Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Afghanistan based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document to promote knowledge sharing and support training activities at ADB. It will be revised and improved as new information is uncovered and advances are made. If you have new information, please contact ychu@adb.org.

Public procurement accounts for more than 50% of the Afghan national budget, focused on purchases of fuel, roads, buildings, textbooks, medical supplies, consulting, and other goods and services. Improved public financial management and public procurement reform has been a key priority for the Government of Afghanistan, noted as a “bright spot” in the country’s fight against corruption. A 2018 Public Expenditure and Financial Accountability (PEFA) Performance Assessment rated Afghanistan’s procurement system highly, noting significant advances in improving openness, transparency, efficiency and fairness. The 2016 Procurement Law specifically allows for social and environmental procurement. A complementary Public-Private Partnership Law recognizes the need to align such partnerships to national policy objectives to achieve important social, economic and environmental goals.

Government buying has been recognized as a tool to promote local private sector development and create jobs. Job creation is an urgent priority in the country, with estimates of more than half a million jobs lost between August 2021 and mid-2022. Women-owned businesses are worst affected — 42% of women-owned businesses had temporarily closed, compared to 26% of men. However, restrictions on women’s participation in the labor market and other political reforms pose significant challenges to advancing SusPP in the country.

>> Visual snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Very Early Stage

Key Achievements

• Procurement law explicitly allows consideration of environmental criteria and promotes the use of domestic preferences
  
• Comprehensive institutional framework on public procurement with lead central agencies for coordination and audit, led by the President
  
• Procurement professionalization program in place led by the National Procurement Institute
  
• Robust reporting of procurement data and contract management through online portals
  

Potential pathways forward

• Explore potential for public procurement to create local jobs especially for women, while realizing current political constraints
  
• Work with Chamber of Commerce and women’s business groups to expand supplier capacity to participate in government contracts
  

>> Timeline of Implementation of Sustainable Procurement Activities

2014

2015

2016

2021

National Procurement Authority established as the lead agency for procurement planning and practice

Nationally Determined Contribution sets target of 13.6% GHG reduction

Procurement Law adopted with clauses to promote domestic preferences and environmental protection

Afghanistan National Peace and Development Framework 2021-2025 recognizes important role of procurement in supporting domestic producers

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Public procurement is recognized in Afghanistan as a tool to promote local private sector development and create jobs. The United States Government launched an Afghan First procurement initiative in 2006 that encouraged contracting Afghan companies to ensure donor money strengthened the local economy, rather than foreign contractors.

This practice was continued by the Government of Afghanistan. Procurement has been a powerful tool to strengthen domestic producers. For example, the Government invested approximately $1 billion into the local poultry sector by procuring chicken from domestic producers for the menu of the Afghan National Army (MoF 2021 at p. 21). The Government also created an arrangement to supply domestic steel mills with scrap metal, enabling them to supply nearly 60% of domestic needs.

However, no specific policy or action plan has been developed to guide a whole of government approach to implementing Sustainable Public Procurement in the country. In its absence, this section highlights national development and sectoral policies that SusPP can contribute to achieving - knowledge that can inform the design of a future policy approach to SusPP reform.

The Islamic Republic of Afghanistan has set 10 National Priority Programs that represent the country’s national development strategy framework (date of adoption unknown). These Priority Programs have been mapped for their alignment to the Sustainable Development Goals, signalling a political commitment to SDG implementation. SusPP can contribute to several Priority Programs including:

• Private Sector Development: Build a capable and thriving private sector that leads the economic growht process, creates job opportunities, contributes to poverty reduction and gradually reduces reliance on foreign aid.
  
• National Infrastructure Plan: Improve productivity, competitiveness and connectivity through planned and targeted infrastructure investment, human capital development, and enhanced regional connectivity.
  
• Women’s Economic Empowerment: Advance Afghan women’s autonomy and well-being by expanding women’s access to economic resources, increasing their ability to operate successfully in commercial markets, and aligning government policy to support these development goals.
  
• Urban: Ensure adequate housing and access to basic urban services for all – promoting new and affordable housing, upgrade informal settlements, and enhance public spaces, transport and urban mobility.
  
