.4: Increased agricultural productivity and value added 2.4.1 Increase in agricultural productivity (Irrigated wheat yields) 2.4.1 Achieved. As of January 2019, under the OFWMP, land productivity has increased tons/hectare (t/ha) to 3.4 t/ha, reaching the target to be achieved by June 2019. Target will be revised for Baseline (2017): 2.5 t/ha higher ambition. Progress (2019): 3.4 t/ha (OFWMP) Target (2020): 3 t/ha 2.4.1.1 (SUPPLEMENTARY INDICATOR) Production of certified 2.4.1.1 Off track. The indicator was revised. wheat seed Baseline (2015): 10,000 tons Target (2018): 30,000 tons 2.4.2 Increase in the number of farmers with access to knowledge 2.4.2 Achieved. Farmers are receiving services through farmers' field schools, services and/or irrigation services (percent female) extension services, and farmers' groups. Target will be revised for higher ambition. Baseline (2016): 1.7 million Progress (2019): 1 million (47 percent women) NHLP (200,000) OFWMP (387,741) Target (2020): 1.87 million (at least 35 percent female) 2.4.2.1 (SUPPLEMENTARY INDICATOR) Percent of target farmers 2.4.2.1 Off track. This is an annual indicator and will be reported on in the next adopting key technology practices for horticulture and livestock, reporting cycle in July 2019. of which percent female farmers: a) Horticulture Baseline (2015): 53 percent Target (2018): 70 percent Female: baseline (2015): 53 percent; Target (2018): 75 percent b) Livestock Baseline (2015): 58 percent Target (2018): 65 percent Female: baseline (2015): 44 percent; Target (2018): 70 percent 2.4.3 Area provided with irrigation and drainage service (hectare, 2.4.3 On track. Under IRDP, as of November 2018, 202,700 ha of land were provided ha) with irrigation and drainage services, while under OFWMP as of November 2018, Baseline (2015): 120,000 ha (IRDP) 54,000 ha of land have been provided with improved irrigation services. Beneficiaries (2015): 200,000 (IRDP) 40 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Progress (2019): 202,700 ha (IRDP) Progress (2019): 54,000 ha (OFWMP) Target (2020): 215,000 ha (IRDP) Beneficiaries (2015): 407,000 (IRDP) Target (2019): 59,000 ha (OFWM) 2.4.3.1 (SUPPLEMENTARY INDICATOR) Transboundary Waters 2.4.3.1 On track. This policy has been developed and it is pending with the Ministry of Policy adopted Foreign Affairs (MoFA) for its concurrence and final approval. Baseline (2016): None Target (2020): Policy adopted River basin DRM plans prepared Baseline (2015): 0 Target (2020): 3 2.4.3.2 (SUPPLEMENTARY INDICATOR) River basin disaster risk 2.4.3.2 Off track. No progress and not specifically pursued through the WBG management plans prepared engagement. Indicator changed to community-based risk management plans to reflect Baseline (2015): 0 the nature of the World Bank Group support. Target (2020): 3 CPF Objective 2.5: Sustainable development of extractive industries 2.5.1 Regulatory regime for extractive industries developed and 2.5.1 On track. Hydrocarbon Law 2018 by president decree January 2018, the Mining being implemented by 2020 law was approved by the Cabinet on September 5, 2018, and presidential decree. Baseline (2016): In preparation Technical and artisanal and small-scale mining (ASM) regulations under the Mineral Progress (2019): Hydrocarbon and mining laws approved law and regulations on chapter II and& III are being drafted. Target (2020): Agreed and operational 2.5.1.1 (SUPPLEMENTARY INDICATOR) EITI on track to be fully 2.5.1.1 Off track. Afghanistan published 5 annual EITI reports, the latest report implemented by 2020 covering 2014–2015. The sixth reconciliation report preparation is under way. Following the conclusion of Afghanistan’s Validation of 2017, the EITI Board encourages the GoA to continue making progress until it achieves compliance under this standard. 2.5.2 Value of resource corridor related PPP/private investments 2.5.2 Off track. In July 2016, to reflect the focus of the Government of Afghanistan transactions developed (GoA) on PPPs instead of resource corridors, the Resource Corridor Project was Baseline (2016): 0 changed to a PPP project (PPIAP), with an emphasis on supporting PPPs for private Target (2020): $10 million sector development. Therefore, this indicator was revised to align it with the PPIAP that does not have a specific focus on resource corridors or extractive industries. Pillar 3: Deepening Social Inclusion CPF Objective 3.1: Improved human development Education 3.1.1 Primary school completion rate 3.1.1 Achieved. Target surpassed and revised, support continues under the EQRA. 41 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Baseline (2015): 45 percent (of whom 37 percent are girls) Progress (2018) 72 percent (of whom 58 percent are girls) Target (2020): 59 percent (of whom 45 percent are girls) 3.1.1.1 (SUPPLEMENTARY INDICATOR) National Education Sector 3.1.1.1 Achieved. The new National Education Strategic Plan (NESP) III was developed Strategy endorsed and being implemented in 2017 and is now being implemented; on track. Baseline (2016): being prepared Progress (2017): endorsed by the government Target (2020): being implemented 3.1.2 Share of graduates from supported vocational institutions 3.1.2 Off track. Indicator was dropped during the project restructuring of 2017. This who find