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Three Afghan success stories

Today, finally a break from the doom and gloom on Afghanistan! Clare Lockhart, the CEO of the Institute for State Effectiveness, spoke at DRI’s annual conference last month and gave three examples of what has gone right in the international effort to rebuild Afghanistan.

These reforms and projects have lasted despite worsening security conditions and will—Lockhart says—form part of the foundation for the next generation of reforms in Kabul.

1) Hawala dealers implement Afghan currency exchange. In 2001, there were three currencies in circulation in Afghanistan, all produced illegally by warlords, with frequently fluctuating values that only the hawala dealers—the country’s informal currency exchangers—could decipher. To move to one unified currency, international donors recommended that Afghanistan switch to the dollar for two years in an expensive and lengthy process that would require the assistance of 15,000 UN bureaucrats. Instead, the Afghans decided to tap into the extensive networks of the local hawala dealers. Once enlisted, they were able to reach every village and change the currency in just 4 months. Clare commented:

To me that’s a lesson of instead of us looking at what’s not there and what do we need to bring in from the outside, how do we turn it around and learn how to …look at what is there. What are the assets that exist on the ground, what are the networks, what are the traditional and existing ways that people manage their daily lives? And how can those be harnessed to the urgent and important tasks of the day?

2) Aid underwrites risk so Afghan telecom can take off. Telecoms were reluctant to enter the risky, post-US invasion Afghan market. Donors had suggested that the Afghan government would actually have to pay the telecoms to provide service. Instead, the government and the international community came up with an innovative way to cover the risk and spur investment. OPIC– a US agency that promotes development in emerging markets- stepped in to write a risk guarantee for $20 million for the firms willing to compete for government licenses. The $20 million was never used, and after $1 billion investment in the sector, there are now more than 11 million phones in Afghanistan.

3) Village-level grant program taps village know-how. Afghanistan’s National Solidarity Program has provided grants to thousands of Afghan villages. The village councils choose how to spend the money, but must post their accounts publicly. Funds for the program are pooled into a locked trust fund that can only be replenished by donors once they’ve seen project audit reports. The program is growing as villages combine grants to take on larger projects, like an irrigation system or a regional maternal hospital, and although the NSP has developed some opposition from politicians who would prefer to be able to skim money off the top of these grants, it has also attracted wide support.

To hear Clare Lockhart tell these stories, listen to this 8-minute clip. If you have the time, it’s also well worth listening to her full presentation with slide show on the DRI website, here

We wouldn’t be Aid Watch if we didn’t note that Lockhart is also an outspoken critic of failures in the aid system. Her talk contains many tragic examples of aid failures in Afghanistan, which we’ll post another day on the blog.

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  1. Watch out Laura, success puts Bill Easterly out of a job. Don’t think he won’t give you the Jeffrey Sachs treatment if he has to.

    Posted March 31, 2010 at 8:54 am | Permalink
  2. Scott Andrews wrote:

    This a great post, nice to hear some positive things coming out of Afghanistan. I like to hear that Afghan telecom is taking off. Cell phones are instrumental to development.


    Posted March 31, 2010 at 3:00 pm | Permalink
  3. David wrote:

    And….why should we trust Clare? After all, this website is about the dirt behind the gloss…have any of us on this site seen these projects up close (i.e. worked within the process for several months? and without a vested interest in their public appearance?).

    Posted March 31, 2010 at 4:21 pm | Permalink
  4. William Easterly wrote:

    James Edward,

    very funny! Laura is at no risk whatsoever of anything except my respect.


    Posted March 31, 2010 at 6:44 pm | Permalink
  5. Adam Baker wrote:

    Thanks for posting a positive review of aid projects, or at least development projects.

    Posted April 2, 2010 at 10:41 am | Permalink
  6. Chris wrote:

    Not to take away from the hugely well-deserved praise that NSP is, but a few things are worth mentioning. First is that despite all the good, security isn’t improving. Another is that bottom-up approaches also leave somethings wanting. For instance, water projects tend to form a big core of what communities want, and for good reason in arid and semi-arid Afghanistan. But sacrificing a whole river systems viewpoint to community-based decisions also has its costs from one village to another.

    But most evidence and evaluation suggests NSP on-the-ground really does a lot of good.

    Posted April 10, 2010 at 1:15 pm | Permalink

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  5. […] about some post-Easter, man bites dog development optimism? Three Afghan success stories from Clare Lockhart, c/o Bill Easterly [see my review of Clare’s book, Fixing Fragile States]. And […]

  6. […] side knows what is better. Look at these list of local solutions to development problems given by Laura Freschi. In each case a national government and international community (led by well-meaning people in the […]

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    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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