The effectiveness of Australia's development assistance to Afghanistan
The committee recognises that the need for assistance in
Afghanistan remains great after decades of violence, civil strife and political
instability that has ruined lives, homes, properties, economic infrastructure
and government and private institutions; displaced a large proportion of the
population and entrenched poverty. The task of rebuilding the nation and
lifting living standards is not only formidable, but a number of significant
obstacles make the challenge even more daunting. They include the lack of human
capacity; centralised government with weak links to sub-national levels of
administration; institutionalized corruption; continuing insecurity; deep-seated
gender inequality; and the large number and diverse nature of aid donors with
their own priorities.
Since 2001, the international community and the Government of
Afghanistan have been working together to help rebuild the country. Numerous
conferences have called on the international community to abide by some
fundamental principles to guide donors. The foundation document is the Paris
Declaration followed by the Afghan compact.
In this part of the report, the committee looks closely at how
Australia delivers its aid to Afghanistan. It assesses how well Australia's ODA
manages the difficulties generated within Afghanistan. In addition, the
committee considers the extent to which Australian ODA adheres to the guiding
principles set down in the Paris Declaration of 2005, and reflected in the
Afghanistan compact of 2006 and the agreements reached at subsequent international
conferences on Afghanistan. They include the 2008 Paris and 2010 London and
Kabul meetings. The committee uses the five broad principles spelt out in the
2005 Paris Declaration as a guide to assessing Australia's
performance—ownership by Afghanistan, alignment with Afghanistan's national
development priorities, harmonisation of assistance so Australia's aid
complements the work of others, managing for results and mutual accountability.
The committee considers aid that is delivered through
Afghanistan's national budget using the Afghanistan Reconstruction Trust Fund,
through multinationals and NGOs and the development assistance that Australia
provides more directly to Uruzgan province.
Afghanistan's national budget
Since 2000, Australia has provided over $710 million (to June 2012) in
ODA to Afghanistan, which is expected to rise significantly to $250 million per
annum by 2015–2016. In 2011–12, Afghanistan received the fourth largest share
of Australia's ODA, an estimated total of $196.75 million.
Indeed, Australia is one of the largest bilateral aid donors to the country.
Australia channels it development assistance using two broad avenues—funding
that goes to the Afghan Government and funds directed to off budget
expenditure. In this chapter, the committee concentrates on aid directed to the
For a number of years, the Government of Afghanistan and the
international donor community have recognised the benefits of direct funding to
the Afghan Government. As part of the 2006 Afghan Compact, donors undertook to
increase their proportion of assistance channelled through the core budget, as
well as through other more predictable core budget funding modalities in which the
Afghanistan Government participates. In 2008, the international community agreed
that aid was to be directed increasingly through the national budget as
strengthened and accountable government institutions acquired greater capacity
for management. Two years later, donors again reaffirmed their commitment to
channel increasing international resources through the Afghan Government budget
and in greater alignment with Afghan priorities. Indeed, in Kabul in July 2010,
participants to the international conference acknowledged that:
...aid delivered through the budget is among the most effective
means of reducing dependence, delivering the shared governance, development and
security outcomes that Afghans desire, and increasing the coherence of aid and
Afghan Government capacity.
To implement the principles of effective partnership with the Afghan
government, donors participating in the Kabul meeting and consistent with the
London Conference Communiqué, restated their support for channelling at least
50 per cent of development aid through the Afghan Government's core budget
within two years.
From the beginning, the Australia Government has endeavoured to help
build capacity and empower local Afghan authorities to deliver essential
services by channelling a considerable amount of its assistance through
government programmes. Indeed, since 2003, Australia has directed a significant
portion of its aid through the Afghanistan Reconstruction Trust Fund (ARTF) as
a means of providing on-budget support. The fund is now the primary vehicle for
delivering Australian development assistance to Afghanistan.
Afghanistan Reconstruction Trust
The ARTF is one of the main avenues through which the international
community contributes funds to the Afghanistan Government. The World Bank
established the fund in early 2002 to facilitate a partnership between the
international community and the Afghan Government for the improved
effectiveness of reconstruction and development efforts in Afghanistan.