employment within a year of graduation indicator is no longer relevant as the focus of the project changed from students to Baseline (2016): 56 percent (of whom 19 percent are girls) TVET’s institutional capacity building and thus a new indicator is added. Target (2018): 62 percent (of whom 20 percent are girls) 3.1.3 Student enrollment in university education in priority degree 3.1.3 On track. As part of the AF to the HEDP, the targets have increased. programs Baseline (2015): 64,200 (of whom 12,000 are female) Progress (2019): 81,900 (of whom 16,900 are female) Target (2020): 82,000 (of whom 18,000 are female) Health 3.1.4: Birth (deliveries) attended by skilled health care personnel 3.1.4 Achieved. Based on Health Management Information System (HMIS) 2018, the (Number and percentage) actual value for this indicator is 890,240 deliveries, which corresponds to actual Baseline (2014): 628,014 progress of +42 percent against the target of +35 percent. Progress (2018): 890,240 (+42 percent) Target (2020): +35 percent 3.1.4.1 (SUPPLEMENTARY INDICATOR) Birth (deliveries) attended 3.1.4.1 Achieved. by skilled healthcare personnel (percentage) Milestone (2018): +32 percent 3.1.5 PENTA 3 (basic immunization) coverage among children aged 3.1.5 On track. World Bank-financed health, nutrition, and population projects, between 12–23 months in lowest income quintile (5) including SEHAT and now Sehatmandi projects, support activities to increase the Baseline (2011): 28.9 percent number of facilities and female staff, ensure continuity of contracts with Progress 2018): 52 percent nongovernmental organizations (NGOs) to provide services, and build performance Target (2020): 65 percent incentives into the contracts, as well as activities and incentives to increase the quality of care. These activities were expected (and are intended) to increase coverage. 3.1.5.1 (SUPPLEMENTARY INDICATOR) PENTA 3 (basic 3.1.5.1 On track. immunization) coverage among children aged between 12-23 months in lowest income quintile (5) Baseline (2011): 28.9 percent 42 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Milestone (2018): 60 percent 3.1.6 Proportion of children aged under five years with severe 3.1.6 Achieved. With support from SEHAT, 77 percent of children with severe acute acute malnutrition who are treated (percent) malnutrition have been treated as of June 2018. Baseline (2014): 32 percent Progress (2019): 77 percent Target (2020): +55 percent 3.1.6.1 (SUPPLEMENTARY INDICATOR) Health care quality score 3.1.6.1 On track. Steady progress until 2017 (63.5), a decrease in 2018 (60). (Balanced Score Card) in health facilities delivering Basic Package Target under Sehatmandi has been revised to 68 percent by 2021 as opposed to the of Health Services previous target of 70 percent by 2018. Baseline (2015): 60.4 percent Progress (2018): 60 percent Target (2021): 68 percent CPF Objective 3.2 Enhanced social protection for the poor and vulnerable 3.2.1 Number of families covered by targeted cash transfers paid 3.2.1 Off track. Follow-on operation to the Safety Nets and Pension Support Project did on a regular basis not materialize, since the government was not very keen on cash transfer engagement. Baseline (2016): 12,000 Target (2020): 200,000 3.2.1.1 (SUPPLEMENTARY INDICATOR) Percent of safety net 3.2.1.1 Off track. No progress on building social safety nets, little traction with the beneficiaries coming from the poorest 40 percent of the Government. population Baseline (2016): 55 percent Target (2020): 65 percent 3.2.1a (NEW INDICATOR) Number of vulnerable households 3.2.1a On track. Instead of targeted cash transfer system, provision of support to the receiving MCCG support most vulnerable has been pursued through community engagement mechanisms; on Baseline (2017): 0 hh track. Progress (2019): 66,403 hh Target (2020): 115,000 hh 3.2.1b (NEW INDICATOR) Number of vulnerable households 3.2.1b On track. Instead of targeted cash transfer system, provision of support to the benefitting from social inclusion grant most vulnerable has been pursued through community engagement mechanisms; on Baseline (2017): 0 hh track. Progress (2019): 6,293 hh Target (2020): 20,000 hh CPF Objective 3.3 Improved government and community capacity to manage and respond to natural disasters 3.3.1 Select line ministries, focusing on Citizens Charter ministries 3.3.1 On track. MRRD, the Independent Directorate of Local Governance (IDLG), MRRD, MoE, MEW and MoPW, and key agencies, particularly ANDMA, Afghanistan Meteorological Department (AMD), and MEW have received 43 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones ANDMA and Afghanistan Meteorological Department, to collect, training on how to better work together and use the platform. However, they have not analyze and use information on disaster risk and climate change started collecting data yet. for evidence-based decision making Baseline (2016): 0 ministries Progress (2019): 9 ministries Target (2020): 5 ministries31 3.3.1.1 (SUPPLEMENTARY INDICATOR) National multi-hazard risk 3.3.1.1 Online platform for the national multi-hazard risk assessment has been assessment launched in online open data platform by January launched and trainings to relevant line ministries have been provided to use it as an 2017 evidence-based