A Guide to Government in Afghanistan '^ Wsi,s, S1 t~Ali - ~- Anne Evans, Nick Manning, Yasin Osmani, Anne Tully and Andrew Wilder U~~~~ THE WORLD BANK Afghanistan Research and Evaluation Unit A Guide to Government in Afghanistan Anne Evans, Nick Manning, Yasin Osmani, Anne Tully and Andrew Wilder * * * Primary funding for this study was provided by the European Commission, with additional support from the Governments of Switzerland and Sweden, * * the United Nations Assistance Mission in * * * Afghanistan (UNAMA), and the World Bank. A Guide to Government in Afghanistan Copyright c 2004 by The Intemational Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433, USA Telephone 202-473-1000 Intemet www.worldbank.org E-mail feedback@worldbank.org and The Afghanistan Research and Evaluation Unit Charahi Ansari Shahr-e-Naw, Kabul Afghanistan Intemet www.areu.org.af E-mail areu@areu.org.af All rights reserved. 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Cover photographs (left to right): Photo by: Keiko Miwa Photo by: Arpan Munier c Office of Communications and Public Information, United Nations Assistance Mission in Afghanistan Photo by: Jonathan Lee c Zebia Media Photo by: David Singh © Office of Communications and Public Information, United Nations Assistance Mission in Afghanistan ISBN 0-8213-5835-9 Library of Congress Cataloging-in-Publication Data has been requested TABLE OF CONTENTS GLOSSARY AND DEFINITIONS ............................... ix DARI TERMS ............................... ix HISTORICAL TERMS ............................... x TECHNICAL TERMS ................................x OTHER TERMS ............................... xi CALENDAR ............................... xiii CURRENCY ............................... xiv ABBREVIATIONS AND ACRONYMS ............................... xv PREFACE ............................... xvii THE PURPOSE OF THIS GUIDE ............................... xvii DATA SOURCES ............................... xviii ACKNOWLEDGEMENTS ............................... xix 1. THE HISTORICAL AND POLITICAL CONTEXT . 1 THE EVOLUTION OF THE AFGHAN STATE .1 CURRENT ADMINISTRATIVE AND FISCAL STRUCTURES .7 THE POLITICAL CONTEXT .12 CONCLUSIONS .21 2. CENTRAL ADMINISTRATION .22 LEGAL BASIS AND ORGANIZATIONAL RESPONSIBILITIES . 22 THE ORDINARY BUDGET .28 THE DEVELOPMENT BUDGET .33 STAFFING .38 ACHIEVEMENTS AND CHALLENGES IN THE CENTRAL ADMINISTRATION 61 3. CENTRAL/LOCAL FISCAL RELATIONSHIPS .70 OVERVIEW 70 REVENUE COLLECTION 71 BUDGET PREPARATION 73 BUDGET EXECUTION .81 CASH MANAGEMENT AND TREASURY OPERATIONS .91 ACCOUNTING AND AUDIT .92 CONCLUSIONS .92 4. CENTRAL/LOCAL ADMINISTRATIVE RELATIONSHIPS . 94 LEGAL BASIS AND ORGANIZATIONAL RESPONSIBILITIES . 94 ADMINISTRATIVE DIVISIONS 95 THE POLITICS OF APPOINTMENTS 97 ORGANIZATIONAL STRUCTURES IN THE PROVINCES 100 STAFFING ESTABLISHMENT ...................................................... 100 PAY AND GRADING ...................................................... 103 PAYROLL ARRANGEMENTS ...................................................... 104 CONCLUSIONS ...................................................... 106 5. MUNICIPALITIES ...................................................... 108 STRUCTURE ....................................................... l08 FISCAL AUTONOMY ...................................................... 109 EXPENDITURES ...................................................... 110 STAFFING ...................................................... 112 LIKELY WAY FORWARD ...................................................... 114 6. EDUCATION SERVICE DELIVERY .115 INTRODUCTION .115 SYSTEM OVERVIEW .117 CURRENT CIRCUMSTANCES AT THE PROVINCIAL AND DISTRICT LEVEL .118 IMPLICATIONS FOR PROVINCIAL EDUCATION SERVICE DELIVERY .126 7. HEALTH SERVICE DELIVERY ....................................................... 129 THE NATIONAL CONTEXT ....................................................... 129 THE CASE FOR CONTRACTING OUT HEALTH SERVICE DELIVERY ....................................................... 130 CURRENT CIRCUMSTANCES AT THE PROVINCIAL AND DISTRICT LEVEL ....................................................... 131 IMPLICATIONS FOR PROVINCIAL HEALTH CARE ADMINISTRATION ....................................................... 138 8. CONCLUSIONS ....................................................... 142 HANDLE THE EXISTING ARRANGEMENTS WITH CARE .............. 142 THE NATIONAL AGENDA ....................................................... 144 THE SUBNATIONAL AGENDA ....................................................... 145 ANNEXES ....................................................... 148 ANNEX 1: CENTRAL GOVERNMENT BODIES AND POLITICAL RESPONSIBILITIES ....................................................... 148 ANNEX 2: CENTRAL GOVERNMENT STRUCTURES IN PERSPECTIVE ....................................................... 151 ANNEX 3: THE LEGAL BASIS FOR GOVERNMENT EMPLOYMENT ....................................................... 154 ANNEX 4: KEY BUDGET AND PERSONNEL FORMS ....................... 155 ANNEX 5: EXCERPT FROM THE LEGISLATION ON MUNICIPALITIES ....................................................... 156 NOTES ....................................................... 158 REFERENCES ....................................................... 160 TABLES Table 1: Formal Central-Local Relationships in Afghanistan ......................... 10 Table 2: Key Features Distinguishing Degrees of Decentralization ............... 11 Table 3: Allotment Procedures ............................................... 30 Table 4 Distribution of External Financing Requirements by NDF Pillar (1381-1383, $ million) ............................................... 36 Table 5: Salary Grades/Steps and Base Pay ............................................... 44 Table 6: Monthly Monetary Allowances within Public Sector Pay ................ 46 Table 7: Monthly Pay and Common Allowances by Grade for Karmand Staff (afs.) ............................................... 46 Table 8: Police Pay Scale (from 1382, afs.) ............................................... 48 Table 9: Education Qualification Allowance (monthly, afs.) .......................... 48 Table 10: Proportions of Teachers by Academic Qualifications, 1382 ............. 49 Table 11: Interim Additional Allowance Scale (afs. per month) .49 Table 12: Maximum Base Salary Scales for NGOs Working in the Afghan Health Sector .51 Table 13: Rural Incentives for NGO Health Sector Staff .52 Table 14: Increase in Base Pay .53 Table 15: Current and Planned Pay Levels (afs. per month) .54 Table 16: Pension Eligibility and Benefits .56 Table 17: Grade Composition of the Civilian Government Workforce. 58 Table 18: Education Levels of Women Civil Servants .58 Table 19: Proportions of Karmand and Agir Staff .59 Table 20: Procedures for Recruiting Graduate Staff .60 Table 21: Revenues Collected, 1381 (afs.) .71 Table 22: Summary of Provincial Revenues and Expenditures for 1381 (afs.) 72 Table 23: First Quarter Ordinary Budget Allotment to Provinces, Salary vs. Non-Salary Split, 1382 .74 Table 24: Provincial Ordinary Budget Allotment by Department, First Quarter, 1382 .77 Table 25: Responsibilities and Problems in the Payroll Process .83 Table 26: Traditional Process for Executing Non-Salary Payments .85 Table 27: Total Provincial Expenditure Shares by Category, 1381 .87 Table 28: Provincial Expenditures by Department, 1381 .88 Table 29: Provincial Budget Execution by Expenditure Category, 1381. 89 Table 30: Provincial Budget Execution by Expenditure Category, First Quarter, 1382 .89 Table 31: Provincial Budget Execution by Department, First Quarter, 1382 . . 90 Table 32: Non-Salary Budget Allotment, First Quarter, 1382 .92 Table 33: Employment Authorities for Staff .94 Table 34: District Administrations by Province .95 Table 35: Summary of Tashkeel by Province, 1382 .100 Table 36: Staffing by Department, 1382 .101 Table 37: Staffing Number Highlights: Comparison of Different Data Sources .102 Table 38: Herat Municipality's Revenues by Category for 1381 .109 Table 39: Faryab Province, Municipality of Maimana, Revenues and Expenditures for 1381 (afs.) .110 Table 40: Provincial Municipalities: Revenues and Expenditures for 1381 (afs.) ......................................................111 Table 41: Provincial Municipalities: Staffing Structure for 1381 ................... 112 Table 42: Access to Government-Funded Education Resources .................... 115 Table 43: Provincial Departments of Education: Summary of Key Statistics, 1382 ...................................................... 117 Table 44: Share of Students Attending Primary School .................................. 118 Table 45: Functional Responsibilities in Education ........................................ 118 Table 46: Number of Education Employees ................................................... 122 Table 47: Key Statistics, Public Health Sector ................................................ 131 Table 48: Intended Functional Responsibilities of Different Health Facilities ...................................................... 132 Table 49: Functional Responsibilities in Health ............................................. 133 Table 50: Ministry of Health Staffing Structure, 1382 .................................... 140 FIGURES Figure 1: Map of the Six Case Study Provinces .............................................. viii Figure 2: Delays in Salary Payments for the Provinces, Excluding Police (days) ...................................................... 32 Figure 3: Execution of the Development Budget, 1382 ................................... 37 Figure 4: Estimated Underlying Totals for Public Employment ...................... 39 Figure 5: Civilian Government Staff for Whom Salaries Have Been Paid, Excluding Police ...................................................... 40 Figure 6: Ministry of Education Staff in Kabul ................................................ 42 Figure 7: Distribution of 1382 First Quarter Allotments, Center vs. Provinces ...................................................... 76 Figure 8: Approval Hierarchy for Budget Allocations ..................................... 78 Figure 9: Daily Wage of Unskilled Casual Labor ($ per day) ........................ 103 Figure 10: Distribution of Karmand Grades for Wardak, Excluding Education ...................................................... 105 Figure 11: Distribution of Karmand Grades for Bamyan, Excluding Education ...................................................... 105 Figure 12: Typical Structure of Provincial Education Department .................. 120 Figure 13: Typical Structure of District Education Office ............................... 120 Figure 14: Distribution of Health Service Delivery Contracts by Donor ......... 130 Figure 15: Structure of Faryab Provincial Health Department ......................... 135 Figure 16: Comparison of Current Ministry Structures with Selected European Countries ...................................................... 151 BOXES Box 1: Early Centralization .3 Box 2: Participative Bodies at the Provincial Level: Historical Context .8 Box 3: Who Controls Subnational Administration? .13 Box 4: The Degree of Alignment Between the de Jure and de Facto States 15 Box 5: The Importance of Disarmnament .17 Box 6: Passage of the 1381 Budget .28 Box 7: Budgets, Allotments, and Execution .31 Box 8: The National Development Framework .34 Box 9: Small Government .39 Box 10: Civil Service W orking Hours ........................................................ 41 Box 11: The History of the Food Baskets ........................................................ 47 Box 12: Personnel Records ........................................................ 61 Box 13: PAREM Program ........................................................ 63 Box 14: Current Capacity-Building Initiatives ....................................... ......... 66 Box 15: Building Program Management Capacity ........................................... 68 Box 16: Budget Planning in Kandahar ........................................................ 73 Box 17: Tashkeel vs. Takhsis ........................................................ 79 Box 18: NSP: A Strategy for Linking CDCs and Subnational Administration ........................................................ 80 Box 19: M anaging the Payroll in Remote Districts .......................................... 82 Box 20: Proliferating Districts ........................................................ 96 Box 21: The Politics of the Appointment System ............................................. 98 Box 22: The Politicization of the Police ........................................................ 98 Box 23: The Sale of Civil Service Positions ..................................................... 99 Box 24: Salary Top-Ups in Kandahar ........................................................ 104 Box 25: The Staff View ........................................................ 106 Box 26: Organizational Restructuring Needed in the Kabul Municipality ..... 113 Box 27: A Governor's Financial Contributions ....................................... ....... 123 Box 28: Teacher Quality in Badakhshan ........................................................ 125 62. \ , UZBEKISTAN TAJiKI CHIN- TURKMENISTANj 6 , f - z > NUllsfAN A AFGHANISTAN Z7 ~~~~AFGHANISTAN AREU AND WORLD BANK PUBLIC ADMINISTRATION PROJECT S MAIN ROAD_PAKISTANS CD CAOEASCSSA U / I \ g ry. 51T6R5 z 9 ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5 65^55~ 65 70SO 72- AVIS ErA 8 GLOSSARY AND DEFINITIONS Dari Terms Agir Government staff hired on fixed-term contracts 'Alaqadar Subdistrict administrator Arbobs Village headmen Babs The six major expenditure codes: 1000 Personal emoluments 2000 Services 3000 Tools and materials 4000 Maintenance and repairs 5000 Land and structural equipment (capital) 7000 Subsidies, grants, contributions, and pensions Fasils The more detailed line item expenditure codes, such as overtime, fuel, office supplies, and so forth Furmaan taknini Legislative decrees approved by the president and Cabinet Hawza Region or zone Loyajirga "Grand council." The institution, which is centuries old, is a similar idea to the Islamic shura, or consultative assembly. Karmand Permanent, tenured government staff Ma'arif Head of a provincial education department Ma'arif-qachkol "Education alms bowl" initiative Mafawk-i-rutba Beyond grade Meshrano Jirga House of Elders; upper house of the National Assembly Mujahidin (Arabic: "fighters") In Afghanistan, the guerrilla rebel fighters who opposed invading Soviet forces and the Afghan communist government (1979-92). Mustoufiat The provincial department of finance Mustoufie velayat or The provincial agent of the Ministry of Finance Mustoufie Qawm Network of affiliations deriving from families or occupations Rasmi gereeda Official publication of the Ministry of Justice akin to an official gazette Rawabit Advocate or someone who can procure a favor or a special service Safayi Municipal service charge and property tax Sharwali uluswali Rural municipality Sharwali wolayat Provincial municipality (Article Ill of the 1964 Constitution indicated that municipal councils are to be established by "free, universal, direct, secret election." Article 6, Chapter 8 of the new constitution notes that municipalities shall be established to administer city affairs.) Shura Council or association Takhsis Budget allotment Tashkeel Staffing establishment or list of sanctioned posts AREU & The World Bank ix Tashkeelat The department, currently in the Office of Administrative Affairs, that authorizes department structures and establishments Ulema Islamic scholars Uluswal District administrator Uluswali District administrations (Article 108 of the 1964 Constitution indicated that "subdivisions are to be fixed by law," and this is elaborated in the Law of Basic Organization of Afghanistan. Article 140, Chapter 8 of the new 2004 Constitution makes reference to districts and villages.) Wali Provincial governor Wasita Personal relationships through which favors may be obtained Wolayat Province (Article 108 of the 1964 Constitution provided that "the unit of local administration is the province. The number, area, subdivisions, and organization of the provinces shall be fixed by law." The law enacted under these provisions and remaining in force during the period of the 1964 Constitution is the Law of Basic Organization of Afghanistan, 20 Mizan 1344. Articles 34-46 deal with local administration. Article 42 names 28 provinces, as well each of the districts. Article 1, Chapter 8 of the new 2004 Constitution specifies that the local administrative unit is the province.) Wolesi Jirga House of People; lower house in the National Assembly established by the 2004 Constitution. Historical Terms Mustoufie al mamalik Head of finance, in Kabul Ra'is-i tanzimiya Govemor general of a region (four or five provinces) Technical Terms Terminology is notoriously difficult in relation to state institutions. In describing organizational aspects of the Transitional Islamic State of Afghanistan (TISA), this paper uses the following conventions: Government is used in the European rather than the United States sense to refer to senior decision-makers in the executive, excluding the judiciary and the National Assembly. In other jurisdictions this group is often referred to as the Cabinet or Council of Ministers. Ministries refer to central government entities headed by a member of Cabinet or a minister. They are without any separate corporate status, and are subject to the general provisions of civil service and public finance law. These features distinguish them from the various commissions and "independent bodies" that are also considered govemment entities, as well as the many govemment enterprises. x AREU & The World Bank Presidency is the generic term for the principal administrative unit within ministries. Central agency refers to the organizations in the executive that coordinate the activities of, and provide guidance to, the line ministries and agencies. Central agencies in Afghanistan are the President's Office, the Office of Administrative Affairs, the Ministry of Finance, the Ministry of Labor and Social Affairs, the Civil Service Commission, and the former Afghanistan Assistance Coordination Authority. Department refers to the provincial outposts of central govemment ministries. Sometimes, for emphasis, these are referred to as provincial departments. District subdepartment is used to refer to the outposts of provincial departments located in the districts. Other Terms Allowances Current rewards other than base pay. These can be provided as part of the employment contract (transportation and food allowances), or can be provided on a non- contractual basis including intangible rewards (trips abroad or training). Bonded trustees Agents who transport cash for salary payments from the provincial capital to a budget unit. Civil service census A check on the actual numbers of staff in position. Censuses typically use one or some combination of three methods: 1. Physical headcounts or staff audits. These typically involve trained teams traveling to various parts of the census area. Individual employees are required to present themselves with identification or other documentation. This can be logistically challenging at the best of times. 2. Employee Questionnaires. These can be distributed to employees or agency heads, who submit the information back up the line and take responsibility for its accuracy. 3. Payroll reconciliation. This involves reconciling the payroll against altemative data sources, including individual personnel files or service books, or the establishment register. Reconciliation can be extremely time-consuming. Civilian central Employees in the central executive and legislative government (as administration, in departments directly dependent on the employment category; head of state or the parliament, together with all other excludes education, ministries and administrative departments of central AREU & The World Bank xi health, andpolice) government, including autonomous agencies paid by central govemment. The exceptions are education, health, and police employees, who are accounted for in other employment categories. Compression ratio The ratio of the highest to the lowest salary on a salary scale. The Organization for Economic Cooperation and Development (OECD) measures wage compression in OECD countries as the mean of ninth decile salaries divided by the mean of first decile salaries. The OECD's approach ensures that a handful of salaries will not dramatically skew the compression ratio. However, all compression ratio approaches can be misleading if there are significant monetary allowances not captured in the calculations, or if the perceived value of non-monetary rewards represents a significant proportion of total rewards. Defined benefit pension A pension scheme in which pension value depends on systems years of membership in the scheme and some measure of eamings. Defined contribution A defined contribution pension plan is one in which each pension systems employee's pension is based on the amount contributed for the employee and eamings on that amount. Grade creep The regrading of staff into higher grades in order to provide pay rises. Job evaluation A process that compares jobs with each other, against a common or accepted set of criteria, and placed in rank order. Job grading The grouping together of jobs within a range of similar quality or job weight. Lateral entry Entrance to the civil service by extemal recruitment or otherwise, rather than through promotion or transfer from within the service. Arrangements for lateral entry are generally most widespread in position-based systems where the emphasis is placed on selecting the best-suited candidate for each position to be filled, whether by extemal recruitment or via intemal promotion or mobility. Length of service credit An additional number of years that an employee is deemed to have served in government, as the result of academic qualifications, qualifying them for early promotion. Nominal roll A detailed list of legitimately employed staff. xii AREU & The World Bank Pay-as-you-go Pension schemes in which the accrued pension liabilities of former employees are funded by current taxpayers or other government revenues. Personal grade The grade that the individual post holder has reached through promotion. Position grade The civil service grade assigned in the tashkeel to a particular post. Rank-in-person A system of advancement where promotions take an appointment system employee up through various grades while they remain in the same post. This is in contrast to a rank-in-post system, where promotion is generally to a new job. All systems have some mixture of the two systems - the issue is one of appropriate balance. Rank-in-post A system of advancement where promotion is generally appointment system to a new job. This is distinct from a rank-in-person system. Replacement ratio Pensions as a proportion of final salary. Calendar Afghanistan uses the Solar Hejra Calendar. This calendar has twelve months, corresponding to dates in the western calendar as follows: Solar month Western month and date (begins) Hamal March 21 Saur April 21 Jawza May 22 Saratan June 22 Asad July 23 Sonbola August 23 Mizan September 23 Aqrab October 23 Qaus November 22 Jadi December 22 Dalv January 21 Hoot February 20 Hamal 1, 1381 corresponds to March 21, 2002. The solar year 1382 began on March 21, 2003. AREU & The World Bank xiii Currency All financial figures are provided in new afghanis (afs.) except where noted. The most significant exception to this are the development budget data, which are officially published in U.S. dollars, and so are also provided in U.S. dollars in this report. The conversion rate current at the time of printing is 49.1 afs. per U.S. dollar. xiv AREU & The World Bank ABBREVIATIONS AND ACRONYMS AACA Afghanistan Assistance Coordination Authority (now abolished) ABC Afghan basic competency materials ADB Asian Development Bank AFMIS Afghanistan Financial Management Information System AKDN Aga Khan Development Network ANA Afghan National Army ANHRA Afghanistan National Health Resources Assessment AREU Afghanistan Research and Evaluation Unit ARI Acute respiratory infection ARTF Afghanistan Reconstruction Trust Fund ASI Adam Smith Institute BHC Basic health center, a small facility, offering the same services as a health post, but with more complex outpatient care BPHS Basic package of health services CBG Capacity-building group CCA Cooperation Center for Afghanistan CDC Community development committee, elected village-level bodies formed under the NSP CHC Comprehensive health center; they cover an area of 30,000 to 60,000 people and offer a wider range of services than basic health centers. In addition to assisting normal deliveries, the comprehensive health center can handle some complications, grave cases of childhood illness, treatment of complicated cases of malaria, and inpatient and outpatient physiotherapy for disability. CHW Community health worker, which, together with TBAs, deliver basic health services out of their own homes, which function as community health posts. CHWs offer limited curative care, including: diagnosis and treatment of malaria, diarrhea, and ARIs; distribution of condoms and oral contraceptives; and micronutrient supplementation. In addition to delivering the BPHS, CHWs will be responsible for treating common illnesses and conditions in children and adults. CIDA Canadian International Development Agency CoAR Coordination of Afghan Relief CSA Civil Service Administration (now abolished - replaced by the IARCSC) CSC Civil Service Commission (now abolished - replaced by the IARCSC) CSO Central Statistical Office DAB Da Afghanistan Bank (central bank) DACAAR Danish Committee for Aid to Afghan Refugees DAD Donor Assistance Database DflD Department for International Development EPI Extended program of immunization HIS Health information system IAM International Assistance Mission IARCSC Independent Administrative Reform and Civil Service Commission ICRC International Committee of the Red Cross IDP Internally displaced person IMF International Monetary Fund IT Information technology AREU & The World Bank xv IOM International Organization of Migration LOTFA Law and Order Trust Fund for Afghanistan MAC Ministerial Advisory Committee MCH Maternal and child health clinics MoE Ministry of Education MoF Ministry of Finance MoFA Ministry of Foreign Affairs MoH Ministry of Health Mol Ministry of Interior MoLSA Ministry of Labor and Social Affairs MoPH Ministry of Public Health MoU Memorandum of understanding MoWA Ministry of Women's Affairs MRRD Ministry of Rural Rehabilitation and Development MSH Management Sciences for Health NCA Norwegian Committee for Afghanistan NDB National Development Budget NDF National Development Framework NDP National Development Program NEEP National Emergency Employment Program NGO Nongovernmental organization NSC National Security Council NSP National Solidarity Program OAA Office of Administrative Affairs ODI Overseas Development Institute OECD Organization for Economic Cooperation and Development PAREM Public Administration Reform and Economic Management (program) PBU Primary budget unit - there are 40 including all the Kabul ministries PED Provincial education department PFO Pension fund organization PHD Provincial health department PIP Public investment program PMU Policy Management Unit in the Office of the President PPU Procurement Policy Unit PRR Priority Reform and Reconstruction Decree, which authorizes enhanced salaries for restructured ministries and departments PWC Price Waterhouse Coopers SBU Secondary budget unit (including provincial departments) SCA Swedish Committee for Afghanistan SOE State-owned enterprise TB Tuberculosis TBA Traditional birth attendant, which focus on providing care for normal deliveries, identifying danger signs, and refenring women to health centers TISA Transitional Islamic State of Afghanistan U.N. United Nations UJNAMA United Nations Assistance Mission in Afghanistan UNDP United Nations Development Program UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children's Fund UNIFEM United Nations Development Fund for Women UNO University of Nebraska at Omaha UNOPS United Nations Office for Project Services USAID United States Agency for International Development WB World Bank WFP World Food Program xvi AREU & The World Bank PREFACE The Purpose of this Guide This guide has three objectives: First andforemost, it seeks to provide newcomers to the administrative and political scene in Afghanistan with a basic guide to the structures and processes of government. In providing this guide, it intends to convey a sense of respect for the nuanced institutional arrangements that constitute the public sector in Afghanistan. The simplistic assertions that the state collapsed in Afghanistan, or that the public sector is an institutional blank slate, are not borne out by the facts. Politically, there was undoubtedly a collapse. The presence of conflict from 1978 onwards stopped any further consolidation of central authority, and there is a continuing crisis of political legitimacy in much of the country. But the administrative structures of the state have proven to be fairly resilient. The arrangements are strongly centralized, but provide a