Funding through this type of mechanism, known technically as on-budget
assistance, is the largest single source of external on-budget financing for
the Afghan Government.
The fund is:
...a financing mechanism that coordinates assistance from key
donors so that the government can make predictable, timely and accurate
on-budget payments for approved recurrent and investment costs.
The Management Committee, which manages the ARTF, consists of the World
Bank (as the administrator), the Islamic Development Bank, the Asian
Development Bank, and the UN.
The ARTF involves pooling funds with many other donors to support country
programs. Since its establishment, 32 donors have provided over US$4 billion
(as of 21 November, 2010), making the ARTF the largest contributor to the Afghan
budget for both operating costs and development programs.
Its specific objectives are to:
- position the national budget as the key vehicle to align the
reconstruction program with national development objectives;
promote transparency and accountability of reconstruction
- reduce the burden on limited government capacity while promoting
capacity-building over time; and
- enhance donor coordination for financing and policy dialogue.
The ARTF contributes to the achievement of the Afghanistan National
Development Strategy (ANDS) goals through its support for national priority
programs, for operating costs of government (wages for civil servants,
operations and maintenance costs etc), and for the policy reform agenda.
In this regard, Professor Howes thought it was important to recognise that
while the World Bank manages the fund and plays a significant role, the ARTF is
a form of budget support. He explained:
That money goes to the Afghanistan government and some of it
is earmarked for particular programs like the National Solidarity Program. But
parts of it are just general budget support and they need that recurrent
funding because they need to employ police and teachers.
AusAID noted that such funds help countries to take financial assistance
from the international community and apply it directly to their budgetary lines
for the delivery of services and for other normal essential activities of
These sorts of arrangements have been in place in a number of fragile,
conflict-affected states when support from the international community was most
Australia's funding through Afghanistan's core budget
Australia made its first contribution to the ARTF in 2003 and between 2004–06
continued to support the delivery of essential services through the fund.
Consistent with undertakings at the Kabul Conference, Australia committed to
allocating 50 per cent of its development assistance to Afghanistan through
According to AusAID, Australia was performing well against this goal and was
providing 46 per cent of the AusAID country program in 2009–10 through the ARTF.
Australia's contribution to the fund, which is now approximately half of
AusAID's country assistance, compares favourably with other donors in relation
to directing funds through Afghan systems (see table 14.1).
To the end of 2012, Australia had contributed $210 million to the fund.
Benefits of funding through the
AusAID informed the committee that pooled funding arrangements such as
the ARTF have proven to be a very effective way to help the governments of fragile
countries meet their immediate service delivery and fiscal challenges.
In AusAID's assessment, the ARTF is one of the better and more effective
examples of a pooled funding arrangement and of international better practice
in managing international development assistance in a fragile context.
According to AusAID officials, Australia has achieved significant results from its
contributions to date and as a confidence-building measure for donors, the ARTF
has proven to be 'very successful as a forum for engagement on serious issues
of economic policy and government reform'.
AusAID referred to the ARTF as a means whereby Australia, as part of the
donor community, is able to engage with the Government of Afghanistan at a
senior level on issues of key economic reform priorities for the country. Mr Paul
Lehmann, AusAID Minister Counsellor, Australian Embassy, Kabul, explained:
...it is about the conversation that the international
community is able to have with the government of Afghanistan in the context of
the fund. It is where we can really talk tintacks about what it is that the
government wants to do and how it is going to fund it, including funding and
assistance provided by the international community, including Australia.
Mr Scott Dawson, AusAID, also referred to the high level of community
engagement under ARTF programs that encourages local ownership of aid projects:
There has been a lot of work at the individual community
level on basic community infrastructure which has been requested by and
overseen by the communities themselves. Exercising the community
decision-making processes associated with the identification of that community
infrastructure and the supervision of its implementation have been very
significant developments in terms of civil society engagement with government,
which has occurred in Afghanistan since 2001.