decision-making tool. National Risk Profile developed by June 2017 3.3.2 Capacity of CDCs to respond to early warning information 3.3.2 MRRD engineers have been trained on core DRM principles and the use of risk enhanced through Citizens Charter program information in the design and implementation of projects at the community level. Baseline (2016): Training and information material to be prepared These engineers have proceeded to train more than 4,500 CDCs in basic DRM. Target (2020): 25 percent of CDCs or 3,000 CDCs received training The training of MRRD staff is continuing. Also, a Community Based Disaster Risk in DRM. Management pilot has been launched to test the methodology for risk assessment and management at the country level and to explore the potential for deploying community based early warning services. 3.3.2.1 (SUPPLEMENTARY INDICATOR) Early Warning System 3.3.2.1 The Afghanistan Hydromet and Early Warning System Roadmap was developed (EWS) roadmap developed by January 2018 and adopted by the Government of Afghanistan in November 2018. It presents the Under the Citizens’ Charter Project, select CDCs in high risk areas strategic pathway for strengthening hydroment and disaster Early Warning services in develop community-based risk maps and DRM action plans by the country. The relevant government agencies are engaging with the World Bank to 2019 seek support and plan for its implementation. Cross-Cutting Issues: Gender CPF Objective 4: Improved capacity of line ministries to collect and analyze gender data 4.1 Percentage of line ministries collecting, analyzing, and 3.4.1 Off track. No progress can be reported. The ministries' annual plans are not reporting on gender data as part of their annual plans tracked and their relevance to the actual bridging of gender gaps is remote. Indicator Baseline (2016): 50 percent 3.4.2 on the gender tag includes gender data (to receive the tag projects must include Target (2020): 80 percent a gender indicator tracking the narrowing of a gender gap in the project results framework). 4.1.1 Percent of portfolio that collects gender-disaggregated data 3.4.1.1 On track. As of 2018, around 68 percent of the portfolio collects gender- Baseline (2016): 57 percent disaggregated data. Progress (2018): 68 percent 31 Initial target for 2020 was 5 ministries/govt agencies, however, a total of 9 ministries/government agencies have been trained including MRRD, IDLG, MoEW, MoPW, ARAZI, ANDMA, AMD, KM, MoUDA. They have been trained on core DRM principles, the use of natural hazard and climate risk information, including cost-benefit analysis of mitigation measures, and how to collect and upload risk information into the existing GeoNode platform. 44 Outcome and Milestone Indicator Progress to Date on Results/Outcomes/Milestones Target (2020): 80 percent 4.2 Number of projects with gender tag (projects that have 3.4.2 On track. Target has been continuously met in FY17–18; work continues to integrated gender concerns) maintain the same standards. Baseline (2015): 40 percent Progress (2018): 100 percent Target (2020): 100 percent 45 ANNEX 4: HISTORIC AND PLANNED COMMITMENTS The World Bank portfolio as of May 2019 (excluding the US$5+ billion ARTF Recurrent Cost Window that has been almost entirely disbursed) stands at US$4 billion, of which US$1.67 billion is IDA. % UNDISBURSED GRANT SOURCE PRODUCT TYPE PRODUCT LINE MILESTONE EA CATEGORY COMMITMENTS (USD MILLION) DISBURSEMENTS (USD MILLION) RATING: DO RATING: IP DATES RISK PROJECT PROJECT NAME CO-FIN ID IDA AND APPROVAL TOTAL IDA OTHER TOTAL CO-FIN OTHER P145054 CASA 1000 Electricity Transmission PE IPF IDA MS MS S 100.0% A 27-Mar-14 316.00 316.00 0.00 0.00 0.00 0.00 0.00 and Trade Project P119047 Financial Sector Rapid Response PE IPF IDA MS MS S 48.9% C 25-Aug-11 45.70 45.70 0.00 0.00 20.61 20.61 0.00 Project P120397 Afghanistan Agricultural Inputs RE IPF RETF MS MS S 0.00 B 17-Jun-13 67.25 0.00 67.25 0.00 36.74 36.74 0.00 Project (AAIP) P120398 AF On-Farm Water Management RE IPF RETF S S S 9.3% B 16-Feb-11 70.00 0.00 70.00 0.00 63.50 63.50 0.00 (OFWM) P122235 AF Irrigation Restoration and PE IPF IDA S S S 28.6% A 28-Apr-11 216.20 97.80 0.00 118.40 147.09 83.67 63.42 Development Project P125597 Kabul Municipal Development RE IPF RETF S MS H 37.3% B 03-Apr-14 110.00 0.00 110.00 0.00 69.00 69.00 0.00 Program P125961 Afghanistan Rural Access Project PE IPF IDA S MS H 13.2% B 26-Jun-12 437.00 125.00 0.00 312.00 376.13 121.62 254.51 P128048 Afghanistan Access to Finance PE IPF IDA S S H 39.8% F 26-Nov-13 50.00 50.00 0.00 0.00 25.55 25.55 0.00 P131228 DABS Planning And Capacity RE IPF RETF MS MS S 79.8% B 10-Feb-16 6.00 0.00 6.00 0.00 1.21 1.21 0.00 Support P131864 Kabul Urban Transport Efficiency RE IPF RETF S MS S 26.4% B 03-Apr-14 90.50 0.00 90.50 0.00 66.64 66.64 0.00 Improvement Project P132742 Afghanistan - Second Skills PE IPF IDA MS MS S 32.0% B 19-Mar-13 54.99 54.99 0.00 0.00 32.97 32.97 0.00 Development Project P132944 Naghlu Hydropower Rehabilitation RE IPF RETF MS MS H 79.7% A 14-Dec-15 83.00 0.00 83.00 0.00 16.85 16.85 0.00 Project P143841 Afghanistan: National Horticulture and RE IPF RETF S S S 23.6% B 12-Apr-13 190.00 0.00 190.00 0.00 145.22 145.22 0.00 Livestock Productivity Project P145347 Trans-Hindukush Road Connectivity PE IPF IDA MS MU