KABUL - The World Bank (WB) has approved a $50 million grant to Afghanistan for creating an environment for investment “in sectors with a high growth potential.”

According to a WB news release issued last week, the grant – to be provided through the Bank’s lending arm, the International Development Association (IDA) – aims to bring about reforms in customs, land administration and management, mining, and information and communication technologies (ICT).

“The results of the project are expected to increase customs revenue, improve the enabling environment for private investment in mining and ICT sectors, decrease the prices for GSM [Global System for Mobile communications] broadband services, improve the legal and regulatory environment for land management and administration as well as produce more opportunities for cost-saving in public infrastructure projects,” the news release stated.

Afghanistan’s Ministry of Finance will be responsible for overall implementation and monitoring of the reform programme.

As a part of the World Bank, IDA aims to reduce poverty by providing loans (called ‘credits’) and grants for programmes that boost economic growth, reduce inequalities, and improve people’s living conditions in the world’s 82 poorest countries, according to its website.

IDA and the Afghanistan Reconstruction Trust Fund (ARTF) are the main sources of the World Bank financing in Afghanistan. Since 2002, IDA has committed a total of $2.6 billion in grants (83 per cent) and credits (17 per cent) in Afghanistan. Thirty-six development and emergency-reconstruction projects and four budget-support operations have been committed as of end-March 2013.

“The World Bank stands with the Afghan Government to implement necessary policy reforms and pave the way for investments in sectors with high growth potential,” the World Bank’s acting Head of Office for Afghanistan, Paul Edwin Sisk, said in the news release.

“This particular grant will help the government maintain growth momentum during the transition and beyond. As the international aid is expected to decline, this grant will also strengthen revenue mobilization and fiscal sustainability,” added Mr. Sisk.

Afghanistan is currently going through political, security and economic transitions. For the first time since 2001, the country recently assumed full security responsibility from its international allies. The security transition coincides with political transition with an election planned next year to choose a new president.

According to the World Bank analysis, the anticipated decline in foreign aid could reduce Afghanistan’s growth prospects to about half of its current average. Poverty rates are persistently high and labour market pressures are increasing with 400,000 to 500,000 young people entering Afghanistan’s labour force every year.

“The fiscal budget relies to a large degree on donor financing and financing needs are expected to increase as a result of the handover of security and development responsibilities to the Afghan government and further expansion of public service delivery,” added the World Bank.