coherent management and accountability framework. The administrative practices are basically sound, and those practices are well understood and consistently followed. Second, and related, it intends to provide reformers with some understanding of how to work "with the grain" of the existing institutional arrangements. The coherence of the fiscal and administrative systems, the common understanding of how they are intended to work, and the entrenched discipline of staff, are valuable resources. The overarching principle that must underpin all assistance to the public sector is to work with these strengths, nurturing the discipline that has remained despite the many years of conflict. In any setting, reform proposals that cut across existing, well-entrenched and well-understood procedures present serious risks of confusion and parallel structures. In a setting where the overwhelming majority of administrative and fiscal procedures are not written, but are well known to most serving officials, the introduction of new arrangements must pay very careful attention to how these will overlay existing practices. Third, this report seeks to pay tribute to the remarkable people who have kept the system running and who are now reforming it. Credit belongs to two main groups. There are the many civil servants who, during more than two decades of turmoil and bloodshed, have nevertheless respected basic administrative and fiscal procedures. They emphasize that the pejorative implication so often associated with the term "bureaucrat" is misplaced. Bureaucracy, with its rules-based procedures, has been the only source of consistency in an otherwise chaotic and unpredictable environment. There is also the new staff in government - politicians, administrators and advisers - who have achieved some remarkable victories in a short period. The achievements in maintaining a small and fiscally cautious government that is disciplined in recruitment and pay policy, while also achieving significant improvements in planning and budgeting capacity, are impressive. In pursuing these objectives, this guide attempts to set out these underlying strengths of the public sector, describing the evolution of the Afghan state, the current political context, and the administrative and organizational components of the AREU & The World Bank xvii government. It sets out the legal basis and organizational responsibilities for key fiscal tasks including revenue collection, budget preparation and execution, and accounting and audit. It also describes the organizational structures in the provinces, the way in which the staffing establishment is determined, and the structure of pay and grading. In particular, it looks at the arrangements for service delivery in the education and health sectors. This guide is supported by detailed case studies of the six provinces that can be found on the World Bank websites on Administrative and Civil Service Reform and on Decentralization at: http://www 1 .worldbank.org/publicsector/civilservice/subcases.htm http://www 1 .worldbank.org/publicsector/decentralization/topic2.htm and on the AREU web site at: http://www.areu.org.af A companion paper, "Subnational Administration in Afghanistan: Assessment and Recommendations for Action," outlines some specific recommendations resulting from these studies. Data Sources This guide draws its data from many sources, but rests largely on a major program of provincial assessments undertaken by the Afghanistan Research and Evaluation Unit (AREU) and the World Bank. The six provincial assessments (Badakhshan, Bamyan, Faryab, Herat, Kandahar and Wardak) were undertaken between December 2002 and July 2003. Provincial assessment teams consisted of national and international public administration, public finance, health, and education specialists who interviewed relevant government employees, NGO staff, and local community leaders in provincial capitals as well as in several districts in each province. xviii AREU & The World Bank ACKNOWLEDGEMENTS The study has been coordinated by the World Bank and the Afghanistan Research and Evaluation Unit (AREU), and funded by the European Commission, the Swedish and Swiss govermnents, UNAMA, and the World Bank. The work has been undertaken under the overall guidance of: H.E. Hedayat Amin Arsala, Vice President, the Transitional Islamic State of Afghanistan; H.E. Ashraf Ghani Ahmadzai, Minister of Finance; H.E. Ali Ahmad Jalali, Minister of Interior. Within the World Bank, guidance has been provided by: Sadiq Ahmed, Director; Ijaz Nabi, Sector Manager, South Asia Poverty Reduction and Economic Management; and Alastair Mckechnie, Country Director for Afghanistan. William Byrd, World Bank Country Manager for Afghanistan, has been a consistent source of practical knowledge and valuable guidance. Additional assistance has been provided by Michael Camahan, Clare Lockhart, and Larry Seale, Ministry of Finance. The team members, their agencies and the provincial assessments to which they contributed were as follows: Badakhshan Akbar, Mohammad SCA Bennett, Christina AREU Byrd, William World Bank Chatterjee, Meera World Bank Evans, Anne AREU Consultant Hager, Rob USAID/BearingPoint Osmani, Yasin AREU Consultant Safi, Naqibullah UNICEF Tokhi, Rafi AREU Wilder, Andrew AREU Bamyan Amin, Aminullah Save the Children, US Evans, Anne AREU Consultant Fishstein, Paul MSH Joyenda, Mir Ahmad AREU Lim, Janet UNAMA Manning, Nick World Bank Mansory, Amir SCA Miwa, Keiko World Bank Navarro, Richard UNICEF AREU & The World Bank xix Osmani, Yasin AREU Consultant Roshan, Yaqub UNAMA Safi, Yusaf USAID/BearingPoint Shah, Mubarak MSH Tully, Anne World Bank Wilder, Andrew AREU Faryab Farooq, Ghulam CARE Fishstein, Paul MSH Francino, Mike Adam Smith Institute Kirby, Helen Save the Children, US Latif, Abdul Adam Smith Institute Mckechnie, Alastair World Bank Saboor, Amin AREU Consultant Tokhi, Rafi AREU Tully, Anne World Bank Van Gelder, Linda World Bank Wilder, Andrew AREU Herat Bosch, Christophe World Bank Chatterjee, Meera World Bank Evans, Anne ASI Johnson, Chris ODI/World Bank Joyenda, Mir Ahmad AREU Majeed, Sayed Ezatullah UNICEF Manning, Nick World Bank Miwa, Keiko World Bank Rinne, Jeffrey World Bank Taaj, Abdul Ghani Ockenden International Kandahar Ahmadzai, Ahmadullah MSH Amin, Aminullah Save the Children, US Evans, Anne AREU Consultant Fishstein, Paul MSH Joyenda, Mir Ahmad AREU Miwa, Keiko World Bank Osmani, Yasin AREU Consultant Wilder, Andrew AREU Wardak Badadori, Sefatullah SCA Fritsche, Gyuri SCA xx AREU & The World Bank Joyenda, Mir Ahmad AREU Karlsson, Pia AREU Consultant Kluyver, Robert Foundation for Civil Society and Culture Middlebrook, Peter World Bank Nassir, Hayatullah CARE Rafiqi, Khaliq UNICEF Thier, Alex Asia Foundation Tully, Anne World Bank Zakhilwal, Omar CIDA/MRRD Additional technical guidance was provided by many patient experts: ARTF monitoring agents (PWC) Data on payroll delays Camahan, Michael (Ministry of Finance) Evolution of the budget process Christensen, Asger (World Bank) National Solidarity Program Cox, Aidan (UNDP) Development budget implementation Esmail, Talib (World Bank) National Solidarity Program Goga, Soraya (World Bank) Kabul municipality Goldsworthy, Diana (DflD) Proposals for supporting cabinet Guimbert, Stephane (World Bank) Allotments and budget execution data Hirabayashi, Kunihiko (UNICEF) Health sector issues Lee, Jonathan (AREU Consultant) Civil servant profiles Lister, Sarah (Institute of Development Studies) Political economy Loevinsohn, Benjamin (World Bank) Health sector issues Lwin, Than (USAID/BearingPoint) Allotment data Middlebrook, Peter (World Bank) Sectoral budget analysis; development budget implementation Prasad, Satyendra (World Bank) Capacity building and the PRR decree Prince, Keir (ASI/DflD) All details of public sector employment totals Salama, Peter (UNICEF) Health sector issues Scott, Graham (Southern Cross Health sector contracting Intemational/World Bank) Weinbaum, Marvin (Middle East Institute) History Wilson, Greg (DflD) Civil service legislation Wilson, Julian (DflD) Proposals for supporting cabinet Winkler, Don R. (World Bank) Post-conflict education reform Venner, Mary (USAID Treasury Advisor, Allotment procedures USAID/BearingPoint) AREU & The World Bank xxi Useful peer review comments were provided in the following areas by four experts: Dorotinsky, William (World Bank) Public expenditure Ebel, Robert (World Bank Institute) Intergovernmental relations/post conflict Leader, Nicholas (formerly UNAMA) Political economy Stevens, Michael (World Bank) Public administration Valuable comments were provided on an earlier draft by William Byrd (World Bank), Steve Symanksy (IMF), and Ghulam Nabiyar (former provincial director of education, Badakhshan province). Additional guidance was provided by more than 100 senior provincial officials who attended a workshop organized by the Ministry of Interior, with AREU, UNAMA, and the World Bank, entitled "Strengthening Provincial and District Government," held at the Ministry of Interior, on October 21, 2003. The paper has also benefited from additional research undertaken by Alex Thier (AREU Consultant), Helena Malikyar, and Bamett Rubin (Center on International Cooperation). The following organizations provided generous logistical support to the provincial missions: the UNAMA offices in Badakhshan, Bamyan, Faryab, Herat, and Kandahar; Coordination of Afghan Relief (CoAR) in Wardak; Aga Khan Development Network (AKDN) in Badakhshan; the Danish Committee for Aid to Afghan Refugees (DACAAR) in Herat; and AKDN, Cooperation Centre for Afghanistan (CCA), Intemational Organization on Migration (IOM), and Oxfam (UK) in Bamyan. And a final thanks to Christina Bennett, AREU Consutant, Tom Muller, AREU Communications Manager, and Brandy Bauer, AREU Deputy Communications Manager, for editing and managing the production of this publication. xxii AREU & The World Bank 1. THE HISTORICAL AND POLITICAL CONTEXT The Evolution of the Afghan State Afghanistan became a nation-state, with its present boundaries, in response to pressures from the expanding British Empire to the south, and the Russian Empire to the north. The country's efforts to resist subjugation were largely successful, though Britain, for a time, asserted the right to control Afghanistan's foreign policy. By 1919, this vestige of foreign interference was removed, and Afghanistan became a member (in many cases a founding member) of the United Nations (IJ.N.) and other international bodies. Throughout its development, the centralized state structure has co-existed uneasily with a fragmented, decentralized traditional society. The interplay - and at times conflict - between the two has been one of the recurrent themes of modem Afghan history. Early state-building King Amir Abdur Rahman Khan (1880-1901) laid the groundwork for the modem Afghan state by establishing a standing army and by instituting a more efficient administration that enhanced tax assessments and collection, and improved trade, roads and basic education. He re-organized civil administration and extended it beyond the capital by dividing the country first into six provinces, each headed by an appointed governor, and then into smaller divisions and subdivisions, led by government-named officials. These newly prescribed lines of authority, however, were mediated by deep personal loyalties, ethnic and tribal solidarities, and Shari'a and customary laws. Abdur Rahman's government sought to penetrate, rather than displace, local political structures. Judges retained their posts, but became salaried and regulated officials of the state. Appointed provincial officials worked through community councils and tribal assemblies, relying on local agents (arbobs) as intermediaries. Larger landowners, traditional leaders, and the ulema were granted wide autonomy in exchange for their cooperation. Successor Afghan rulers gradually added to the state's administrative goals and capacity, and cautiously attempted modernization. While much of Amir Habibullah Khan's (1901-1919) reign was spent fending off foreign encroachment and protecting royal power, he accomplished several educational and cultural reforms. He cultivated the rise of a progressive and nationalist elite, and launched the country's first genuine (bi-weekly) newspaper. He opened a high school to meet the increasing manpower requirements of the central government, and founded a military academy to create an officer's corps. Amanullah (1919-1929), who assumed power after his father's assassination, introduced the country's first constitution. The 1923 Constitution formed a modem executive, but kept legislative powers in the hands of the king and his seven- member cabinet. It granted virtual equality to women, abolished slavery and gave rights to non-Muslim minorities, while abolishing many traditional executive privileges and limiting the power of religious court judges. Primary education AREU & The World Bank 1 A Guide to Government in Afghanistan was declared compulsory in a system of national schools, while intermediate and secondary schools were set up in Kabul and in provincial capitals. The state also subsidized private industries and encouraged the expansion of trade and private investment. Municipal and provincial councils were formed for the first time. Amanullah instituted direct taxation of farmers and traders, and regular budgeting and accounting procedures. But his attempts to use state administration to impose these reforms prompted opposition from conservative religious and tribal leaders. In 1929, a Tajik peasant rebel group seized control of the capital and forced Amanullah to step down. Mohammad Nader Shah (1929-1933) - the eldest of the five prominent Musabihan brothers - restored the rule of the royal family. He pursued a reformist agenda by promoting small-scale industry and by initiating a modem banking system in hopes of expanding foreign trade. He invested state revenues (now mostly from taxes on imports and exports) in improved civil and military administration, communications, and transport. He re-opened schools that had been closed during the 1929 rebellion, invited foreign teachers, and opened Kabul University, including a school of medicine. After Nader Shah's assassination in 1933, his young son, Mohammad Zahir Shah (1933-73), assumed the throne. For the next 20 years, the king's uncles ran the govemment and did little to further greater political expression or social innovation. Though goverrment expenditures on education were high, second only to those for the military (about 12 percent of the total budget in 1948-49), (see Wilber, 1956:169), Afghanistan's 100,000 students represented less than 10 percent of school-age children, and only 20 percent of the nation's schools were located outside of Kabul. The government added faculties of law, theology, and letters to Kabul University, but enrollment remained low. Throughout this period the state administration remained centralized, financed through indirect taxes on commercial agricultural exports including karakul, cotton, raisins, and fruit. In the 1950s, the extraction of taxes from the rural areas had declined markedly, and the revenue barely covered local expenses (see Schurmann, 1962: 234-5). This was in marked contrast to the situation that prevailed under Amanullah, when land and animal taxes represented two-thirds of govemment revenue (see Fry, 1974: 155-156). It was the king's first cousin, Mohammad Daoud Khan, who became prime minister in 1953, who recognized a new opportunity for state expansion. Politically repressive and aggressively nationalist, Daoud prioritized economic growth and made the critical decision to accept Soviet and East European economic and military aid (see Ghani, 1987).1 Capitalizing on Cold War competition, Daoud also attracted more modest amounts of American and European assistance (see Dupree, 1971: 21-23).2 Together, these foreign loans and grants, totaling more than $1 billion,3 covered most of the country's development projects through the mid-1960s (Dupree, 1971:1) Such extemal assistance allowed the state to expand. Foreign aid and (after 1968) natural gas exports allowed the expansion of govemment projects and services, 2 AREU & The World Bank The Historical and Political Context including education, roads, and dams, and also Box1: EarlyCentralization strengthened the military. "(In the 1930s, provincial officials) . . .were almost always The civil service that was outsiders - usually Pashtuns from the south - and they approximately 10,000 were frequently transferred to prevent them developing employees in 1955 grew personal power bases. As a result, they had little to nearly 60,000 by 1963. knowledge of the areas under their jurisdiction, and they had little interest in creating close ties with local leaders. D a ou d a s5o m ad e In addition, administrative distance was encouraged by earnest attempts at the centralized government organization. All major earnest attempts at decisions were referred to higher officials in Kabul. All professionalizing public provincial recruitment and staffing were done through administration. Ministries the ministries in Kabul, and each ministry maintained were reorganized and a separate chain of command that precluded easy preference in recruitment cooperation at the local level. In general, an official and promotion was given was more concerned with keeping good communications to those with foreign with his superiors in Kabul than in having good relations technical or professional within his district... training. Most officials in In sum, the weakest link in the government chain of positions of higher command was between the subprovincial administration authority were Persian- and the villages, where the government was faced with speaking ethnic Pashtuns, indigenous political structures and where its own agents who were regularly were not well respected." assigned outside their homigned provtines. the Source: Barfield, 1984: 172-174. home provinces. However, officials sent to rural areas often viewed the local population with contempt, a feeling reciprocated by villagers who considered the government's representatives overbearing and corrupt (see Barfield, 1984: 172-173). Provincial and local administration also became more functional during this time. The country's regions, provinces, divisions, districts, and subdistricts were headed by governor-generals, governors, commissioners, district governors, and alaqadar. The provincial governors, who exercised considerable autonomy, were appointed directly by the prime minister; all administrative heads were named by and responsible to the central government. The country's districts became its key administrative units, and the only government with which most citizens came into contact. In a step toward popular participation, cities of more than 10,000 were allowed to elect city councilmen and mayors every four years. However, the provincial governments could veto candidates and, in practice, the elections were not uniformly held. Central government powers were also expanded in tribal areas, though actual government control varied (see Box 1). Government garrisons were posted only to the larger administrative units, making implementation of government policies elsewhere difficult and sporadic. For example, in more remote areas, the government made no effort to collect taxes, and tribal governance continued unimpeded. The still sizeable nomadic community was linked to government administration only tenuously. Several large eastern tribes that straddled the Pakistan border retained many of their own military, economic, and administrative functions. Among other AREU & The World Bank 3 A Guide to Government in Afghanistan prominent tribes, many of their leaders were co-opted, brought to Kabul, and given sinecure posts in the executive or the military. Some were appointed as governors, but always to provinces other than their own. For all of his accomplishments, including educational and modest cultural reforms, the autocratic Daoud was ill-equipped to pursue any of the far-reaching initiatives advocated by an expanding urban, educated elite. More pointedly, it was Daoud's "Pashtunistan" policy - agitation in favor of irredentist claims on Pakistan - that closed the border, disrupted trade and precipitated King Zahir Shah's decision, in 1963, to take the reins of government away from his prime minister. The 1964 Constitution In 1964, King Zahir Shah convened a loyajirga (grand assembly) to ratify a new constitution that envisaged a constitutional monarchy with a bi-cameral parliament comprising a popularly elected lower house and a partially elected upper chamber. Though the powers reserved for the king were less than democratic, those elected from the country's districts were given an opportunity to participate in the state's decision-making process and accorded wide access to the bureaucracy in Kabul. In addition, the constitution's expansion of civic rights and protection of minorities went far beyond any previous provisions. The laws and regulations that followed reinforced the centralized administrative and fiscal nature of the government structure. Officials working in the country's 27 provinces4 were to work closely under Kabul's supervision. Provincial and district administrations were designed as miniature replicas of their respective ministries in Kabul, bringing to the countryside programs affecting economic development; education, health, and culture. Though they did not always follow Kabul's orders, they did maintain regular relations with the central government by sending weekly, monthly or quarterly reports to their ministries, and by asking for instructions from the center on issues they could not solve. Though the constitution allowed for district councils (shuras) or consultative bodies, the law establishing them was never passed and the concept was not applied in all parts of the country. In 1964, Afghanistan also witnessed improvements in irrigation, agricultural modernization, increased enrollment in basic and higher education, and investment in small and large industry. To handle the increased funding and activity, the central government underwent enormous growth, expanding to 15 ministries (eight concerned with development activities alone), and creating state institutions such as banks, construction and insurance companies, two regional development agencies, a national airline, and new higher educational institutions in public health and the sciences (see Newell, 1981:86-88). For all of the development gains, however, the 1964 Constitution's democratic experiment was foundering. Successive governments were unable to address mounting economic and social problems or deal with a politically radicalizing urban population. Legislative paralysis arrested social and administrative reforms. What few laws came into being were enacted during the parliament's recesses by 4 AREU & The World Bank The Historical and Political Context government decree. Such promised legislation as land reform and a progressive income tax were never addressed. Corruption and nepotism were widespread. Judicial administration reform offered a somewhat brighter picture. The formal court system had become visible in the larger cities and provincial capitals, and the associated legal cadres of judges, prosecutors, and attorneys were gaining prominence. Inspired, in part, by the 1964 Constitution, judicial administrators emphasized both modernization and respect for traditional Islamic jurisprudence. Progress in resolving the incompatibilities between customary and religious legal norms and secular law in new legal codes was leading toward co-existence in a dual legal system, though in practice, administration of justice was often indiscriminate, inappropriate, and biased. Even so, the strides made in judicial administration set a positive example for other Afghan political institutions and suggested that many of the excesses in Afghan democracy could be moderated. The Daoud republic and the communists Increasingly polarized politics, policy stagnation, and a crippling drought during 1971-1972, set the stage for the return of Daoud to power in a military-led, communist-assisted coup in 1973. Abolishing the 1964 Constitution and the monarchy, Daoud declared Afghanistan a republic with himself as president. Daoud soon distanced himself from the socialist ideas that originally motivated backers of the coup. He sought instead to broaden and intensify relationships with other Muslim countries, even while repressing the country's Islamists. By reaching out to Iran and Pakistan as well as the Arab states, Daoud hoped to attract development financing and lessen his country's now 20-year economic dependence on the Soviet Union. Most government structures were kept largely intact. Bureaucrats speak fondly of this period as a time when the basic administrative systems worked comparatively smoothly and when some serious efforts were made to reduce corruption. This included significant amendments to the civil service legislation of 1970 that created the basis for a transparent and coherent system of public employment. The same year, Daoud proposed a new constitution to replace the "pseudo- democracy" of the monarchy with a "new democracy." In reality, Daoud had little interest in expanding domestic freedoms. He allowed only one political party, appointed a cabinet of sycophants and friends, and failed to implement a strong development program. The communist factions, in particular, felt bitter and marginalized, and united to mount anti-government demonstrations and, with support from the pro-Soviet military, staged a full-fledged coup in April 1978, killing Daoud. The new communist regime, led by Nur Mohammad Taraki and Hafizullah Amin, aimed to reform Afghan society and reorient its economy. Using inherited administrative structures but classic Marxist rhetoric, the communist government decreed a wide range of programs that included land reform, elimination of landless peasant's debts, and equal rights for women. However, the government underestimated the alienating effect these reforms would have on a conservative AREU & The Word Bank 5 A Guide to Government in Afghanistan population, which perceived them as socially and economically disruptive and a threat to traditional culture. Populations were further antagonized by the dispatch of young party activists to the provinces and by the communists' use of military- backed political repression that included arbitrary arrests and detention, secret trials, and executions without trial. Localized revolts, most carrying the banner of Islam, broke out in the summer of 1978 and soon spread throughout the country. With the Afghan army near collapse and the communist leadership in disarray, the Soviet Union sent troops to Afghanistan in December 1979 to subdue the rebellion and defend its perceived regional strategic interests. Amin, who was never fully trusted in Moscow, especially after ousting Taraki, was killed in the takeover. The invaders installed Babrak Karmal, a communist with a reputation for loyalty to his Soviet patrons, as prime minister. Karmal, the Soviets naively assumed, would soon be able to accommodate the government's enemies and stabilize the country. By the early 1980s, much of the countryside stood outside the central govemment's effective control. Kabul continued to appoint governors, but their full writ extended only in the vicinity of provincial capitals. Most districts and villages were under the influence of Islamic mujahidin factions, strongly supported by Pakistan, the United States and Saudi Arabia. As the state structures gradually crumbled, various nongovernmental organizations (NGOs) and the U.N. delivered basic services to the population by forging direct relations with local leaders and mujahidin commanders, and creating de-facto decentralization. Determined to neutralize the opposition, whether by force or enticements, Moscow sought fresh leadership in Afghanistan, and installed Najibullah, former head of the secret police, as president in November 1986. Najibullah introduced a new constitution the following year that was intended to put a more politically pluralistic, Islamic face on the government. Though Soviet and Afghan militaries devised new tactics against the mujahidin, they made little headway and, in 1988, peace accords in Geneva were signed that specified a timeframe for the Soviet army's withdrawal. Mujahidin and Taliban rule The last Soviet troops departed Afghanistan in early 1989, leaving the Afghan communist regime to struggle on in a civil war. Without its benefactor, Najibullah's government survived longer than expected, but eventually collapsed in April 1992. An interim mujahidin government took control of Kabul, while regional militias, financed by foreign backers, arms smuggling and drug trafficking, took over most of the rest of the country. Over the next four years, the state largely ceased to exist, its economy in ruins. The various mujahidin parties battled among themselves for control of the capital, while anarchy reigned elsewhere. Militia leaders and regional warlords exacted road taxes and transit fees from cross-border traffic, and engaged in various other forms of extortions, including kidnapping. The delivery of food from international aid organizations and the U.N. became indispensable. Order was largely restored and authority centralized with the emergence