• Governance: Reforming the national budget process to increase transparency, efficiency, and the flexibility to align budget allocations with national policy priorities.
  

The Islamic Republic of Afghanistan submitted its Intended Nationally Determined Contribution in 2015 with a goal of 13.6% reduction in GHG emissions by 2030. However, the NDC has not been updated since 2015.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

The Procurement Law (2016) that governs procurement planning and practice in Afghanistan explicitly allows for social and environmental procurements. One of five procurement objectives is ensuring economy (best value for money) in the procurement of goods, works, and services [Article 2.4] - a concept that supports SusPP practices. The Procurement Law makes clear that “lowest price” is not the sole basis of award, rather procuring entities must first identify all bids that meet the qualitative and technical criteria and then award the contract to the lowest price bid within this pool of responsive bids [Article 22].

Domestic preference

Procuring entities may apply a margin of up to 25% preference to Afghan companies and international companies that have Afghan partners or resident offices in Afghanistan [Article 7]. Procuring entities are obligated to procure from domestic suppliers as long as the price difference is within 25%. They must design tenders in a way that facilitates participation of small domestic enterprises and individuals [Article 8]. One approach can be to split up procurements into lots [Article 15].

Environmental protection

Procuring entities and suppliers are obliged to take necessary actions to protect the environment, both during procurement proceedings and in contract implementation [Article 9].

International procurement guidelines

Article 4.2 offers an explicit entry point for SusPP in ADB-financed procurements. In the case of conflicts with procurement guidelines of international institutions, procurements can be organized in accordance with the rules of such other institutions. Thus, ADB financed procurements can follow ADB procurement guidelines that explicitly support SusPP.

Procurement Infrastructure and Award of Concessions

Contracts for private investment in construction and/or operation of public works and services against awarding concessions for use (Public-Private Partnership) are regulated by the Public Private Partnership (PPP) Law, 2016. The PPP Law requires that any private sector proposals align with the country’s National and Sectoral Development Plans, including priorities related to social, economic, and environmental impacts [Article 7.3] PPPs are to be operated on the principles of public interest, value for money, risk sharing and protection of the environment [Article 13].

Pillar 3: Institutions & Capacity

Procurement Bodies

The National Procurement Authority (NPA) is the lead agency responsible for procurement policy-making, facilitation and monitoring in accordance with the 2016 Procurement Law. It was established in 2014 as part of the Administrative Office of the President. The NPA acts as a secretariat to the National Procurement Commission (NPC), the body responsible for reviewing and approving contracts above specified thresholds. (Different thresholds have been set for services, goods, and works, depending on the applied procurement method.) President Ashraf Ghani presides over the weekly NPC meeting to review high value procurements. For procurements below the threshold, the procuring entities carry out the procurement function. The Supreme Audit Office is responsible for external audit of government procurement and financial statements.

Interministerial Bodies

On women’s empowerment, an Inter-Ministerial Steering Committee for the National Priority Program on Women’s Economic Empowerment has been formed, co-chaired by Ministry of Labour, Social Affairs, Martyrs and Disabled (MoLSAMD) and Ministry of Women's Affairs (MOWA). It convenes regular meetings to improve coordination of WEE activities. However, since the establishment of the Taliban government on 7 September 2021, MOWA was replaced by the Ministry for the Propagation of Virtue and the Prevention of Vice.

Capacity Building

National Procurement Institute (NPI) as the training arm of NPA. It teaches globally accepted procurement approaches and techniques and is responsible for educating Afghan procurement specialists. Currently, no training programs on sustainable public procurement were identified.

The National Procurement Institute has invested in an internationally recognized Monitoring and Evaluation (M&E) framework that is founded on the Kirkpatrick model of training evaluation.. As part of the procurement reforms, NPI is committed to delivering ongoing training to 1,400 government employees responsible for public procurement at the national and provincial levels , preparing them to ensure that public resources are spent efficiently. However, all procurement training came to a halt during the COVID-19 pandemic. However, the NPI and the National Statistics and Information Authority launched eLearning courses using the Moodle Learning Management System to allow continued learning through video programs at no additional costs.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The primary private sector association in Afghanistan is the Afghanistan Chamber of Commerce and Investment. It promotes the growth of the Afghan private sector and supports business opportunities in the country and abroad. No specific programs on sustainable business practices were identified in this review.

