Rural development and food security
Conflict not only takes human life but destroys food and water sources,
such as irrigation systems; degrades the land; and disrupts markets. According
to ActionAid, the three decades of war in Afghanistan has meant that the
agricultural sector 'has been neglected completely changing from a major source
of exports to subsistence level production'.
Afghan farmers have not only endured decades of war devastating their food
producing capabilities and depleting critical seed stock, but are also subject
to a harsh climate and highly vulnerable to natural disasters especially
The committee has referred to the importance of ensuring that Australia's aid
to Afghanistan is well targeted and in sectors where Australia is best placed
to make a positive contribution. In this chapter, the committee considers
Australia's contribution to assisting Afghanistan rehabilitate its agricultural
sector and develop its mining industry.
Land use in Afghanistan
Afghanistan is a highly agrarian society with about 80 per cent of the
population living in rural areas. Yet only a fraction of the land is suitable
for agriculture with the mountainous terrain meaning that 'vast tracts of land
cannot be irrigated or cultivated'.
According to ACIAR, approximately 8 million Afghan farmers depend on
crop-livestock production systems for their livelihood. Save the Children,
Oxfam and World Vision drew attention to the vulnerability of many of these
farmers. It stated that subsistence farmers make up half of the population that
depend on agriculture as their main livelihood source and are 'greatly exposed
to seasonality and unable to maintain their livelihoods for up to half of the
Raising livestock is also essential for rural Afghan families that keep
small ruminants and dairy cows as a source of income and for insurance in times
of need, crisis, or celebration.
ACIAR noted that in Afghanistan 'forage of sufficient quality for livestock has
always been a limited resource and worsens during years of drought'.
Indeed, with regard to livestock, ACIAR informed the committee that for much of
the year, the animals are in very poor condition and not only suffer from a
shortage of quality fodder but also of roughage. They also carry quite a
significant burden of parasites.
Even allowing for Afghanistan's difficult environment, the country's
yields are very low at the moment and its rural areas are producing only a
fraction of their potential. The ADB noted that the growth in agricultural
production of cereals, fruits and nuts, and livestock has failed to keep up
with Afghanistan's overall growth in population. Agriculture's share of GDP
over the period 2002–2010 fell from the equivalent of 30 to 15 per cent and, in
recent years, Afghanistan has had to import food with some provinces requiring
food aid due to shortages. The sector's poor performance is a serious problem
for the country, because, according to the ADB's evaluation, 'an estimated 85%
of the population depends directly or indirectly on agriculture and
agricultural products, which also account for about half of all exports.
Although security is the main priority in a number of Afghanistan's
provinces, overall agriculture rates as one of the country's top concerns. This
high rating reflects the sheer number of Afghans who rely on agriculture for
Whatever the future holds for Afghanistan, agriculture will be central
to its prosperity and the wellbeing of its people. Its importance to the
welfare of Afghans will be even greater should the country suffer any setbacks
on its road to recovery. Thus, helping Afghanistan to achieve sustainable
improvements in agriculture must be a priority for donor countries, especially for
Australia, which has proven research skills and expertise in this area of arid
and semi-arid agriculture.
ACIAR anticipated that improved germplasm combined with better agronomy
or crop management could increase yields significantly and therefore improve
household food security and income in Afghanistan.
Improved, reliable and greater wheat production would not only decrease
reliance on costly wheat imports and international food aid efforts but also
contribute to food security, income generation and rural employment
Afghanistan's agricultural sector has been neglected
'changing from a major source of exports to subsistence level production'.
Australia occupies a reasonably unique position as a developed economy
that shares many of the ecological, climatic and soil conditions of arid and
semi-arid conditions found in Afghanistan.
Also ACIAR, a well-established Australian agriculture research institute, 'can
work alongside developing countries in addressing some of their priorities'.
The committee has noted the work that ACIAR and AusAID have done to
promote agriculture in Afghanistan. ACIAR's assistance to Afghanistan goes back
many years starting in 2002, when it supported its first multilateral project
in Afghanistan, led by the International Maize and Wheat Improvement Center.