The World Bank, the Government of Afghanistan and donors to the ARTF determine
jointly the priorities and governance arrangements for the fund's projects.
The 2011 Independent Review of Australia's Aid Effectiveness explained
that, by being a contributor to the ARTF, Australia is not only part of the
multi-donor effort to advance development results but importantly 'buys a seat
at the table'.
AusAID informed the committee that aid channelled through the ARTF is
'delivered in line with the development priorities of the Government of
Afghanistan as articulated in the Afghan Compact and the ANDS'.
The funds are directed to National Priority Programs including the National
Solidarity Program, the Education Quality Improvement Program (EQIP), the
National Rural Access Program and the Microfinance Investment Support Facility
for Afghanistan and the Basic Package of Health Services (BPHS).
Ms Michaela Browning, AusAID explained that AusAID participates in helping
the Afghan Government design programs and then it endorses the funding for each
one of its national priority programs.
As noted previously, the ARTF involves many donors combining their funds
to support country programs. The Independent Review of Aid Effectiveness
reported that such trust funds count as earmarked funds and like core funding
generally involve low administrative costs for AusAID.
In this regard, Mr Dawson argued that the fund is effective because it reduces
transaction costs significantly by linking directly to the government budget of
the country concerned.
In effect, the ARTF reduces the administrative burden on the Afghan Government while
building the government's capacity.
Mr Dawson explained further that by using the fund it is possible to use the
one single structure instead of having 'multiple donors with multiple
individual programs and multiple management and monitoring structures.'
Thus, such an arrangement also addresses the problem of coordinating programs.
The 2011 Independent Review of Australia's Aid Effectiveness
noted that the World Bank exercises an important coordinating role at country
level through the trust fund.
It found that the use of government systems has the advantage of avoiding
parallel systems for donor projects that create administrative burdens for
governments and donors.
According to the review, large global trust funds such as ARTF 'generally
reduce fragmentation of aid by encouraging donors to work through one mechanism
rather than bilaterally.'
AusAID also informed the committee that channelling funds through the
Afghan system helps to counter the tendency for aid fragmentation and enhances
According to Ms Browning, Australia is heavily involved in donor coordination
and overseeing the management and implementation of the fund—in how Australian
money is delivered and to what it contributes.
Professor Howes and Mr Pryke also observed that the World Bank
management provided 'useful coordination and oversight'.
Dr Bizhan noted that the on-budget mechanisms foster institution-building and
can ease monitoring and coordination of international development.
Managing for results
Aid effectiveness depends on reaching those in most need; matching their
needs; and supporting projects that will be sustainable. In Afghanistan, a weak
central government severely constrained by a lack of capacity to deliver front-line
services and with poor links beyond urban areas means that managing aid for
results is difficult. The National Solidarity Program (NSP), a centrepiece
activity of the ARTF, exemplifies the positive results achieved from this
community-centred outreach approach. It is discussed separately later in this
Corruption is a major factor in diverting aid from the intended
beneficiaries. Evidence suggests that in Afghanistan aid operating outside government
systems is more susceptible to corruption than development assistance
channelled through the ARTF.
According to AusAID, while corruption remains a serious problem in the public
sector, the ARTF helps to counter unethical and dishonest practices in its
program by promoting transparency and accountability.
The 2011 Independent Review of Australia's Aid Effectiveness
noted that budget support was provided 'with very rigorous monitoring through a
multi-donor trust fund managed by the World Bank'.
In this regard, the World Bank employs a number of review mechanisms. For
example, World Bank technical experts conduct comprehensive fiduciary risk
assessments and reviews of ARTF programs before the programs receive approval
According to AusAID, the World Bank also commissions independent evaluators
every three years to review the financial, policy and implementation progress
of programs funded through the ARTF.
It explained further that:
An independent monitoring agent (PriceWaterhouseCoopers)
conducts regular site visits to check funds and ensure that expenditures comply
with fiduciary standards.
Professor Howes and Mr Pryke noted that while the Afghanistan Government
is tainted, corruption does not seem to feature through the largely recurrent
and service delivery areas which the ARTF funds.
