Twenty-two months after the fall of the Taliban, Afghanistan’s Transitional Authority has the unenviable task of putting this country back together again.

To call the process reconstruction is almost misleading; construction would be more accurate. Twenty-three years of civil unrest, war and day-to-day life under the Taliban have not provided much to build on. Every area of life needs attention—poverty reduction, public administration, security, social services, healthcare, education, unemployment, telecommunications, road, displaced refugees, irrigation—are all top priorities.

This is the first year the Afghanistan Government has had a comprehensive development plan and the budget to carry it out. The $1.7 billion budgeted for national reconstruction and development has not all been resourced yet, but a significant amount has and a number of UN-assisted infrastructure projects are under way.

One of the biggest challenges facing the Transitional Authority is how to spread the relative peace and development being established in Kabul throughout the rest of the country.

The largest is the reconstruction of Afghanistan’s main highway, 1,200 kilometers of road intended to link its three major cities, Kabul, Kandahar and Herat. Work is said to be progressing at the heady pace of around two kilometers per day; a second stage will see villages and district centers connected to the highway, and to each other. "Within two years, almost all major parts of the country will be connected through either new roads or repaired ones," says Ercan Murat, United Nations Development Program (UNDP) country director for Afghanistan.

As the majority of those living in extreme poverty are in rural areas, a national solidarity program is empowering local communities to act upon their own priorities for reconstruction and development, providing them with the financial resources to do so through grants. Local development councils are being established in the provinces through elections and will receive block grants of $20,000 per village. The program has begun in 29 provinces so far, and will roll out to the remaining three in the next few months. In the first year more than one-third of the population of Afghanistan will benefit from this program.

Afghanistan has never in its history received the amount of international assistance that it has had during the past 12 to 18 months. "In the rate of disbursement, and the delivery of donors on their pledges and commitments, we are quite pleased," says Mohammad Haneef Atmar, Minister of Rural Rehabilitation and Development. "But the reason we are not so satisfied with the overall contributions to Afghanistan’s reconstruction is that the initial estimates for the amount of resources we will need were quite low."

The Tokyo Conference of 2002 saw the international community pledge $5.25 billion during the next five years, despite World Bank estimates of $10 billion needed for reconstruction. The country’s President, Hamid Karzai and other ministers estimate the amount required to be more like $15-20 billion.

Additional pledges have been made individually, including a new $1 billion aid package being prepared by the American Government, but it is difficult to see how much is being double counted, says Gareth Price, an economist with the Economist Intelligence Unit (EIU).

There are different figures around and a lot has never been delivered. The money is not coming through in the extent that it is needed. However, the amount pledged for 2000 has been fully realized, and the shortfall on the current budget and development budgets seem to be coming in; although it is too soon to tell if the $2.3 billion required for this financial year will eventuate.

Another concern is that much of the initial aid money has been programmed outside the government’s frame work, through parallel structures. In short, the cheques are being handed to the UN and other NGOs, not the Afghan Government. This is quite understandable while there was no legitimate government, but the situation has now changed.

Afghanistan now has a legitimate government that is increasingly reconstructing these structures and policies and strengthening its capacities under a robust reform process. Now it is the time for the international community to critically consider the way it is allocating and programming its resources. The Afghani Government has the same goals as the UN and the reset of the international community, namely reducing terrorism, reconstructing the country, being accountable and trustworthy. The reconstruction of the state administration is essential. And that reconstruction cannot take place until the international community trusts these institutions with their contribution.

Alongside the development of roads and hospitals, there is a real need to lay the foundations for some semblance of an economy. Afghanistan’s GDP is predicated by the EIU to show rapid growth in 2003/04.

Key sectors the future Afghani economy will depend upon include agriculture, animal husbandry, and carpet. But obviously these are not enough for the sustainable growth of the country, which has enormous untapped natural resources, which need to be explored and exploited, such as copper, gas, oil and precious and semi-precious stones.

Afghanistan was always a trading center, taking its importance from its position bridging Central and Southern Asia. But the problem is that in years of crisis it has been bypassed and it will take a long time before the position reappears.

This is why projects like the potential pipeline proposed to connect gasfields in Turkmenistan with Pakistan, via Afghanistan is getting so much attention; they are trying to find something different to be a revenue.

Afghanistan’s most important resource is ultimately its human resources, which is currently still underutilized and untrained.

There are no reliable statistics in terms of unemployment; as the country has really never had the chance to collect data. But statistics are irrelevant when poverty is clearly visible. The government has launched a national emergency employment program reaching all corners of the country. The aim of the program is two-fold: it should create 15 million man-days of paid employment for a rural population of between one and two million through the construction of more than 12,000 kilometers of rural access roads. Many of these roads will, for the first time in history, connect some of these districts and villages to the outside world and at the same time put millions of dollars in the pockets of very vulnerable people.

