GROWTH AGENDA FOR TRANSFORMATIVE CHANGE AND SELF-RELIANCE: IMPLEMENTATION PLAN INTRODUCTION Under the Afghanistan National Peace and Development Framework (ANPDF), the Growth Agenda for Transformative Change and Self-Reliance prioritizes reforms and interventions that will drive both short-term growth and establishing the foundations for self-reliance over the medium-term. The following tables fully articulate the comprehensive program of priority reforms underpinning the ANPDF Growth Strategy. All reforms included in these tables are included in existing policy documents, including National Priority Programs, sector strategies, or existing reform plans. This document therefore does not present a new reform agenda but highlights the highest priority reforms for achieving ANPDF Growth Agenda outcomes from the Government’s existing reform program. Reforms included in the document are costed, where sufficient data exists. Further, the likely direct contribution of identified reforms to Growth Agenda outcomes of increased exports, improved revenues, and accelerated economic growth are identified. Costings and potential contributions presented in this document are consistent with and have been used to develop the macroeconomic modeling scenarios that underpin the ANPDF Growth Strategy. The tables presented in this document will be used to monitor and report on progress with implementation of the Growth Agenda. A dedicated mechanism will be established within Government to trace progress against actions identified in this plan, update priorities on the basis of new information and analysis or changes in government policy, coordinate required reforms, and report progress to the public and the international community. The Implementation Plan is structured into three sections that correspond to the structure of the ANPDF Growth Strategy. • 1 Section one presents high-level short-term policy priorities. • 2 Section two presents detailed sectoral policy reforms and investments that will support Growth Agenda implementation, focusing on priority sectors of agriculture and agribusiness and extractives. • 3 Section three presents detailed policy reforms and investments that will support Growth Agenda implementation through strengthening the broader enabling environment, including business regulatory reforms, regional connectivity, human capital, and public financial management. INTRODUCTION 1. HEADLINE PRIORITIES TO 2021 3 HEADLINE PRIORITIES TO 2021 1. Sectors and Programs 1.1. Expand irrigation by 240,000 hectares within three years 1.2. Establish four pilot agri-business industrial parks, following economic viability analysis and establishment of appropriate regulatory frameworks 1.3. Scale up the number of farmer learning resource centers to 400 1.4. Reduce documentary requirements for agricultural exports to three documents 1.5. Review customs duties and tariffs to reduce costs of agricultural inputs based on economic analysis and in compliance with WTO obligations 1.6. Implement improved risk-based measures for customs inspection and introduce a National Single Window (NSW) to automate the application, processing, and approval of all trade related licenses and permits 1.7. Resolve or renegotiate mineral and hydrocarbon contracts at all major sites 1.8. Finalize contracts for private investment in at least two existing cement plants. HEADLINE PRIORITIES TO 2021 4 HEADLINE PRIORITIES TO 2021 2. Enabling Factors 2.1. Maintain a stable macroeconomic policy framework, evidenced through successful implementation of IMF programs 2.2. Transfer responsibility for deed registration from the Supreme Court to ARAZI 2.3. Implement regulations and process changes allowing land titles to be guaranteed by ARAZI, including standardized cadastral surveying and adjudication 2.4. Improve Doing Business scores for obtaining construction permits and accessing an electricity connection to the global average 2.5. Launch Afghanistan Central Business Registry (ACBR) one-stop-shop 2.6. Implement the Value Added Tax and establish a dispute resolution mechanism at the Afghanistan Revenue Department 2.7. Ratify international agreement to support enhanced regional trade, including conventions on the international movement of goods and vehicles 2.8. Complete costed NPP implementation plans and institutionalize allocations to priority sectors through the budget process 2.9. Implement a program of expenditure reviews to identify opportunities for reallocating resources away from underperforming programs and projects 2.10 Implement aid program review processes to ensure closer alignment between non-discretionary and off-budget aid flows and government growth and development priorities. HEADLINE PRIORITIES TO 2021 5 HEADLINE PRIORITIES TO 2021 3. Foundations for Long-Run Growth 3.1. Increase the proportion of on-budget public expenditure allocated to health and education to reverse recent declines 3.2. Through PRISEC, identify and prioritize measures to address business environment and regulatory constraints in the construction sector 3.3. Implement outcome-based labor intermediation programs to match potential employees with employers for sustainably improved employment outcomes 3.4. Building on the recently