Aleem Siddique, Senior Public Information Officer (SIO): Good morning and welcome to UNAMA's regular Monday morning press briefing. Most of you will have heard by now of the murder of our colleague, the journalist, Ajmal Naqshbandi by Taliban extremists yesterday. We condemn this senseless murder unreservedly and call on the authorities to bring those responsible to justice. The perpetrators of this crime have shown absolute indifference to the value of human life by ignoring the calls of his family, journalists and all Afghans who called for his safe return. At this difficult time, our thoughts remain with Ajmal's family, friends and all those in Afghanistan who respect freedom of expression and human rights.

In another incident yesterday the United Nations Mission in Afghanistan (UNAMA) was also saddened to hear of the death and injury of so many Canadian soldiers in southern Afghanistan . We wish to express our sincere condolences to the families and colleagues of those Canadian soldiers killed as well as to those wounded. The commitment and sacrifice of the men and women of the Canadian armed forces, together with all those serving together under NATO-led ISAF command is an inspiration to us all as they continue to play a crucial role in efforts to restore peace in Kandahar, Helmand and all of Afghanistan.

On a more positive note we will be looking at the economy and our guest speaker today is Alastair McKechnie, World Bank director for South Asia who joins us this morning to make a few remarks on the progress and challenges for Afghanistan 's economy.

There are a number of fact sheets and publications available on the side table which should be helpful to you in understanding Afghanistan 's economy and the World Bank's activities here in Afghanistan .

Alastair McKechnie, World Bank Country Director for Afghanistan: We see the development of Afghanistan as one of the most difficult challenges that any country can face. There is first of all a challenge of poverty, of raising incomes and the welfare of the people. This is a problem of the magnitude which we see in sub-Saharan Africa . The second challenge is rebuilding institutions which were largely destroyed in nearly a quarter of a century of war. The third large challenge we face is security which has local Afghan dimensions, regional dimensions and global dimensions. And of course there is the problem of narcotics – Afghanistan , as we all know produces more than 90 percent of the world's opiates. Any one of these problems alone would be a formidable challenge for any country, but when you have all four of them together, then this really demonstrates the magnitude of the task in helping Afghans to rebuild their state.

Even though the scale of these challenges are enormous a lot has been accomplished in the last five years and I'm someone who has been traveling to Afghanistan since 2002. One of the early successes was in education, in getting children back to school, and I think it's now true to say that there are more girls than at anytime in Afghanistan 's history. In three and half years access to basic health services has increased from around nine percent to more than 80 percent. And it's not just providing services - it's the impact of these services on health. There are survey results being analysed at the moment and the Minister of Public Health will be making an announcement soon, but, the preliminary indications are that there have been some dramatic improvements with regard to child mortality. We want to check the numbers carefully, but they may reveal that tens of thousands of children who would have died are now alive. There has also been a lot of progress in roads, in connecting villages to markets. And of course much of the ring road system has been completed, the connections between Afghanistan and neighbouring countries and indeed, the World Bank financed the rehabilitation of link road from Kabul through the Salang tunnel to the border with Tajikistan . And what may be less visible are the connections of villages, of valleys to the main road system, the upgrading of roads and tracks through the Government's rural access programme and through the National Solidarity Programme. And the current situation of the National Solidarity Programme is that something like 17,000 out of roughly 30,000 villages in Afghanistan have elected their Community Development Councils and more than 10,000 village level projects have been completed. Some of these very successful programmes, like the programme to supply a basic package of health services and the National Solidarity Programme itself are attracting other countries to start to look at the success of these in Afghanistan to see how they can do similar things in their own country. So in a sense Afghanistan is actually demonstrating some successes to the world that other countries are seeking to copy.

And a lot of the success is revealed in the big numbers of, for example the growth of Gross Domestic Product, and I think it's true to say that Afghanistan is the fastest growing economy in South Asia and that's saying something. In fact there has been on average double digit economic growth for the last six years and we expect the economy to continue growing at rates in the order of ten to twelve percent per annum. Admittedly this is from a low base of a very depressed economy in 2001 and there have been a couple of years where the growth rate fell below ten percent because of drought - but the underlining trend is for double digit growth.

I don't want to pretend that everything is rosy in Afghanistan because clearly there are some major challenges and let me list a number of these. First there is the challenge of creating an efficient, effective, clean public administration at central, provincial and district level. Second is the problem of corruption where the data is not particularly good, but there is some evidence that it may have got worse over the last year or two.