of the Taliban. However, the Taliban showed little interest or aptitude for governing aside from enforcing their strict, uncompromising notions of Islam. The Taliban 6 AREU & The World Bank The Historical and Political Context leadership appointed relatively few people to administration, except in the areas of security and law enforcement. In Kabul, most major services such as water, sanitation, health and food deliveries were handled by aid organizations. The only institution-building enterprise considered by the Taliban, the construction of a gas pipeline, never progressed. Negotiations with an American-Saudi consortium during the mid- 1 990s to build the pipeline and bring revenues to the government and jobs to the economy were stalled for security and political reasons. The completion and operation of the pipeline would require that the Taliban defeat their opposition in the north and pacify much of the country. The already risky foreign investment became a political target for those who viewed any agreement as an unconscionable sanctioning of Taliban rule. Post-Taliban rule The Taliban's ouster in November 2001 left the newly installed Afghan authorities with the major goals of restoring security and directing the country's rehabilitation and reconstruction. Following the signing of the Bonn Agreement on December 22,2001, an interim administration was established under the leadership of Chairman Hamid Karzai. This was replaced by a transitional authority and the appointment of Hamid Karzai as president, following the Emergency Loya Jirga in June 2002. The Bonn Agreement reinstated the provisions of the 1964 Constitution, unless they were amended by the Bonn Agreement itself.5 The Bonn Agreement laid down the timetable for national elections to be held in mid-2004. Broadly in line with this timetable, a new constitution was debated and endorsed by the Constitutional Loya Jirga, which started on December 14, 2003 and concluded on January 4, 2004. The new constitution provides for an elected president (along with his/her nominated two vice presidents) and a national assembly comprising two houses - the Wolesi Jirga (the House of People) and Meshrano Jirga (House of Elders). Members of the Wolesi Jirga are to be elected by the people in free and fair elections. Members of the Meshrano Jirga are to be elected or appointed as follows: each provincial council elects one member for a period of four years; from among the district councils in each province one member is elected for a period of three years; and the president appoints the remaining one- third of the members for a period of five years from experts and persons of appropriate stature (including two representatives representing the disabled and impaired and two representatives from the Kuchis), with 50 percent of these to be women. Efforts are now underway to prepare for elections of the president and national assembly although it is not clear that these will happen simultaneously. Current Administrative and Fiscal Structures The consequence of this complex history is that the structure of government is unitary; all political authority is vested in the government in Kabul. The powers and responsibilities of the provincial and district administrations are determined (and therefore may be withdrawn) by central government. Though provinces and districts are legally recognized units of subnational administration, they are not AREU & The World Bank 7 A Guide to Govemment in Afghanistan intended to be autonomous in their policy decisions other than through some flexibility in implementing centrally determined programs. However, there have been some attempts at establishing local participative bodies (see Box 2). Article 3, Chapter 8 of the 2004 Constitution specifies that a provincial council is to be formed in every province, with elected members, and Article 5, Chapter 8 specifies that district and village councils are to be elected. There are four types of subnational administration: * 32 provinces (wolayat) * Approximately 355 districts (uluswali) - each province contains between 3 (the minimum) and 27 districts * Provincial municipalities (sharwali wolayat) - each province, in principle, contains one such municipality * Rural municipalities (sharwali uluswali) - each district contains, at most, one rural municipality, but some have none. Municipalities are, in principle, a separate level of government in that they have some limited autonomy in budget execution and in budget preparation. However, the Ministry of Interior (Mol) controls their staffing establishment and approves their budgets. Organizationally, central government in Afghanistan is comprised of 30 ministries, two constitutional agencies (the Office of the President and the Supreme Court), eight independent bodies and other central government agencies Box 2: Participative Bodies at the Provincial Level: (Central Statistics Office Historical Context including the Afghan C o m put e r C enter, Article 109 of the 1964 Constitution set out provisions Geodesy & Cartography concerning provincial councils, including a provision Office, National Security that the councils shall take part in the "realization of Agency, Narcotics development targets in a manner specified by law" and Eradication Agency, that members' salaries shall be fixed by law. Article 43 Science Academy, of the Law of Basic Organization of Afghanistan, 20 National Olympics Mizan 1344, provides for a provincial council whose Committee, Civil Service members shall be elected by the residents of the province Commission, andi thvie "in a free, direct and secret election." Commission, and the Office of the Attorney However, Article 44 provides that the organization and General). There are duties of the provincialjirga will be regulated by law, ambiguities in the status emphasizing that another implementing law would be of the Attorney General's needed. No such law was ever enacted. A previous Office; although this was Law of Advisory Councils, 8 Aqrab, 1336, was so established as a separate neglected as to have been effectively repealed. Office in the 1980s, the The Law of Provincial Administrative Councils, 28 Qaus Minister of Justice (MoJ) 1343, enacted with the first laws after the 1964 d i s p u t e s t h e Constitution, created a council of provincial officials - constitutionality of this the goveror, the deputy goveror, the mustoufie, and move. Annex 1 provides a security commander. further details. 8 AREU & The World Bank The Historical and Political Context While there are understandable reasons for the current number of Cabinet ministers, a large Cabinet is by no means the norm. Previous administrations were smaller: the Daoud Cabinet, for example, comprised only 15 ministers. Central/local relationships To place these structures in context, it should be noted that unitary govemments with strong political centralization can still have some administrative and fiscal decentralization. Afghanistan, however, is strongly centralized along both administrative and fiscal lines. The fact that a large proportion of the public sector workforce is located within Kabul emphasizes this centralization. Table 1 provides a summary of the formal relationships between central and local govemment in Afghanistan. AREU & The World Bank 9 A Guide to Government in Afghanistan Table 1: Formal Central-Local Relationships in Afghanistan Administrative arrangements Fiscal arrangements Structure Personnel Revenue Expenditure The departmental The govemor approves All tax and customs The "ordinary" and structure mirrors the junior staff levels are set by central development ministry structure in appointments and govermment statute. budgetary allocations Kabul - although not transfers (karnand All revenues are for the provinces are all ministries have grade 6 and below and collected on behalf of the sum total of the corresponding agir staff at grade 3 Kabul. Subsequent administrative < departments. and below), the fiscal transfers to the decisions made by the relevant minister province are made as various Kabul 2 approves karmand per-line department ministries conceming staff from grades 3-5, budget allocations. the allocations to their and senior staff (grade Actual cash transfers provincial 2 and above) are reflect the difference. departments. appointed by the president. The structure mirrors The govemor approves Districts collect minor The "ordinary" and the departmental junior staff business taxes; rates development budgetary structure in the appointments and are reviewed by a allocations for the province - although transfers (karmand review committee of districts are the sum not all departments grade 6 and below and district and provincial total of the E have corresponding all agir staff), the representatives every administrative units in the district. relevant minister three years. Revenues decisions that have approves karmand are remitted to the been made by the staff from grades 3-6, province. various provincial and the senior staff departments (uluswal and judge) conceming the are appointed by the allocations to their president. district subdepartmnents. The municipality The govemor approves All tax and fee rates The "ordinary" and structure (departments the appointment and are set in Kabul. development and numbers of staff) promotion for agir Revenues remain in budgetary allocations is set by the Ministry grade 3 and below. the municipality and for the municipality are ' of Interior, with the The govemor approves fund all municipal processed by the < agreement of the other junior staff expenditures. municipality and .c' govemor. appointments and approved by the transfers (karmand Ministry of Interior grade 6 and below and (municipalities general agir grade 2 and presidency), with the above), the relevant agreement of the minister approves govemor. 2 karmand staff from grades 3-5, and the senior staff (grade 2 and above) are appointed by the president. The structure is set by These are district staff, All tax and fee rates No formal budgetary the Ministry of therefore the govemor are set in Kabul. allocations are made Interior, with the approves junior staff Revenues remain in other than salary . agreement of the appointments and the rural municipality payments. c provincial municipality transfers (karmand and fund all Development budget : and govemor. grade 6 and below and expenditures. expenditures are all agir staff), the agreed ad hoc and relevant minister administered by the approves karmand municipality. staff from grades 3-5, and any senior staff are appointed by the president. Source: AREU/WB staff assessment. 10 AREU & The World Bank The Historical and Political Context In terms of the framework set out in Table 2, Afghanistan comes closest to the model of "deconcentration." But even on this scale, the formal control by Kabul of the day-to-day administrative decisions appears highly centralized. Despite this, the practical reality is that, politically, the center's authority is limited, given the regional strengths of some commanders who control substantial revenues and military power. The 2004 Constitution, with its provision for elected provincial, district and village councils, could conceivably contribute to the emergence of a more "delegated" model over time. Table 2: Key Features Distinguishing Degrees of Decentralization Political features Fiscal features Administrative features Deconcentration * No locally elected * Local govenmment is a Staff working at the (minimal) govemmental service-delivery arm of local level are authority. the central govemment, employees of the central Local leadership is and has little or no govemment and are vested in local discretion over how or fully accountable to the officials, such as a where service is center, usually through govemor or mayor, provided. their respective who are appointed by Funding is provided by ministries. and accountable to the the central govermment central govemment. through individual ministry budgets. There are no independent revenue sources. Delegation Govermment at the Spending priorities, Staff could be (intermediate) local level is led by program norms, and employees of the central locally elected standards are set or local govemment, but politicians, but they are centrally; local govem- pay and conditions of accountable, or ment has some employment are partially accountable, management authority typically set by the to the central over allocation of center. govemment. resources to meet local * Local govemment has circumstances. some authority over Funding is provided by hiring and location of the central govemment staff, but is less likely to through transfers, have authority over usually a combination firing. of block and conditional grants. There are no independent revenue sources. Devolution * Govemment at the local Subject to meeting Staff are employees of (substantial) level is led by locally nationally set minimum the local govemment. elected politicians who standards, local Local govemment has are fully accountable to govemment can set full discretion over salary their electorate. spending priorities and levels, staffing numbers determine how to best and allocation, and meet functional authority to hire and fire. obligations. * Standards and Funding can come from procedures for hiring and local revenues, revenue- managing staff, however, sharing arrangements may still be established and transfers (possibly within an overarching with broad conditions) civil service framework from central govemment. covering local governments generally. Source: Evans and Manning, 2003. AREU & The World Bank 11 A Guide to Government in Afghanistan The new constitution, ratified on January 4, 2004 by the Constitutional Loya Jirga, explicitly allows a measure of decentralization by stating that "the government, while preserving the principle of centralism - in accordance with the law - shall delegate certain authorities to local administration units for the purpose of expediting and promoting economic, social, and cultural affairs, and increasing the participation of people in the development of the nation" (2004 Constitution, Article 2, Chapter 8). Many countries have pursued policies of decentralization, and a well-developed body of literature examines different aspects of decentralization, including its advantages and disadvantages, and strategies for implementation. Decentralization is, in fact, a complex, multi-dimensional concept that affects all facets of government. No one right approach fits all situations. While there is a commonly held view that decentralization is associated with improved service delivery at the local level, this must be balanced against the important benefits to be gained from a strong central government, such as uniform access to basic services regardless of location. In Afghanistan, a modest shift towards deconcentration - a very limited form of decentralization - could give the center more practical control over local operations. This is not an argument for reform to the basic unitary nature of the Afghan state. The Political Context The focus of this study is on the administrative and fiscal structures and processes of government in Afghanistan at the national and subnational level. These relationships are not only based on technical and procedural issues, but operate within a political context and shape and are shaped by complex political dynamics. The strengthening of subnational administration must therefore be seen as a political process of institution-building that will be affected by the current distribution of power in Afghanistan and will have political effects on the establishment of legitimate authority throughout the country. The following section briefly outlines the political context within which the detailed discussions and recommendations about the administrative and fiscal structures of the state in this study must be understood. The dejure state vs. the defacto states This chapter has already highlighted the unitary nature of the Afghan state and the fact that, in political and fiscal terms, it is formally one of the most highly centralized states in the world (its administrative centralization, although striking, is less unusual).6 In reality, however, during the past 25 years Afghanistan has become highly decentralized, with factional leaders operating in relatively distinct geographic areas and, at times, organizing loose alliances to gain control of, or to resist, the center. In this context, the challenge for policymakers is to take steps to centralize the de facto reality of a highly decentralized state while promoting measures to help decentralize what is now an overly centralized state in theory. This section incorporates significant material provided by Sarah Lister, Research Fellow, Institute of Development Studies, Sussex, U.K. 12 AREU & The World Bank The Historical and Political Context Since 2002, during the tenure of the Afghanistan Transitional Administration, significant changes have taken place that appear to represent a centralization of politics. First, Kabul's authority seems to be growing, particularly in areas such as appointment of staff and fiscal authority, as the centralized administrative structures are restored and strengthened. Second, many of the factional leaders (or their representatives) who enjoy power in the provinces have moved to Kabul and are sitting in the Cabinet. Additionally, it is likely that the new constitution and the upcoming national elections (scheduled for June 2004) will further centralize politics. However, this apparent shift of politics towards the center has not yet been matched by a corresponding increase in the power and authority of the central government in the provinces. To better understand this apparent contradiction, it is helpful to move away from an analysis of power based on local and central, or decentralization and centralization distinctions. Instead, it is useful to make a conceptual distinction between de jure and de facto states. De jure states exist by fiat of the international community, which recognizes them as sovereign entities whether or not they have a government that can effectively control or administer the territory. De facto states actually administer a territory (a distinction made by Jackson, 1990: 1001-1023). States that enjoy international recognition and exercise control through strong institutions are both de jure and de facto. In Afghanistan, the de jure state, currently led by President Karzai and his government, has very weak institutions and a lack of both military and administrative control in large parts of the country. The de facto states that exist in most areas outside Kabul are controlled by regional warlords and local commanders. Their make-up and operation vary from province to province, but they are built on power that is based on financial and military strength, as well as personal, factional, and historical loyalties supported by the current political economy of Afghanistan. The situation is complicated by the fact that some individuals were given de jure positions based on their de facto power and use the latter to influence the de jure structures according to their interests at both the central and local levels (see Box 3). Box 3: Who Controls Subnational Administration? District and provincial officials interviewed felt that Kabul's influence was very limited at the subnational level: "It's only in name that we have a system of government - it doesn't exist in reality. I'm the acting governor but I have no authority. I can only sign but have no feeling of responsibility - I don't have the power to say 'no." (Acting provincial governor) "Mujahidin commanders still hold power. All the mujahidin groups are getting stronger again because they don't think the government will do anything against them." (Provincial governor) "The international community made a big mistake by giving a clear mandate and strong support for regional warlords to rebuild their bases of power. Mujahidin commanders were appointed to some key positions. Within 18 months, the government couldn't change governors, commanders, chiefs of police." (Provincial mayor) AREU & The World Bank 13 A Guide to Government in Afghanistan The structures of subnational administration are some of the major sites of struggle between these different sources of power and authority in Afghanistan. One provincial governor clearly saw the "zero-sum" nature of the relationship, expressing it as a struggle between "warlord" and "central" power: The most negative point of the government is keeping warlords strong in the regions. Most Cabinet members are warlords and leaders of previous parties that are responsible for all the problems of this country. I have had very bad experiences with the interference of central ministers in our province and districts... If the government is going to be successful, ministers shouldn't be commanders and shouldn't have the right to do whatever they want... If the government moves against a warlord there won't be a vacuum of power. The central government will step into power when they remove local warlords. Keeping warlords in power is weakening the government. The more the government pays them off, the stronger they will become and the weaker the government will be. The best example of the lack of power of the central government at the subnational level is in Herat, where Governor Ismail Khan has claimed significant political and fiscal autonomy. Ismail Khan's power is derived from his control of both military and civil administration, supported by large amounts of customs revenues, particularly from trade with Iran and Turkmenistan and the reverse traffic from Kandahar and Pakistan. The central government has worked hard to reduce Ismail Khan's power by pressuring him to remit customs revenues to the center, by publicly rejecting his self-appointment as "Emir of Western Afghanistan," and by acknowledging only his control over civil administration as governor and not over the military. However, his strong financial position means that he is largely in a position to ignore demands from Kabul. Herat is different from most other provinces in that while the structures of the central state are not subject to political control by central government, and are instead dependent on the patronage of Ismail Khan, these structures are still heavily relied on to provide services to residents of the area. In the other provinces visited during this study, subnational government structures had been rendered largely irrelevant in important political decisions that affected the area. In Faryab Province, for example, the governor only dealt with day-to- day civil affairs. Major issues, particularly ones related to security, were referred first to General Dostum or his representatives rather than directly to Kabul. According to a former deputy governor of that province, General Dostum's "special representative" title bestowed on him by President Karzai legitimized his involvement in civil affairs and his title of "deputy defense minister" legitimized his involvement in military affairs. Aligning the dejure and defacto states "There is currently a paradoxical situation where the international community and government of Afghanistan want to bring security to Afghanistan through those people who don't want security and have been the greatest cause of insecurity. How can the government be successful with this strategy?" (District governor) 14 AREU & The World Bank The Historical and Political Context One of the major policy challenges for the Afghan government and its supporters is how to more fully align the de facto states operating in Afghanistan under the authority of the de jure state. Box 4 illustrates the current degree of alignment between the de jure and de facto states in Afghanistan. A key finding of this study has been that the de jure state has maintained a foothold at the subnational level through the administrative structures, and that procedures of the Afghan state have proven to be remarkably resilient. The basic rules, such as the staffing quotas and grades contained within tashkeels (staff allotments), are well understood and relatively well adhered to. There is also a general acceptance of the rule that all staff positions above grade 6 have to be approved by Kabul, though it is often the de facto rather than the de jure power of senior officials in Kabul that influences the approval of provincial appointments (see Chapter 4 for a discussion on the politics of appointments). There is some alignment in terms of fiscal relationships as the basic budget rules of the de jure state are understood and accepted at the provincial level. However, there is less alignment when it comes to practice, especially with regard to the remittance of locally raised revenues to the center. As discussed above, the study found strong de facto political decentralization and very limited political power for the de jure state at the subnational level. Box 4: The Degree of Alignment Between de Jure and de Facto States de Jure de Facto NILo-i pro' inces accept Ihai Kabul Stroing dJe lure ha a role r0p1) in appro. ing svron de lurc he~~-nior le%ea el 0 it.,. bul Administrative admimstrallye cental/povinial entralization, with relationships vrtually all administrative olice ra i deci*ionx made at herules ot the idniiitaiitae same concerning grades and tashkeels. Provinces do report and transfer locally rqsied re: enueh to the Strong de jure tlscal Nlnistiy o4Piap e ho% er. Fiscal centralization. wiLh no thee ar itoutlur or centraUprovincial own-source revenues or iiiliheldi relationships authonty over expenditures rmNce .' at the suhnatii'nal le' el *XAll rpmii Ccept the haic nile' ul ihe fiqc:il name conceming budget preparation and execution. Strong de dire poli&al ce' n t rali zattoI'!n ' . i, Sell-e %idenil , politicallythere is Political subnanonal POliticl yr or de tacto decentralization, central/prosuncial p°s°nsappoFl*1 t - gional warlords or local relationships natonal governmenct, i ilander; setting policy. no mandaiorv regional representation in ihe ndtional go'errnent Source: AREU/WB staff assessment. AREU & The World Bank 15 A Guide to Government in Afghanistan While the resilience of the administrative structures of the de jure state remains an important finding of this study, it is clear that these structures are often controlled by the de facto power-holders at the local level. Technocratic interventions to strengthen subnational administration that fail to understand the political context could therefore result in strengthening de facto power holders rather than the de jure state. To date, there has not been a clearly discernible political strategy to rebuild the Afghan state so that it enjoys both de jure and de facto power. Instead, there has been an over-reliance on reconstruction projects to try to legitimize and strengthen the central government. Due, in part, to shortsighted communications strategies, the expectations of Afghans for reconstruction assistance have been raised to unrealistic levels. The inevitable perception of the majority of Afghans that they are not receiving enough assistance means that too much reliance should not be placed on reconstruction activities alone to strengthen the legitimacy and authority of the de jure state. Instead, a political strategy must integrate the critical need for security sector reformn (particularly disarmament), and the need for the de jure state to control most state revenues (and limit illicit revenues), with reconstruction strategies and state-building strategies that enhance the effectiveness and authority of the de jure state. The recently announced Afghanistan Stabilization Program (ASP) could be an important component of a political strategy to align the de jure and de facto states at the subnational levels. The ASP is comprised of integrated security, governance and reconstruction components to be implemented at the provincial and district levels. The importance of the integrated approach of the ASP was highlighted in the field research conducted for this study, which identified three key areas that a political strategy to strengthen the authority of the de jure state at the subnational level would need to address. Disarm local commanders and armed groups "Disarmament is the top priority - the administrative system can't function as long as people are armed because you have to do what the armed people tell you to do, not what the rules tell you to do." (Deputy governor) The strongest and most consistently articulated issue raised in interviews in all provinces was that if the effectiveness and authority of the de jure state is to be restored, disarmament of commanders and their armed groups was the top priority (see Box 5). There was considerable criticism of the international community and the government for doing so little about an issue of such great importance, especially because many felt that disarmament would not be that difficult to achieve due to the strong public support and demand for disarmament, combined with the fact that the vast majority of commanders were not very strong and were so unpopular. Many provincial- and district-level government staff emphasized that until disarmament puts an end to the "rule of the Kalashnikov," the rule of law and authority of the central government could not be restored. In Badakhshan, in particular, the difference between the quality of local administration in the districts 16 