passed minerals and hydrocarbons laws, develop and implement a full legal, regulatory, contractual, and fiscal management framework across the mining/hydrocarbon project cycle 3.5. Resolve the financial sustainability of DABS through restructuring of existing debt and reductions in technical and commercial losses 3.6. Invest in major regional connectivity projects subject to rigorous analysis of economic costs and benefits 3.7. Reform the governance of State-Owned Commercial Banks and support the development of an interoperable payment system. HEADLINE PRIORITIES TO 2021 6 SECTOR PRIORITIES 7 AGRICULTURE Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Correspondin Cost1 Impact2 g Plan Access to land and • Finalize industrial park policy • Investment in infrastructure for 1-2 pilot Agri-Business $91.4 Million $ 330.8 Million in infrastructure for • Assure coordination among participating ministries and clarify distribution Agri-Food Parks Charter Agro-Processing agricultural of responsibilities over industrial parks between MoCI and MAIL Value Added processing • Establish industrial park management authority Disintegrated value • In-depth technical and economic feasibility studies for Agri-Food Park chains (AFP) development (market demand assessment, sizing of necessary industrial land, master planning and development, business development plan, environmental and social impacts, and projected returns). • Establish management for industrial parks under a regulatory framework set by Afghanistan Industrial Parks Regulatory Authority, • Define plot allocation mechanisms and security arrangements Lack of irrigated • Invest in the rehabilitation of irrigated land to increase irrigated area from • Invest in the rehabilitation of irrigated Irrigation $4.7 billion 995,000 MT of land 2.5 currently to 2.8 million hectares land to increase irrigated area from 2.8 to Restoration additional wheat 3.5 million hectares and production Development Project Export certification • Revise customs procedures to reduce documentary requirements for trade • Initiation of the procedures for Agri-Business $ 6 Million 5 % increase to and streamline export processing. The focus will be on reducing the recognizing the equivalence of the Charter agricultural documentary required for exports by narrowing it down to only 2-3 systems of control over sanitary and exports documents (export declaration, invoice, and packing list). phytosanitary measures with competent • Reviewing and updating procedures for issuing sanitary and phytosanitary authorities of (potential and existing) certificates. trading partner countries. • Establishment of export certification laboratories within industrial parks Availability of high • Review/revise tariffs on imports of consumer products and farm inputs • Strengthening import inspection facilities Agri-Business $ 14 Million 136,136 MT of quality inputs relating to the livestock sector, while ensuring these are consistent with at international airports and border Charter additional wheat WTO obligations. This activity will include periodical cost-benefit studies to crossings. production support decision-making on applied tariffs on imports and impacts on the consumers. • Review and possibly further reduce custom duties on machinery/equipment required for agro-processing to foster technology upgrade and competitiveness of the agro-food sector. SECTOR PRIORITIES 8 AGRICULTURE (CONT.) Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Cost Impact Plan Poor on-farm • Scale up Farmer Learning and Resource Centers in selected province to • Develop existing extension system Agri-Business $ 30 Million 272,272 MT of production 400, including construction, training equipment and facilities and into a community extension agent Charter additional wheat management demonstration plots. system to provide advice and disease production practices. • Training of MAIL extension staff to build human capital on production control. National practices and disease control Agriculture Extension Policy Inadequate • Increased investment in O&M • Roll-out of new O&M policy FPIP Additional investment in O&M • Approval and piloting of new O&M policy guiding allocation and costing annual O&M for maintenance of methodologies expenditure infrastructure of US$700 portfolio million by 2025 Weak governance • Introduce Irrigation and Drylands Agriculture policies to improve • Implementation of new Irrigation and Irrigation and Negligible and contested governance of water resources to avoid conflicts and manage Dryland agriculture policies Dryland property rights over environmental impacts agriculture water resources policies SECTOR PRIORITIES 9 EXTRACTIVES Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan(s) Cost Impact Uncertainty about • Undertake geological surveys and publish all studies • Prepare and launch international tender for Oil National Infrastructure Negligible Afghanistan’s mining available to the government. and Gas contracts Plan potential Absence of a • Finalize, design and implement extractive industry • De-risk and reduce policy uncertainty Negligible • Up to $1 billion functioning institutional, legal, contractual and regulatory surrounding private sector investment