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Last Updated: Sunday, 26 February 2006, 20:31 GMT
The battle to rebuild Afghanistan
By Toby Poston
BBC News business reporter

A construction site in Kabul
Building works are springing up all over Kabul

As more than 5,000 British troops are being deployed in Afghanistan, it is becoming clear that the dire security situation is just one of many obstacles that hold back reconstruction efforts.

True, security is a major worry for aid agencies, who saw 30 of their workers die last year.

But in some cases, the agencies' wasteful bureaucracies are also holding back efforts to rebuild this war ravaged country, according to Ashraf Ghani, who has written a report on international development and post-war reconstruction, sponsored by the Overseas Development Institute (ODI).

As chancellor of Kabul University and Afghan finance minister between 2002-2004, Mr Ghani's word carries some weight.

When he says millions of dollars worth of aid money is being wasted, both donor nations and aid agencies take note.

Complete waste of money

Mr Ghani believes the Afghan government could build a school for about $40,000 (23,000), a fraction of the $250,000 cost racked up when one international aid agency took on the task of delivering 500 schools.

Within six months of starting my job as finance minister, my best people had been stolen by international aid organisations who could offer them forty to a hundred times the salary we could
Ashraf Ghani
Chancellor of Kabul University and Afghan finance minister, 2002-2004

The difference would arise because the Afghan government would use locally hired contractors, while the aid agency spent 80% of its funds on hiring external technical assistants, he explains.

Another case of money being wasted was the reconstruction of the road between Kandahar and the capital Kabul, which the government estimated would cost $35m.

It was eventually built by USAID and ended up costing more than $190m, Mr Ghani says.

Moreover, these are not isolated cases, Mr Ghani insists, as he estimates that more than 90% of the more than $1bn that was spent on about 400 UN projects in Afghanistan in 2002 was a waste of money.

More harm than good

But the billions of dollars of aid pumped into Afghanistan over the past four years have not merely been wasted; the cash injections might even be doing more harm than good, Mr Ghani suggests.

In particular, it has been damaging to the government and its ability to build law and order and deliver public services, he says.

With more than 2,400 national and international aid agencies and other non-governmental organisations (NGOs) registered in the country, the government is finding it hard to hold on to its staff, Mr Ghani says.

The country's 280,000 civil servants earn an average wage of $50 per month, while approximately 50,000 Afghans work for aid organisations where support staff earn up to $1000 a month.

"Within six months of starting my job as finance minister, my best people had been stolen by international aid organisations who could offer them forty to a hundred times the salary we could," he says.

Lucrative work

ODI workers on the ground say Mr Ghani has a point.

They say Afghanistan is brimming with expensive foreign contractors and consultants who are often duplicating or replacing work that could be carried out by the government.

"There is a tendency for UN agencies and non-government organisations to rush in with thousands of small projects, each requiring international staff and drivers," says Clare Lockhart, a research fellow at the ODI and a former advisor to the Afghan finance ministry.

These experts cost far more in overheads like living expenses and repatriation costs than in actual fees for their services, but with further lucrative work in the pipeline, it is not in their interests to pass on their skills to their Afghan counterparts, Ms Lockhart explains.

Nevertheless, she also points out that some projects, for example like the National Solidarity Programme, are worth copying.

The programme has seen hundreds of millions of dollars delivered straight to local communities, thus enabling 13,000 villages to plan and manage their own reconstruction and development projects, she says.

Corruption

Critical voices, such as Mr Ghani's, have helped ensure that in future Afghanistan's own government and people will gain greater control over how aid money is spent.

Lancaster House summit
Donors pledged $10.5bn at the "Afghan Compact" talks

Early this month, the launch of the Afghan Compact initiative saw more than $10.5bn in aid pledged to Afghanistan over the next five years, as part of an agreement where both the Afghan government and its outside backers must benchmarks progress in areas such as security, economic development and better government.

In the UK, the Department for International Development is paying 70% of this year's 100m aid budget direct to the Afghan government, making it the largest donor to it's core budget.

The funds are not earmarked, and there are firm commitments to deliver the funds for at least three years hence. This gives the Afghan government the chance to plan ahead.

Peace building Commission

The Development department has also set up a Post-Conflict Reconstruction Unit, similar to the US State Department's Co-ordinator for Reconstruction and Stabilisation, while the United Nations has launched its Peacebuilding Commission in an attempt to revitalise its approach to state-building and reconstruction.

The United Nations HQ in New York
The UN has been criticised for the way it delivers aid

It is hoped that new organisations like these can help pull together some of the expertise and skills developed through years of peacebuilding and reconstruction in regions like the Balkans, East Timor, Sierra Leone, Afghanistan and Iraq.

These new approaches need to work, not just for the sake of the Afghan people. The advent of global terrorism means people in the West cannot be secure when poverty and chaos elsewhere means large regions remain unstable.



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