AREU & The World Bank The Historical and Political Context Box 5: The Importance of Disarmament * "In one district the head of the education department was replaced. But because he had armed supporters he was reappointed in three days." (Teacher) * "If you want good administration, the first thing you need to do is disarmament. There's a big difference between saying and doing. We've heard a lot about disarmament on the radio, but we are seeing nothing." (Citizens group) * "The two biggest issues are disarmament and salaries. Until there is disarmament we won't get good security, and until government employees earn enough to survive on and get paid regularly the government system cannot function properly. If these two things are done the law will be ruling - today the Kalashnikov is the law." (Deputy head ofpolice) * "If I don't have a commander around, immediately I become strong and get respect. If there are armed people around, I can't say anything." (District governor) * "If higher authorities accept disarmament then lower authorities will. If higher authorities don't accept, lower ones won't either. If those who have power at the center agree to disarnament, everyone lower down the chain of command will accept. Those with power to construct and destruct at the center are the problem, not those at the provincial and district levels." (District governor) * "Unless the commander issue is dealt with no one will be successful in rebuilding Afghanistan." (Deputy governor) where disarmament had taken place and those districts still dominated by local factional commanders was striking. In one district, where two commanders had been fighting each other, the new district governor was able to get troops in from Kunduz who disarmed the two commanders in three days. The result was that the district became one of the most peaceful districts in the province. In the words of the district governor: Before I came to [this district] there was no district administration. All NGO assistance and humanitarian assistance - about where to build schools, clinics, etc. - used to go through the commanders. Land disputes went to the commanders to be solved. Since I've been here and the commanders were disarmed, people now come to the administration to resolve their problems. When I came, no one thought the administration could make a difference. People really want a powerful administration system and a reduced role for the commanders, but we need higher salaries and some budget for furniture. All provincial administrators are very aware of the importance of other aspects of security sector reform, particularly the need to reform provincial and district police as a means of strengthening subnational administration. As discussed in more detail in Chapter 4, large numbers of fighters from factional militias being incorporated into the police are politicizing the police force and strengthening the hand of local, de facto power holders by legitimizing the positions of their armed followers. Understand and address the political economy of subnational power "We warned people we would punish them if they grew poppy, but in some areas local commanders encouraged farmers to grow, saying central government is weak and won't do anything. They have their own interests in mind as they tax the poppy. There's now no war on so commanders are looking for alternative livelihoods." (Provincial governor) AREU & The World Bank 17 A Guide to Government in Afghanistan The financial resources that underpin the control exerted by regional and local commanders come from a variety of sources, including the narcotics trade, customs revenues, revenues from mineral and natural resources such as mines, oil and gas fields, land and water, and unofficial taxation levied by local commanders. Not only do the financial resources provide the commanders with the opportunity to arm themselves and resist the authority of the de jure state, they enable them to engage in more "legitimate" activities designed to win support, such as providing equipment or salary supplements to government employees. Ensuring that higher percentages of customs and other revenues on licit activities raised by the provinces are remitted to the center and pursuing more aggressive strategies against the growing opium economy will have the dual effect of providing further resources for disbursement by the center to the provinces while weakening the position of commanders as local patrons. Disbursement of flmds from the center to the provinces and districts could be used as a strategy to create a new political economy dynamic at the subnational level that could help link districts and provinces back to the center. Currently, administrators have no option but to look for sources of revenue elsewhere and the legitimacy of the de jure state is called into question when it has no resources to do anything. In the absence of budgeted government resources, the role of local administrators has become that of intermediaries, able to refer difficulties to NGOs or commanders, but without the resources to tackle problems themselves. Receiving financial resources from the center could prove to be an effective way of linking these provinces back to the center, especially in resource-poor provinces. One of the most serious threats to the de jure state in Afghanistan, and one of the biggest challenges it faces in increasing its authority at the subnational level is the dramatic spread of the opium economy. The U.N. Office on Drugs and Crime (UNODC), in its Afghanistan Opium Survey for 2003, reported that poppy cultivation had increased from 18 provinces in 1999 to 28 of Afghanistan's 32 provinces in 2003. The report estimated that the $2.3 billion opium economy amounted to about half of Afghanistan's GDP in 2003. The UNODC director made a point of highlighting that "out of this drug chest, some provincial administrators and military commanders take a considerable share" (BBC, 2003). Provincial administrators speak of the alleged involvement in the narcotics trade by elites at all levels, including government ministers, commanders, police, and provincial and district governors. For example: "Poppy cultivation and processing is strongly supported by commanders and police. They are very involved and take their share. No one could produce poppy if they did not allow it... opium and heroin is transported in vehicles with official plates." (District administrator) "The poppy business is linked to important people in Kabul and there is no support from Kabul to fight with commanders - they have more money than we do." (General of provincial garrison) In some areas, the ability to tax the drugs trade at all stages is considered to be payment in lieu of a reasonable government salary. 18 AREU & The World Bank A Guide to Government in Afghanistan Staffing Establishment Tashkeels The tashkeel is an essential component in the whole budgetary and payroll process. The tashkeels provide the organizational chart for the ministry detailing staffing positions and levels. Historically, ministries prepared their tashkeels and then sent them to the Civil Servant Organizations Department of the Ministry of Finance for verification. The Ministry of Finance was authorized to make some reasonable modifications. Preparation of the tashkeels was regarded as one element of preparing the overall budget. During the mujahidin period, this responsibility was moved out of the Ministry of Finance and the tashkeels are now approved by a department in the Office of Administrative Affairs (OAA). All budget units must have a tashkeel agreed to at the beginning of the budget year before they can execute payroll and recruit staff. Provincial departments and district offices receive their tashkeel for the year from their respective ministries. The other component needed by ministries and departments for processing payrolls, is the takhsis. The takhsis is the staff allotment for the budgetary unit, which is provided by the line ministry based on allotments provided by the Ministry of Finance for the ministry as a whole. No tashkeels were issued in 1381, and the tashkeels for 1382 were issued late - many districts still had not received them by mid-year - and they are occasionally inconsistent with the allotment. There is no reason why the takhsis should match the tashkeel. It is quite common to have a situation where fiscal constraints result in a level of funding that cannot cover all approved positions. In these situations, managers must decide which approved positions are to be funded. However, for Afghanistan, this would be a dramatic departure from current practice, where traditionally the tashkeel has been the sole control on staff, and the line ministries in Kabul make all decisions about the tashkeel. Switching to a system where the takhsis was the controlling number would mean that managers at the provincial level would have to choose which positions are to be funded - a significant change in delegated authority. While this is certainly possible in principle, provincial staff would need training before taking on this new authority. Staffing numbers General civilian government Reasonable estimates put the total general civilian govemment employment anywhere between 250,000 and 350,000 people. The uncertainty over numbers arises for two reasons. First, there is no list of legitimately employed staff (nominal roll), either in Kabul or decentralized in the provinces. Second, there is considerable variation in the numbers of staff paid each month in each ministry or provincial payroll. A primary reason for such variation is the delay in submitting and 38 AREU & The World Bank Central Administration allocation by NDB sector; (d) the geographic spread of the budget; and (e) analysis of the costs of execution through the U.N., NGO, or private sector. Figure 3: Execution of the Development Budget, 1382 500 400 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 300 - - 0 <2 or ' g r ',ts A~~~ o eP$ecO [ Budget * Commitment Disbursement Source: Development Assistance Database cited in the "Mid-Term Budget Review," September 19, 2003. In addition, the execution of the development budget has been constrained by poor security conditions around the country, and limited capacity in line ministries with respect to project and program management, procurement, and financial management. Figure 3 above demonstrates the slow pace of execution. By September 2003, only $223 million is recorded in the DAD as having been disbursed against an overall budget requirement of $1.7 billion for 1382. This also reflects some difficulty faced by the database in capturing all donor commitments and disbursements. AREU & The World Bank 37 A Guide to Government in Afghanistan Table 4: Distribution of External Financing Requirements by NDF Pillar (1381-1383, $ million) National Development Framework 1381 1382 1383 Three-Year Total Pillar 1: Human and social capital 909 865 1293 2,867 Pillar II: Physical reconstruction and natural resources 426 622 1179 2,227 Pillar III: Security and rule of law 139 231 207 577 Total 1,474 1,718 2,680 5,671 Source: Ministry of Finance. 1383 Guidance recently issued for the 1381 development budget emphasizes that the 1383 public investment program will reflect more detailed information on needs and enhancements in the management and coordination mechanisms. During the 1383 PIP preparation it is hoped that the CGs will take a more active role. To ensure predictability and sustainability in the development budget, the finalized 1383 National Development Budget (NDB) will only include those projects that have attracted sufficient funding by February 26, 2004. Donors were requested to confirm by February 26, 2004 which projects set out in the draft PIPs they wished to support. At this point, the status of funding to all projects will be reviewed and any discretionary govemment resources allocated. Those projects that have not received sufficient financial commitments may be removed from the 1383 NDB. During the course of 1383, there will be opportunities at fixed time periods for projects that could not be included in the 1383 budget or for new projects to be reviewed and, if approved, included in the 1383 budget. Executing the development budget Most of the financial support provided by donors to the national budget remains in the hands of donors, and is not available as cash or otherwise fungible resources to the govemment. As such, monitoring the execution of the development budget has been complex. A number of programs such as the National Emergency Employment Program (NEEP) and the National Solidarity Program (NSP) are funded through the national budget, but are implemented through contracts to NGOs supervised by govemment ministries. The Donor Assistance Database (DAD) has been established to assist with aid coordination and, increasingly, expenditure tracking. The analysis provided by the database has been limited to tracking donor commitments with some information on disbursement, but little is known about service delivery. The reporting that does exist remains highly aggregated and little analysis has yet been conducted regarding (a) the long term recurrent implications of the development budget; (b) the level of recurrent financing inherent within the development budget; (c) provincial 36 AREU & The World Bank Central Administration Each NDP is currently supported by a sectoral coordination group (also called a "consultative group" or CG) chaired by the relevant ministry and supported by a donor or agency. The objective of the CG process is to increase the effectiveness and efficiency of aid coordination in support of the national development and poverty reduction objectives through the implementation of the national budget. The government has identified three ways in which donors can fund Afghan programs: * By direct contribution to the government for designated purposes, to be administered by the Ministry of Finance; * Through trust funds administered by international organizations before being channeled to the Ministry of Finance, such as the ARTF; and * By direct support to private sector organizations to carry out government- identified priority projects (Ministries of Planning, Reconstruction, and Finance, 2002). Donors are requested to focus their financial support to government and to improve cohesion and focus investment towards particular results and activities by limiting their contributions to three sectors. Large donors can "buy" into additional sectors with a $30 million contribution, if their commitment to their other three chosen sectors is at least that large. Discussion within the CGs is intended to help the ministry prioritize project areas, within which donors may propose to fund and implement projects. Advisory groups on humanitarian issues, gender, environment, and human rights have also been established to allow common issues to be integrated into national policy and budget preparation; working groups in key national security areas such as counter narcotics and disarmament were also established. In preparing the development budget for 1382, a call circular was extended to the 12 lead ministries associated with the national development programs requesting that public investment programs (PIPs) be developed for each NDP, in consultation with cooperation partners. Tradeoffs are required as the Ministry of Finance set some expenditure limits for each NDP, based on the assumed absorptive capacity of the sector. The total funding requirement was estimated at $1.7 billion in 1382, rising to more than $2.6 billion in 1383 and $3.6 billion in 1384 as large projects get underway. Table 4 presents the distribution of external financing to the three pillars of the NDF, for 1381, 1382 and 1383. The figures for 1381 remain indicative, as the budget was only presented in draft. The 1382 budget was agreed by Cabinet on the March 17, 2003, and the figures for 1383, are rolling budget estimates prepared by the lead ministries. AREU & The World Bank 35 A Guide to Government in Afghanistan which projects had been approved. The department Box 8: The National Development Framework then prepared detailed cost Pillar 1: Human Capital and Social Protection estimates that were Refugee & IDP Return submitted to the ministry Educational & Vocational Training subprogram - National Primarv Health & in Kabul. The ministry Education reviewed this and gave the Health & Nutrition department a specific Livelihoods & Social Protection allocation. The department subprogram - National Solidaritv Program & then informed the Emergency Public Works respecntivnfme di cts, as Cultural Heritage, Media & Sports appropriate. Pillar 2: Physical Infrastructure and Natural Resources Per previous practice, a Transport number of ministries had subprogram - National Transport (Roads & Airports) submitted development Energy, Mining & Telecommunications budgets to the Ministry of Natural Resource Management Finance through the subprogram -National Water Resource Ministry of Planning in Investment 13 8 1, but these were never Urban Management 1381, but these were never subprogram - National Urban Infrastructure funded. Pillar 3: Enabling Environment for Development 1382 Trade & Investment Policymakers took a Public Administration Reform and Economic Policyakers ook a Management different approach when subprogram - National Governance Infrastructure preparing the development Justice budget for 1382. The NDF Security and Law and Order Program was prepared by the AACA and presented to donors by then-Chairman Karzai at a donor conference in April 2002. The NDF provided general guidelines and priorities for development expenditures. It presented 12 NDPs, with six national priority subprograms under three broad pillars (see Box 8). Subsequently, a number of national security programs were also added to the overall framework. The NDF was designed to address the risk that a large Cabinet, coupled with an equally large and diverse donor community, would lead to an uncoordinated approach to the allocation and management of major expenditures. In essence, the development budget, and the supporting NDPs, were established to focus financing on national priority programs, as well as to improve govemment and donor coordination. It sought to discipline donors as they spend their money on projects that, despite generally good government ownership, donors would largely consider their own, implemented according to their own donor procedures and timetables. The objective was to link the operating and development budgets - to include operating and maintenance expenditures for completed development projects in the operating budget, and provide sufficient capacity to assist in the implementation of development budget projects. However, for practical purposes, there is currently little connection. 34 AREU & The World Bank Central Administration Procurement The procurement regulations require a decentralized approach to public procurement; each entity handles its own procurement needs. However, later versions of the regulations refer to the possible designation by an entity to carry out centralized procurement of common-use items. No central entity has yet been designated within government to undertake procurement. Prior to its abolition in October 2003, the Afghanistan Assistance Coordination Authority (AACA) provided assistance to ministries undertaking major procurement, particularly under donor financed programs. The procurement unit is now part of the Afghanistan Reconstruction and Development Services (ARDS) and is supervised jointly by the Ministry of Planning (MoP) and the Ministry of Reconstruction (MoR). Articles 90 and 91 in a draft procurement law, now under discussion, establishes a Procurement Policy Unit (PPU). The PPU is intended to assist the government in monitoring procurement activity, setting policy, and guiding the professional development of procurement officials. The placement of the PPU within the government is now under consideration. Establishing the PPU as an autonomous entity, reporting directly to the president, firmly divorces the unit from major procurement activities, but might equally remove a key area of policy from direct government control. Locating the PPU within the Office of the President would make it highly vulnerable to political direction. If the PPU is to be housed within a ministry then, in principle, the Ministry of Finance with its overarching stewardship role must be a prime candidate. Audit The control and audit office accepts its responsibility to audit government financial statements for 1381. Audits for the government accounts are required by law to be submitted by September 21 - six months after the start of the solar year. Accounts for the Afghanistan Reconstruction Trust Fund (ARTF), a mechanism for financing national development programs (see the budget preparation section below), have been submitted to the auditor general and the audit of these accounts has begun. Currently a systems review of the Ministry of Finance accounting system and a pilot certification audit of Ariana, the national airline, are underway. This will assist with the preparation of accounts for the first time for more than 10 years. A new audit law is under development. The Development Budget Budget preparation 1381 Previously, development funds were budgeted for the Kabul ministries by the Ministry of Finance but through the Ministry of Planning. Sometime early in the fiscal year, provincial departments submitted a request for specific capital projects to their respective ministries in Kabul. The line ministry reviewed these requests against their available development budget, and informed the provincial departments AREU & The World Bank 33 A Guide to Government in Afghanistan Payroll The Ministry of Finance in Kabul now processes all payrolls. While the Ministry of Finance has always processed Kabul ministry payrolls, this is a new procedure for provinces, introduced since the collapse of the Taliban regime. Previously, provincial payrolls were consolidated and authorized for payment at the mustoufiat in each province; now, mustoufiats must forward the payroll to Kabul for authorization. Following significant delays in processing payrolls in 1381, particularly for the provinces, the timeliness of payroll execution appears to have improved in 1382. Figure 2 measures delays as the average number of days between the date on which provincial pay was due, and the date on which the Treasury Department in the Ministry of Finance issued checks to the province. However, this presents only part of the picture. There could be extensive delays at the "retail" end, for example, from the governor via bonded trustee to the budget unit and individual. The figure shows the delays in processing the first checks and in processing the last check issued. As each province submits many separate payrolls for processing each month (typically around 300), delays are measured for the first and last payments processed. The delays in initiating the payroll have gradually diminished. However, the delays in making the last payment significantly increased at the beginning of 1382 and have only resumed a significant downward trend. The fact that the delays were limited to less than 20 days toward the end of 1381 suggests that the system is indeed capable of timely payments. This should be a target. Figure 2: Delays in Salary Payments for the Provinces, Excluding Police (days) 200 - 180 160 140 120 - First amntmd 100 80 Pa--Last pamn made 60- 40 20 0 z 4 5 6 7 8 9 10~1112 1 2 3 4 6 6 SY1381 SY1382 Source: PWC, ASI, and World Bank staff calculations. Non-uniformed staff of the Ministry of Interior are paid through the payroll in the usual way. However, payrolls for uniformed police are submitted to the Ministry of Interior without checking with the mustoufiat. There are very significant delays in salary payments for police as September 2003 payroll reports indicated that slightly fewer than 50 percent of police had been paid for Jawza (May 22- June 21). 32 AREU & The World Bank Central Administration Box 7: Budgets, Allotments, and Execution In Afghanistan, annual budgets are approved for all primary budget units (PBUs) - primarily ministries. Once the annual budget is approved, PBUs prepare quarterly allotments for their secondary budget units (SBUs) - primarily their provincial departments. Historically, the quarterly allotments were advanced in cash to the mustoufiat in each province. Salaries and non-salary expenditures were paid out of this advance, and proper expenditure reports were sent to Kabul. Allotments could be adjusted on a quarterly basis if necessary to reflect budget adjustments or cash flow needs. Salary allotments were determined based on the tashkeel, or staffing establishment, which was developed by ministries but approved by the Ministry of Finance as part of the budget process. However, today no advance is provided to provinces for salaries. Instead, provinces must submit their payroll documentation to the Ministry of Finance in Kabul, after which payment is made. Nevertheless, the tashkeel is still issued (but not necessarily reviewed in detail by the Ministry of Finance), and quarterly allotment amounts for provincial departments are still issued by ministries as the formal authority to the province to spend. As a consequence, provinces must receive their allotment - now simply a document authorizing spending for the quarter, rather than a cash advance - before submitting their payroll documentation to Kabul for payment. This is further complicated by the fact that the tashkeel and salary allotment do not necessarily match for individual provincial departments, as they had in the past. As a result, when allotments are delayed beyond the start of the fiscal year, provincial departments are often in a position of having to ration an allotment that may be smaller than the tashkeel, after the staff have already earned their pay. Therefore, the role of salary allotments to provinces has changed. It is no longer the basis for providing an advance to provinces; instead its only purpose appears to be to ensure that the payroll is kept within budget limits, on the assumption that the tashkeel cannot be considered a reliable financial control mechanism. However, if this is the intention, provinces need to be informed of this change, and be trained on how to manage a staffing complement that is subject to overriding budget controls - a function they have never been required to perform in the past. It is also critical that the salary allotment information be provided to provinces early enough in the process so that it does not simply frustrate the budget execution process. In the future, it will be important to move to an annual budget system with the provinces, especially if they are to take on increasing responsibility for managing their payroll within financial limits, in order to give them adequate time to plan. Similarly for non-salary expenditures, the quarterly allotment to provinces is no longer a cash advance, but is simply a document providing formal authority to spend. Until August 2003, practices varied, but generally those provinces that had access to revenue would use this to make non-salary purchases, and those without access to revenue either purchased on credit or just did not spend. At the very end of the fiscal year 1381, Kabul did provide some cash to some provinces. In August 2003, the tools for a more regularized payment process were established with the setting up a single expenditure and revenue account in each province, and each expenditure account was "seeded" with I to 2 million afs. from which non-salary expenditures could be made. Once proper expenditure reports are submitted, these funds are to be replenished. No data are yet available on how well this process has worked. However, if this system of advances is funded based on the actual quarterly allotment amounts and replenished in a timely manner, it should address many of the earlier concerns about lack of access to non- salary funds. As with the salary allotment, future consideration should be given to moving to an annual allotment or budget, consistent with increased planning responsibilities at the provincial level. In the meantime, however, the system of quarterly allotments can also serve as an incentive for provincial performance, in that the quarterly allotment for non-salary expenditures could be adjusted depending on whether a particular province is meeting its performance targets. AREU & The World Bank 31 A Guide to Government in Afghanistan Executing the ordinary budget Appropriations and allotments All appropriations, which are the approved annual budgets of PBUs, are made according tofasils (the more detailed line item codes) and babs. Allotments are sent only by babs. Appropriations are made at the PBU level and are effected through the passage of the Budget Law (schedule 1). In effect, the budget provides political authority for the PBUs to spend - a delegated appropriation - subject to conditions. The conditions include the requirement that the PBUs prepare salary allotments for their central and provincial units, and that the Ministry of Finance agrees to these. Section 4 of the 1382 Budget Decree stipulates that, "No expenditures will be permitted by any ministry until allotments have been submitted to and agreed by the Ministry of Finance, including allotments authority distributed to provincial components of each ministry." Table 3 outlines the annual allotment procedures. Table 3: Allotment Procedures Before the first quarter Annual allotments are made by the Ministry of Finance for the PBUs. Each PBU prepares the quarterly allotments for each of its secondary budget units, and submits them to the Ministry of Finance. Before the second quarter Primary budget units submit revised quarterly allotments for each of their secondary budget units. The Ministry of Finance retains 25 percent of agreed allotments pending submission of expenditure reports. Before the third quarter Similar to above arrangements. Before the fourth quarter Similar to above except that the Ministry of Finance retains 50 percent of agreed allotments pending submission of expenditure reports. Primary budget units can transfer allotments between their secondary budget units. However, transfers between babs and any proposed increase in total primary budget unit budgets requires re-appropriation and must be authorized by the finance minister. Box 7 provides details on how budgets and salary allotments are determined, approved, and executed. 