leading to National Infrastructure annual revenue in institutional and framework, addressing full cycle of the relaunching of new tenders for exploration Plan medium-term regulatory framework mining/hydrocarbon projects i.e. law, regulations, and development by consolidating from major contracts, procedures, standards etc. internationally benchmarked, competitive and mineral/hydrocar • Resolve/renegotiate awarded hydrocarbon contracts transparent institutional, regulatory and bon projects i.e. Amu Darya, Totimaidan blocks. contractual frameworks and by promoting • Resolve/renegotiate awarded mineral contracts i.e. investment in Afghanistan’s extractive sectors in Aynak, Shiada, Balkhab, Badakhshan, Zarkashan, international forums Hajigak • Strengthen transparency – adherence to EITI • Strengthen data sharing and systemization between standards of transparency including public Ministry of Mines, Ministry of Finance and Ministry disclosure of mining revenues and agreements. of Commerce mining operations to facilitate licensing and taxation. • Refine upstream contractual/fiscal framework. Lack of regulatory • Capacity building of MOMP and tax authorities in • Promote standard tertiary education in National Infrastructure Negligible • Revenue from enforcement and tax good international practices of extractive industry. extractive sector at university level. Possibly Plan taxing informal collection capacity ▪ Define and implement Afghanistan developing a domestic professional certification mining could Gas Enterprise’s institutional reform association/board of geologists, engineers and reach $50 million (corporatization) geo-scientists. ▪ Introduce an O&G institutional • Improve tax administration processes and capacity building program enforcement capacity to prevent leakages, • Adopt O&G transport and distribution tariff undervaluation of exports etc. structure • Tax informal mining sector at border customs check points. High investment cost • Prioritize required infrastructure project for • Devise mechanisms to implement the newly National Infrastructure Negligible due to a lack of extractive sector. Easy access to electricity, developed National Infrastructure Plan(NIP). Plan infrastructure and transportation etc. domestic supply chains Poor production • Improve standards for dimension stone • Promote standard tertiary education in $40-$50 million • $100-200 million practices leading to • Regulatory Framework and Capacity Building for extractive sector at university level. Possibly in annual loss of value in Mine Inspectorate developing a domestic professional certification revenues. minerals • Capacity building programs for small miners in association/board of geologists, engineers and mining practices and mine development to prevent geo-scientists. losses in value of minerals. SECTOR PRIORITIES 10 EXTRACTIVES (CONT.) Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan(s) Cost Impact Poor production • Improve standards for dimension stone • Promote standard tertiary education in $40-$50 million • $100-200 million practices leading to • Regulatory Framework and Capacity Building for extractive sector at university level. Possibly in annual loss of value in Mine Inspectorate developing a domestic professional certification revenues. minerals • Capacity building programs for small miners in association/board of geologists, engineers and mining practices and mine development to prevent geo-scientists. losses in value of minerals. Defunct natural gas • Establish downstream contractual framework for • Prepare and launch international tender for Oil Negligible • $30 million in production and lack of Natural Gas Distribution. and Gas distribution contracts revenues from market linkages for • Informal Mining - Developing an inventory of mining • Adopt Natural Gas Distribution tariff structure gas production. small and artisanal operations/activities aimed at monitoring the scale • Develop a legal framework for the • Up to US$40 mines and the size of the subsector. establishment of small mining consortiums. million in • Policies for Local Content & Benefits Sharing revenues from improved production techniques. Constraints of fiscal • Strengthen Tax Policy (codify royalties schedule) • Designing appropriate tools to control and New activity should be Negligible regime to manage • Resource Corridor Development / Local Content oversee utilization of extractive revenues integrated with ministries public revenue from within mining contracts addressing resource curse i.e. fiscal rules, fiscal work plan. extractives • Develop mechanisms for revenue sharing with council, sovereign wealth funds (SWFs) etc. subnational government and communities (mitigating informal extractive sector). Weakly performing • Finalize contracts for private investment in at least • Finalize contracts for private investment in Negligible Up to 7 million tons of cement plants two existing cement plants, potentially including remaining cement plants, potentially though PPP import substitution through PPP models. models. (US$700 million) SECTOR PRIORITIES 11 REGIONAL INTEGRATION Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan Cost Impact Documentary and • Introduce a Trade Information Portal as a single