The project was seeking to deliver better suited wheat and maize cultivars.
Initially, AusAID provided funding to the project named 'The Seeds of Strength'
for two years commencing in July 2002.
During this project, NGOs distributed wheat, together with fertiliser, to 9,000
farmers in four provinces. ACIAR reported that the new varieties of wheat had
yielded up to 5 tonnes per hectare and better, 'almost double the yield of
locally favoured varieties'.
The Independent Review of Aid Effectiveness cited Australian
support to Afghanistan's farmers as a notable achievement. It noted that
Australian aid had helped 'identify and promote better wheat and maize
varieties; yields have increased by more than 50 per cent and were expected to
increase total production by more than $100 million'.
Even so, witnesses, including a number from NGOs that recognise the primacy
of agriculture in Afghanistan, highlighted the importance of accelerating
agriculture and rural development to help eradicate extreme poverty and hunger
in Afghanistan (MDG 1).
ActionAid observed that after ten years of direct intervention by the
international community, there was still little recognition of how critical
Afghanistan's agricultural sector was for this country's development.
Due to increasing insecurity and Afghanistan’s recurrent
exposure to hazards such as drought and flooding, a vast majority of the
country’s 30.4 million people are chronically or acutely vulnerable. As many as
three million individuals are affected by natural disasters, including 2.8
million by recurrent drought. In this context food security is a primary
concern for many Afghans especially for the 85% who rely on agriculture for
The importance of intensifying the effort in this area is underscored by
some troubling trends including changing climate (less rainfall and higher
temperatures) and land degradation. According to Save the Children, Oxfam and
The most vulnerable groups to climate change in Afghanistan
are poor farmers and pastoralists that are least able to adapt to changing
conditions. Meanwhile, as a result of both drought and increased poverty,
coupled with poor natural resource management, the availability of wild food
resources has also been strained, and supplies have been overharvested, further
In their view, these projections call for a reconsideration of existing
agricultural approaches in Afghanistan to foster economic growth and build the
resilience of communities to adapt to the effects of climate change. The three
NGOs noted that 40 per cent of arable land was currently used for the
production of cereals, predominantly wheat. Although wheat is a high-value
crop, they suggested that it was important to reconsider its dominance given
that the crop is highly water-intensive. They recommended that further research
be conducted into new or improved varieties of crops, including wheat,
chickpea, lentil, barley and mungbean, particularly pulses and beans, that
provide higher yields than local varieties, require less water, are
nitrogen-fixing, provide feed for animals and are edible by humans. This would
also help address nutrition deficiencies.
Dr Bizhan also argued that agriculture requires more attention. He noted
that Afghanistan is a country that is facing many challenges in this area
because only 12 per cent of the land is arable and the climate is dry. In his
view, Australia could share its experience at macro level and at policy level.
Uruzgan in particular could benefit from a greater concentration of effort on
its agriculture (according to the ANDS, the province's top priority is
security, followed by governance then agriculture). The TLO report noted that
Uruzgan is beset by droughts and poor irrigation systems which make it
difficult for farmers to count on reliable harvests and grow enough produce to
sell surpluses in the market. The report noted, however, that most development
money spent in the province continued 'to be spent on indirect economic
expansion through the improvement of basic infrastructural elements such as
roads, schools, and clinics rather than on direct investment in the local
The committee supports Australia's funding in the agriculture sector and
recommends that as Australia's projected aid contribution to Afghanistan increases
that agriculture remain a priority. Further, the committee suggests that ACIAR
in collaboration with international and national NGOs give fresh thought to how
they can best help the farming sector in Afghanistan manage changing
Distribution and accessibility
A number of witnesses not only wanted to see an increased effort in
assistance to farmers and a renewed way of thinking about Afghan farming
systems but wanted existing problems with delivering current assistance
addressed. In particular, they argued that attention should be given to
ensuring that the poorer farmers were able to take full advantage of the
benefits of research, education and improved infrastructure.