30 AREU & The World Bank Central Administration presented to donors. All work on budget preparation was done at the central ministry level; provinces had no involvement. The key challenges in preparing the budget were to balance the proposed spending and staffing on security (including defense and police) with spending in other areas, and to ensure that the non-wage components in the key social sectors, such as health and education, were adequately funded. For reasons of political pragrnatism, the defense budget was somewhat loosely defined.7 An additional challenge was to assess the scale and nature of expenditure that was occurring off budget. This included expenditure that could come on budget in a quite straightforward way, such as the use of revenues earned in embassies overseas to fund those embassies and the foreign ministry more broadly, expenditure from revenues collected at provincial level that were not reported to the center, and expenditure from assistance provided by neighboring countries. The 1381 ordinary budget was approved for $460 million, of which $150 million was for staffing, and against which domestic revenue totaled $83 million or 18.5 percent. The balance was financed through external donor assistance. 1382 The 1382 budget process was somewhat different than that of 1381. Late in 1381, ministries were required to first re-estimate their likely spending needs for 1381 and then to calculate the implications for 1382 on the assumption of no policy changes. Any changes to the estimated "ordinary" budget needs were to be justified by a separate estimate for each policy change along with some indicative performance information, or expected results. From a provincial perspective, this new budget process had little or no impact in terms of their involvement in the process - they continued to be completely excluded. Time and capacity did not allow any training to be provided by the finance ministry to spending ministries. The major instruction provided by the finance ministry to the spending ministries was a request that they prepare and issue a staffing chart. No guidance was provided for operations and maintenance or capital expenditures. The overall expenditure level for the operating budget for 1382 was initially set at $450 million, by the Ministry of Finance, or around 10 percent of estimated GDP. Because of the relatively low level of domestic resource mobilization, it was recognized that donor financing would be needed for a large portion of the budget. This meant that budget documentation had to not only be available in English, but also had to be prepared to a standard that provided donors with sufficient comfort to allow them to support the operating budget. The budget was agreed by Cabinet on March 17, 2003. The approved 1382 ordinary budget was equivalent to $550 million - a 19 percent increase over spending in 1381. Domestic revenue forecasts were set at $200 or 36.4 percent of the budget, requiring more than $350 million in external assistance. AREU & The World Bank 29 A Guide to Govemment in Afghanistan The Ordinary Budget Budget preparation As discussed above, central government ministries and institutions are primary budgetary units (PBUs) with specific budgets determined by law, while the provincial departments of the central government ministries are secondary budgetary units, and receive allotments at the discretion of the primary budget unit. 1381 The ordinary budget was designed to provide operating expenditure, including wages and salaries, operations and maintenance, and some capital expenditure to the PBUs. The preparation for the 1381 budget was complicated by the short period of time that was available to the AIA (see Box 6). A one-month appropriation bill was prepared to cover the first month, while a more comprehensive full-year budget was developed. Information was poor, particularly in relation to staffing, with widespread confusion about the actual number of staff in post and authorized establishment, or number of positions. The choice of exchange rate also presented problems. Because the budget was more than 70 percent donor funded, there were arguments for presenting the budget in U.S. dollars. Box 6: Passage of the 1381 Budget However, because the majority of expenditures The finance minister prepared a draft budget for were on local purchases - consideration, but time was not sufficient for detailed particularly local wages - consideration of the budget by Cabinet members. partculrly oca wags - Accordingly, Cabinet agreed to the recommendation of the political priority was the finance minister that one- thirteenth of the draft to maintain the nominal annual appropriation should serve as the appropriation value of the wage that civil for the first month of 1381 . servants collected on a monthly basis. During that first month, Cabinet debated the budget for the remainder of 1381. In some cases, there was quite The first stage of the actual detailed agreement over the budget, including staffing budge prearatin prcess levels. However, in other areas, such as defense, budget preparation process agreement was looser. A budget decree, with the i n v o l v e d m in i s t r i e s appropriation schedule attached, was agreed to by Cabinet proposing staffing on April 6, 2002 (17 Hamal 1381). structures to the budget department in the Ministry The decree included a number of general policy of Finance, and then pronouncements, including the requirement that no wage bargaining over these raises could occur until reform of the public sector had staffing numbers. The begun. This was effectively reversed six weeks after secofind tg e entaild., the passage of the decree by the decision to introduce an additional lunch allowance. However, a clause international advisers forbidding overdraft financing has been rigidly enforced. working with the proposed Summary material, including the budget decree and the staffing structures and appropriation schedule, were provided to donors in compiling a budget English. The appropriation schedule and decree were document that could be circulated to ministers in Dan. 28 AREU & The World Bank Central Administration The recent history of the organizational arrangements for policy management support to Cabinet in Afghanistan is complex. It appears that the pre-Soviet arrangements were relatively orthodox: the Prime Minister's Office provided cabinet secretariat functions, and a relatively small personal office supported the president. The Soviets introduced a classic "apparat" - tasked with overseeing the line ministries' implementation of Moscow-driven sectoral policies. This was placed within the Office of the President. Support for Cabinet was provided by the Prime Minister's Office. The Taliban abolished the Prime Minister's Office, requiring that the Cabinet support function be moved to the Office of Administrative Affairs. The Afghanistan Interim Administration (AIA) reestablished the Prime Minister's Office and established the National Security Council (NSC), followed by an Office of the National Security Council Adviser, which seems to have some significant influence in the preparation of cabinet submissions. As a result, Afghanistan's government today comprises the following array of central agencies: * A Prime Minister's Office with few apparent functions but with about 300 staff (approximately half of the original, pre-abolition total). The Prime Minister's.Office has recently been subsumed under the Office of the President as a budget unit, though still appears to function as an organizational unit. * An Office of Administrative Affairs with about 1,200 staff with domestic and logistical functions, and a further 300 staff with professional duties, including support to Cabinet. This office: O Oversees the activities of all ministries through five sectors, each staffed with 20 sectoral experts; o Reviews all requests for senior staff appointments with, seemingly, the authority to veto ministries' recommendations; and o Organizes the meeting of ministers, including agenda-setting and sending out the decisions to line ministries. * A small, but growing, Office of the President, with a small Policy Management Unit (PMU) of up to 12 staff that: o Provides expert advice to the president on policy issues, enabling the president to enter into informed dialogue with the relevant ministry; o Liaises with independent commissions established under the Bonn Agreement (including the Judicial Commission and the Human Rights Commission), and advises the president on cross-cutting issues; and o Monitors the implementation of the president's decisions. * A small but growing Office of the NSC Adviser. There appear to be some rivalries and organizational tensions concerning responsibility for Cabinet support, including managing the process for preparing submissions and managing the Cabinet agenda. In addition, Cabinet faces an accumulation of some 482 overlapping regulations relating to decision-making authority and responsibility. Despite this overload of regulations, there are significant gaps. There are, for example, no consistent criteria concerning what requires a presidential decree vs. a cabinet decision. AREU & The World Bank 27 A Guide to Government in Afghanistan used for recruitment and promotion for civil servants below grade 2 carried out by ministries and government agencies. o The Independent Appeals Board will review appeals by current civil servants and applicants for civil service employment. * The Civil Service Management Department o The Civil Service Management Department will establish and implement policies on employment and management of civil servants and administrative efficiency, including professional development and human resource management information systems. * The Administrative Reform Secretariat o The secretariat within the IARCSC will support the Ministerial Advisory Committee (MAC) and the chairman of the IARCSC in leading and managing the administrative reform program, including the review of programs and projects. Members of the MAC include the ministers of foreign affairs, interior, finance, justice, labor, and social affairs, and up to three other ministries on an annual rotating basis, appointed for one year. Prior to the establishment of the IARCSC, the Ministry of Labor and Social Affairs had responsibility for all staffing records. It also had - and continues to have - responsibility for managing staff being considered for redundancy. In principle, such staff should join a surplus list maintained by the ministry for six months, while attempts are made to find them employment in other ministries. This amounts to a flat rate six-month salary payment for any retrenched staff. Policy management in the center ofgovernment Government policies in Afghanistan, as elsewhere, are disseminated in several forms. First, strategic policies are signaled through personal announcements by the president and by ministers. Second, policies are conveyed, particularly at the sector level, by the operating and development budgets. Third, government can issue various laws and decrees. On the latter, the usual hierarchy applies: * Legislative decrees (furmaan taknini) approved by the president and Cabinet * Decrees of an administrative nature passed within the president's sole authority * Regulations adopted by Cabinet * Legislative documents under a variety of names (rules, directives, guidelines, and so forth) passed by individual ministers. The National Assembly, re-established by the 2004 Constitution, has the authority to ratify, modify, or abrogate laws and legislative decrees, thus placing the laws that it passes at the top this hierarchy of policy instruments. Policy management is crucial to ensuring that government is seen to be consistent and predictable in all these policy pronouncements. The phrase "policy management" is used deliberately. Policies are generally made in the sector ministries and managed at the center; there is little advantage to the Cabinet office or other central agency second-guessing technical proposals from the ministries. 26 AREU & The World Bank Central Administration Until recently, no single agency or ministry had responsibility for managing the public service. Human resource management functions, including recruitment, promotion, and staff placement, were spread out among different organizations - the Ministry of Labor and Social Affairs, the Ministry of Finance, and the administrative affairs office. In addition, there were other functions, such as organizational restructuring and public administration reform that were not performed at all. Consequently, there has been no place within govermment for making civil service policy, precluding any opportunity for considered policy action. The Bonn Agreement provided for the establishment of an independent Civil Service Commission. This was established by Decree No. 257, dated 1381/3/2 (May 23, 2002). Subsequently, the passage of Decree No. 25 and the regulations in the form of Decree No. 26 on 1382/3/20 (June 10, 2003) amended and extended the responsibilities of the Civil Service Commission into that of an Independent Administrative Reform and Civil Service Commission (IARCSC). The decree and regulation gave the IARCSC responsibility for: * Appointments and appeals. In order to fulfill its mandate under the Bonn Agreement, the Commission will recruit and promote candidates for senior civil service posts on merit, and will develop and oversee the application of merit-based recruitment procedures for the remainder of the civil service. The Commission will also hear appeals and deal with grievances from civil servants. Two independent boards are being appointed for these purposes. * Civil service management. The Commission will develop a new civil service law, will review and amend, as necessary, existing legislation on civil service employment, and will develop personnel policies and procedures to ensure the legislation is applied in practice. The Commission, in consultation and collaboration with ministries, will be responsible for conducting reviews of institutional structures and administrative processes to improve the efficiency and effectiveness of govemment business. It will also develop strategies for enhancing the use of modem information technology throughout government. A civil service management department is being formed to carry out these tasks. * Administrative reform. The Commission is the focal point within government for oversight, coordination, and management of the Public Administration Reform Program, one of the 12 priority National Development Programs (NDP) in the government's National Development Framework (NDF). The IARCSC is headed by a chairman, who is directly responsible to the president. Currently, the chairman is one of the four vice presidents appointed as part of the Transitional Authority. Structurally, the commission comprises: * The Independent Appointments Board and the Independent Appeals Board, with five and three members, respectively, appointed by the president for periods of between one and three years, renewable at the discretion of the president for one additional period of three years: o The Independent Appointments Board will identify and recommend to the president recruitment of civil servants at grade 2 and above (or equivalent in any new grading structure), and will review the procedures AREU & The World Bank 25 A Guide to Government in Afghanistan Staffing The underlying arrangements for recruiting and promoting staff stem from the 1970 (1349) Law on the Status and Condition of Government Employees, as amended by the 1977 (1356) Decree No. 1433. The 1970 law and amendments provided for a system of centralized recruitment, and established a system of job classification and grading that underpins the management of pay policy within the public sector. The law also confirmed the distinction between karmand staff, who are considered to be regular and permanent, and agir staff, who are hired on fixed- term contracts. This is murky legal territory however. There is also a 1977 Staff Regulation No. 12.3 (1356) which contains many regulations that duplicate the contents of the 1970 law, particularly those that relate to salary and other benefits, promotion, and resignation. The 1977 regulation cancels previous regulations published in 1969, but it does not mention the 1970 law. It appears that the 1988 Law on Government Workers (1367) Decree No. 666 superseded this law. However, this latter law appears to cover karmand staff only. The 1988 law was, in turn, overtaken by the Taliban Employment and Labor Relations and Personnel Law. The date of passage of this law is apparently 1998, but the latest edition was published by the Ministry of Justice in the official gazette, Rasmi Gereeda, in 1999. Though broadly consistent with the previous laws, it omits reference to two key issues that underpin the structure of government employment: the distinction between karmand and agir staff, and the concept of promotion in post. It is possible that the omission of this distinction in the Taliban law has led to some confusion about the current practice. The Taliban 1999 law, in its final article, cancelled Decree 666. The Taliban law is widely considered to include a ban on the employment of women but a reading of the law does not suggest this is so. Regardless, the Bonn Agreement and the subsequent Presidential Decree No. 66 nullified any legal instruments that were inconsistent with the 1964 Constitution. That Decree, promulgated in 2001 (1380), annuls all laws, orders, regulations and articles inconsistent with the Bonn Agreement and requests the Ministry of Justice to review all laws and legislative documents passed before 1380. There is also a labor law that was promulgated in 1987, but this appears to apply exclusively to private sector enterprises and those companies with up to 50 percent of government ownership. Annex 3 sets out the range of public sector legislation that has been identified to date. It is important to note that employment within government is regarded as a homogenous whole. There is no distinction made between employees of a commercial government enterprise with government ownership greater than 50 percent, and those of a central government ministry. Similarly, there is little distinction between the terms and conditions of permanent staff and those on contracts. The result seems to be that all staff are effectively permanent and staff can, with permission, transfer between government enterprises and other positions in government. In practice, it seems that staff mobility is quite modest. 24 AREU & The World Bank Central Administration and in the past has been the primary source of information for the preparation of the budget for the following fiscal year. The Presidency is also undertaking "external" audits in the provinces. * It requires that pre-audit be conducted by representatives from the Ministry of Finance who must pre-approve expenditures prior to distributing of salaries, procurements, and purchasing supplies, and prior to signing any contracts. * It also provides for ministries to have an internal audit department - though in practice these departments are largely ineffective. Primary responsibility for implementing the Budget Law lies with the Ministry of Finance in Kabul, and the ministry's network of provincial agents (the mustoufie velayat, also known just as the mustoufie). The organizational structure for the Ministry of Finance is somewhat over-elaborate but unremarkable, including departments for financial and economical analysis (responsible for macroeconomic projections), budget, revenue, customs, treasury, and accounting. Pensions' administration has recently been transferred to the Ministry of Labor and Social Affairs (MoLSA), although responsibility for pension policy remains in the Ministry of Finance. The Procurement Regulations were first issued in 1977, and modifications have consisted primarily of periodic adjustments to the monetary thresholds. In addition, there is a parallel set of Construction Works Regulations. These are both, in principle, more or less adequate, covering the procurement of goods, works, and services at all levels of public administration. The latter regulations are much closer to international standards, though there are some significant shortcomings in the procurement arrangements: * Ideally, all procurement regulations should be enshrined in law rather than regulations. * There is some ambiguity concerning procurement carried out using extra- budgetary funds and the permissible breadth of national security exclusions. * The regulations do not provide general conditions of contract, standard bidding documents, or guidance on ethics and penalties. * The regulations allow for - and indeed encourage - auctions and open bidding, with contracted prices subject to further negotiation, and provide unfair advantages to nationalized industries and disadvantages to foreign bidders. A new draft procurement law is currently being discussed with the Ministry of Justice. Meanwhile, draft regulations have been prepared and draft standard bidding documents are under preparation. Central government ministries and institutions are primary budgetary units with specific budgets determined by law. The provincial departments of the central government ministries are secondary budgetary units, and receive allocations at the discretion of the primary budget unit. The net effect of these arrangements is that, in principle, the budgetary allocations for the provinces are simply the sum of the administrative decisions that have been made by the various Kabul ministries concerning the allocations to their provincial departments. There is no concept of a consolidated provincial budget. AREU & The World Bank 23 2. CENTRAL ADMINISTRATION Legal Basis and Organizational Responsibilities Fiscal management There are four main pieces of legislation that govern Afghanistan's fiscal mechanisms: the Budget Law (1983), the Accounting Manual (date uncertain), the Control and Audit Regulation (issued under the Budget Law in 1985) and the Procurement Regulations (1977). The Budget Law and Accounting Manual, while somewhat complex, are sound and provide appropriate checks and balances. The Budget Law provides some elements of very good practice, in particular in its requirement that the full cost of donor projects should be reflected in the government's budget. It also has some significant shortcomings: * It makes a separation between the development and "ordinary" budgets, rather than the more straightforward distinction between recurrent and capital budgets. The law does not reflect the current budget structure. It is divided into central and rural budget, development budget, social welfare budget, and confidential budget. * It does not reflect the current institutional structure of Afghanistan, with frequent references to the Revolutionary Council as the budget appropriation and amendment institution. * It prescribes a Soviet-style budget preparation procedure, based on indices in the five-year development plan, and detailed input cost norms. * It fails to establish a consistent framework for internal control, internal audit and external audit. * It does not include any provisions for financing of the budget, guarantees or other below-the-line operations. The Accounting Manual establishes the "...legal requirements, organization, policies, procedures and rules concerning the accounting system of the Royal Government of Afghanistan." Though the document is not dated, it was promulgated after 1962 as it makes reference to a loan issued in that year. There is a separate Treasury Manual. The Control and Audit Regulation recognizes three types of audits: * It makes the General Control and Inspection Presidency of the Council of Ministers the supreme audit authority for the whole of government, under the auditor general, providing ex-post external audit. This presidency audits the Final Account of Revenues and Expenditures of the Ministry of Finance. The "Final Account" contains the appropriations of the primary budgetary units, the allocations that are issued during the fiscal year, and the revenues collected and expenditures made by government entities. The Final Account is prepared by the accounting, treasury, and revenue departments of the Ministry of Finance 22 AREU & The World Bank The Historical and Political Context in these conditions - we feel ashamed," said a member of a district elders' shura, referring to the office of the district governor. Deprived of resources, civilian administrators have little with which they can demonstrate the relevance and importance of central government. Efforts to boost the prestige and capacity of subnational administration must go beyond simple "bricks and mortar" interventions. The importance of hiring qualified personnel into key positions at the subnational level was highlighted in numerous interviews: "For a good administrative system you must hire professional people. Even in Islam it says professional people should be hired to do duties. The governor should look at ability and experience before hiring people." (Member of civil society group in Badakhshan) "Work should be given to qualified people - now illiterate people have power which is why nothing gets done." (District shura in Badakhshan) Staffing provincial and district governments with trained administrators who are appointed according to their competence will have the dual effect of weakening local power-holders and increasing the legitimacy of local government structures. Conclusions This chapter has outlined the evolution of the Afghan state and described the current political context of misalignment and political struggle between the de jure state in Kabul and de facto states at the subnational level. Afghanistan's current political context is very different from the history of tension between a centralizing state and a decentralized society based on the power of traditional institutions with substantial legitimacy. Today, there is a widespread desire for the power of the central government to be extended to the provinces, replacing the currently illegitimate de facto states run by local and regional commanders. While these wishes are often expressed in terms of a desire for a centralized state, this does not necessarily imply a centralization of the rules of operation with all activities based in Kabul. Some modest delegation may be necessary, but such increases in delegated authority should not be taken to mean broad-based decentralization. The task is to make a deconcentrated system work, not to seek heroic or destabilizing radical change. The integrated nature of the current political, security, fiscal, and administrative problems facing Afghanistan means that strategies to legitimize and strengthen the de jure state that rely solely on reconstruction strategies will be inadequate. Instead, there is a need for an overarching political strategy that provides for integrated responses that promote the rule of law and security, especially through disarmament, along with reconstruction activities and measures to undermine the political economy supporting the commanders and warlords of Afghanistan. Strengthening national and subnational administration, the focus of the remainder of this study, will both result from and contribute to a political strategy to align the de jure and de facto states in Afghanistan. AREU & The World Bank 21 A Guide to Government in Afghanistan Take advantage of the strong sentiment for central authority "The administrative system is controlled by commanders, and many officials are linked to commanders. For example, the governor is from Jamiat [a factional group led by former President Burhanuddin Rabbani] and the Chief of Police is from Hezb-i-Islami [a factional group led by Gulbuddin Hekmatyar]. But 90 percent of people support the central government - they are unhappy with rule by commanders. Overall control of Badakhshan is by Rabbani, but if disarmament took place power would be transferred to the people. People are really looking forward to democracy and want to support the center. For example, people voted for me to be a Loya Jirga delegate even if I was opposed by commanders." (Provincial official and Emergency Loya Jirga delegate) Centralized state institutions in