H 88.4% A 20-Oct-15 250.00 250.00 0.00 0.00 27.38 27.38 0.00 Project P146184 Higher Education Development RE IPF RETF S MU S 49.5% B 07-Jul-15 55.00 0.00 55.00 0.00 27.77 27.77 0.00 Project P147147 URBAN DEVELOPMENT SUPPORT PE IPF IDA MS MS H 80.5% B 13-Jun-17 20.00 20.00 0.00 0.00 4.52 4.52 0.00 PROJECT P149410 CASA-1000 Community Support RE IPF RETF MS S S 84.9% B 24-Mar-14 40.00 0.00 40.00 0.00 6.05 6.05 0.00 Program (P149410) P156894 Afghanistan Digital CASA Project PE IPF IDA MS MS S 94.2% B 28-Mar-18 51.00 51.00 0.00 0.00 0.67 0.67 0.00 P158768 Public-Private Partnerships and PE IPF IDA S MS H 90.8% A 27-Jun-18 53.20 20.00 0.00 33.20 4.11 0.22 3.89 Public Investment Advisory Project P159378 EQRA PE IPF IDA S S S 74.0% B 28-Sep-18 298.00 100.00 0.00 198.00 76.58 38.40 38.18 P159655 Fiscal Performance Improvement PE IPF IDA S S H 77.6% C 19-Dec-17 100.00 25.00 0.00 75.00 22.47 19.47 3.00 Support Project (FSP): P160567 Citizens' Charter Afghanistan Project PE IPF IDA S S H 44.0% B 27-Oct-16 472.00 227.70 0.00 244.30 266.17 87.98 178.19 P160606 Afghanistan Strategic Grain Reserve PE IPF IDA S S M 97.1% B 13-Jun-17 29.99 20.30 0.00 9.69 1.33 1.33 0.00 (SGR) Project P160615 Afghanistan Sehatmandi Project PE IPF IDA S S H 65.0% B 28-Mar-18 305.00 140.00 0.00 165.00 100.18 26.46 73.71 P160619 Cities Investment Program PE IPF IDA S S H 100.2% B 19-Dec-18 50.00 25.00 0.00 25.00 0.00 0.00 0.00 P161348 Modernizing Afghan State-Owned PE IPF IDA S MS S 91.9% C 28-Mar-18 40.00 40.00 0.00 0.00 1.82 1.82 0.00 Banks Project P162022 Herat Electrification Project PE IPF IDA S MS H 89.2% B 13-Jun-17 60.00 60.00 0.00 0.00 7.49 7.49 0.00 P164443 Women's Economic Empowerment PE IPF IDA S MS S 96.0% B 28-Sep-18 100.00 25.00 0.00 75.00 3.94 0.92 3.02 Rural Development Project P164762 Afghanistan Land Administration PE IPF IDA H 99.2% B 25-Apr-19 35.00 25.00 0.00 10.00 0.00 0.00 0.00 System Project P164882 AF Incentive Program DPG PE DPF IDA H 0.0% 14-Jun-18 300.00 90.00 0.00 210.00 297.58 87.58 210.00 P166127 Afghanistan: Eshteghal Zaiee - PE IPF IDA S S H 100.3% B 19-Dec-18 200.00 150.00 0.00 50.00 0.00 0.00 0.00 Karmondena (EZ-Kar) Project P166978 Tackling Afghanistan’s Government PE IPF IDA S S H 91.5% HRM and Institutional Reforms C 19-Dec-18 75.00 25.00 0.00 50.00 6.45 2.13 4.32 P168266 Payments Automation and Integration PE IPF IDA H 99.9% of Salaries in Afghanistan (PAISA) C 25-Apr-19 45.00 10.00 0.00 35.00 0.00 0.00 0.00 3999.83 1677.49 1856.04 46 The World Bank FY20 pipeline (as of May 2019): PRODUCT TYPE PRODUCT LINE COMMITMENTS (USD MILLION) PROJECT PROJECT NAME ID TOTAL IDA ARTF P157827 Mazar-e-Sharif Gas-to-Power GU IPF 25.00 25.00 0.00 Project P161728 Afghanistan Placing Labor PE IPF 50.00 10.00 40.00 Abroad and Connecting to P164962 Employment Domestically Kajaki Hydrelectric Dam GU IPF 15.00 15.00 0.00 Addition P166405 Sheberghan Gas to Power GU IPF 12.80 12.80 0.00 Project P168179 Opportunity for Maximizing PE IPF 175.00 25.00 150.00 Agribusiness Investments and TBD Development 2020 Incentive Program PE DPF 400.00 100.00 300.00 Development Policy Operation P169970 Afghanistan Water Supply and PE IPF 230.00 50.00 180.00 Sanitation Services and P170112 Institutional Support Scaling-up Solar Program in Afghanistan GU IPF 100.00 100.00 0.00 Guarantee P170179 Afghanistan Extractive Sector PE IPF 65.00 60.00 5.00 Development Project (AESD) 1072.8 397.8 675 Projects outside of the FY20 pipeline will be formulated in close dialogue with the Government and development partners and as part of the post-2020 ARTF financing and partnership strategy (to be developed in 2020). IFC Committed Portfolio, end-April 2019 LOAN LOAN EQUITY QUASI LOAN + GUARANTEE RISK Commitment Institution ALL Committed Repayment Committed - QUASI-EQUITY Committed - MANAGEMENT Fiscal Year Short Name Committed - IFC - IFC - IFC IFC Committed - IFC IFC Committed - IFC 2006/2004/2008/2012 FMBA 0 0 2.14 0 0 0 2.14 2009/2010/2013/2017/ AIBank 0 0 3.43 0 0 0 3.43 2011/2015/2016/2012 2013 Roshan 45.88 19.12 0 0 0 0 45.88 Rikweda Fruit 2018 0.95 0.05 0 0.50 0 0 1.45 Process Grand Total: 46.83 19.17 5.57 0.50 0 0 52.90 47 IFC ADVISORY PORTFOLIO Project Name Business Area Total Funds Managed by IFC- US$ Equitable Growth, Finance and Afghanistan Leasing Project 1,084,000 Institutions (EFI) Equitable Growth, Finance and Afghanistan Secured Lending Project 1,215,658 Institutions (EFI) IFC Manufacturing, Agribusiness & Strengthening Afghanistan Horticulture Exports 1,196,820 Services (MAS) Afghanistan Business Registration and Licensing Equitable Growth, Finance and 2,718,323 Reform Phase II Project Institutions (EFI) Cross-cutting Public Private Mazar IPP AS 85,276 Partnerships (PPP) IFC Cross-cutting Public Private Afghan Solar 2,357,913 Partnerships (PPP) IFC IFC Manufacturing, Agribusiness & Afghanistan Raisins Supply Chain Development 1,100,000 Services (MAS) Equitable Growth, Finance and Afghanistan Business Enabling Project 1,847,530 Institutions (EFI) Total Advisory portfolio 11,605,520 MIGA’s gross outstanding exposure in Afghanistan as of end-May 2019 FY15 FY16 FY17 FY18 FY19 YTD Number of Projects 3 3 3 4 4 Number of Guarantees 6 6 4 5 6 Gross Exposure ($M) 154 154 116 121 124 Adjusted Net Exposure ($M) 106 106 76 78 80 48 ANNEX 5: MAXIMIZING FINANCE FOR DEVELOPMENT IN