Save the Children, Oxfam and World Vision referred to employing better
methods of distributing improved seed varieties and fertilisers. Notably, they stressed
the importance of ensuring that in Afghanistan the rural poor have equitable
access to seeds and fertilisers. The three NGOs noted:
One of the significant criticisms of the Ministry of Agriculture,
Irrigation and Livestock (MAIL)’s current seed distribution program is that it
is only accessible to medium-large sized farmers who have the means to purchase
subsidised packages, thereby failing to support poor farmers.
They suggested that the Afghan Government work with NGOs to identify
appropriate ways to reach the poorest households in remote and insecure areas.
ActionAid also stated that food security and distribution continued to
be a major problem and both were sources of 'vulnerability for the Afghan
The organisation's Country Director for Afghanistan, Mr Krishnan, informed the
committee of his concern about farmers' access to seed stock. He explained that
the government requires farmers to buy seeds from government-certified depots
only, but that a poor farmer cannot afford to buy seeds from the centres.
Furthermore, when no stock is available in the depot, the farmer cannot sow his
own seeds. Mr Krishnan could not understand this 'strange policy' whereby a
farmer is not allowed to grow his own seeds but must buy the seeds from a
certified seed company.
ACIAR provided the committee with additional information on the seed
There were more than 100 local seed multiplication companies
in 2012 which multiply registered seed, predominantly of wheat, received from
the parastatal Improved Seed Enterprise and sell the resulting certified seed
to the National Seed Board which organizes subsidized distribution of certified
seed to farmers, largely supported by donors...Recent policy discussions have
emphasised a gradual shift from the public sector system dominated by the
National Seed Board towards a free market system.
According to ACIAR, its sustainable wheat and maize improvement project
seeks 'to enhance the supply of improved seed varieties and “examine ways in
which community multiplication for wheat seed and improved wheat seed could be
strengthened”'. It informed the committee that this objective recognises that distribution
channels in Afghanistan are inadequate and options for improvement will be
considered. It noted further, however, that at present its key focus was on 'the
research and development of improved seed varieties, together with more
efficient wheat crop husbandry practices'. The Afghan government's policy on
seed access was not a primary focus of ACIAR’s project.
Outreach is central to the success of programs designed to help farmers
benefit from research and must be an integral part of program design,
implementation and evaluation. If farmers have difficulty gaining access to the
advanced lines and improved varieties of seeds produced through projects such
as the wheat and maize improvement project, then the project is incomplete—it
Train the farmers
Save the Children, Oxfam and World Vision noted further that as well as
providing support for improved seeds, it was important to 'train farmers in
improved farming techniques to increase crop yields in a sustainable manner'.
Mr Krishnan added that most donor support had gone into building systems in
Kabul, but had not percolated down to the people on the ground. Aside from the
NSP other programs tended to be centred in Kabul and therefore do not reach the
He gave an example based on ActionAID's experience in the northern
provinces where the organisation created what it called 'barefoot agricultural
trainers'. Under the project, young, qualified, interested farmers from the
community were chosen and underwent intensive training on different types of
farming. According to Mr Krishnan, the young farmers are now back in the community
and advising other farmers and the results 'have been wonderful'.
Women in agriculture
The third matter that Save the Children, Oxfam and World Vision
highlighted was the importance of designing agricultural programs to encourage
greater participation of women. They noted studies showing that women were more
likely than men to invest in their children’s health, nutrition and education. As
a consequence, they argued that:
Agricultural interventions that increase women’s income and
their control over resources can dramatically increase the potential for positive
child nutrition and health outcomes, and the results are most pronounced among the
lowest income groups.
The three NGOs cited the governance model established under the NSP,
managed by the Ministry of Rural Rehabilitation and Development and implemented
through local and international NGOs. They explained:
Under the NSP, each village establishes a gender-balanced
community development council through a democratic process. Each community
development council must plan, manage and monitor its own development projects
in consultation with the village community, with an emphasis on the
participation of women in decision-making.
