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The Politics Of Aid In Afghanistan – Analysis

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The Afghans need to pick up the spade and start doing their own digging — they must come out of the war economy mindset that facilitates aid money perpetually.

By Ejaz Ahmed*

Over the last 18 years since the ouster of the Taliban regime in Afghanistan, billions of dollars in aid have been spent on rebuilding the devastated economy and yet the Afghan economy remains almost entirely dependent on aid. However, it would be a fallacy to claim that all the aid money has nothing to show for it. The capacity of state institutions has improved significantly since 2002. Tax revenue as a total share of GDP increased from 4% in 2004 to 10% in 2015. A lot has been achieved since 2001— establishing democratic institutions and ministries being one of them. Primary education has expanded, roads have been laid and transport infrastructure has drastically improved.

Aid has been pouring into Afghanistan not just from the US but from around the world over for the last decade or so, but what actually transpires on the ground is a different reality altogether. Since, aid makes up for most of the Afghan economy, how it is utilised has effects that percolate to the lowest levels of the population as well as the overall development of the country. Aid in Afghanistan flows in from mainly three sources— Directly to the government through the Afghanistan Reconstruction Trust Fund; Secondly, through those that are indirectly connected with the government such as local and international NGOs; and lastly through channels that function outside the governmental network such as the coalition forces and other international NGOs that bring in their own fund.

Anatomy of Aid

Aid comes in mainly two forms in Afghanistan, military and non-military aid. A bulk of the US aid in Afghanistan is military aid that is dedicated to the sustenance of the security apparatus set up post 2001 by NATO forces. The non-military aid is channelled to NGOs that use it for developmental works such as building infrastructure, education and youth empowerment. But, what happens to the aid that is disbursed for developmental works is the real question that nobody seems to ask. The developmental works are mostly given out to contractors of foreign origin, usually belonging to the donor country. 40% of the aid money is usurped by consultant salaries and corporate profits. The cost of employing an expatriate in Afghanistan amounts to roughly $250,000 per year which is about 200 times the average annual salary of an Afghan civil servant, who is paid $1000 per year.

The Government’s Accountability Office which reports on the contractor performance in Afghanistan, have cited major miscarriages; for instance, Afghan contractors built a bathroom without holes in the wall or floors for plumbing at a cost of $1,30,000. In addition, UNICEF Statistics say that 70% of Afghans have never even seen a toilet, how could they possibly know what’s involved in building a toilet. The picture is also not all that bright at the military aid side of the story. As per a Special Inspector General’s Office (SIGAR) report, the US gave $1.1 billion for fuel for the Afghan Military without determining the actual need. When SIGAR investigated the matter, it found that the Afghan Military was counting trailers and non-motorised conveyances in vehicles needing fuel. Furthermore, it had destroyed all records of fuel dispersals.

Torn realities

There are a number of donor conferences that are held round the year where-in countries come forward to pledge their support for development in Afghanistan. The Geneva Conference in Afghanistan is one of the largest & most prominent annual gatherings of international donors where billions of dollars are pledged to the National Unity Government of Afghanistan. However, on delving deeper into the crevices of aid promises, the data from the Ministry of Finance, Afghanistan paints a different picture than what is made apparent in the international discourse. In reality, less than 50% of the aid money pledged is disbursed to the Afghan government.

Table1: Proportion of Aid Pledged and Disbursed (2002-2011, $ Million)

DonorsTotal Aid Pledged(2002-11)Total Aid Disbursed(2002-08)Disbursed Percentage (%)
Saudi Arabia22076.934.95
World Bank2627.2852.7232.46
Asian Development Bank1740.58547.831.47
China145.54128.18
Turkey9020.823.11
US/US-Aid22,7895022.922.04
India942.03204.2621.68
Spain253.2925.610.11

Source: Ministry of Finance, Afghanistan

As is evident from the data, big amounts are promised and even bigger are the headlines that manufacture a certain image of the western ‘help’ but what transpires on the ground is a different reality. Although foreign aid has had an undeniable impact on Afghanistan’s development, the question is whether aid that poured in could have provided more value for the buck? Perhaps. A fundamental issue that persists with the aid economy in Afghanistan is that it is mostly supply driven. Local aspirations and needs are generally not taken into account and much of the so called ‘development’ is imposed in a top-down fashion. A classic mismatch in aid and need for aid in Afghanistan is the fact that despite 80% of the population being directly or indirectly dependent on agriculture, only about $400-500 million have been allocated for the purpose. This is a fraction of the tens of billions of dollars that pour into the aid economy in Afghanistan.

Also, there exists a fair amount of secrecy in the ‘how’ & ‘where’ of aid allocation, because the rationale behind each project is often decided behind closed doors. Most of the focus is on Kabul because that is where the international attention mostly is— 70% of the national operation and maintenance budget is diverted to Kabul itself. This leads to an ever increasing socio-economic gap in the social order. Furthermore, aid is making the economy and the people of Afghanistan both complacent & aid dependent. Aid has created an artificial economy that is nothing but a bulge on the actual economy of the country— it is a ventilator whose plugs could be pulled off anytime and death would be imminent.

The future of Aid without America

For obvious reasons, the lion’s share of American aid goes into security related services. Without security, there could not be any possibility of meaningful development. More than half (57%) of the total US assistance has gone to the Afghan Security Forces Fund. The US military currently spends about $36 billion annually in Afghanistan which amounts to roughly $100 million a day. The sheer amount of aid from the US is mind-boggling. However, there are reports of Trump administration contemplating on complete withdrawal from Afghanistan.

There is a reason why donors across the spectrum pledge whatever amount they think fit to Afghanistan and that reason is US involvement on the ground. The absence of US troops in Afghanistan is going to create yet another vacuum which will have ramifications on all paradigms of domestic and international politics. The major question is who, if at all anybody, will pick up the responsibility of nurturing Afghanistan’s economy with fat paychecks every quarter.

Afghan have been conditioned to aid money for the last century or so— first the British paid off the Emirs to maintain good relations in the region to facilitate trade routes and to maintain a certain amount of hegemony. Then the Soviets barged in and fertilised the country with prolonged chaos and, of course, aid. Then the American invasion in 2001 followed and the rest, as they say, is history. Aid has however been a fundamental characteristic of the economy despite being artificial in nature.

To Aid or not to Aid

Without doubt, in the short term the absence of aid will hurt the Afghan economy where it hurts most— the lives of ordinary people. In the long term, it could have a positive effect of making the Afghan economy resilient and self-sustaining by pushing Afghans to plan their economic decisions better rather than making them complacent with the aid cushion. Aid has only driven corruption and further entrenched the problems it ought to solve in the first place. Although there is no historical precedent to back the idea of slowly tightening the noose on aid, pursuing the idea would be well worth a try to make Afghanistan self-sustainable.

The Afghans, on the other hand, can start by focusing where their strengths lie — agriculture caters to 80% of the population, however, not a substantial part of the budget is spent in that sector to develop it. Secondly, education should be developed taking into consideration needs of the Afghan people and not donor imposed needs which are not only western oriented but also outdated. Most importantly, the Afghans must eventually pick up the spade and start doing their own digging — they must come out of the war economy mindset that facilitates aid money perpetually. Afghanistan must find a way to resourcefully use the aid money to further achieve a society that is not only self-sustaining but also has an economy that is resilient.


The author is a Research intern at ORF, New Delhi.



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Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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