AFGHANISTAN Given Afghanistan’s deeply fragile context and manifold challenges, the need for harnessing the comparative advantage of the WBG to maximize finance for development is highly pressing. The WBG in Afghanistan has made progress in this regard but, scaling up across strategic sectors remains to be done. Stimulating the private sector to help address the development gaps and support job creation is essential to ensure sustainable and inclusive growth. Progress to date: Progress on the MFD approach in Afghanistan can be highlighted in four high potential sectors: agribusiness, energy, ICT and the financial sector. • Agribusiness. As discussed in the main body of the PLR, the WBG’s support to Rikweda, a raisin processing facility, is a major achievement and it is expected it will play a demonstration example, thus leading to further transformational private investments in agribusiness. Furthermore, WBG in Afghanistan is working on scaling up agribusiness in Afghanistan through different instruments/engagements: IFC MAS, FCI and WB Agriculture GP. • Energy. The WBG is currently supporting the development of 4 IPPs in Afghanistan: Mazar IPP (gas to power IPP, supported by IDA, IFC and a potential MIGA guarantee), Sheberghan IPP (gas to power IPP, supported by IDA), Kajaki IPP (hydropower IPP, supported by IDA and potentially MIGA) and a solar power IPP (developed by IFC with support from IDA). The development of 4 IPPs in Afghanistan is also made possible by significant investments in the policy, legal and institutional environment, with WB technical assistance and complementary investments and IFC upstream development support. IFC investment and C3P (PPP advisory) teams collaborated to provide upstream support to the Mazar IPP client for development of bankable transaction structure/documentation. Technical assistance to develop the PPP legal and institutional framework (with support from PPIAF and the IDA/ARTF financed Public-Private Partnerships and Public Investments Advisory Project, PPIAP) pave the way forward. WBG support to the development of the Mazar IPP started in early 2015 and shows that it is critical for the WBG to adopt a long term and sustained approach to MFD. In an FVC context, the underlying technical and institutions capacity, security and financing constraints make the development and implementation of the PPP fleet of agreements particularly challenging. This has led to significant delays and has required significant handholding. • ICT. The telecom sector in Afghanistan has been able to mobilize significant private investments, including from IFC, and with MIGA support. The IDA financing Afghanistan Digital Central Asia South Asia Project (Digital CASA) aims to crowd-in private sector investments to improve regional and domestic fiber-optic connectivity infrastructure. The MFD agenda in the ICT sector has however been challenging to implement so far due to slow progress on critical policy reforms and mixed signals from the government to the private sector. • Financial sector. The WBG has been working for 15 years to develop the Afghan nascent financial sector and increase private investments in the sector. The WBG has focused in particular on strengthening the financial sector regulatory environment (with support to the Central Bank), on improving the financial infrastructure to increase access to financial services (with a focus on credit information, secured transactions and digital payment infrastructure) while investing in high potential commercial financial institutions (IFC has invested in two commercial banks, and established the first microfinance institution alongside international DFIs) and providing technical assistance. Continuous efforts are needed to further support the development of the sector and 49 increase access to financial services, as the level of access to financial service, despite improvements, remains at an extremely low level. Lessons learned: • In FCV environments with scarce public resources, it is vital to ensure an emphasis on the MFD approach to ensure that scarce public resources are used strategically and to maximize the reliance on private resources, when feasible. This requires a systematic approach to explore the potential of MFD, as supported, for example, by the IDA/ARTF financed PPIAP. In a context of constant urgent needs, it is important to maintain an emphasis on the MFD approach, when relevant and realistic (instead of automatically reverting to the traditional and tempting public financing). This approach includes a strong focus on foundational reform efforts to open opportunities for private investments. • Attracting private investors to FCV contexts is particularly difficult, given the perceived and/or real risks and requires the full mix of WBG instruments. In such environments, it is critical to work jointly as a WBG to help de-risk by providing (i) capacity building/upstream/project preparation support to both public and private entities; (ii) utilizing blended finance to help bankability of projects; and (iii) political risk guarantees, for which first-loss facilities, such as MGF, become key aspects of engagement. In the Afghanistan context, the IDA PSW has proven critical and is allowing groundbreaking IFC and MIGA investments. • Implementing the MFD