The committee has noted the success of this program. Importantly, with
regard to agriculture, the three NGOs noted that an independent evaluation of
the NSP indicated that it had led to increased involvement of women in local
governance and suggested replicating the model as a means of harnessing greater
participation of women in the design of agricultural programs.
Disaster reduction and management—building resilience
A number of witnesses also mentioned the importance of increasing donor
commitment to disaster risk reduction at the community level. Mr Poulter stated
that there can be 'a diversion of attention, with the focus, understandably, on
stabilisation and strengthening of government'. He indicated that sometimes the
humanitarian crisis in Afghanistan can be ignored.
Caritas drew attention to the vulnerability of a great many Afghans to
the effects of natural disasters. It suggested that while humanitarian work
should be resourced adequately, it should be accompanied by an expansion of
disaster preparedness and disaster risk reduction activities in order to build
the resilience of communities.
ActionAid stated that drought and other natural disasters had caused major food
insecurity in the country—a problem that had existed since the start of
international involvement but one that requires much greater attention.
According to Mr Krishnan:
In Afghanistan, the problem is the small disasters that hit
almost on a regular basis. We have not had a widespread, huge, massive disaster
in spite of being in an earthquake zone. What we have had are floods that
affect three districts, four districts. At those times, the donor interest is
also much less because there is not enough size to the disaster; there is not
enough media interest in that. So people have to cope with the disasters
ActionAid noted that although billions of dollars had been sunk into
different agricultural programs, people remained concerned about achieving
durable long-term solutions for natural disaster management such as tackling
issues of drought.
In its assessment, current efforts in the agricultural sector were 'scattered,
uncoordinated and had a piecemeal rather than sectoral approach based on a
Mr Krishnan referred to the Afghanistan National Disaster Management
Authority but suggested that at the provincial level there was no understanding
of disaster response or disaster reduction. He stated:
They are totally disconnected from Kabul. Whereas, at the
Kabul level, they are getting support from the UNDP, their Director-General is
flying all over the world on a monthly basis, but they have no understanding at
the grassroots level.
Mr Naeem noted that currently donors in Afghanistan focus less on
environmental protection and preservation and suggested that Australia assist
in this 'cross-cutting issue'.
With its considerable experience and increasing expertise in this area
of dry land agriculture, Australia is well placed to continue its significant
role in assisting Afghan agriculturalists, including its poorer farmers, to
improve the productivity of their land. The committee notes the three areas
identified as having the potential to give greater momentum to the benefits
already accruing from international assistance in the area of agriculture:
improved accessibility for poorer farmers to the benefits of
- emphasis on training farmers; and
- inclusion of women in every facet of improving agricultural
production including the nutritional content of the produce.
The committee is of the view that Australia's assistance to Afghanistan
in the food security sector pay close attention to these areas.
The committee understands that ACIAR funds multinational organisations
to deliver its aid. Even so, the committee believes that through its links to,
and support of, relevant centres such as ICARAA, Australia can advocate that,
while high level research needs to have practical application, assistance
programs also need to ensure that poorer farmers have access to, and training
in appropriate use of, new, improved crop varieties and technologies.
The committee recommends that the Australian Government ensure that as
Australia's ODA increases in the coming years that the funding in the area of
food security and agriculture increases proportionately.
The committee recommends that AusAID and DFAT use their influence with
the Government of Afghanistan, relevant line ministries and major multilateral
organisations delivering agricultural assistance to reinforce the importance that
- ensures that poorer farmers have affordable and easy access to
seed centres and appropriate technologies;
- takes account of the need to train farmers, especially those
in the poorer communities, to apply the benefits of agricultural research and
- involves women in all aspects of aid funded agriculture
projects to enable women and their families to benefit from reforms in
- includes disaster risk management, especially building the
resilience of poor Afghan farmers to withstand natural disasters, as a
The committee recommends further that the four principles identified
above are given priority when designing, planning and implementing Australian-funded
agricultural projects in Afghanistan.