On private sector investment it's clear that a lot of small and medium scale investment has taken place, but I think if we look back to what we expected three years ago a lot more could have happened and I think this is due to some real problems in the business environment that need to be tackled. I think the problems of weakness in public administration, corruption and the unrealised potential for private investment are all inter-related. Related to the issue of private investment is the challenge of creating employment - jobs for school leavers, jobs for people who have migrated to the cities and also jobs in the rural economy. As well as the problems caused by corruption for private investment, we also need to recognise that urban services, the efficiency with which cities like Kabul operate is also a constraint to private investment.

Finally I'd like to say something quite briefly about the South Asian Association for Regional Cooperation (SAARC) meeting that took place in Delhi earlier this month. As you know Afghanistan is now a full member of SAARC and most observers and of course the Government of Afghanistan itself sees its development in the regional context. Afghanistan already has a more liberal trade regime than the other SAARC countries and its other neighbours and this is something which the World Bank strongly endorses. We would certainly encourage Afghanistan to maintain low import duties and a trade regime of low tariffs and low restrictions because this has been shown worldwide to lead to a more efficient economy, higher rates of economic growth and more employment opportunities. There will always be manufacturers who want import protection but advice to the Government is to resist such pressures. The real barriers to trade in the SAARC region and also the ECHO region, which includes Iran and Central Asia are the bureaucratic procedures at the borders and it's interesting to note that the SAARC conference did make a declaration to reduce these impediments to the flow of goods across borders.

As well as trade, Afghanistan 's role as a land bridge between central Asia, Iran and south Asia , there is also its role in energy trade, particularly electricity. Afghanistan already imports electricity from all its neighbours, with the exception of Pakistan and this level of trade is likely to increase substantially over the next two years. The World Bank is working with the Asian Development Bank to carry out a number of studies at the moment on very large scale trade in electricity between central Asia and Pakistan . Thank you.

Questions & Answers

Radio Free Europe (RFE): The Taliban killed Ajmal Naqshabandi yesterday after keeping him hostage for one month. Do you think that somehow the Afghan Government is also responsible for his killing?

SIO: If you are looking for where the responsibility for this crime lies, then one should look no further than the Taliban extremists who carried out this appalling crime. That is where the responsibility firmly needs to lay.

IRIN: Regarding development in Afghanistan . I would like to have your opinion about disparity in development. How much are the economic benefits shared in the overall population of Afghanistan ? How much of the Afghan economic growth has been achieved by Afghanistan 's own resources, rather than by international assistance? As you know Afghanistan is dependant on international assistance for its day-to-day business.

World Bank Representative: Thank you for your question. Well we don't have much data on those issues. I think it is probably safe to assume that the quite impressive development rate of the economy that has taken place over the past five years has not affected the whole country uniformly and even within areas there maybe disparity among people.

I think if you look back to the starting point at the end of 2001, the situation there was one of widespread poverty. Almost everybody was poor and making money from a war time economy. I think we probably have seen that the incomes have risen in areas where there is relative security. And security in this context could mean as much as an environment where private property and private investment is protected. This is an issue of crime as well as an issue of insurgency. Having said that, a lot is being done to assist people and certainly the kinds of programmes the World Bank is financing are aimed at reducing poverty. Firstly giving children access to school and ensuring that where there is a school, that children learn the required skills. This is very important because that is one way for people to get out of poverty.

Secondly, healthy people are capable of work and earning money and health is a very important dimension of poverty reduction as well. This is another area which was financed and the results have been quite impressive. This economic activity is enabling villages to essentially connect to the rest of the country, connect with markets to get information and see the road programmes and communication which I think have helped a lot of rural communities. What will be looking to see is the Government's National Development Strategy that should be completed next year which will set out a programme for reducing poverty in Afghanistan and also meeting the millennium development goals.

What are the sources of growth in Afghanistan ? I think it is true that foreign assistance plays a large part. I think Afghanistan has received something like around three billion dollars of foreign assistance per year. Afghanistan 's GDP is about eight billion dollars at the moment. Clearly foreign assistance is important as it was in the 1970s. It is part of the nature of the Afghan economy. However, there is a lot of domestic production and agriculture has taken off particularly since the drought of late 1990s ended.