approach in an FCV context requires a long-term vision and commitment, both on the WBG and Government sides. WBG interventions should focus on setting the scene for increased private investments, through sectoral and transversal policy and institutional reforms (e.g. supporting the Government to develop a strategic vision for the development of renewable energy). Such enabling reforms must be complemented by upstream project development support (as undertaken by IFC PPP transaction advisory and sector teams and the IDA/ARTF financed PPIAP). Programmatic approaches - that allow for malleability - with significant handholding, are critical here, considering that transactions bearing fruit take considerable time and effort. Ensuring close WBG and development partners coordination from the onset is critical for alignment of objectives as well as ensuring that all relevant stakeholders are committed. • Implementing the MFD approach in an FCV context requires substantial technical assistance on both the public and private sector sides. In low capacity context, technical assistance plays a vital role to develop projects (including up-stream project development), ensure their bankability and their successful implementation. The Rikweda investment required over 3 years of preparation, the support to the Mazar IPP was initiated in early 2015 and has required intensive project preparation support from the WBG. Technical assistance is required both on the government side to support the development of a sound enabling environment, as well as on the private sector side. In addition, technical assistance is critical both during project preparation and project implementation. To finance the required technical assistance, the WB can rely on IDA and/or ARTF financing, however IFC usually needs to mobilize additional donor resources to complement its own resources. • In FCVS contexts such as Afghanistan, IFC is often uniquely positioned as the only long-term funding option available to the private sector and provide countercyclical support . IFC engagement, particularly on the investment front can have a positive signaling effect in the market, especially helping to mobilize funding from other DFI/IFIs. This has been evidenced by IFC’s pioneering investment in the First Microfinance Bank of Afghanistan. Additionally, as being the sole provider of long-term finance (LTF) in the market, it allows IFC to also engage with clients more thoroughly, potentially complementing its investment with technical advisory support (e.g. 50 improving corporate governance, raising E&S standards, upstream support) that enhance the overall impact/outcomes of a given project. With respect to helping lower the cost of financing to operate in a high-risk environment like Afghanistan, IFC recognizes the need for risk management and credit enhancement products which become key enablers for project viability and sustainability. IFC has utilized its innovative de-risking instruments such as blended finance that allows for IFC co-investing concessional funds as loans, guarantees and equity alongside IFC's own resources to catalyze investments that would not otherwise happen, and are meant to address market barriers that prevent wide scale adoption of private sector investments. In Afghanistan, this was achieved through the Global Agriculture and Food Security Program (GAFSP) for the Rikweda project. IFC is keen to continue supporting private sector in Afghanistan and plans to work across the WBG to remove the impediments on capacity, project preparation, upstream sector reforms (as highlighted above) that limit Afghanistan from realizing its potential of private sector led growth and job creation. • MIGA plays a critical role in FCV environments. The private investment insurance market is essentially closed for Afghanistan given the high political risks present in the country. MIGA recognizes that the agency represents one of very few options for foreign private investors to obtain insurance for cross-border investments in Afghanistan. In addition, MIGA provides long tenors and pre-claim management services which are typically not available elsewhere. In this regard, MIGA’s political risk insurance offers a clear example of additionality for foreign investors. MIGA’s de-risking products have a valuable role to play in encouraging the foreign private sector invest in the country. However, given that Afghanistan is a very high-risk FCV, MIGA may be constrained in issuing guarantees for projects there. First-loss facilities help the agency to reach a level of comfort to continue supporting foreign investors interested in doing business in the country. In 2004, the World Bank launched the Afghanistan Investment Guarantee Facility, aimed at assisting Afghanistan in its reconstruction efforts by stimulating foreign investment through a program of political risk insurance. In June 2013, MIGA launched the Conflict-affected and Fragile Economies Facility, which used donor partner contributions together with MIGA’s guarantees to enable the agency to assume higher risk and insure more investment projects in FCVs, including Afghanistan. In 2018, the MIGA Guarantee Facility under the IDA 18 IFC-MIGA PSW was launched, aimed at supporting eligible projects in IDA member countries, including