prioritization and implementation plan - Cooperazione Italiana allo ...

UNLEASHING INVESTMENTS IN ECONOMIC AND INFRASTRUCTURE DEVELOPMENT
Economic and Infrastructure Development (EID)
Cluster Members: Ministry of Mines, Ministry of
Transportation and Civil Aviation, Ministry of
Public Works, Ministry of Energy and Water,
Ministry of Commerce and Industry, Ministry of
Communications and Information Technology,
Ministry of Urban Development, and Kabul
Municipality.
Situation Analysis
For the first time in Afghanistan’s long and
eventful history, Afghanistan has the opportunity
to transform its vast mineral and hydrocarbon
resources into great wealth for all its current and
future generations. Never before has a set of
opportunities for the environmentally friendly
exploitation of Afghanistan’s vast mineral
resources for the benefit of all Afghans presented
itself to the country’s leadership. While this unique
set of opportunities is now in place, there are key
conditions that need to be established to ensure that
Afghanistan’s growth prospects are realized and
the country avoids all the worst effects of the
resource curse. The EID Cluster has been designed
to serve as the engine of formal growth and
revenue mobilization. It not only requires
substantial long-term investment, but is also
contingent on progress being made around a set of
advanced policy and institutional reforms deemed
essential to attaining the EID Cluster and overall
ANDS objectives.
Needed Response
The overall program is designed with a long-term
vision, while delivering a number of immediate
and short-term wins, as part of an overall improved
economic governance framework. Moreover, given
the focus on “narrow” growth, with generated
revenues providing resources for broad-based
inclusive growth delivered through the ARD and
HRD Clusters, and the Program for Advanced
Reform and Restructuring under the Governance
Cluster, the EID program is designed as an
integrated national economic development
program.
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Results emerging from the EID Cluster that
directly impact on growth prospects, revenue
potential and employment opportunities are
considerable. Possible impacts include:
• Growth effects. Preliminary estimates of
successful implementation of EID and
Governance Cluster programs indicated that, by
2025, contribution to GDP from related
components of the services sector (c20%) and
industry (c25%) could represent an increase
from 18% to almost 50% of GDP, with GDP
potentially increasing to US$80 billion from the
2009 level of US$13 billion. A further decade
could possibly see GDP reach a quarter trillion
US dollars. 2
• Revenue Effects include increasing net revenue
earning potential to US$1b by 2017 and US$3b
by 2025. Second round tax revenues would also
increase exponentially up to 2025 followed by
diminishing increases. 1
• Employment effects are derived from a variety
of sources, including: (i) 10 million labor days
derived from construction related activity in the
EID Cluster’s flagship program: the National-
Regional Resource Corridor Initiative (NRRCI);
(ii) 1 million sustainable jobs from supporting
the Small and Medium-sized Enterprises (SME)
from increased export opportunities and import
substitution; with iii) further substantial
increases with successful implementation of
SME support and good urban planning to build
communities including around resource
corridors hubs. Second round employment
opportunities through growth impacts are
enormous.
The overall objective of the EID Cluster is to
"support Afghanistan’s transition to financial
independence and developing a business climate
that enables private investment." The six
supporting National Priority Program objectives
follow: (i) Connecting Afghanistan to the region,
and the rest of the world; (ii) Progressing
2 More robust estimation of revenue impacts will require development
of the LEFMA and a supporting macroeconomic model.