They argued that the ARTF has some notable advantages, including transparency
and accountability, that allows it to avoid corruption and patronage seen in
other parts of government and in other parts of the aid program which bypass
government. They noted the following measures taken by the ARTF to aid greater
transparency in, and accountability for, its funding and implementation of
- strict World Bank oversight, which includes periodic external
reviews, strict reporting requirements of funds entering and leaving the fund,
external auditing, etc;
- the nature of disbursements, whereby most spending from the ARTF
occurs in the form of pensions, salaries and other recurrent costs—these forms
of spending are much more accountable (there is an established feedback
mechanism when staff are not paid) than large pools of cash that are made
available for infrastructural development and other types of investment; and
- a high degree of independent, third party monitoring, including the
AusAID sponsored external review of the ARTF in 2012.
Despite these measures, Professor Howes and Mr Pryke go on to say that
on-budget aid may still be wasted and ask:
Consider the aid which finances a teacher who does not turn
up to school or who cannot read (having perhaps obtained their job by political
connections). Or the aid which covers the costs of corrupt or violent police.
Even so, according to Professor Howes, while Afghanistan suffers considerably
from corruption, it would be wrong to conclude that the Afghanistan government
should be avoided altogether.
Other witnesses supported the view that the ARTF was less susceptible to
corruption. Dr Bizhan also referred to corruption and lack of capacity in the
Afghan Government to spend the assistance effectively as a major concern.
Nonetheless, in his view once the level of assistance is increased through
on-budget funding, the capacity of the Afghan Government should grow, which
should put more pressure on the government to tackle corruption.
The National Solidarity Program
The operation of the ARTF is consistent with the fundamental principles
of aid effectiveness with one particular program a notable success so far—the
National Solidarity Program (NSP), a community-driven reconstruction and rural
infrastructure development program. This program is specifically designed to improve
service delivery by strengthening linkages between national and provincial efforts.
The program provides support for local communities and is intended to promote the
development of rural villages and to empower communities to construct their own
According to the World Bank, the NSP has made significant achievements in
empowering communities, improving community relations, and increasing public
faith in the system of government.
The NSP also makes up for the shortfall in government capacity at both
national and provincial level by drawing on civil society including major NGOs
to help deliver basic services. Moreover, the program fosters strong community ownership
and alignment of aid projects with the needs and priorities of communities.
To date, the project has disbursed over US$1 billion of which US$700
million has gone directly to community bank accounts.
AusAID explained the projects under this program are small scale, such as a bridge,
some road refurbishment or construction. Importantly, there is also:
- the Education Quality Improvement Program (EQIP), which provides
teachers and school facilities and supports communities to better manage their teaching
the National Rural Access Program, which connects villages to
basic rural infrastructure and services such as markets, health care and
schools and generates employment opportunities for rural communities; and
- the Basic Package of Health Services (BPHS), which is linked to
the Afghan Ministry of Public Health’s plans for Afghanistan with the money channelled
through the World Bank.
In addition, the program provides some microfinance investment support.
According to the World Bank, the NSP is an ambitious move by the
government to reach rural communities across Afghanistan and to address their
needs using participatory approaches:
Implemented by the Ministry of Rural Rehabilitation and
Development, through an extensive network of Facilitating Partner organizations
(mostly NGOs), the NSP...has grown into the government's flagship rural
Elected village-level Community Development Councils (CDCs),
in which women play a key role, reach consensus on development priorities,
develop investment proposals, and use grants and local labour to meet local
Recognised as the World Bank's showcase program in rural areas, the NSP
has reached all 34 provinces and succeeded in establishing 27,360 CDCs, which
have undertaken at least 59,629 locally identified subprojects.
A World Bank study, which analysed the NSP, looked at the program's contribution
to economic welfare, attitudes to government, and security. The results
indicated that the program had 'a significant positive effect on economic
well-being and attitudes toward all levels of government, NGOs, and possibly
also to foreign forces'.