"There are jobs for educated people, and education is counted as having computer skills and English" says 20-year-old Mahmoud Zahir, who is an example of one of Afghanistan’s greatest assets—its educated returnee population. While the majority of the one and a half million refugees that have returned to the country are causing further logistical problems in terms of poverty and displacement, a section of the younger returnee population may be its brightest hope.

The regimes and conflict of the past 23 years drove a substantial amount of the population away, but it also drove them into countries where they could receive strong education and business experience, something that was impossible under the Taliban. Now, many of those returning are bringing with them important skills and capital, especially up-to-date technical knowledge.

Zahir’s computer training, gained during his years in Pakistan, mean that he is able to get a highly paid job at $415 a month working as an IT program assistant for the UNDP, in stark contrast to his former university professor father, who earns $30 a month working for the Ministry of Education. The UNDP’s flagship ICT project is staffed by this new generation of 20-something returnees bright enough to be trained up in a relatively short time by visiting experts, before passing their new skills on to the larger population.

The ICT project is aimed at training Afghanistan’s civil servants to be computer literate so that they, in turn, can train their colleagues. With a letter taking 15 days to reach Pakistan from Kabul, email alone could revolutionize government processes. There are 16 training centers established across Afghanistan so far—each housing 20 computers and catering for 120 students a day—and there are plans to build nine more.

By the UNDP’s own definitions, the project has been a success. "With all programs, we are judged by how soon we are able to leave," says Murat. "We are not supposed to be doing this for years and years, if we have not been able to get out of any project within a reasonable timeframe that means we are failing." UNDP experts work with two or three local counterparts in order to transfer their knowledge and extrapolate themselves as soon as possible.

The ICT project’s success is being echoed in a UNDP telekiosk project aimed at the public. Under the project, post offices are fitted with around half a dozen computers and a trained supervisor, giving Afghans the chance to access the Internet and produce basic documents.

Technology is certainly one sector that seems to be showing nascent growth; the newest, brightest signs on Kabul’s streets advertise computer hardware, mobile phones and Internet cafes. The communications infrastructure is very poor, with the country still reliant on expensive VSAT technology, putting the $3 an hour internet cafes out of the reach of the most Afghans. There are virtually no landlines to speak of, and although there are the beginnings of satellite coverage for mobile phones in Kabul, rural areas remain virtually incommunicado.

Still, ICT infrastructure is progressing relatively fast by Afghan standards, largely because it is one sector proving attractive to foreign investors. This will not only speed development, but generate badly needed government revenue in terms of licensing and taxation. The government cannot do everything itself and it will merely provide ICT policy, roadmaps and facilitate where necessary, but the work is best done by a competitive private sector.

Private sector investment in telecommunications was 50% higher than that of the public sector in 2002. It is estimated to reach $94 million in 2003 and up to $300 million in the following years.

Private investment is increasingly being seen as the government’s best way to speed economic development across all sectors. As such, the transitional government is going all out to attract it. The new foreign investment law passed last October offers freezone-like terms: 100% foreign ownership, tax waivers, exemption from export tariffs and duties, and the right to transfer profits and capital out of the country. The only requirements to invest will be having a valid bank account and no criminal background.

The law which provides a legal framework for investors as well as ensuring favorable conditions is showing results. More than 1,000 companies have approached the interim government to set up operations, and that several million dollar projects have been approved, involving industries such as cement, agriculture and food companies.

The private sector is also interested in transport, light industry, construction and services. It is expected that by the end of the year many of these private investors will be able to start their projects.

Aside from the obvious lack of infrastructure—financial, judicial, logistical—Afghanistan’s success in attracting private investment rests on one major, so far uncontrollable factor: security. One of the biggest challenges facing the Transitional Authority is how to spread the relative peace and development being established in Kabul throughout the rest of the country. Unless security is fully established in all corners of the country there can be no real talk about real economic growth and development. There must be an environment for investment as real economic growth can only happen with investment from the private sector.

The biggest reconstruction challenge is not rebuilding the roads or communications infrastructure, but the minds of the people. After 24 years of war they are completely shocked and they do not have full trust in the government. They had promises from the last government that were never delivered.

It could be worse, says the EIU’s Price in an attempt at optimism. "At least it is not as bad as Iraq. Even if GDP growth of 30% translates into merely 30% more than the next-to-nothing you made last year, it is still an improvement."