access • Establish National Trade Facilitation Negligible 10 percent procedural point for traders, both importers and exporters, to obtain Committee (NTFC) to provide a formal increase of requirements for information on all the regulatory requirements needed for mechanism for enhanced interagency exports exports international trade. cooperation and improved dialogue • Implement a National Single Window (NSW) to automate with the private sector. the application, processing, and approval of all trade related licenses and permits • Revise customs procedures to reduce documentary requirements for trade and streamline export processing. The focus will be on reducing the documentary required for exports by narrowing it down to only 2-3 documents (export declaration, invoice, and packing list) Long wait times at • Operationalizing the Automated System for Customs • Expanding border capacity and related $ 55 million border Declaration World’s advance declaration procedures and infrastructure (24/7 customs services, manifest functionalities to allow prescreening of scanners, weighbridges, warehouses) consignments prior to their arrival at the border • Implementing cargo tracking to better manage the risks associated with movement of goods between the border and inland clearing depots. Lack of harmonization • Ratify key set of international conventions on the Negligible of transportation international movement of goods and vehicles in transit standards across (e.g. Brussels Convention on pallets; Geneva Customs countries Convention on containers; Customs Convention on the Admission Temporaire/Temporary Admission (ATA) carnet for the temporary admission of goods; Bern Convention on International Carriage by Rail; etc.). Insufficient • Continue Turkmenistan-Afghanistan-Pakistan-India • Complete Turkmenistan-Afghanistan- Infrastructure National CASA-1000: $759 million infrastructure for Natural Gas Pipeline Pakistan-India Natural Gas Pipeline Priority Program $300 million annually in transit and • Continue CASA-1000 Electricity transmission project • Complete CASA-1000 Electricity revenue from connectivity • Progress discussions and commence work on TAP-500 by transmission project TAPI: $100 transit fees by 2020 • Implementation of regional railway million 2025 projects subject to rigorous cost- benefit analysis TAP-500: $150 million SECTOR PRIORITIES 12 ENABLING FACTORS 13 BUSINESS ENVIRONMENT REFORMS Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan Cost Impact Limited access to land • Transfer responsibility for deed registration from • Establish electronic land registration Not currently specified in Negligible Estimated increase in and insecure land Supreme Court to ARAZI database providing full data on land whole-of-government plan private investment by 2 rights • Implement regulations and process changes holdings and ownership to all percent of GDP per year. allowing land titles to be guaranteed by ARAZI, stakeholders including standardized cadastral surveying and adjudication Weak coordination of • Further strengthen the effectiveness of PriSEC • Clarify institutional framework for Private sector Negligible business reforms (Private Sector Development Executive investment promotion and development NPP across Government Committee) to drive business enabling strengthen capacity for investment environment reforms promotion (after care services and • Utilize PRiSEC to identify and address priority investor grievance redress regulatory constraints impacting the construction mechanism) sector Business regulatory • Launch Afghanistan Central Business Registry • Improve performance across 10 Private sector Negligible constraints (ACBR) one-stop-shop Doing Business indicators development NPP • Pursue improvements on the Doing Business indicators, with a short-term focus on Construction Permits (Kabul Municipality), Getting Electricity (DABS) and Trading Across Borders (ACD) and Getting Credit (MoU between DAB, DABS and ATRA to include data in public credit registry) Limited access to • Restore financial sustainability of DABS through • Continue roll-out of systems to Infrastructure National Debt Increase in on-grid electricity restructuring existing debt subject to achievement improve billing and collection by up Priority Program restructuring of electricity coverage to of performance targets to 90-95 % and 80-85 % respectively around US$1.8 49.5 percent by 2030 • Progress roll-out of digital, prepaid, and tamper- by end of 2021 billion over three proof meters • Implement DABS investment plan years. Contribution to • Establish electronic systems to support • Pursuit of large-scale and community- economy-wide improvements in billing and collection efficiency level solar and hydro investments, Annual productivity and • Implement DABS investment plan subject to identification of financing investment of investment increase and full economic analysis. around US$160 million to 2030 ENABLING FACTORS 14 HUMAN CAPITAL Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan Cost Impact Inadequate financing of • Increase human capital • Maintain human capital expenditure Not currently included in any Increase of US$300 per Increase in literacy rate to health and education, allocations