An Afghan Ministry of Finance evaluation also noted that although the role of
the civil society was much more limited:
...some Afghan government designed programs, namely the
National Solidarity Program (NSP), promote a citizen inclusive development
process at the grass roots level.
As mentioned previously, a number of witnesses noted the centralised
state of public administration in Afghanistan and the weak connections between
the national government and local communities which create problems for the
effective delivery of aid. Some cited the NSP as a solution. Mr Krishnan
referred to the NSP as 'one of the most successful programs in Afghanistan'
while Professor Howes stated that national programs such as the NSP were
effective at getting funds out to the provinces.
Professor Maley argued that rather than implementing a proposed agenda of
development that may not match what communities need, the program reflects 'the
sense of needs that actually exist in real communities'. In his view,
this alignment with people's needs was the program's strength.
Although, according to Professor Maley, there had been some
sustainability issues with the program, the arrangement whereby small amounts
of money were provided through local councils had 'worked quite well'.
He also noted that even though some NSP projects may have gone wrong, the one-off
grant arrangement meant that the amount of money lost in the process had not
been all that large because funds were released in relatively small tranches:
If, say, $60,000 is not effectively used at a particular
level the council administering it knows in advance that the prospect of
getting another piece of funding from the process will be relatively limited.
Professor Maley suggested that the NSP was a prime example of the
'bottom-up' approach, which had 'allowed grants to be made to community
development councils to spend in ways which for them appeared to have the
greatest local priority'. He noted, however, that the program had been confined
to rural areas, and elsewhere, the 'top-down' model had received more support.
The NSP has been particularly successful at delivering essential services
in the fields of education and health, two areas of particular relevance to
Australia's aid program in Afghanistan. Indeed, currently the large proportion
of AusAID's expenditure that goes through the World Bank Trust Fund program support
basic services delivered by the Afghan Government including health and
Afghanistan's Target for Millennium Development Goal (MDG) 3—universal
primary education—is to ensure that, by 2020, children everywhere, boys and
girls alike, will be able to complete a full course of primary schooling.
Education is a focus of Australia's aid program in Afghanistan and one
of the strategic visions identified in Afghanistan ANDS. Through the ARTF, Australia
funds national programs including the Education Equality Implementation Program,
EQUIP. This program is intended to increase access to basic education; improve
skills of teachers and principals; as well as the ministry of education's
management, monitoring and evaluation of its programs.
It has constructed over 1,500 schools; graduated over 67,000 teachers from
teacher training college; trained over 150,000 teachers; provided school
management training to over 11,000 principals and school managers; and provided
5,000 scholarships for women to study at teacher training colleges.
Mr Poulter, CARE Australia, noted the successes of this community based
education program run by village education committees that oversee the schools.
He stated that there have been 'quite a lot of incremental gains':
...it is the process of communities coming together and looking
at their situation collectively and deciding what they can do to change it with
support from the national government. For me, that is a big positive of the
last 15 years.
Recently, the program has reached over 100,000 people. Mr Poulter
informed the committee that over the past two years, the program had not only
included grades 1 to 6, but moved to grades 7 to 9 and early secondary, and
experimented with community based early secondary schools.
According to AusAID, there is also a strengthening higher education
program designed to restore basic operational performance at a group of core
universities in Afghanistan. An Afghanistan's skills development program is
also in operation to improve access to high-quality vocational education, and
to train management in administration, information, and communications
It should be noted that in April 2011, as part of its regular oversight
of EQUIP, a World Bank review mission found that school construction was 'below
the expected standard, and that some schools were unsafe'. The review made
several recommendations to ensure that schools were repaired and management
systems improved. Both the World Bank and the Ministry of Education have put in
place measures to rectify the deficiencies.
Afghanistan’s targets for MDG 4 and 5 (reduce child mortality and
improve maternal health) are to:
- reduce by 50 per cent, between 2003 and 2015, the under-five
mortality rate, and further reduce it to one third of the 2003 level by 2020;
- reduce the maternal mortality rate by 50 per cent between 2002
and 2015, and further reduce it to 25 per cent of the 2002 level by 2020.