Afghanistan have historically co-existed uneasily with a fragmented, decentralized, and traditional society. The conflict of the past 25 years, however, has changed the nature of politics both at the local level and between the local and national levels. One of the most significant changes is that decentralized power, which previously rested largely in the structures of customary institutions (primarily tribal and religious) with considerable legitimacy, today rests on control of military and financial resources generated by participation in the conflict and war economy. The increasing gap between traditional customary institutions and power at the local level, the nostalgia for the days of relative peace under King Zahir Shah, and the bad experience local communities have had with the decentralization of power to warlords in recent years have seriously eroded the legitimacy of decentralized power. Interviewees in all six provinces were virtually unanimous in their support for the restoration of central political authority over provincial and district administration. This sentiment was often expressed most passionately by those who in some way owed their appointments to warlords and commanders, suggesting that these loyalties may not be strong. Other poll-based research has also provided evidence that there is a strong attachment to the idea of central government - for many it would be their first port of call, even though citizens are all too aware of its limited capacity (The Human Rights Research and Advocacy Consortium, 2003:29-30). Many interviewees expressed considerable frustration at how little had been done by the international community and the current government to assert its influence, especially in view of the widespread popular support there would be for such a move. In keeping with this concern to rebuild the central state, administrators and others in the provinces and districts were keen to see the prestige of the civil administration rebuilt. "The poorer government is at the district level, the bigger the gap between central government and the people. Uluswal offices are 90 times less adequate than NGO or commander offices, so the prestige of the uluswal is going down while that of commanders and NGOs increases. Either get rid of uluswals or strengthens them - it's better to have no government than a weak government that ruins the reputation of government." (District governor) Interviewees considered the current conditions disgraceful and politically damaging to the reputation of the government: "It is shameful for the government to work 20 AREU & The World Bank The Historical and Political Context The narcotics trade not only provides financial resources to warlords and commanders to support their de facto power, the failure of central government to control both the growth of poppy and the processing and transportation of opium is a visible sign of the weakness of the central administration and its inability to enforce its edicts. To quote one district administrator: We received a letter from Kabul about not growing poppy which we announced to the people, but we can't stop farmers from growing poppy with 40 soldiers ... If smuggling continues the prestige of the administration will be reduced - both at the national and intemational levels, as well as the local level. Smugglers always try to hurt and weaken the administration system. It is not just the illicit economy, however, that is supporting the de facto decentralized states in Afghanistan. As discussed elsewhere, revenues from customs duties are considerable, especially in Herat and Kandahar, and the process of revenue remittance to Kabul is regarded as one of "negotiation." The study teams were told that revenues from the Daulatabad salt mines in Faryab and the lapis lazuli mines in Badakhshan were all captured by commanders and not remitted to the government. There are many other sources of unofficial taxation by commanders at all levels, including taxes on productive and transport activities. Furthermore, some regional warlords are reportedly still funded by neighboring and regional states seeking to increase their influence in the country. Power holders often manipulate the structures of subnational government to ensure the continued access to resources that underpin their control. For example, four northern districts of Faryab Province have been taken over by the neighboring province of Jawzjan. The deputy governor explained that while these four districts were "administratively" still part of Faryab Province, they were "operationally" part of Jawzjan Province, the home province of General Dostum. While geographical considerations could be used to justify this change, as these districts are more accessible from the provincial capital of Jawzjan than Faryab, the opportunity for resource capture was behind this. The four northern districts include the major carpet trading town of Andkhoi and, more importantly, the Turkmenistan border customs post at Aqina. Anecdotally, there is some evidence that as municipalities become more vibrant administrative centers, a "commanderization of municipalities" is taking place. As explained in greater detail in Chapter 5, provincial and rural municipalities are the only structures of subnational administration that are legally permitted to retain and spend revenues from taxes and fees raised locally. In several districts, the study teams found that mayors of rural municipalities wielded more power and prestige than district governors, and often were the ones to provide hospitality because they had access to revenues. More significantly, the dramatic increase in land prices in urban areas has created tremendous rent-seeking opportunities in provincial municipalities (and even more so in Kabul). Urban land mafias, often under the control of the factional leaders of the de facto states, are reportedly muscling their way into the municipalities of the major cities of Afghanistan to gain control of the lucrative revenues raised through the illegal rental and sale of state-owned properties. AREU & The World Bank 19 Central Administration processing the provincial payrolls. However, the Box 9: Small Government average numbers of staff Even the largest of reasonable staffing estimates places p aid per month i s Afghanistan at the low end of public sector employment gradually stabilizing. relative to population compared to its regional neighbors. Overall, there are few Public sector employment in Afghanistan is between signs of any significant 1.1 percent and 1.6 percent of an assumed population increases in staffing at the of 22 million. In recent years, general civilian government Kabul or provincial levels employment (i.e. public sector employment excluding since early 1381. the military and state-owned enterprises) has accounted for about 2.5 percent of the population in countries in Although this government the Asia and the Pacific region. Of this, the social sectors i s q u it e s m a 11 i n (education, higher education and health) typically account employment terms (see for 40 percent, except in states that were part of the Box 9) relative to its former Soviet Union, where social sector employment capability, this is not a averages at around 70 percent of general civilian small government given government. the weak capacity of government. A large proportion (around 40 percent) of this relatively small workforce is located within Kabul. This is potentially problematic, because it suggests that any moves toward adequate staffing in the provinces without corresponding reductions in staff in Kabul could produce a large government, which would be both unnecessary and unsustainable. Figure 4 sets out a current estimate for the underlying total of public employment. Figure 4: Estimated Underlying Totals for Public Employment Population (2003 est.) 22 million TOTAL PUBLIC EMPLOYMENT C C G 395,666 Civlian Central Govt. F as % of Population I.0 % Education 0.5 % STATE-OWNED ENTERPRISES GENERAL GOVERNMENT 6,100 l F 389,566 ARMED FORCES CIVILIAN CENTRAL GOVERNMENT MUNICIPALADMINISTRATION 60,000 326,566 3,000 Based in KABUL Based in the PROVINCES 119,525 207,041 of which: total teachers 16,841 53,879 70,721 teachers health 13,323 12,247 25,571 health pealtce 21,935 47,491 69,427 peolice Source: World Bank Afghanistan Public Employment and Wages Model. AREU & The World Bank 39 A Guide to Government in Afghanistan Figure 5 shows the numbers of staff for whom salaries have been paid in civilian central government (excluding police), set against the estimated underlying totals. There is no certainty that these numbers reflect the actual number of staff who have received their pay. Figure 5: Civilian Government Staff for Whom Salaries Have Been Paid, Excluding Police 300,000 250,000 200,000 150,000 100,000 F 50,000 0 1 2 2 < 4 n 5 6 7 8 o01 1 2 < 4 0) 6 ~~ z 0< Ghof ~~~~~~~~~~~~~Kuna r L rg ~~~~~~~~~Nangarha Farah t1 IDA (World Bank) Vmro n Kandahar USAID/Reach liriHilman-d EC UpdiZd Now nber 14, 2003 ( KfW (German) Source: Ministry of Health, UNICEF. The first contracts for PPAs and PPA-like agreements have now been signed and donors have agreed on a geographical distribution of priority provinces and/or districts, as described in Figure 14. It will be noted that a number of provinces and districts are not included in the map. For some of these areas, there is some expression of interest by donors, but specifics, including funding, may not yet be in place. For instance, the Asian Development Bank (ADB) is not included on the map, as it has not decided its target districts in Badakhshan and Ghor Provinces. Even still, there are some districts where there are no plans for contracting out services. The Case for Contracting Out Health Service Delivery While it is not the purpose of this paper to judge the appropriateness of this policy choice, it is useful to lay out the arguments that have led to this decision. The case for contracting out the provision of primary health care rests on three points: sector investment, institutional agility and speed, and efficiency. The first argument is easily made. The government of Afghanistan does not have enough money within its own budget to spend on health. For the 1381 ordinary budget, health sector planned spending (948 million afs.) amounted to 6.06 percent of the total budget, dwarfed by the shares to education and security. On a per- capita basis, 1381 spending on health is shown in Table 47, with Kandahar at 19.89 afs. per capita, Herat at 18.18 afs. per capita, and Bamyan and Faryab at 5.23 and 5.85 afs. per capita, respectively. For 1382, a total budget of 1,256 million afs. 130 AREU & The World Bank Health Service Delivery has been allocated to health sector spending. While this represents a 25 percent increase over last year's budget, the problem of inadequate funding remains. Based on admittedly unreliable data, it appears that, in contrast, the resources available for the health sector from the major donors, including the World Bank, will amount to about $4 per capita per year, or about 175 afs. (World Bank staff estimates). Arguably, this funding is only available because donors are more reassured by the fiduciary arrangements implicit in the contracting approach. Table 47: Key Statistics, Public Health Sector Active health facilitiesb Provincial expenditures 1382 IQ 1381 (afs.) allotment Province Population2 for Total Population/ Actual Spending health Hospitals Clinics facilities facility expenditures per capitac (afs.) Badakhshan 725,700 1 19 20 36,285 6,985,338 9.63 8,090,880 Bamyan 391.700 3 5 8 48,963 2,048,522 5.23 2,197,109 Faryab 794,100 3 7 10 79,410 4,647,147 5.85 3,692,689 Herat 1,208,000 1 23 24 50,333 21.962,106 18.18 9,038,007 Kandahar 913,900 8 13 21 43,519 18,176,621 19.89 6,501,086 Wardak 448,700 3 7 10 44,870 2,752,968 6.14 3,981,768 Notes: a! CSO 2003/04 estimate. b/ National Health Resources Survey, September 2002, MoPH/USAID/AHSEP. c/ 1381 actuals / 2000 population stats. Source: Provincial health departments, MoF, and as above. Apart from the fiduciary concerns of the donors, it is unlikely that the government could spend the necessary amounts of money quickly enough to achieve any results in the short term. In 1381, there was a significant budget execution problem in health. At year end, total expenditures were only 541 million afs., or 57 percent of the total allotment. For 1382, it is likely that the execution rate will be higher as by the second quarter, 343 million or 27.3 percent had been spent. However, it does suggest that government has a problem in scaling up rapidly, especially to the level planned by donors. The parallel argument concerning institutional efficiency is more intuitive, although it is strongly bolstered by research on Cambodia (Bhushan, Keller, and Schwartz, 2002). The results of a survey in Cambodia showed that contracted districts consistently outperformed the control districts with respect to the predefined coverage indicators. The presumption is that if the funds were simply given to government to hire more staff, then they would not spend those funds wisely - through poor hiring practices, patronage appointments, poor incentives for staff, and low attendance rates at clinics. Current Circumstances at the Provincial and District Level While these arguments present a strong case for action, contracting out will also have significant implications for local public administration, both in the short and medium terms, which the new arrangements must address. But before these implications can be discussed, it is useful to review the current status and issues that exist in the provincial administrative structure. Some of these are common AREU & The World Bank 131 A Guide to Govemment in Afghanistan across the public sector and reflect the same fiscal and administrative issues raised earlier in this section. Others are unique to the health sector. Provincial structures and responsibilities In health, in contrast to the education sector, the current allocation of functional responsibilities is ambiguous. The Ministry of Health in Kabul has responsibility for overall policy-making, and, more concretely, for approving the organizational structures of the entities at subnational levels. The minister authorizes recruitment of all senior staff (grades 3-5). The provincial health department (PHD) reallocates staff between facilities, within the establishment authorized by the ministry, hires staff from grades 6-10, and contracts for basic services. The region, the province, and the districts all manage hospitals. Some districts also are responsible for a combination of basic health centers, sub-health centers, maternal and child health clinics (MCH), and an expanded program of immunization (EPI) clinics. Table 48 illustrates the services that different facilities are intended to deliver. Municipal authorities have no health service responsibilities. Table 48: Intended Functional Responsibilities of Different Health Facilities .' C i | t C w Regional hospital x x x x x x x x x x x Provincial hospital x x x x x x x x x some x District hospital x x x x x x x some x some x Basic health center x some x some x x some x some Sub-health center x x some some x x Maternal and child health clinic (MCH) x x x x x x Expanded program of immunization (EPI) clinic x some Rehabilitation center x x Source: AREU/WB staff assessment. Table 49 illustrates the overlap between the functions of hospitals at the provincial and district levels, and emphasizes that extemal funding from NGOs and donors is pervasive. The health sector also faces the same confusion arising from the shadowy existence of the "region" as a coordinating layer of administration. In preparing budgets and plans for the health sector, staff and managers face far more uncertainty and potential conflict in assigning responsibilities (and therefore budgets), and correspondingly more uncertainty about their accountabilities, than their colleagues in education. 132 AREU & The World Bank Health Service Delivery Table 49: Functional Responsibilities in Health Level of Fne administration Budget-funded Funded Ministty of Health Health policy-making Contracts with NGOs Extemal funding is (Kabul) Authorizing "organigram" Private sector regulation pervasive across the (staffing) sector and is found at Recruitment of staff: grades 1-5 all levels of Regional health Aggregating health data administration and departments Donor coordination (within the region) for all functions. (western provinces Regional hospital services: Outpatient services * Immunization only) Inpatient services * Rehabilitation * Surgery Health * Antenatal care Education * Delivery X-ray * Postnatal care Diagnostic Lab Province * Reallocation of staff Facilities mgmt: buildings, between facilities vehicles * Recruitment of staff:' Provincial health plans grades 6-10 Collecting basic health data * Contracting of services Quality control of services * Procurement of drugs and Primary health care supplies * Quality control of services Provincial hospital services: Outpatient services * Immunization * Inpatient services Rehabilitation * Surgery Health education * Antenatal care * X-ray * Delivery (sometimes) * Postnatal care * Nutrition Diagnostic lab Rehabilitation facilities: * Surgery * Rehabilitation District District health plans District hospital services: * Outpatient services * Immunization * Inpatient services * Some nutrition * Surgery services * Antenatal care * Health education * Delivery * Some X-ray * Postnatal care services Diagnostic Lab Basic health centers: * Outpatient services * Immunization * Some limited * Some nutrition surgery services * Antenatal care * Health education * Some delivery * Some diagnostic * Postnatal care services Sub-health centers: Outpatient services * Some postnatal * Some limited care surgery * Immunization * Some antenatal care * Health education Matemal and child health Outpatient services * Immunization clinics (MCH): * Antenatal care * Nutrition * Posmatal care * Health education Expanded program of Immunization immunization (EPI) clinics: . Some nutrition services Source: AREU/WB staff assessment. AREU & The World Bank 133 A Guide to Govemment in Afghanistan Prior to the introduction of the health service delivery contracts, the allocation of responsibilities both within government and between government and donors and NGOs was very unclear, with the former problem exacerbating the latter. Govermnent and NGO agreements are in the form of memoranda of understanding (MoUs) and are apparently reached at the provincial level, although the central Ministry of Health seems to have a say in according permission for locations and activities of external agencies and has a registration system in place. This multiplicity of actors is leading to some conflicts. Provincial-level decisions, such as staff reallocations, changes in the organizational structure, contracts with NGOs, and charging for drugs are ambiguous and are subject to being overruled by the Kabul Ministry of Health. Central policy requires that all health services be provided free, but many NGOs and donors insist on cost recovery either through consultation charges or partial payment (40-60 percent of the market price) for the drugs dispensed. However, some may continue to provide drugs free to the poor. Similarly, there is some confusion concerning charging for X-rays and laboratory tests. Government feels that this is inappropriate, as people are too poor to pay. However, as they need money to address urgent health problems, some districts have decided to charge fees regardless. The formal organizational structure of PHDs is roughly as described for Faryab (see Figure 15). This seems to be typical for other provinces in the study. Although the structure shows different "departments," in reality, most of these consist of only one or two people. Moreover, in many cases, such as gastroenterology, ophthalmology, laboratory, the departments do not exist, owing to lack of staff, equipment, or material. For instance, without electricity or cooling equipment, the blood bank function can only be fulfilled when the donor and patient are present at one time. In addition, there are no supplies required for analysis and testing. Equally typical is the fact that the PHD structure has not been revised in many years, even though it is outdated. In Kandahar, for instance, where the PHD is located in the provincial hospital, the director noted that, while there had been a lot of changes in both the structure of the PHD as well as the types and volume of cases, the Ministry of Health has not revised the tashkeel, which contains the positions that were created 30 years ago. For example, at one time there was a separate obstetrics and gynecology hospital, but now this has been absorbed into the provincial hospital without any changes in the tashkeel. Similarly, the hospital's tuberculosis control ward did not exist 20 years ago. 134 AREU & The World Bank Health Service Delivery Figure 15: Structure of Faryab Provincial Health Department WHO Provincial Health Director ': UNICEF F | Deputy Provincial Health Director Administration Surgery Intemal Medicine OB/GYN Paediatric Ophthalmology Family Planning Family Planning ENT Laboratory Stomatology Radiology Blood Bank g | 1 ~~~~Malaria l TB Control .--------------- - EPI lDistrict Level I BH IE Hc A lB;IE rlHl rBH IE~ H FII H I BH I I BH I FBHC; Source: Faryab Department of Health. Second, there is a significant bias towards physician-based and hospital-based care. In fact, many of the provincial health offices are located in the provincial hospital. There is certainly great need and demand for curative care, but the system is severely lacking in outreach. Many patient complaints could be addressed more cost effectively (in terms of financial and other material resources, patient time, opportunity costs, and human suffering) through outreach. Community health workers (CHWs) and traditional birth atfendants (TBAs) are being trained, largely by NGOs whose different capabilities and philosophies translate into training of various lengths and quality. But these important workers do not appear to be integrated into the health system and so lack the steady supplies, continuous "supportive supervision," technical back up, and refresher training necessary for their effective functioning. Planning and budget preparation As with the education sector, officials in the PHDs are not involved in any aspect of budget preparation. They are, however, engaged in a dialogue with the Kabul Ministry of Health with regards to health planning. During annual planning exercises, the provincial health director submits an annual budget request to the Ministry of Health that includes salaries, supplies, and equipment, as well as additional requests for new service delivery or administrative positions. In past years, the Ministry of Health has consulted with the PHDs on the location of basic health centers and other facilities at the district level. AREU & The World Bank 135 A Guide to Government in Afghanistan Planning is of course challenged by the problems of communication. Communications between Kabul and the provinces are typically by pouch or traveler. In general, both WHO and UNICEF provincial and regional offices have been acting as links between Kabul and the provinces, using both phone and e- mail. It seems that this system has become relatively formalized in most provinces. Salary paymn ents and staffing It is considered the responsibility of the central Ministry of Health to ensure availability of human resources in terms of numbers, quality, and funding. However, some agencies have expanded the number of staff in the health system through special programs. For example, under the Ministry of Health structure, there is only one vaccinator per district. UNICEF has increased this to a team of two per health facility or about five teams per district to meet the needs of the expanded program of immunization. NGO staff are working in many government facilities, and most front-line staff receive supplementary payments from NGOs. In some cases, NGOs have recruited staff directly and placed them in health centers. These staff are either returnees or have resigned from government service. Some government-employed doctors manage to negotiate their transfers to provinces and facilities where NGOs are active, or obtain leave without pay - the current rules allow up to three years of such leave. Both donor agencies and NGOs have been providing "top-ups" to government salaries, or incentives. For example, the Afghan Red Crescent Society (ARCS) paid all staff 50 percent more than their government salaries. Doctors' salaries paid by other international NGOs and agencies appear to be around $150-$200 per month (including the government remuneration). Nurses and midwives receive about $120-130 per month, other paramedical staff about $100-150, and support staff about $80 per month. Project managers in the Ministry of Health receive about $250-300 per month. UNICEF has an elaborate effort-based system for vaccinators involved in immunization campaigns or national immunization days, paying $9 per campaign and $24 per month. The current ad hoc approach to top-ups is generating some concern regarding reporting lines. Many staff feel responsible to the donors rather than to the government. The medium-term consequence of this may be a move by staff away from government facilities to an emerging "private NGO sector." Given this confounding situation, the government and NGOs active in the health sector have agreed to standardize the incomes of workers in the health sector by putting limits on the salaries that NGOs can pay. A document describing this policy has been prepared by the salary policy working group in the Ministry of Health (Salary Policy Working Group, 2003). If this effort succeeds, it would have the effect of reducing some top-ups. An unusual feature of the public health system is the allowance of private practice. It applies to all employees, but is especially relevant to doctors. As long as doctors 136 AREU & The World Bank Health Service Delivery put in their hours (usually 8am-lpm daily) in the public facility to which they are assigned, they can run a private practice afterwards. While there are allegations that doctors often work fewer hours than required in the government system as a result of this allowance, the arrangement is widely supported. It is believed to benefit the public system insofar as it ensures the availability of doctors, and reduces the pressure on the health system to pay high salaries because private practices are quite lucrative. Top doctors in the cities can apparently make $2,000 to $3,000 per month in private practice. Nurses and other health staff are also known to have private practices (e.g. giving injections), but often engage in other non-health related work to make ends meet. Varying levels of training among paramedics may call some of their private practices into question. In situations where qualified medical practitioners are in very short supply, paramedics have both motive and opportunity to overstep their capabilities. Recruitment Health sector appointments in the provinces and districts follow the same framework as for other sectors. In essence, the governor approves junior staff appointments and transfers (karmand grade 6 and below and all agir staff), the relevant minister approves karmand staff from grades 3-5, and the senior staff (grade 2 and above) are appointed by the president. The provincial health director can discipline staff by withholding or deducting amounts from salary, and can fire a person in the event of major discipline problems. A staff member who is absent for more than 20 days without leave is automatically terminated. Once an adverse comment is recorded, it becomes a fairly permanent mark on the employee's record. It is very difficult to recruit staff to the rural areas. Despite the plethora of top- ups and incentives available, many health facilities are significantly understaffed. Prior to 1979, incentives for serving in rural areas included a higher salary than in urban areas, housing, and a vehicle. These are now replaced by NGO incentives. While medical graduates are required to work for two to three years in a rural area, the effectiveness of this has declined because of the availability of employment with NGOs. To increase human resources in rural areas, local staff interviewed advocated a rural to urban salary ratio of 2:1. It was felt that other staff (such as administrators and vaccinators) should get at least $150-200, and more in remote areas. It should, however, be stressed that pay alone would not be enough. As in other developing countries, Afghan doctors are an urban class and have high expectations, both professional and personal. Adequately staffed, equipped and supplied health centers, and technical support are critical to their satisfaction, and facilities such as vehicles, good housing and amenities, and schooling for children are among the basics expected. In the case of women professionals (both doctors and paramedics), there are the additional needs for personal security and spousal employment. Management and staff development Skills and capacity for both clinical and management work are weak. Those skills that are available are inconsistent with current public health needs. One of the first casualties of the tight resource constraints has been training. As a