The Afghan Women's Chamber of Commerce and Industry (AWCCI) has partnered with the United Nations Development Programme to support 26 small and medium businesses owned by Afghan women at an exhibition in Rotana Arjaan in Dubai from 16 to 18 March 2023. The exhibited commercial items include jewelry, carpet, dry fruits, handicrafts, wooden artifacts, shoes, and Saffron-based products. The UNDP programme supports over 34,000 women businesses across Afghanistan.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

The Government of Afghanistan recognizes the powerful role of procurement to support the growth of domestic businesses and producers. The National Peace and Development Framework 2021-2025 cites examples of the Government boosting the local poultry industry through contracts to feed the Afghanistan National Army, and the steel industry through the provision of scrap metal.

However, no specific tools or programs to support or mainstream SusPP practices in Afghanistan were uncovered in this desk review.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

No specific monitoring system has been put in place to track sustainable procurements. This section describes the general monitoring framework for public procurement, into which SusPP tracking could be integrated.

The PEFA baseline report identified the Procurement Management Information System (PMIS) as a central hub for databases or records on procurement contracts, including the product/service category, contract value, and awarded supplier. All procurement entities have access to PMIS where they regularly update their procurement information as required in the Procurement Law [Article 46]. The PEFA assessment found cases of non-reporting for below-threshold contracts. A complementary Contract Progress Monitoring System has also been developed to capture post-contract activities.

The National Procurement Authority is responsible for periodic inspections of procuring entities and sampling to ensure compliance with the Procurement Law. The NPA prepares an annual report with qualitative and quantitative data on annual procurements - indicators on SusPP could be integrated into this system. The current monitoring covers central government operations only due to limited staffing resources, not municipalities and provincial authorities that have been delegated the procurement function.

Projects Supported by ADB

ADB has placed its regular assistance to Afghanistan on hold effective 15 August 2021, but in 2022 supported the economic and social development of the Afghan people through a special arrangement with the United Nations to address basic human needs.

Other Initiatives supported by National/International Agencies

The Women’s Access Dignity and Advancement project (WADA) is set to run for four years from 2023, with the initial phase to be implemented in the first 24 months. Both UNHCR and FAO have contributed $1 million each to kick-start the project while looking to fundraise the $18 million balance needed for the scale-up.

Launched in 2021, the project “Supporting the Economic Empowerment of Afghan Women through Education and Training in Kazakhstan, Uzbekistan and Kyrgyzstan” expands an ongoing EUR 2 million cooperation program aimed at enhancing the resilience and empowerment of vulnerable women in Afghanistan. It focuses on their academic, economic, and social development by providing education and training in Kazakhstan, Uzbekistan, and Kyrgyzstan in the new phase. The goal is for 105 Afghan women to graduate with higher and professional education from Central Asian universities by 2027.

References

ADB Member Fact Sheet, 2023. Afghanistan.

Islamic Republic of Afghanistan, Ministry of Justice (2016). Public Private Partnership (PPP) Law.

Islamic Republic of Afghanistan, Ministry of Justice (2017). Procurement Law.

Islamic Republic of Afghanistan (2017). Afghanistan National Peace and Development Framework 2017-2021.

Islamic Republic of Afghanistan, Ministry of Finance (2021). Afghanistan National Peace and Development Framework 2021-2025 .

Islamic Republic of Afghanistan. National Priority Programs.

Islamic Republic of Afghanistan, Ministry of Economy. Aligning National Priority Programs with the Afghanistan Sustainable Development Goals (ASDG).

PEFA Secretariat (2018). Afghanistan Public Expenditure and Financial Accountability (PEFA) Performance Assessment Report Based on PEFA 2016 Framework - Baseline report.

Special Inspector General for Afghanistan Reconstruction (2017). Quarterly Report to the United States Congress.

The World Bank. Global Public Procurement Database “Afghanistan country profile for 2021”.

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