The committee also recommends that the Australian government provide
direct support for agricultural development programs based on the four
principles in recommendation 15.
In the context of agriculture in Afghanistan, a number of witnesses were
concerned about the level of recognition given to opium cultivation and its
importance to the country's economy.
Opium has become Afghanistan’s leading economic activity and accounts
for almost 90 per cent of the world's production.
According to a World Bank study, opium is Afghanistan's most important
agricultural crop by value and provides much-needed livelihoods for many people
in rural areas. While the cultivation of opium may bring short-term gains for
the rural population, it distorts incentives to develop a sustainable formal
agriculture sector in the long run. In addition, the large criminal profits of
the drug industry 'undermine governance, fuel corruption, nurture dysfunctional
politics, and ultimately stimulate insecurity and conflict'.
While removing economic reliance on opium is a development priority for
Afghanistan, its importance as a high-value, storable commodity with a ready
market and a secure cash crop, means that this objective will not be easy to
The Governor-led opium poppy eradication initiative achieved a 154 per
cent increase in eradication in 2012 compared to its 2011 level (9,672 hectares
eradicated in 2012). Even so, the total area under opium poppy cultivation in
Afghanistan was estimated at 154,000 hectares (125,000–189,000) in 2012, which
represented an 18 per cent increase in cultivation. According to the UN Office
on Drugs and Crime, in 2012 the potential opium production, however, was estimated
at 3,700 tons (2,800–4,200 tons), a 36 per cent fall from the previous year.
This decrease was due to reduced opium yield caused by a combination of a
disease of the opium poppy and adverse weather conditions, particularly in the
Eastern, Western and Southern regions of the country.
The vast majority of total cultivation, accounting for 95 per cent, took
place in nine provinces in Afghanistan’s Southern and Western regions, including
the country's most insecure provinces where cultivation remained stable (72 per
cent of opium cultivation was concentrated in Helmand, Kandahar, Uruzgan, Day
Kundi and Zabul). The UN Office on Drugs noted this regional divide in opium production,
whereby cultivation was mainly confined to provinces dominated by insurgency
and organized criminal networks. In its view, this pattern of cultivation
confirmed 'the link between insecurity and opium cultivation observed in the
country since 2007'.
Clearly, the effects of opium cultivation on the economy, polity, and Afghan
society are far reaching. Although opium production may produce some short-term
economic benefits for the rural population, these gains are vastly outweighed by
the detrimental effects on security, political stabilisation, and state
building, which are central to sustainable and high quality growth.
Witnesses were similarly concerned about the adverse effects of poppy
cultivation in Afghanistan; donors failure to acknowledge the problem; and
their lack of effort to help curb production. The Australian Council for
International Development referred to poppy production as 'a real threat and
that viable measures to counter this trend should be identified'.
ActionAid stated that during the last decade the Government of Afghanistan and
the international community have claimed their highest commitment to opium
eradication. Yet it indicated that:
...the opium problem is causing agriculture backwardness and
promoting poverty in Afghanistan and all intentions and claims for fighting it
has had very little impact.
Professor Howes and Mr Pryke recommended that rather than avoid the
issue of opium production, Australia's aid strategy should contain explicit
analysis of the prevalence and trends in poppy production in Afghanistan.
It should also determine a position on whether one of the aims of Australia's
aid is to reduce poppy production and, if so, what strategies would be used.
ACIAR does not conduct work on poppies but argued that, if it made a
contribution towards the prosperity of farmers growing wheat and other crops
and livestock, then it might reduce the propensity of those farmers to seek to cultivate
poppies as a source of income. In other words, having an alternative to poppies
could help—if farmers have choices, there is a better chance they will move
away from that particular crop.
The heavy reliance by some areas of Afghanistan on opium production
underscores the importance of development assistance encouraging farmers away
from cultivating the opium poppy by providing them with a viable substitute.
The committee has made a number of recommendations designed to provide farmers
and local communities with the incentive to do so.