result, much-needed improvements in technical and managerial competence for AREU & The World Bank 137 A Guide to Govemment in Afghanistan all cadres of workers are delayed or simply not made. Many doctors, for example, have not been for refresher training or "exposure trips" for more than 20 years, and are unfamiliar with modem medical technologies. Other than training provided by the NGOs, training for either clinical or management staff is extremely limited. In-service or on-the-job training is non-existent. Similarly, there is virtually no access to new technology or information, and new textbooks are not readily available. Even teachers are outdated in their information and techniques. Younger doctors also need training, especially to strengthen preventive health knowledge and skills. Given the strong curative orientation of the system, it is not surprising that public health skills are low. Existing job descriptions and guidelines for staff are many years out-of-date and require revision. Work plans exist only for special efforts such as the EPI. While absenteeism is believed to be low, there is no systematic monitoring of attendance at BHCs. Infrastructure and non-salary expenditures Vehicles and fuel are in desperately short supply. Some buildings have been recently rehabilitated, while others remain in very poor condition. While local procurement is possible, the lack of any non-salary operating budget means that it is difficult to purchase drugs and medical supplies. Consequently, they are in short supply. When purchases are absolutely required, such as fuel to heat water for surgery, staff are purchasing goods on personal credit from local shopkeepers, under the assumption that cash will eventually arrive from Kabul. It also appears that patients and their families are bearing the load of purchasing essential supplies. In general, the NGOs and U.N. agencies are supplying just about everything except the Ministry of Health staff salaries, including food for patients, medicines (UNICEF, ICRC), equipment, training, and a variety of salary top-ups and enhancements. In some cases, individual clinics have been able to generate local in-kind contributions, such as land or mud bricks for clinic construction. The situation with respect to fees for service is murky with blurred distinctions between official fees and unofficial co-payments. Some clinics report that they collect fees and that the money goes to the local health committee for other activities. Implications for Provincial Health Care Administration With the adoption of a contracting-out strategy for the delivery of health care services, there are both short- and medium-term issues relevant to local public administration that the new arrangements must address. Short term In the short term, the deregulation of the health sector labor market must be managed. To the extent that government was previously the only employer, it could artificially depress wage rates in the sector. If skilled staff could not emigrate, 138 AREU & The World Bank Health Service Delivery they had little choice but to remain in low-paying government jobs. Under the new arrangements, there are many employers and there is a risk that these new employers will compete with each other for scarce staff skills and so will contribute to wage inflation. For this reason, the health sector market remains regulated, albeit with a "lighter touch" through a standard set of maximum rates that the service providers can pay. These rates are generous by comparison with other government salaries, and are likely contributing to pressures for pay raises elsewhere in the public sector. Nevertheless, it seems probable that the various donors will break ranks and will pay any rates (or in-kind incentives) that they feel are essential in order to attract staff to their projects. There is already some evidence that USAID will decline to be bound by the wage caps. However, the Cambodia experience suggests that the risk of creeping wage increases may be small. The only alternative method for managing salary levels will be by increasing the supply of skilled labor. A recent survey found that there were a total of 12,107 health providers working in active facilities (Transitional Islamic State of Afghanistan, 2003). In addition, there were another 6,854 support staff recorded - bringing the total number of staff in active health facilities to just fewer than 19,000. The number of doctors per 1000 people is 0. 1, against an average of 1. I for developing countries. It is lower than Cambodia, also a post-conflict country, where it is 0.3 per 1000. However, most crucially, there is great inequality between provinces and districts. For example Balkh has 3.1 doctors per 1000 people, Uruzgan only 0.01. In total, Afghanistan has 0.3 health workers per 1000 people, varying from 0.8 in Balkh Province to 0.1 in Uruzgan and Paktika. Although the absolute number of doctors is low, other medical staff are even more scarce and so 24 percent of all health workers are doctors. Less than a quarter of doctors are females. So training more mid-level, and preferably female, health workers is a first priority. The importance of training more staff is emphasized if, in the longer term, funding for the sector drops and govermment can no longer attract NGOs and others prepared to provide services under contract. Under those circumstances, arguably, it might have no alternative but to re-employ staff directly - and the labor costs will determine the coverage that it can afford. A second short-term issue to be addressed is the risk of monopolistic behavior on the part of the NGO service providers. The "lead NGO" model might cause other NGOs to be crowded out, as the lead NGO may have incentives to dominate the provision in the province and be unwilling to subcontract with others. There are two risks with this. On the one hand, it is possible that smaller NGOs will exit, ceding the field to the lead NGOs regardless of whether they have a comparative advantage in all districts. This could lead to deterioration in service quality or coverage or both. On the other hand, smaller NGOs, who are not funded by the lead NGO, might resort to providing services "off-budget" by not placing the costs of their services within the national development budget and so undermining government planning. AREU & The World Bank 139 A Guide to Government in Afghanistan The third short-term issue Table 50: Ministry of Health Staffing concerns the management of Structure, 1382 staff within the provincial Filled Total positions health department. The positions Vacancies (tashkeel) number of staff varies Badakhshana,b 506 492 998 significantly across provinces Bamyan 224 0 224 (see Table 50 for health staff Faaba, b 5Oic 1 502 numbers for the six case study provinces), but probably Herat 620 0 620 averages around 500. Once Kandahar 505 0 505 the contracting out strategy is Wardak 146 157 303 implemented, these staff will Notes: a/Includes staff of malaria depts. de facto have no service b/For 1381. delivery responsibilities at all c/ This figure was reported by the governor's office, in the short term, apart from but the health department reported a lower figure of some of the provincial 225-256. hospitals, because service Source: Provincial governments. provision of primary care and secondary care up to first level referral hospitals will be provided through the lead NGOs. There will be both a planning function and a coordination function - although it must be recognized that currently the grants and contracts management unit in the Kabul Ministry of Health, along with the respective donors, undertakes most of the negotiation with the lead NGOs. This leaves a significant number of staff with no jobs. As retrenchment is politically implausible in the short tern, there are three options for these staff. Some with clinical skills and qualifications will be hired by the NGOs. Others will be content to remain effectively unemployed but continuing to receive their current civil service salary. A small number will be needed to form the basis of a provincial level contract management unit that will take over these responsibilities at some point in the future. Ensuring that the PHD retains competent staff for this purpose will be challenging, and will require urgent application of the PRR decree to ensure that adequate salaries can be paid within a restructured PHD. Long term The longer-term issues are dependent on the future shape of the institutional arrangements for the sector. If it is assumed that the current level of donor funding and technical assistance is transitional - and that in the future more resources and more technical capacity must be found within government - then one likely scenario is that PHDs become the funding and planning agencies with service provision remaining with NGOs. Currently, the funding and planning function is within the lead agency in the World Bank PPA model, and is within the contractor (MSH) in the USAID model. This function would need to be gradually separated from the service provision role and either placed within the restructured PHD, or this function could itself be contracted out - leaving the PHD as the "purchaser of the purchaser." If this is the future of the sector, then the PHD - as the planner and purchaser of local primary health care services or as the agent responsible for managing the contract with the purchasing body - will have some challenging tasks to perform. 140 AREU & The Word Bank Health Service Delivery First, it is highly probable that there will be some moves away from outcome contracting to purchase of outputs, or even inputs. Outcome contracting is a highly sophisticated technique and there is a lack of capability in the Ministry of Health and PHDs to measure and monitor outcomes. Although third party validation will provide some measures in the short term, it is possible that these might not be affordable or sustainable in the longer term. Thus providers might be contracted to provide X staff or Y services, rather than be provided with incentives to achieve Z results. Refining the nature of the contracts will require considerable capacity. Second, and related, the roles of the Ministry of Health, PHD and the NGO service providers will need some recalibration in relation to the rationalization and reconfiguration of hospitals and health centers. Under the current arrangements, the Ministry of Health decides on the number of new first referral hospitals, comprehensive health centers and basic health centers that a province requires based on the number of existing facilities, its population, density, and geography. However, the capital investments needed for new facilities may be outside of the basic contract for services, and will require some careful linking of the investment and ordinary budgets. The current uncertainties concerning the ownership of facilities and equipment will also need to be resolved. A final challenge that will need careful attention is the very real risk that some parts of the country will not be covered. The current process relies on NGOs to bid on contracts, but so far no NGOs have shown interest in some of the very difficult and remote districts, such as those in Nuristan. The main reason for this is that these contracts are performance based, so there is reluctance to bid where logistics and access to services is not easy. If funding for the sector were to be significantly reduced, then it is probable that there would be more areas not covered by PPAs. Ultimately, as noted above, government might be forced back into the role of direct employer for some health staff in order to ensure comprehensive coverage. Based on this assessment, there are some specific actions required and areas for assistance in order for the PHDs to be effective contributors to health care service delivery in the future: In the short term: * Ensure that sufficient numbers of staff are trained locally to guarantee that supply matches demand and that pressures for increases in wage rates are controlled. * Manage monopoly behaviors of the lead NGOs. * Undertake a self-transformation that will entail the movement of clinically skilled staff to the new NGOs, developing and retaining a small number of staff to form the basis of a provincial-level contract management unit, and managing the residual unskilled group who will have no tasks. In the long term: - Separate the funding and planning function from the service provision role either by assuming this task, or by contracting it out. * Manage a shift from outcome contracting to purchase of outputs. * Determine how capital investment decisions will be made, and resolve the uncertainties concerning the ownership of facilities and equipment. * Ensure coverage in all districts. AREU & The World Bank 141 8. CONCLUSIONS Handle the Existing Arrangements with Care This report began with an assertion that the procedures and institutional arrangements within government, while undeniably awkward and often ignored in practice, form a coherent framework. Failing to take them into account in reform design is unlikely to be productive. Achieving the balance between respect for the past and a drive for change in the immediate future is perhaps captured in five basic proposals: Continue to embrace a modest role for government Given the self-evident historical socio-ethnic fragility of Afghanistan, the fiscal and administrative centralization of the state has some logic: local and regional elites have to refer to the central government for financing and the authority to deliver public activities. However, the corollary is that the central government should limit itself to a relatively minimal set of activities and functions. Moreover, the fiscal reality of extremely limited financial resources over the medium term means that government will have to limit activities to essential service delivery. Overall, the ambitions of the sector ministries and their provincial and district departments must continue to be constrained by the vision of a lean, competent bureaucracy in Kabul, supporting a provincial and district administration overseeing the delivery of core services. Respect the institutional architecture In the past, Afghans have spoken of a "six-mile rule," meaning that government funds were rarely used on projects located more than six miles outside of major urban centers. Reaching rural areas throughout Afghanistan is a key goal of the Transitional Islamic State of Afghanistan, in order to ensure fairness, spur widespread development, and extend central government influence. In addition, expectations are that a new government, with access to significant levels of donor resources, will ensure greater access to basic social services throughout the country than was feasible or expected several decades ago. Reaching the underserved areas will require a significant scaling up of activities in the provinces and districts. Focusing resources through provincial and district administration offices, and providing them with the capacity to direct, monitor, and support - if not deliver - the extension of services will ensure that resources are reaching rural areas and not remaining concentrated in urban areas. It is important to keep in mind that the logic of the current arrangements is that provinces and districts deliver (or contract for service delivery), while Kabul ministries act as their "back office support." The donor focus on Kabul has created a sense that service delivery will be made or broken in Kabul. The binding constraint is in the provinces and the districts - and the task of Kabul is to help the provinces, districts and municipalities overcome difficulties - not to bypass them. 142 AREU & The World Bank Conclusions Be pragmatic about service provision This study observes that the education and health sectors are taking very different tacks for improving service delivery. On service delivery, education is broadly reincorporating donor activities back into the public sector (noting that development projects will undoubtedly remain largely funded by donors and executed outside of government). Health is heading in the opposite direction, with significant contracting out of service delivery responsibilities to NGOs and others. In general terms, both of these approaches may be reasonable; the challenge is to ensure that they are determined by pragmatism and not by dogma. Continued participation of NGOs in the education sector, at least in some areas, may help the government meet a level of demand for education that it could otherwise not meet in the short term, at least at any reasonable level of quality. In the health sector, given the low level of government service provision and the already high presence of NGOs, the use of contracting models may be expedient at the moment, assuming that appropriate conditions can be created to support the contracting approach. But over the longer term, a health care system that must be sustainable without external funding may necessarily include direct service delivery by government once more. Promote transparent government There is a well-established tradition of using "social monitoring" techniques to inform the public of the costs and benefits of development projects - putting signs on public works programs, for example, indicating the costs and who to contact for further details. The tashkeel and quarterly allotments system within Afghanistan offers the opportunity to take this one stage further and to provide the public with information on core public sector activities. For example, if all public offices had their tashkeel and quarterly allotments prominently displayed, the public (and staff from other departments) could see at-a-glance which positions are sanctioned in the department, and the resources that the department is disbursing. This might be particularly effective in the health and education sectors where there is high community demand for service provision from government. If consolidated provincial budgets were publicly available, informed debate of how subnational resources are allocated could be promoted. Pursuefairness, not uniformity Over the last 20 years, unity and fairness in the Afghan civil service has been maintained by a common pay scale and shared terms and conditions. This uniformity has been disrupted by the arrival of large numbers of advisors and other consultants on relatively high pay scales, and ad hoc top-ups provided to civil servants by donors and NGOs in some sectors. This disparity has been the source of some resentment. A second level of disparity has been introduced between Kabul and the provinces. The differential pay arrangements for provinces and Kabul, along AREU & The World Bank 143 A Guide to Govemment in Afghanistan with major delays in payments to the provinces, have given provincial staff a distinct sense that they are second best. One plausible model is of a stratified public service with differential pay levels, comprised of a small, elite "civil service," and a larger and more easily accessible, "government service." The civil service could be subject to distinctive employment legislation with tight codes of conduct and some significant restrictions on personal activity (no involvement in politics, regular asset declarations). The National Agenda Following that suggested approach, there are five areas where cross-cutting institutional reforms are necessary. Pay and pension reform Despite recent pay reforms, current salary levels still present a serious problem. Pay reforms will have some recurrent fiscal impact in the short and longer terms, not least because there are few opportunities to trade off staff numbers against pay. Retrenchment is politically implausible - and would save very little as current salaries are low. Confidence building in the new structures After some considerable period of uncertainty about the role and responsibilities of the IARCSC, it is undoubtedly a major step forward to have it in place with a well-considered structure and remit. This is a solid foundation, but some additional technical and policy actions are necessary to ensure that the Commission delivers on its new responsibilities quickly. Short-term capacity injection Systematic rebuilding of the administrative structures is necessary but insufficient to achieve a detectible increase in the policy or implementation capacity of government within the short term. As a short-term kick-start to improved policy formulation and program management within Kabul ministries and provinces, it is essential to recruit a significant number of staff on contractual terms at remuneration levels that are sufficient to attract experienced managerial staff from national and regional NGOs and private sector organizations (lateral entry staff on contract). Basic payroll and human resource management (HRM) systems Construction of a database should begin with the establishment data that are automatically provided to the Ministry of Finance through the payroll. Subsequently, a civil service census should be conducted to substantiate the information in the human resource database. Reforms to the civil service legalframework The basic laws that underpin the civil service are not clear. No major retrenchment or significant repostings of staff have been attempted to date; but if major reforms involving these or other painful reforms were to be introduced, it is doubtful that a presidential decree would be seen to embody sufficient legitimacy to carry public 144 AREU & The World Bank Conclusions opinion. In the longer term, detailed personnel policies and procedures cannot be developed without clarity on the underlying legislation. The Subnational Agenda The lesson of more than a century of governance in Afghanistan has been that progress toward stability and development is most likely to occur when the center possesses both the capacity to enforce its will on the provinces and the acumen needed to exercise that power pointedly and selectively. There is an urgent need to find ways to rebuild a degree of loyalty between Kabul and the provinces/districts if staff at that level are to be effective agents of government, and central government de facto control is to be strengthened throughout the country. The analysis presented above of a distant and hostile central administration that cannot provide pay or guidance to its staff in the provinces and districts in a timely manner serves only to emphasize the need for action on various fronts. Staff at the provincial and district levels urgently need the resources and support necessary to do their jobs. In turn, mechanisms are needed at all levels of government to ensure that real accountability for service delivery is built into the administrative system. Additionally, it must be recognized that local control exercised by warlords and commanders is both a cause and effect of the weakness of subnational administration. Administrative and fiscal reforms must be accompanied by disarmament, security reform, and reform of the political economy, as discussed in Chapter 1 of this study. Key areas for administrative and fiscal action are outlined below, but are discussed in more detail in the companion policy paper Subnational Administration in Afghanistan: Assessment and Recommendations for Action. Build loyalty to Kabul Delays in processing the payroll, and a high-handed and unresponsive approach from Kabul, are turning provincial and district staff into active critics rather than loyal supporters of government. The actions needed are primarily policy reforms within government, requiring that payroll stages are completed within specified periods, and that payroll processing is returned to the provincial level as soon as practicable. However, some investments are needed in the establishment of radio networks with data transmission capabilities by radio or phone between Kabul and the provinces. Addressing the delays in staff appointments, and amending outdated tashkeels are policy actions requiring little new investment. The low levels of non-salary cash flow available to the provinces and the districts are damaging to morale and service delivery. The issue can be resolved through policy actions including monthly advances to mustoufiats and districts and a tighter requirement on ministries to justify their split of non-salary expenditures between the central ministry and the provinces. This move will have some recurrent fiscal impact and there are development budget costs associated with the necessary improvements to the DAB facilities. Resolution of the difficulties caused by the lack of field presence of the Kabul ministries, and the absence of data on Kabul ministry administrative performance can be resolved through policy actions with no significant costs associated. AREU & The World Bank 145 A Guide to Government in Afghanistan Similarly, the demoralization associated with the politically motivated changes to district and provincial boundaries, the undermining of municipal autonomy, and the disconnect between the community-level planning procedures of the NSP and the existing district and provincial budget and planning processes, can be resolved through policy actions with minimal associated costs. Build on existing municipal arrangements Municipalities represent the only subnational level of more or less autonomous government in Afghanistan. Cautiously reasserting municipal autonomy, with a careful strategy of disentangling the lines of accountability (district municipalities should not be reporting through provincial municipalities) and specifying service expectations for municipalities with differing revenue raising capacities, could offer a promising vehicle for scaling up local services. Provide tools to do the job The absence of procedures can be resolved at minimal cost through the development of procedural manuals and training programs for staff in key provincial and district positions. Major investment expenditures are necessary to provide adequate office facilities, particularly for district staff; some initial piloting is already planned. Once provinces and districts are meeting certain performance expectations, a second, more advanced set of improvements could be provided. The performance expectations could include establishing a good record of timely reporting of expenditures, revenues, and payroll. Ensure public oversight of the budget The lack of public awareness of government functioning is chronic and must be addressed if government is to feel under pressure to perform. Publication of the national and provincial consolidated ordinary budgets, annual staffing limits by department and by province, and data on budget execution are all important - and do not suggest any major cost. For the development budget, improved public monitoring that allows expenditure tracking against commitments with more precise analysis of long-term recurrent implications and the level of recurrent financing would offer more discipline on donor activities. Crucially, for both the ordinary and development budgets, provincial-level (and ideally district-level) tracking of execution would provide the public, donors, and other development partners with a benchmark against which to evaluate the scale of the resources being provided to provinces and districts - and provide an opportunity to begin to reduce regional inequities. For the development budget, one useful step might be the establishment of a cross-cutting consultative group with a remit to focus on "regional equity," drawing from some provincial and district-level data that a significantly expanded donor assistance database might provide. The medium-term agenda for budget oversight must, of course, include significant capacity building for the planned assembly. 