The past decade has seen impressive progress toward achieving these
goals. The Afghanistan Mortality Survey 2010 shows that the number of
children dying before the age of five has fallen from one in four to one in 14;
the maternal mortality rate has fallen from one death in 62 live births to less
than one in 300; and for women, the lifetime risk of dying from
pregnancy-related complications has fallen from one in 11 to one in 50. The percentage
of the population with access to primary healthcare has increased from 9 per
cent to 60 per cent, and the proportion of children vaccinated against
diphtheria, tetanus and whooping cough has jumped from 31 to 82 per cent.
According to Save the Children, Oxfam and World Vision Australia, these
significant achievements were due in large part to the Basic Package of Health
Services (BPHS) and the Essential Package of Health Services.
The community based approach is at the core of the BPHS' effectiveness. Some
15,000 community health committees have been formed with more than 23,000 voluntary
community-based health workers recruited and trained. According to the three
NGOs, approximately 50 per cent of these health workers were women, making
health services more accessible for women and girls. BPHS' success can also be
attributed to the fact that the services are free at the point of delivery and
implemented in districts where 85 per cent of the population live. In
particular, the BPHS’ focus on mothers and children has contributed to ante-natal
care more than tripling between 2003 and 2010, and the number of births being
assisted by a skilled birth attendant more than doubling in the same period.
The three NGOs cited the Ministry of Public Health's Strategic Plan,
which reported that contracting with NGOs had worked well and had shown to be a
way for the Afghan Government to regain and maintain policy leadership rapidly.
The strategic plan also noted that contracting had proven 'enormously successful
in expanding service coverage and improving on quality of care.'
The bulk of Australia’s support to healthcare in Afghanistan has been
delivered to the BPHS, via the ARTF.
The Australian Council for International Development (ACFID) informed
the committee that the implementation models adopted by the NSP and the BPHS were
generally regarded as having been effective in bringing about significant
advances in service delivery, and the model adopted by the EQUIP was also
beginning to produce results. Save the Children, Oxfam and World Vision
Australia identified the following positive aspects of these models:
- the majority of funding is on-budget and managed by the concerned
ministries, thus ensuring that programs fit with government priorities,
policies and strategies—implementation, monitoring and evaluation are standardised
and regulated by the ministry;
- ministries contract out program implementation to NGOs, who are
able to draw upon their expertise in the communities in which they work, thus
enhancing the quality of program design;
- programs delivered by NGOs are often in areas that are out of
reach of the government line ministries, and yet the programs are recognised by
communities as government programs, thus enhancing government legitimacy;
- donors, government and implementing NGOs work in partnership,
leading to mutual learning and capacity building, support and supervision;
- substantial measures are taken to include women in the programs,
such as the NSP's minimum quota of two women in each community development
council executive; and
- significant involvement of the community in program design, implementation
and monitoring, resulting in ownership and sustainability.
Save the Children, Oxfam and World Vision Australia saw potential to
improve the programs further. In their view, if such programs were expanded and
replicated, backed by long-term, sustainable funding, and the lessons from past
evaluations addressed, the impact of a reduction in international development
assistance could be substantially mitigated. 
Assessment of funding through government systems
A 2010 ACFID study reported that independent evaluations assessed the
ARTF as 'performing highly' and well regarded.
The 2011 Independent Review of Australia's Aid Effectiveness found that on
the whole, distributing funding through partner government systems had 'been a
positive experience'. Indeed, it recommended that Australia expand its share of
aid being disbursed through government systems. The review noted that the use
of government systems has two advantages:
- it avoids parallel systems for donor projects that create
administrative burdens for governments and donors; and
- can help donors influence and improve policy and program settings
of entire government systems rather than being confined to individual aid
The core funding, however, goes toward general operations and therefore
cannot be traced to particular activities. Even so, the review argued that
donors, including Australia, can legitimately claim their core funding has
contributed to the overall results achieved by multilateral organisations.