Afghanistan has abundant mineral resources (natural gas, petroleum,
coal, copper, silver, gold).
Since the 1970s, however, most have not been successfully developed nor
systematically explored using modern methods.
Afghanistan also poses particular risks for mining enterprises seeking to take
advantage of mineral opportunities. The environment can be challenging and
expensive, with many of the reserves located in remote, rugged mountains that
lack infrastructure, power and a readily available trained workforce. Some of the
areas are subject to extreme seasonal changes with harsh winters in higher
altitudes. Security, tribal conflicts and local power struggles further
complicate efforts to develop mineral properties.
The committee recognises the challenges confronting mineral companies
seeking to extract Afghanistan's mineral reserves. Its main concern, however,
is with the safeguards needed to ensure that mineral
exploration and extraction does not cause harm to local communities, result in
unnecessary environmental damage, fuel corruption or derail sustainable
Potential driver of development
The committee has referred to the critical need for Afghanistan to
develop the potential to generate its own revenue in order to meet the looming
fiscal shortfall. At the moment, mining in Afghanistan is substantially an
untapped resource, which contributes only marginally to the country's GDP—less
than 0.5 per cent during the 2000s.
Afghanistan has a very substantial fiscal gap that it will need to fill
and, as mentioned previously, has limited existing sources for economic growth
and employment. One of the great hopes for Afghanistan's future economy derives
from the potential to exploit its mineral wealth. The World Bank has estimated
that potentially there is around $1 trillion worth of revenue and resource
available for the country.
Even so, mining profits are not expected to come on line for another decade. According
to AusAID, the careful management of its extractive industries will provide the
Government of Afghanistan with 'a very significant boost' to its finances and
its 'capacity to finance delivery of basic services including health and
Dr Bizhan noted that mining infrastructure is a sector where Australia
has a comparative advantage and expertise.
In his view, Australia could not only provide technical assistance to Afghanistan
in the area of mining but also encourage the Australian private sector to
invest in that country.
Indeed, the Memorandum of Understanding between the Government of Afghanistan
and the Government of Australia, identified mining as a sector where Australia
has particular expertise, comparative advantage and can have the most impact.
A number of reports, however, raise concerns about the detrimental
effects that mining could have—the resource curse—on a conflict-affected
country such as Afghanistan.
Concerns about mining in
The term 'resource curse' refers to the situation where, despite the
potential for prosperity, resource-abundant countries underperform: where
exploitation of their resources in effect undermines their economy. The curse
can be linked to inflation, disparity in the distribution of wealth, poor
public services, corruption that counters economic development and destruction
of the environment. For example, corrupt leaders and officials may
misappropriate income from these resources and instead of supporting the
country's growth and development, use it for personal enrichment. Such
inequalities can fuel local grievances leading to conflict.
Already rent by ethnic and tribal rivalries and troubled by corruption,
Afghanistan would be vulnerable to this curse. Indeed, a recent independent
review of the ARTF stated that China and India's significant mining investments
and increasing interest in oil and gas exploration in Afghanistan makes the concern
about the 'resource curse' more urgent than ever. According to the review, the
resource curse may become 'a major challenge for all development partners'.
In this context, the UN Secretary-General referred to fears within
Afghanistan that the windfall from mining 'could perpetuate civil conflict'.
Drawing from recent world-wide history, he noted that since 1990 at least 18
violent conflicts had been fuelled by the exploitation of natural resources
such as timber, minerals, oil and gas.
According to the Secretary-General:
Sometimes this is caused by environmental damage and the
marginalization of local populations who fail to benefit economically from
natural resource exploitation. More often it is caused by greed.
Some witnesses underscored their fears that mining development in
Afghanistan could generate serious security, social and environmental problems
and were wary of development assistance being used in this sector. For example,
AID/WATCH drew on the history of mining in developing countries to show that 'economic
growth from the mining sector rarely translates to improvements in income or
basic services for the poor'.