146 AREU & The World Bank Conclusions Build administrative underpinningfor social sector reforms For education, the necessary improvements in planning capacity in provincial and district offices, and capacity improvements in curriculum design, teacher assessment, student assessment, data management and analysis, and policy analysis will require technical assistance. Moves towards piloting local school development plans, within the context of provincially developed education plans, will have some fiscal implications. The rollout of school-centered community support grants across the provinces, and moves toward capitation grants to schools for non-salary supplies and equipment, such as textbooks, will have larger recurrent costs. Involving provincial and district health staff in the planned reforms in the health sector, and developing transition strategies, will require intensive technical assistance. Some sector-specific pay reforms will be necessary but ensuring that that pay levels in the NGO delivery structures are in line with anticipated post pay reform levels in the public sector require policy actions rather than investments. Major costs might arise from the expansion of the pool of educated healthcare workers, through improved educational opportunities, in order to lower labor costs. AREU & The World Bank 147 ANNEXES Annex 1: Central Government Bodies and Political Responsibilities Function Kabul level Status Cabinet members organization Executive President's Office Agency under President: Authority (includes the presidential authority Hamid Karzai Office of Vice Presidents: Administrative Mr. Ustad Abdul Karim Khalili, Affairs) Mr. Naimatullah Shahrani, Marshal Qasim Faheem, and Hedayat Amin Arsala * Deputy Security Adviser: Prof. Rasool Amin * Adviser on tribal issues and member of the National Security Council: Taj Mohammad Wardak * Security Adviser on Northern Provinces: General Abdul Rashid Dostum Prime Minister's Agency under prime Office (including ministerial authority, the General Control pro tem under the and Inspection president Presidency of the Council of Ministers) Fiscal and Ministry of Finance Ministry Dr. Ashraf Ghani Ahmadzai, economic Minister of Finance policy Ministry of Ministry Haji Mohammad Mohaqiq, Planning Minister of Planning Central Statistics Independent body Mohd Ali Watanyar, Office (includes the General Director, Central Statistics Afghan Computer Office Center) Geodesy & Independent body Eng. Abdul Raouf, Cartography Office General Director Foreign Ministry of Ministry Dr. Abdullah Abdullah, Affairs Foreign Affairs Minister of Foreign Affairs Internal and Ministry of Defense Ministry Marshal Qasim Faheem, Minister external of National Defense and Vice President Ministry of Interior Ministry Ahmad Ali Jalali, Minister of Interior Ministry of Ministry Arif Khan Noorzai, Minister of Frontiers Border Affairs National Security Independent body Dr. Zalmai Rasool Agency Narcotics Independent body Ghulam Jaliani Sattari, Director of Eradication Agency Narcotics Eradication Department Office of the Independent body Abdul Mahmood Daqiq Attorney General Legal advice Ministry of Justice Ministry Abdul Raheem Karimi, Minister to government of Justice 148 AREU & The World Bank Annexes Education and Ministry of Ministry Mohammad Younis Qanooni, human Education Minister of Education and resource Security Adviser development Ministry of Higher Ministry Dr. Sharif Fayez, Education Minister of Higher Education Science Academy Independent body Culture and Ministry of Ministry Sayed Makhdoom Raheen, heritage Information and Minister of Information and Culture Culture National Olympics Independent body Mohd Anwar Jikdalak, Committee President Health Ministry of Ministry Dr. Suhaila Seddiqi, Health Minister of Health Welfare and Ministry of Labor Ministry Noor M. Qirqeen, social policy and Social Affairs Minister of Labor and Social Affairs Ministry of Martyrs Ministry Abdullah Wardak, Minister of and Disabled Martyrs and Disabled Ministry of Ministry Innayatullah Nazari, Refugees Retum Minister of Migration Ministry of Rural Ministry M. Haneef Atmar, Rehabilitation and Minister of Rural Rehabilitation Development and Development Ministry of Ministry M. Amin Nasiryar, Minister of Hajj Religious Affairs and Hajj Ministry of Ministry Habiba Sarabi, Minister of Women's Affairs Women's Affairs Prof Mahbooba Hoqoqmal, Minister of State for Women's Affairs Ministry of Ministry Mangul Hussain Ahmadzai, Repatriates Minister of Overseas Afghans Affairs Industrial and Ministry of Ministry Mustafa Kazimi, trade policy Commerce Minister of Commerce (includes Chambers of Commerce) Ministry of Light Ministry Alim Razim, Industries and Food Minister of Light Industries Ministry of Mines Ministry Mohad. Mafooz Nidae, Acting and Industries Minister of Mines & Industries Ministry of Water Ministry Shakir Kargar, and Power Minister of Water & Power Natural Ministry of Ministry Sayeed Hussain Anwary, resources Agriculture Minister of Agriculture Ministry of Ministry Ahmad Yousuf Nooristani, Irrigation and Minister of Irrigation Water Resources Infrastructure Ministry of Ministry Sayeed M. Ali Jaweed, Transport Minister of Transport AREU & The World Bank 149 A Guide to Govemment in Afghanistan Ministry of Civil Ministry Mirwais Sadiq, Aviation Minister of Civil Aviation Ministry of Ministry Masoom Stanikzai, Communications Minister of Communications Ministry of Urban Ministry Gul Aga Sherzai, Minister of Development Urban Development Ministry of Ministry M. Amin Farhang, Reconstruction Minister of Reconstruction Ministry of Public Ministry Eng. Abdullah Ali, Works Minister of Public Works Judicial Supreme Court Independent body Mr. Fazel Hadi Shinwari, authority Chief Justice and Head of Supreme Court Oversight Independent Independent body Hedayat Amin Arsala, Commissions24 Administrative Chair of Civil Service Commission Reform and Civil and Vice President Service Commission Human Right Independent body Dr. Sima Samar, Head of Commission Afghanistan Independent Human I_____________I____ _ Right Commission Note: This table has been assembled from various sources, including a review of the new Chart of Accounts, analysis of payroll data, and interviews with senior staff However, several ambiguities remain. First, although the attomey general was established as a separate office in the 1980s, the minister ofjustice disputes the constitutionality of this move (International Crisis Group, 2003). Second, the official reporting line for the general control and inspection presidency of the Council of Ministers is now directly to the President's Office rather than that of the prime minister. Third, it appears that the Prime Minister's Office has recently been subsumed as a budget unit within the President's Office. 150 AREU & The World Bank > Annex 2: Central Government Structures in Perspective m c- Figure 16: Comparison of Current Ministry Structures with Selected European Countries --I < . Functions UK Germany France Hungary Macedonia Lithuania Afghanistan 0 Core functions QL Fiscal and * H.M. Treasury Federal Ministry of Ministry for the - Ministry of * Ministry of Ministry of Ministry of Finance mOD economic policy Finance Economy, Finance Finance Finance Finance Ministry of Planning and Industry Foreign affairs and Foreign and Federal Ministry Ministry of Foreign Ministry of Foreign * Ministry of Foreign Ministry of Foreign Ministry of Foreign aid management Commonwealth for Economic Affairs, Cooperation Affairs Affairs Affairs Affairs Office Cooperation & & Francophony Department for Development Ministry for International Foreign Office Overseas Affairs Development (DflD) Intemal and extemal Ministry of Defense Federal Ministry of Ministry of Defense Ministry of Defense Ministry of Defense Ministry of National Ministry of Defense security Home Office Defense and War Veterans Ministry of Interior Ministry of Interior Defense Ministry of Interior Federal Ministry of Ministry of the Ministry of Interior Ministry of Frontiers the Interior Interior, Intemal Security & Local Freedoms Legal advice to * Law Officers' * Federal Ministry of * Ministry of Justice * Ministry of Justice * Ministry of Justice Ministry of Justice Ministry of Justice govenmment Department Justice * Department of Constitutional Affairs Relations with other * Northern Ireland * Ministry of Civil * Ministry of Local levels of govermnent Office Service, Self Government * Scotland Office Administrative * Wales Office Reform & Town & & Country Planning CD 81 xCD~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U 6I) 6) M ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~G) 0 Social sectors CD 3 Education and human Department of * Federal Ministry of Ministry of National Ministry of Ministry of Ministry of Ministry of 3 CD resource development Education and Skills Education and Youth, National Education Education and Education and Education a Research Education and Science Science Ministry of Higher S Research Education Culture and heritage Ministry of Culture, Ministry of Culture Ministry for National Ministry of Culture Ministry of Culture Ministry of 5 Media and Sport and Communication Cultural Heritage Informnation & Ministry of Sports Culture Health * Health * Federal Ministry of Ministry for Health, Ministry of Health, Ministry of Health Ministry of Health Ministry of Health Health & Social the Family & the Social Affairs & Care Security Disabled Family Welfare and social Department for * Federal Ministry Ministry for Social Ministry of Labor Ministry of Labor Ministry of Social Ministry of Labor & security Work & Pensions for Family Affairs, Affairs, Labor & & Employment & Social Welfare Security & Labor Social Affairs Senior Citizens, Solidarity Ministry of Ministry of Martyrs Women, and Youth Children, Youth & & Disabled Sports Affairs * Ministry of Refugees Return * Ministry of Repatriates * Ministry of Rural Rehabilitation & Development Mministiry of Religious m Affairs and Hair Ministry of Women's Affairs CD 0- 0) X, m Economic resources CD oIndustrial and trade Department of Trade * Federal Ministry of Ministry of Ministry of Ministry of Ministry of o policy & Industry Economics & Labor Economy & Economy Economy Commerce rL Transport Ministry of Light Industries & Food Ministry of Mines & Industries Ministry of Water & Power Natural resources Ministry for Federal Ministry for Ministry of Ministry of * Ministry of - Ministry of Ministry of Environment, Food Consumer Protection, Agriculture, Food, Agriculture & Agriculture, Forestry Agriculture Agriculture & Rural Affairs Food & Agriculture Fisheries & Rural Regional & Waters Ministry of Ministry of lrrigation Federal Ministry for Affairs Development Ministry of Environment & Water Resources the Environment, Ministry for Ecology Ministry of Enviromment Nature Conservation & Sustainable Environment & & Urban Planning & Nuclear Safety Development Water Management Infrastructure Department Federal Ministry for State Ministry for Ministry of Ministry of Ministry of Ministry of for Transport Transport, Building Capital Works, Information Transportation & Transport Transport and Housing Transport, Technology & Tele- Communications Ministry of Civil Housing, Tourism & communications Aviation the Sea Ministry of Communications * Ministry of Urban Development * Ministry of Reconstruction * Ministry of Public Works TOTALS 17 13 15 14 14 13 30 Source: AREU/WB staffassessment, and official govemment web sites. > CD Xl i cC A Guide to Govemment in Afghanistan Annex 3: The Legal Basis for Government Employment The following list of identified public employment legislation extends from 1305 (1926) to 1381 (2002): * 1926 1305 Employee Leave (Vacations) * 1926 1305 Regulations of Basic Organizational Structure of Afghanistan * 1931 1310 Basic Principles of the Afghan State * 1934 1313 Principles of Nationality * 1935 1314 Principles of Recruitment of Foreign Nationals in Afghanistan * 1935 1314 Principles of Conscription for Scholars and Experts * 1935 1314 Principles of Career * 1949 1328 Principles of Attendance and Holidays of Employees * 1950 1329 Principles of Paper Archives * 1950 1329 Principles of Secretariat Offices * 1951 1330 Principles of General Administrative Monitoring * 1954 1333 Principles of Employees, Recruitment, Retirement, and Promotion * 1960 1339 Principles of Marks and Medals * 1960 1339 Principles of Budget and Accounting * 1961 1340 Principles of Conscription of Professionals * 1962 1341 Principles of Audit and Control - Office of the Prime Minister * 1964 1343 Constitution of Afghanistan * 1964 1343 Principles of Regular and Ad Hoc Employees * 1965 1344 Law of the Basic Organization of Afghanistan * 1970 1349 Law on the "Status and Condition of Government Employees" * 1976 1355 Principles of Employees Health Insurance * 1977 1356 Decree No. 1433: State Employees Statute * 1977 1356 Staff Regulation 12.3 * 1987 1366 Law of Work of Republic of Afghanistan (Labor Law) * 1988 1367 State Employees Statute, Decree No. 666 * 1998 1378 Taliban Employment and Labor Relations/Personnel Law (Official Gazette No.790: Officials' Law of Islamic Emirate of Afghanistan) * 2001 1381 Decree No. 66: Cancellation of all Regulations, Articles, Laws Contrary to the Bonn Agreement * 2001 1381 Amendment of the First Paragraph of Article No. 160 of Official Gazette No. 678 dated 1988 and also Official Gazette No. 645 dated 1986 - concerning the retirement age of women, which was 50 and should be 55 * 2002 1382 Decree No. 150 concerning re-employment of the employees retired by Taliban * 2002 1382 Official Gazette No. 791 refers to the following (inter alia): o Classification, appointment (registration) promotion of agir; o Retirement rights of the employees; o Regulation on overtime; o Conditions for the employees who are sick and asking for additional leave; o Regulation on vacation in excess of 20 days vacation for karmand and agir; o Regulation on financial responsibilities of employees; o Regulation on replacing records lost due to war. 154 AREU & The World Bank Annexes Annex 4: Key Budget and Personnel Forms B3 Annual approved budget (yearly appropriations) of ministries and other independent budgetary units are announced by B3 prior to the start of the fiscal year. B3 is issued by the Budget Department of the MoF. B4 Ministries provide their units with their detailed staffing structures (tashkeel) by departments, positions, grades, and respective salaries on B4. B6 Non-salary expenditures are reported by B6. B20 Ministries inform their relevant secondary units in the center or provinces of their budget allotments by B20. Copies of the B20s are sent to the Budget Department of the MoF. The Budget Department of the MoF sends the original or the copies of B20s to the mustoufiats.The budget allotment is given to the provinces via form B20, one copy of which is provided to the line departments, while another copy goes directly to the mustoufiat. In the past, B20 contained a detailed breakdown by expenditure category: babs are the major codes, such as "personal emoluments" and "services," and fasils are the more detailed line items, such as overtime, fuel, and office supplies. For 1382, allocations are being provided at the bab level only, however, provincial departments are still expected to report at both the bab and fasil level. This change is significant, in that it gives provinces more flexibility to move finding around within a particular bab - and arguably more room for abuse. B23 Requests for re-appropriation between babs. B24 Transfers from reserve fund (bab 9000). B27 The Budget Department of the MoF issues allotments on a quarterly basis. The allotments are issued by B27 as following: First quarter 100% Second quarter 75% Third quarter 50% Fourth quarter 50% M16 Summary payrolls. M23 Districts are required to report expenditures to the mustoufiat within 10 days of the end of each month on form M23. M29 Transfers to Kabul arise when revenues raised in a province are in excess of the approved budget, and these are supposed to be transferred to the government budget account at the end of the fiscal year on the basis ofthe monthly income report provided by the mustoufiat to the Ministry of Finance Revenue Presidency on form M29. M40 Personnel record for individual civil servants, showing changes in position and grade throughout their career. M4 1 Monthly payroll from a budget unit. The payroll provides detailed information on each employee, including position, grade, salary, and attendance record. Provincial departments submit the payroll to the mustoufiat, and the provincial governor approves it. Once the governor's approval is received, the payroll is then sent to the Treasury Presidency in the Ministry of Finance in Kabul for payment. P2 Appointment papers for individual civil servants. The P2 contains the following information about employees: grade, position, vocational privileges, position, and grade to which they have been appointed. AREU & The World Bank 155 A Guide to Government in Afghanistan Annex 5: Excerpt from the Legislation on Municipalities Reference No. 732 in Rasmi Gereeda Dated 15/10/1369, as amended 1379. Chapter 4, Article 16 Municipality and its city zones, functions and responsibilities: 1. Taking measures towards providing living conditions for the residents living within their region; 2. Taking measures towards construction and maintenance of wells, underground waterways, pools, and other drinking water supplies through relevant departments; 3. Taking measures towards development and preservation of green areas, promotion of cleanliness and sanitation within their region, and conservation of the environment; 4. Taking measures towards construction of roads, public washrooms, public bath houses, market places, and civil and educational centers through attracting private investments according to the city plan; 5. Setting prices for residences based on regulations; 6. Setting rents on municipality properties based on regulations; 7. Taking measures towards monitoring, with the help of relevant departments, of the cleanliness of public bath houses, restaurants, hotels, guesthouses, teahouses, swimming pools, and food suppliers; 8. Taking measures towards establishing cooperation with health-care organizations in implementing policies to prevent spread of diseases and preserve the living environment; 9. Taking measures in regards to land distribution for construction of residence and business areas based on relevant regulations; 10. Confiscating of lands based on property confiscating regulations; 11. Taking measures towards participation in establishment and construction of residential quarters, maintenance of roads, streets and residential areas; 12. Taking measures towards improvement of city transportation by the relevant department; 13. Taking measures towards assistance in production and distribution of food supplies and in improvement of living services; 14. Controlling of the prices and tools of measurement, organizing and generalizing the metric system in their area; 15. Taking measures towards promotion of sports and physical education; 16. Attracting people's voluntary assistance in performing cleaning activities, keeping regions green and other activities helpful to the city; 17. Taking measures towards assisting in preservation and maintenance of historic and cultural monuments with attracting cooperation of relevant departments; 18. Taking measures towards assisting in gathering census and demographic data; 19. Collecting taxes for city services based on rules and regulations; 20. Taking measures towards effective cooperation in the fight against illiteracy, improving the general level of cultural and educational information of the community, improving civil services sectors, improving general and vocational institutions, and libraries through relevant departments, while keeping into consideration Islamic customs; 21. Approval of manuals in accordance with content of this legislation; 22. Leading relevant subordinate departments and organizations; 23. Inviting and organizing meetings in regards to the service delivery for the city; 24. Managing the implementation of annual budgetary and expenditure plans and taking measures towards preventing excess expenditure; 25. Observing and controlling the execution of administrative council decisions; 26. Making suggestions in regards to construction of traffic structures within the city; 27. Designating slaughterhouses and better regulation and observation of healthiness butcher shops; 28. Distribution of pricelists based on Islamic laws; 29. Studying contract, agreements, and leasing of properties of the municipality; 30. Constructing, repairing and cleaning of sewers and trenches in the city; 31. Receiving the public and resolving their complaints in timely and just manner and taking decisions within authority; 32. Assisting in alleviating primary and emergency needs of the public with the help of relevant authorities; 33. Designating areas for the cemeteries; 34. Taking measures in assisting in funeral and burial of unidentified or homeless individuals free of charge with the help of the Red Crescent; 156 AREU & The Wodd Bank Annexes 35. Making decisions on destruction of buildings near demolition based on proposal by the experts' council; 36. Accepting gifts, donations, and other charitable contributions on behalf of the municipality and documenting them properly; 37. Preventing construction of structures without plan or authorization, with the help of security units of the region; 38. Granting business licenses to the small businesses; 39. Granting work permits for the workers of foreign institutions; 40. Collecting and recording of accurate information in regards to marriages, births, deaths. and relocation with the help of relevant organizations; 41. Firm implementation of the pricelist; 42. Assisting in strengthening of security, civil order and safety of public; 43. Assisting in defending the legal rights of residents of the region; and 44. Cooperating fully in construction of the society and strengthening the Islamic rule. AREU & The World Bank 157 NOTES I As Ghani notes, "(f)rom 1955 on, foreign aid provided the bulk of the funds for government expenditures, with five major consequences: (1) the state became the most important economic power in the country and the major source of employment; (2) the expansion in the size of the bureaucracy gave the intellectuals who were staffing it considerable power in affecting other segments of society; (3) military officer training became increasingly concentrated in the Soviet Union; (4) socialism emerged as the slogan of a vocal group of the intellectuals...; (5) the rulers of the state failed to forge organic ties with members of the landed, merchant and religious elites in the country." 2 Afghanistan, with debt repayments of 35 percent of total exports, had one of the world's highest debt repayments. Most of the servicing of the Soviet debt was managed through the export of natural gas. For a discussion of the consequences of foreign aid on government expenditures see Ghani, 1987. 3 All dollar amounts are U.S. dollars. 4 The provinces were expanded to 27 in 1963. 5 The Bonn Agreement decreed that the following legal framework would be applicable on an interim basis until the adoption of a new constitution: i) The Constitution of 1964 a) to the extent that its provisions are not inconsistent with those contained in this Agreement; and b) with the exception of those provisions relating to the monarchy and to the executive and legislative bodies provided in the Constitution; and ii) Existing laws and regulations, to the extent that they are not inconsistent with this agreement or with intemational obligations to which Afghanistan is a party, or with those applicable provisions contained in the Constitution of 1964, provided that the Interim Authority shall have the power to repeal or amend those laws and regulations. 6 Afghanistan's new constitution, ratified by the 502 delegates to the Constitutional Loya Jirga on January 4, 2004, reaffirms that Afghanistan is a unitary country but states that "the government, while preserving the principle of centralism, shall - in accordance with the law - delegate certain authorities to local administration units for the purpose of expediting and promoting economic, social, and cultural affairs, and increasing the participation of people in the development of the nation" (Chapter 8, Article 2). This therefore allows for a measure of deconcentration within the constitution, but it is not, in practice, likely to lead to significant shifts in the structures of subnational administration. 7 The 1381 budget included $100 million for defense, but provided little information on how these funds were to be spent. Criticism of this lack of detail, while easy, fails to appreciate the complexities of the situation. Put simply, the views of key stakeholders around different aspects of the defense expenditure were not sufficiently aligned to make it possible to put together an explicit budget that would have kept all parties at the table. A more explicit budget would have seen at least one and possibly more key military stakeholders leave the very tenuous coalition around (then) Chairman Karzai. s General civilian government refers to civilian staff at the national and provincial levels. It excludes government enterprise staff, and all military and security staff. See http://www 1.worldbank.org/publicsector/civilservice/cross.htm#l for further details of public sector employment categones. 9 Decree on Regulating Externally Funded Reimbursements and Allowances for Civil Servants and its associated procedures on (Septeriber 04, 2003). 10 This has not centralized the process between the provincial and national level, as the previous decision-makers were the central ministries. I For instance, bab # 1000 - personal emoluments - contains such items (fasils) as "overtime and special payments," "hazard or regional pay," and "incentive bonus," in addition to basic salaries. There is a potential for these amounts to be used to top-up salaries. 12 "Each ministry and institution must present to the Ministry of Finance their proposed total employment, specified by center and province, before the beginning of the 1382 financial year. After reviewing these proposals, the Ministry of Finance will recommend a comprehensive list of employment limits for each ministry by center and province to the Council of Ministers durng Hamal 1382, and the Council of Ministers will approve the total employment limits for the ministries. Ministries and organizations should not increase the number of their employees from the level in the month of Hoot, before the Council of Ministers' review and approval." 158 AREU & The World Bank Notes 13 A joint committee comprised of the Office of Administrative Affairs and the respective ministry reviews the proposed tashkeels. The tashkeels are then signed off by Vice President Arsala, Head of the Civil Service Commission. (Note that the number of employees for ministries and provincial departments was supposed to be reviewed by the Ministry of Finance and approved by the Council of Ministers, according to the 1382 Budget Decree, but apparently this did not happen.) 14 This was presumably undertaken by the General Control and Inspection Department of the Council of Ministers. The reason for the change is not clear. 15 From an admittedly ad hoc selection of eight countries (Benin, India, Indonesia, Mexico, Pakistan, the Philippines, Poland, and Uganda), Evans concludes that only in Indonesia and the Philippines, followed by Poland, is there real decentralization of administrative arrangements as opposed to delegation or deconcentration in the sense that local government really is the employer, with the ability to hire, fire, assess performance, set establishment ceilings, and to some limited extent, set or influence pay scales. 16 The 1978 Master Plan was not implemented fully, reportedly due to insufficient funds and lack of management and planning capacity. Unplanned shelter expansion occurred, including the construction of facilities outside of the master plan by government agencies. 17 In all countries, municipal independence is qualified; in many countries there are several categories of municipalities, based on population size, city, GDP, etc. 18 It should be noted that the reported data in the education sector is not always coherent or reliable. Data reported from different sources were often inconsistent. Some of the reasons given included the changing number of enrolled students, counting NGO schools as government schools, and counting the girls and boys sections located in the same building as separate schools. 19 This is below the lowest point on the standard pay scale because the second food allowance, introduced on May 5, 2002, is not payable to teachers. 20 In Burundi, for example, the gross enrollment rate declined from 73 percent in 1990 to 43 percent in 1996. 21 In Rwanda, the genocide of 1994 had a serious short-term negative impact on enrollment rates, but by the late 1990s enrollments had recovered their historical trend line. 22 Prior to the Transitional Administration private practice was allowed onlv if a doctor was in government service. While this stipulation has apparently been removed, there seem to be three situations for doctors currently (a) an MoH appointment and private practice; (b) an MoH appointment plus deputation to an agency with a top-up and private practice; and (c) a salaried assignment with an agency with less opportunity for private practice because of agency requirements. 23 The availability of female health workers in health facilities is a particular concern. The overall male/female gender ratio among health providers was 3 to I at the time of the survey. Forty percent of the 773 BPHS facilities that reported staff present have no female health provider at all. Again, the regional variations are extreme. Nuristan, for example, has only one female health worker - making the gender ratio for that province 43 to 1. Herat has a male/female health provider ratio of less than two. The male/female ratio is slightly worse in the district hospitals where it is slightly more than 5 to 1, and in malaria centers where it is 6 to 1. EPI fixed centers have a male/female ratio of 18 to 1. 24 The Bonn Agreement established four commissions that would be responsible for rebuilding the justice system, monitoring and investigating human rights violations, assisting in the preparation of a constitution, and maintaining the integrity of the civil service. The Civil Service C'ommission and the Human Rights Commission appear to be standing commissions that were intended to have a continuing functional task beyond the reform of existing constitutional and government structures. AREU & The World Bank 159 REFERENCES Adam Smith Institute. April 2003. "Consolidated Plan for State-Owned Enterprise Reform in Afganistan: A Consultation Document." Afghanistan. 2003. Afghanistan National Health Resources Assessment Report, 5 April 2003. Kabul: Transitional Islamic State of Afghanistan. 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