Making Afghanistan Self-Reliant

In early October, representatives from about 70 countries and 30 international organizations and agencies will gather in Brussels to attend the Partnership for Prosperity and Peace conference on Afghanistan. The meeting comes as the country is facing security and political challenges, declining economic growth, and a brain drain. It will serve as a platform to review the government’s progress since the Tokyo conference in July 2012 and the London conference in December 2014 and to set out a vision for continuing reform and growth. It will also be an opportunity for the donor community to renew its commitment to sustained political and financial support for lasting peace, state building, and development in Afghanistan.

Driving this discussion should be Afghanistan’s efforts to finalize the new Afghanistan. National Peace and Development Framework, the government’s five-year strategy for achieving self-reliance. The importance of this plan cannot be overstated. The previous Afghanistan National Development Strategy assumed untenable levels of foreign assistance, failed to acknowledge the impact of corruption, and included uninformed expectations about Kabul’s ability to capitalize on Afghanistan’s resources. As a result, Afghanistan let some opportunities slip away and lost credibility with donors.

If the conclusions of several recent government forums are to be believed, the new framework presents a more realistic picture of Afghanistan’s future. Most notable is the government’s acknowledgment of the devastating impact of corruption and its serious commitment to tackle it. These steps will help the government gain international confidence and support and will also promote investments in key sectors, such as infrastructure, energy, and natural resources. Further, even as Kabul has recognized the country’s significant natural resources, it has taken note of the logistical challenges it must address before developing a mining industry that can serve as a backbone for economic development.

Afghanistan is rich in mineral deposits. The total value of the country’s mineral deposits has been estimated to be between $1 trillion and $3 trillion, including $420 billion worth of iron ore, $274 billion worth of copper, concentrations of gold with an estimated value of $25 billion, $81 billion in niobium deposits, and $50 billion worth of cobalt. And demand is high. According to a recent World Bank study, if the country appropriately develops its mining industry, it will likely contribute two or three percent annually to GDP by 2021. The potential revenues during the first stage from the Mes Aynak copper and Hajigak iron ore mines alone have been estimated at around $322 million annually. According to the same report, the revenues would increase to $923 million each year during the second stage of the project. Exploitation of a natural gas field in Sheberghan, other verified gas fields, and verified deposits of rare-earth minerals would offer additional revenue sources.

Mining-sector revenue will be a valuable contribution to Afghanistan’s self-sustainability as international aid declines. For one, the income could be used for projects that aid poor households and support general social and economic development. More important, the development of the sector will help create jobs for both skilled and nonskilled workers in the country. That, in turn, could help facilitate industrialization and modernization as it spurs the development of downstream industries. 

Afghanistan has significant numbers of unskilled workers who are in desperate need of employment, but it still suffers a critical shortage of highly qualified mining technicians and professional staff. Mining companies and the Ministry of Mines and Petroleum face difficulties finding qualified labor from the domestic labor market, and demand for such workers will only grow. The success of the mining sector will thus depend on training Afghans to do skilled work for the mining industry, or else risk social tension caused by ever-greater numbers of temporary foreign workers.

Meanwhile, strengthening government institutions will be a vital step if Afghanistan is to overcome the so-called resource curse. Researchers have shown that resource-rich countries with strong institutions (such as Botswana) have experienced rapid growth and development, whereas those with weak institutions have been trapped in cycles of corruption, decay, and the capture of resource rents by political elites. That is why Afghanistan will have to double down on promoting good governance, improving the rule of law, implementing efficient fiscal policies, increasing transparency, and building an effective judiciary system that protects property rights, enforces contracts, and serves minorities and the dispossessed. 

Meanwhile, measures to build up institutions should be met with efforts to create social capacity and political consensus. For example, Afghanistan needs new national policies to improve its educational system (including not just standard schooling but also vocational and technical programs across the country) so that it can respond to the needs of Afghanistan and not just the interests of foreign investors. This was one of the key factors in the development of successful natural resource sectors in Australia, Chile, Mexico, Sweden, and the United States. It is also important for the government to come up with a comprehensive program for developing the capacity of the Ministry of Mines and Petroleum.

Finally, Afghanistan will not succeed as a mining hub without sound infrastructure. The development of major mineral industries in Afghanistan is already spurring the creation of much-needed infrastructure, such as road, rail, power, and water systems. But building is only the first step in the development of a functional transport system. Roads in Afghanistan were laid by the hundreds of kilometers following the downfall of the Taliban, but many of them are now unusable. A functioning roadway system must be consistently and professionally maintained, a cost that should be budgeted into any project. 

In addition, Afghanistan will have to pass usage rules and regulations. Such legislation regulates the public use of the infrastructure proposed for development, including transportation, energy, and other systems. All developed countries and most developing countries have limits on the configuration and weight of the vehicles allowed on their highway systems in order to prevent the rapid decay and destruction of those systems. Afghanistan will need similar rules and an enforcement system to identify those vehicles that should not be on the roads and to remove them and prosecute their operators.

The international donor community can play an important role in helping the Afghan government develop good strategies for the effective governance of both the country’s infrastructure and its natural resource sectors and in providing technical and financial support for capacity building and the implementation of these strategies. The international community can also help ensure sound environmental management to keep the mining sector viable and safe for the long term. Development and fiscal independence are critical, but Afghanistan must be reminded to look to not just immediate needs but also the needs of future generations.

The development of strong infrastructure and Afghanistan’s rich mineral resource sector will create economic growth, jobs, and stability. The upcoming Brussels conference will give the Afghan government an opportunity to discuss its plans and progress with the donor community and reconfirm a long-term partnership as the country works toward achieving self-reliance.