A member of AID/WATCH's committee of management, Mr Gareth Bryant, referred
to how mining activities could generate conditions favourable for the resource
curse, exemplified by social inequality, political corruption and ecological
damage. In his assessment, the problem with relying on mining was that it
proceeds to the 'detriment of other more sustainable and more participatory
forms of economic development'. Thus, all the money would flow into the mining
industry thereby crowding out other sectors and rendering them unviable. He
also noted that mining was not a large employer resulting in the bulk of
society being excluded from the mainstream economy while the elite few participating
in the mining industry become the main beneficiaries. He suggested that a sustainable
way to develop Afghanistan's economy was to start from its existing strength especially
developing agriculture in a way that gives people good alternatives to poppy
Also to his mind, in a divided country like Afghanistan mining could exacerbate
the divisions. He explained that the problem was the structural basis of
mining, which excludes people:
...the economic surplus from mining is a rent and is a windfall
which excludes ordinary people. There is a dual economy and that money will
flow to political and economic elites, fuelling corruption et cetera.
According to Mr Bryant, the Government of Afghanistan had begun awarding
mining rights to multinational corporations, with Australian mining companies publicly
expressing an interest in investing in Afghanistan's resources. DFAT informed
the committee that although there was general interest, it was unaware of
specific Australian companies interested in mining in Afghanistan.
Mr Byrant noted that AusAID supported mining in Afghanistan by providing
training programs and mapping geological resources. In his view, such
activities blur 'the boundaries between making projects that would otherwise
exist more sustainable and making Afghanistan's mining industry more profitable
for private interests and private investors'.
He argued that there was 'little evidence that democratic support will be a
precondition for mining projects supported by AusAID in Afghanistan'. He
Instead, AusAID's plan risks becoming another form of boomerang
aid to the Australian mining industry, justified in terms of our economic
national interest while locking the people of Afghanistan into a problematic
On behalf of AID/WATCH, he urged the Australian Government to:
- cease using aid to promote minerals extraction in Afghanistan in
favour of participatory forms of community development;
- enact legislation to ensure that Australian mining companies
operating overseas are held to the same social and environmental standards as
they are in Australia; and
- participate in international efforts to promote
self-determination at the local and national level in mining developments.
Mr Loewenstein pointed out that there was virtually no post-conflict or
current conflict country endowed with massive natural resources that, as a
means of supporting its people, had managed mining well. To his mind, this was
a major concern.
In response to concerns about mining development in Afghanistan, AusAID
agreed that resource dependence in its narrow economic definition (measured by
the share of primary exports in GDP) had the potential to foster political and
economic instability, conflict and corruption in resource-rich developing
countries. It argued, however, this situation could be avoided with appropriate
management. It informed the committee that:
The empirical evidence conveys a mixed picture. Some
countries have been able to avoid the risks associated with resource extraction
and benefit from the opportunities to improve the living standards of their
According to AusAID, notable examples include Timor Leste and Chile.
AusAID noted the importance of unlocking Afghanistan's considerable
resource holdings in a way that was transparently and inclusively managed. According
to Mr Lehmann, the Afghan Government was seeking to learn about mining, an area
where Australia could make a difference. Indeed, the Afghan Government and its relevant
ministries look for guidance from countries, such as Australia, which have
particular expertise in tackling issues across the spectrum of mining activity.
He told the committee:
While we do not pretend to be the biggest thing in mining for
Afghanistan, particularly from the point of view of the aid program, there are
certain niche areas where we really do think we can provide targeted assistance
and support to the ministry, to other parts of government and to the ministry
of finance to ensure that those transparency mechanisms are up and running when
these projects come on stream.
AusAID is interested in providing assistance to the governance of Afghanistan's
extractive industries from the perspective of building the capacity of its oversight
institutions to improve mineral sector governance, including transparency and
Its focus is on how Australia can improve Afghanistan's compliance with the
Extractive Industries Transparency Initiative (EITI)—a significant
international initiative to improve transparency in relation to revenues from
the minerals sector. The initiative sets out a series of best international
practice arrangements for the management of mineral revenues.
