Tokyo declaration to push donors, Afghanistan to make better use of aid

KABUL Mon Jul 2, 2012 4:30am EDT

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KABUL (Reuters) - Donor countries will ask Afghanistan to build up safeguards against corruption even as they pledge to channel more aid money through the government's coffers, in a document that will be the centerpiece of a major aid conference next week.

The meeting in Tokyo on July 8 aims to secure aid commitments for Afghanistan in the years up to 2014, when most NATO troops will depart, and to chart a course for assistance beyond then as donors seek to prevent a country still mired in insurgent war from slipping back into greater poverty and chaos.

After over 10 years and billions of dollars in outside aid, Afghanistan remains one of the world's 10 poorest countries, while widespread corruption continues to undermine outsiders' willingness to send much-needed investment.

While major strides have been made in schooling children and improving health for mothers and children, three-quarters of Afghans are illiterate and the average person earns only about $530 a year, according to the World Bank.

Afghanistan's central bank estimates that $6-7 billion a year in aid will be needed over the next decade to foster economic growth in a country with few thriving industries.

Despite intense fiscal pressures of their own, donor nations say they are determined to continue to help Afghanistan, in part to ensure it does not move back into conditions that helped give the fundamentalist Taliban a foothold in the 1990s.

Also shaping the future of aid to Afghanistan may be waning patience among donors anxious to see the government of President Hamid Karzai take decisive steps to combat waste and fraud.

"There's no question that it's constantly on the table," a U.S. embassy official said on condition of anonymity, referring to corruption and the need for aid accountability.

"It also shapes the thinking of government of Afghanistan in its dealings with donors, because donors do have such stringent fiduciary guidelines that they raise when they sign agreements."

The official said there was a 'positive donor climate' ahead of the Tokyo conference, where both Afghanistan and donor countries will sign off on a 'mutual accountability framework' spelling out obligations for both the Afghan government and for countries providing assistance.

AFGHAN RESPONSIBILITY

Addressing a long-standing Afghan complaint about scatter-shot, poorly conceived assistance, donor countries will be asked to channel more aid money through the Afghanistan budget rather than through contractors or aid groups, the official sad.

While the United States will provide 42 percent of its aid through the Afghan budget in fiscal 2012, aid groups estimate that the overall level of on-budget foreign aid is much lower, around 20 percent.

In the conference commitment, donor nations will also pledge to better tailor aid to the government's priorities.

Afghan 'national priority programs' include health, education, agriculture - and the mining sector, which Western officials see as a possible engine for growth in the future.

Afghanistan, meanwhile, will pledge to develop its own capacity to keep track of aid and prevent funding from going to corrupt government officials or inefficient contractors -- rather than outsourcing auditing duties to outsiders.

"This next phase, this next decade of development for Afghanistan is going to be especially important," the U.S. official said, in part because of "donor concerns that a lot of life and treasure have been given here."

In a special address focused on corruption last month, Karzai tried to fend off donor concerns about corruption, calling on parliament to curtail nepotism and misuse of state funds.

But his government has yet to prosecute a single high-level corruption case, despite Afghanistan's ranking by Transparency International as one of the world's most graft-affected nations.

(Additional reporting by Hamid Shalizi and Amie Ferris-Rotman in Kabul; Editing by Michael Georgy and Jeremy Laurence)

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