The recent review of the ARTF found that the overall structure and functioning
of the fund was deemed to be 'very good'. It reported:
The ARTF remains the mechanism of choice for on-budget
funding, with low overhead/transaction costs, excellent transparency and high
accountability. It provides a well-functioning arena for policy debate and
consensus creation. The close links with the IDA [International Development
Association (World Bank)] provide economies of scale and free access to
high-quality relevant knowledge products but raises questions about ARTF
funding decisions being too much driven by IDA choices.
Many witnesses agreed with the general assessment about the
effectiveness of the ARTF. According to Mr Dawson, the headline changes in
Afghanistan's development circumstances since 2001 had been due to funding provided
through the ARTF. He cited the very significant increase in school
enrolments—from about a million in 2001 to almost eight million today, of which
2.7 million were girls who were not in school before. He stated further that
international community pooled funding through the ARTF had produced a very
significant increase in access to basic health care services as well as the rehabilitation
of more than 10,000 kilometres of rural roads, providing thousands of jobs.
Professor Howes identified the budget support through ARTF as a success
He and his colleague, Mr Pryke, reported that by all accounts, the ARTF worked
well and seemed to be 'an effective aid delivery mechanism'.
They noted that 'compared to other donors, Australia appears to have a
relatively high proportion of its aid directed to national programs', which
they suggested was a strength.
Mr Leahy, CARE Australia, informed the committee that budget support was 'a
very valid way of promoting development effectiveness objectives'.
Dr Bizhan, who has been working in Afghanistan as head of the joint coordination
and monitoring board secretariat, recognised the value in using jointly managed
trust funds such as the ARTF and the government budget.
He noted that while Australia was largely using the Afghan country systems, there
was scope for improvement. He suggested that the total on-budget assistance of
Australia should increase to 50 per cent from 46 per cent of its total annual
2012 independent review of the ARTF
Although the independent review of the ARTF described the fund as 'an
effective mechanism which remains fit for purpose', it found scope for improved
In its view, a structured approach to defining medium-term objectives in
relevant projects and ARTF as a program was missing. Also, the review would
like to see 'more reporting, analysis and knowledge generation on
geographic/sectoral results, differences and opportunities for progress'. According
to the review:
Given likely (regional) challenges to gains already produced
over the coming period, more intensive and detailed reporting becomes
The review also found that while performance tracking had improved, considerable
work was required to get 'a consistent, comprehensive and critical tracking and
reporting system in place for ARTF as a program'.
In addition, it referred to managing natural resource rent and the resource
curse and the importance of defending gains made to date during the transition
and transformation period. Both matters are considered later in the report.
Mr Lehmann, AusAID, agreed with the finding that the ARTF could do
better. He mentioned improvements 'around aligning the funding that comes
through the fund with the Government of Afghanistan's priority programs',
suggesting that 'a little bit more work' could be done in this area. Also,
according to Mr Lehmann, donors need to work with the World Bank to ensure that
their results and reporting capacity are 'up to scratch'. He noted that
Australia had been on the front foot in this regard and was working quite
closely with the bank to ensure that, post 2012, the ARTF would have 'an even
more robust results framework'.
Overall, evidence from numerous reports and from witnesses appearing
before the committee support AusAID's view that funds directed through the Afghan
Government systems are more successful in promoting government ownership and
aligning projects with government priorities. This arrangement also helps to
prevent wastage of funds, encourages better coordination between projects (less
duplication and better targeted) and is better suited to counter corruption.
The committee recognises the positive results gained through the ARTF,
especially the NSP. The committee supports the Australian Government's
commitment to channelling 50 per cent of its ODA to Afghanistan through the
World Bank supervised fund. The committee notes observations about the
potential to improve the operation of the ARTF such as defining mid-term
objectives; ensuring that 'a consistent, comprehensive and critical tracking
and reporting system' is in place for ARTF as a program; and improved
accountability by setting down measurable conditions for allocating funds.
These recommendations for improving the performance of the program certainly
contain lessons for all donor countries, including Australia, and are discussed
in the final chapter.
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