There is a lot of scope for increasing agriculture activity, especially though irrigation, improved seeds and fertilisers. For example, the product activity of wheat in terms tonnes per hectare is about half for Afghanistan compared with its neighbouring countries. So just taking a very simple crop like wheat there is potential for essentially doubling production. There is also the issue of narcotics and the numbers I have quoted exclude drugs. The share of narcotics in the total economy actually has gone down. I think for 2004 and 2005 it was twenty-six percent, mainly because the non-drug economy has grown. Clearly money leaks from one to another. And those who make money from drugs also have access to the legal economy.

VOA: You said that Afghanistan 's GDP is US$ 8 billion and this does not include the drug money. How much money do people earn from drugs and how much of this money reach the farmers themselves?

World Bank Representative: The latest number I have is for 2005-2006 and it is US$2.6 billion dollars and it has probably gone up a little bit since then. This money is distributed unevenly. In fact there is a report we produced jointly with UNODC which sets out the numbers. At the top of the pyramid are fifteen to thirty major drug dealers and at the bottom there are three hundred thousand families that are involved in drug production. I think the information and the data shows that small farmers, particularly share croppers who do not have their own land, are not making much money from opium production. Many of these farmers are trapped by debt into the opium economy and I think for these reasons any policy to deal with the problems of narcotics have to be a very smart and well thought-out strategy.

All India Radio: My question is about Mr. Naqshbandi. What do you think of the role of Government in Naqshabandi's killing? The Government could have negotiated his release together with the Italian journalist but it didn't negotiate?

SIO: As I said earlier, there is one place where the responsibility for this crime lies and that is with the Taliban extremists. That is where we need to look when we are looking to hold those responsible to account and for them to be brought to justice for this abhorrent murder.

Pahjwok news agency ( translated from Dari ): You mentioned that the economic progress did not uniformly cover the whole of the country. What is the reason for this?

World Bank Representative: I think security is clearly one major factor. In areas of insecurity then people are simply not going to invest. That is one major thing. Another is access to infrastructure – there are some parts of the country where the infrastructure is very good and where the local economy is connected to either Afghan markets or to markets in neighbouring countries. Some of the border regions have much better electricity supplies than, for example, Kabul has. There are other areas where rehabilitation of irrigation systems has moved faster than elsewhere and I think the largest constraint to private investment in Afghanistan is land. In some places land is available and in some places it is either not available or is controlled by semi-criminal groups.

Voice of Freedom ( translated from Dari ): I would like to ask about the murder of Ajmal Naqshbandi. I would like to know UNAMA's view on the double standards by the Afghan and foreign Governments regarding the release of the Italian journalist when they agreed to swap him for senior members of the Taliban, but this did not include Ajmal?

SIO: The United Nations cannot and does not support prisoner exchanges - full stop. The United Nations does not negotiate with terrorists and we do not recommend that others do so.

BBC ( translated from Dari ): Following up your answer, the process of negotiations which was going on and is still going on between the Government of Afghanistan and the Taliban. Does the United Nations support that process?

SIO: There is a big difference between making efforts to ensure the safe return or release of a journalist and trading or negotiating with terrorists. As I have said earlier, we support all efforts to ensure the safe return of those being held against their will, but that does not equate to negotiating with terrorists.

IRIN: In 2004 Afghanistan 's first ever human development report was published and cited where over half of the population lived below the poverty line on less than two dollars a day. Has that figure changed?

World Bank Representative: There has been some more recent work done on estimating poverty in Afghanistan and it's being done as part of the preparation of the Afghanistan National Development Strategy. World Bank staff are involved in this process, which is essentially about interpreting data from the [ inaudible ] surveys. All of these poverty numbers are on a very shaky foundation – even determining what the poverty line is, there are different definitions of doing that and there are some technical limitations of the surveys. For example, we know that there are some seasonality food consumption, although the surveys are not carried out across the country, month-by-month for twelve months, which would be really difficult. Getting the numbers right is difficult and my colleagues could probably provide you with more information. It also depends on agricultural production which fluctuates with rainfall. In some ways, this is academic – whether poverty in Afghanistan is 55 percent of the population of 50 percent – the fact remains that there are lots of poor people in this country and it is a challenge for all of us to help the Government do something about it.

Thank you.