Afghanistan. All these facilities have played an important role in allowing the agency and investors assume the high risk of investing in Afghanistan. • Going Forward, agribusiness, energy, ICT and financial sector have been identified as priority MFD sectors for WBG in Afghanistan. These are in line with Government priorities and are sectors, where the WBG can leverage its comparative advantage to enable greater private participation. • Agribusiness. Following the landmark Rikweda investment, on-going and planned WBG interventions aim to facilitate the emergence of additional investment opportunities in agribusiness. These WBG interventions include: (i) an IDA/ARTF financed operation (under preparation) aimed at developing integrated agro-parks and attracting private investors in 3-5 strategic locations in Afghanistan; (ii) IFC FCI-MTI Advisory Services project focused on export competitiveness and (iii) an IFC MAS Agribusiness Program, focusing on Upstream work identifying, developing and promoting investment opportunities and Advisory services to current and new agribusiness firms. More specifically, the WBG will engage more deeply in addressing food safety and sanitary and phytosanitary issues, and help to develop integrated agri-spatial solutions, which includes investment in agri-food parks, and increasing access to finance. • Energy. The focus is on ensuring that the 4 IPPs (two gas to power, one hydro and one solar) currently supported by WBG reach financial closure. In parallel, the WBG aims at further 51 expanding its support to renewable energy in Afghanistan, supporting additional solar IPPs (considering the vast potential of Afghanistan and leveraging the WBG Scaling Solar initiative) as well as hydropower and possibly wind IPPs (with initial identification by IFC, funded through CMAW, underway). • ICT. The WBG will further leverage the financing allocated to the Afghanistan Digital CASA Project ($51 million) to support the implementation of reforms to tackle major enabling environment constraints affecting private investments in the domestic and international optical fiber connectivity and telecom sector in Afghanistan. The focus is on supporting the government of Afghanistan to provide credible signals to give comfort to private investors, in a highly complex environment. • Financial sector. The following priority areas have been identified moving forward: digital finance, agriculture finance and mobilizing additional investments in banking sector. The recently approved IDA/ARTF financed Payments Automation and Integration of Salaries in Afghanistan (PAISA) Project will provide the required public financial infrastructure to enable digital government-to-person payments in Afghanistan. Complementary investments from financial institutions and mobile money operations will be required and the IFC is in discussion with commercial financial institutions to help them scale up activities in digital finance in Afghanistan. There is also potential to scale up WBG activities in agriculture finance through the MFD approach, leveraging on-going WBG interventions in Afghanistan (e.g. developing a WBG risk-sharing facility). The WBG will also focus on supporting increased private investments through further IFC investment in the Afghan banking sector, to strengthen the sector and improve access to financial services. Under a peace settlement scenario, the risk of war, civil disturbance and terrorism would be expected to gradually abate, which could open up markets and opportunities for the private sector to eventually flourish. However, building investor confidence, government and firms’ capacity in key sectors will still require time and effort, making the WBG even more relevant as the scale of investments expands. The MFD agenda would provide even greater benefits in terms of private sector investment under such conditions. 52 ANNEX 6. SERVICE PROVISION IN CONFLICT AREAS: KEY ENABLERS Flexible Implementation Model is critical for delivery of public services in conflict and remote areas. The NGO contracting model used in health is an extraordinary achievement in Afghanistan, showing that it is possible to deliver services efficiently and cost-effectively even in an FCV situation. NGOs had the flexibility and independence to be able to ensure services were delivered, expanded and improved, despite even deteriorating security. Being one step removed from Government, they manage to have easier access and acceptability in terms of working on the ground in conflict areas. They were able to forge alliances and agreements with local leaders and adapt to specific local situations in ways that would not have been possible for government employees. Under the National Solidarity Program, a High-Risk Areas’ Implementation Strategy (HRAIS) allowed flexibility in operations and certain policies and procedures for insecure areas. Community accounting and procurement procedures were simplified, grant disbursement procedures were streamlined. The HRAIS also provided for some insurance and remedial measures in case security incidents occur. In education, NGOs, as neutral entities, also can play an important role delivering education services, such as Community Based Education and Adult Literacy programs. Partnering with communities has been an