Afghanistan is currently a candidate country for full membership, and is
seeking to become a fully-compliant country.
The deadline for the Afghan government to implement the EITI standards and
undergo the relevant validation in order to become an 'EITI Compliant' country
was 9 August 2012.
AusAID informed the committee that the Afghan Government submitted a request
for an extension to the validation deadline which was granted and the EITI
Board was now reviewing Afghanistan's final validation report.
It should be noted that, although AusAID promotes EITI abroad through
its aid program, Australia is yet to sign up to implement EITI domestically. It
has, however, launched an EITI pilot and agreed to host the biennial EITI
Global Conference in May 2013.
When Australia announced its decision to pilot the EITI, the EITI Chair,
Claire Short, stated that Australians were 'now taking further steps to
practice what they preach'.
The committee recognises the need for transparency in the exploitation of
Afghanistan's extractive industries and of the importance of Australia
strengthening its advocacy for Afghanistan to become EITI compliant.
The type of assistance that AusAID is considering to help Afghanistan
improve its governance of the minerals sector involves education and training. Under
the Mining for Development Initiative, AusAID intends, from 2012, to provide 36
Australian Development Scholarships annually to public servants from key Afghan
government ministries including six to the Ministry of Mines. The aim is to
assist the Afghan Government to improve its capabilities and to achieve
Other programs in support of Afghanistan’s mining sector are likely to focus
- providing support for the reform of legislation and regulation
relevant to the modernisation of the mining sector; 
- supporting the government, particularly the Ministry of Mines, to
establish their own capacity to handle the investment pipeline from concept and
exploration to extraction and then the flow of revenues to ensure there is
maximum benefit from extractive industries to the Government of Afghanistan and
therefore to its budget and ability to deliver services.
Since the Tokyo conference on Afghanistan, there has been quite a
considerable amount of activity connected to the passing of a minerals law through
the Afghan parliament. According to AusAID, the ministry and Afghan Government,
with the support and urging of donors, were taking legislation and regulation
with a focus on transparency and accountability very seriously. Mr Lehmann
indicated that although the regulatory framework was a work in progress, one
advantage of having a nascent industry in Afghanistan was the opportunity to
put in place structural legislative and regulatory mechanisms that would 'vouchsafe
the revenue stream for the future'.
According to the October 2012 Afghanistan Economic Update, however, uncertainty
about a new mineral law, was clouding progress in the mining sector. It stated:
While investor interest in the sector is encouraging, gaps in
the legal and regulatory framework of the sector do not provide sufficient
confidence to investors to start operations or make firm commitments.
The update noted that a new law was in preparation but had been heavily
According to AusAID, as of April 2013, the new draft Minerals Law was still
being debated within the Afghan Government.
In light of the serious concerns expressed by the UN Secretary-General
and the independent review of the ARTF as well as the sorry history of the resource
curse in conflict-affected countries, the committee believes that much greater
effort is required to help Afghanistan ensure that it is not afflicted by this curse.
The committee recommends that AusAID continue to encourage and offer advice
and technical assistance to help Afghanistan become and remain a
fully-compliant member of the Extractive Industries Transparency Initiative.
The committee recommends that AusAID continue to encourage and offer
advice and technical assistance to the relevant line ministry in Afghanistan to
develop a robust legal and regulatory regime for extractive industries in
The committee recommends that the Australian Government should, through
the Afghan Government, make itself available to support local community
involvement in all aspects of a proposed mining activity in their locality,
including matters such as planning and oversight, particularly when it comes to
the environment, local employment and investment of some of the mining revenue
in local industries.
The committee recommends that AusAID monitor its Australia Development
Scholarship Program to ensure that its administration is sound; that the
selection process is open and transparent; that there is a close correlation
between the courses undertaken and the development needs of Afghanistan; and
that the students return to Afghanistan to take up positions in that country.
Navigation: Previous Page | Contents | Next Page