in the budget to reach at 50 percent of annual recurrent government plan year to reach 50 52.2 percent with declining 50 percent of annual recurrent expenditure percent of recurrent expenditure on a per expenditure by 2024 expenditure by 2022 Labor force growth rate capita basis reduced from 2.7 percent to 2.4 percent Population growth rate reduced from 2.5 percent to 2 percent Inadequate channels for • Convene inter-ministerial • Outcomes-based contracts (i.e. only Not currently included in any $34 million to 2023 Up to one million new jobs managed labor mobility working group to address paying for job outcomes), demand- government plan by 2030 constraints to labor mobility led international labor • Review and revise the legal, intermediation services delivered Remittances increase to regulatory, and policy framework nationwide 18% of GDP to address unnecessary constraints to labor mobility, Increased labor including reducing time and cost productivity through burdens stronger incentives for • Pilot and test outcomes-based human capital investment international labor intermediation contracts Skills gaps and weak • Pilot and test outcomes-based • Outcomes-based contracts on (i.e. Not currently included in any $30 million to 2023 350,000 jobs by 2030 intermediation between domestic labor intermediation only paying for job outcomes), government plan demand and supply of contracts demand-led domestic labor Increase in labor skills • Test contracts for outcomes- intermediation services delivered productivity based work experience and in- nationwide work training • Outcomes-based contracts (i.e. only paying for job outcomes) for soft skills, demand-led training, volunteering and business start-up for jobseekers ENABLING FACTORS 15 PUBLIC FINANCIAL MANAGEMENT Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan Cost Impact Weak policy-budget links • Complete National Priority Programs • Complete costed implementation Fiscal Performance Negligible Impacts captured in • Development of standard costing strategies for National Priority Improvement Plan capacity of government methodology and monitoring Programs to manage and frameworks implement required • Establish sectoral allocations through the investments while budget process, aligned with strategic maintaining real per growth sectors capita expenditures on Weak PIM processes • Subject projects to strategic screening • Projects included in the national Fiscal Performance Negligible non-human capital through the budget process budget costed using life-cycle Improvement Plan recurrent expenditure. • Criteria to appraise and select large and costing methods and subject to most significant public investment cost-benefit analysis projects approved Incremental approach to • Rolling program of public expenditure • Expenditure reallocations through Fiscal Performance Negligible budgeting, with few reviews implemented budget process informed by Improvement Plan revisions to existing • Security sector public expenditure review expenditure reviews expenditure implemented ENABLING FACTORS 16 MOBILIZING NEW SOURCES OF FINANCE Constraint Short-Term Reforms (1-2 years) Medium-Term Reforms (3-5 years) Corresponding Plan Cost Impact No domestic debt market • Finalize legal and regulatory • Issue domestic debt instrument Fiscal Performance Negligible Domestic debt framework for the development in limited amounts and Improvement Plan financing of 2% of GDP of a domestic sukuk market according to debt management by 2030 strategy Weak debt management capacity • Develop and publish a Medium- • Develop and publish annual Fiscal Performance Negligible Additional and practices Term Debt strategy, laying out borrowing plans linked to in- Improvement Plan concessional financing government borrowing plans year cash needs of 5 percent of GDP by and portfolio composition and 2030 presenting analysis of risks • Build capacity to analyze and • Explore options for additional Not yet in any plan Negligible assess debt risks and renew concessional borrowing from publication of regular debt non-traditional lenders sustainability analyses Limited private sector access to • Finalize financial inclusion • Clarify law and regulations on Private Sector NPP Negligible Increased growth rate finance strategy Islamic banking Implementation Plan of private sector • Support the development of • Implement the state-owned Private Sector NPP Negligible investment to 10 digital finance through pursuing bank reform strategy Implementation Plan percent. broader use of G2P payments • Encourage the use of the Public • Allow private firms and Private Sector NPP Negligible Credit Registry by increasing individuals to access credit Implementation Plan awareness of stakeholders, information on other borrowers users, consumers and data and provide credit scores by providers of the credit system reviewing the Credit Regulation. Limited progress with PPPs • Maintain progress with PPP • Develop a pipeline of PPPs for Private Sector NPP Negligible framework to identify priority largescale infrastructure Implementation Plan investment projects with projects potential for private investment • Finalize ongoing PPP transactions (Sheberghan, Mazar, and Kajaki) ENABLING FACTORS 17