effective way to deliver services in Afghanistan. Community Development Councils (CDCs) have shown that if given control over resources, they are capable of planning and managing development activities. The community-driven approach has proven cost- effective and sustainable, due to the close engagement and contributions by communities. And it is proven as a resilient mechanism for community organization and delivery in conflict-affected areas. Relying heavily on CDCs has been helping to make up for the government’s limited ability to act, especially at sub-provincial level and in conflict-affected areas. Participatory planning (e.g. through Community Development Councils, School and Health Shuras, etc.) has also facilitated local buy-in and allowed programs to work in conflict areas. In cases like the Citizens’ Charter and EQRA projects the funds themselves have transferred to these local bodies which makes it easier to negotiate implementation with insurgent groups. Likewise, the inclusion of requirements for local hiring also helped since it creates jobs for the local community (especially the unemployed youth). Recruitment of female staff especially in health and education sectors and even for CDD type projects like CCAP has been key for service delivery to female beneficiaries in the context of Afghanistan, especially in areas with strict social norms. Usually insecurity and strict social norms exacerbate women’s access to basic services; however, having female staff helps particularly with overcoming the social norm related challenges. Close coordination with different levels of government is still much needed for service delivery . Not all problems can be solved at the community level; line agencies must be enabled to be responsible for actions beyond communities’ control, such as ensuring teacher and health worker quality, providing engineering expertise, ensuring appropriate operations and maintenance interventions and coordinating subprojects’ linkages with higher level infrastructure trunk networks (roads, sewerage, etc.) In health, systematic work through successive projects has enabled the alignment and harmonization of services, with the SEHAT project bringing all contracting, contract management and payment under a single process. NGO participation in service provision also needs careful training, selection and contract management to ensure consistent implementation performance. Sustaining high level of financing. NGOs and other facilitating partners bear high costs when operating in insecure and remote areas, dealing with armed insurgents and suffering from staff kidnappings, assaults or extortions. The National Solidarity Program HRAIS introduced additional allowances for partners working in remote and insecure areas as an incentive to encourage coverage of such places but also to allow the additional security measures that would be needed when working in them. Appropriate 53 platforms had to be built to allow public service providers to coordinate with CDC leadership or sub- committees at the local level, underpinned by closer coordination at the center. Basic health service package and to some extent provision of basic education were supplemented by the National Solidarity Program and the Citizens’ Charter Afghanistan Project work at community level, where communities prioritized these sectors. An increased reliance on performance-related funding helps further. It started in the health sector with a small pilot, advancing to making 20% of payment performance-related under SEHAT, to linking full payments to performance under the currently active Sehatmandi project. Social Mobilization. Engaging citizens has been essential to service delivery in Afghan context, but it requires robust social mobilization and participatory exercises that ensure not only the inclusion of poor and very poor households from all communities but also emphasizes their hardships and struggles to survive. As a result, the process promotes a pro-poor environment and prevents elite capture. Furthermore, good facilitation at the community level by Social Organizers broadens participation, can manage and defuse polarization, and can channel discussion towards constructive solutions without controlling. Years of experience and capacity building: Effective social mobilization takes time and patience and must consider the local dynamics. In some communities this work proceeds more smoothly, and in others it takes more time and effort. Therefore, years of implementation and reflection on this work enabled the National Solidarity Program and the Citizens’ Charter to improve the design in terms of the social approaches to service delivery through the “Pause/Reflect/Adapt” model which includes not only the High-Risk Strategy but also frequent changes to the Operations Manual, Social manuals etc. Sources: National Solidarity Program III Implementation Completion and Results Report (December 28, 2017; Report No: ICR00003688), the Afghanistan – System Enhanvement for Health Action in Transition (SEHAT) Project Implementation Completion and Results Report (January 29, 2019, Report No: ICR00004520), and GP SURR/country team’s inputs. 54 ANNEX 7. ARTF PARTNERSHIP FRAMEWORK AND FINANCING PROGRAM ARTF_Partnership_Framework_and_Financing_Program (2018-2020) 55