Afghanistan Needs an Economic Czar --- China had its Deng Xiaopeng; India, Manmohan Singh; the United Arab Emirates, Sheikh Rashid; Singapore, Lee Kuan Yew; and dozens of others statesmen have unlocked the economic potential of their countries and paved the way for phenomenal economic growth and development in their countries. It is time to reset the economic development agenda for Afghanistan. Afghans can find a sustainable source of economic growth based on natural resources and geographic location in Asia under an economic czar with a vision for the Afghan economy and a program for economic reform in a short time span. -- In the past 13 years, the Afghan economy has had double digit economic growth with an average growth rate of 9.5 percent per year along with a single digit inflation rate. However, since 2013, the GDP growth rate has plummeted from 13.5 percent to 3.2 percent, based on World Bank and IMF estimates. This drastic fall in GDP growth is due to the withdrawal of foreign forces, a prolonged election, fading business confidence, and pervasive corruption within the Afghan government. -- The recipes for building a sustainable Afghan economy ranged from reviving the Silk Road to building a resource-based economy given Afghanistan's vast underground mineral resources. Under President Hamid Karzai, either these models did not work or security priorities overtook the economic development agenda. Furthermore, as Karzai was never interested in an economic development agenda and vision for Afghanistan, economic issues never made it high in his agenda. His assumption was that the international community would continue pouring in millions of dollars in foreign aid, keeping his country afloat and bringing much needed foreign exchange to the economy -- not realizing that, like any form of foreign aid, it won't last long. -- Too many recipes: an inflation of strategies and policies --- With the establishment of the interim administration, led by Hamid Karzai in 2002 -- the then-coordinator of aid for Afghanistan and current president, Ashraf Ghani, formulated the first ever post-Taliban economic development strategy, called the National Development Framework (NDF). The NDF categorized the economic development and poverty reduction priorities of Afghanistan into four pillars and was later presented to donor countries at a Berlin conference as a seven-year plan, called Securing Afghanistan's Future. -- After Ghani's departure as finance minister and with the arrival of a pool of ministers that followed, a plethora of new development strategies were devised for Afghanistan from Afghanistan National Development Strategy (ANDS) to Kabul Conference National Priority Programs (NPPs) to the document presented at the Tokyo Conference II referred to as "Towards a Self-Reliant Afghanistan." Unfortunately, none of these plans were completely implemented. Policy priorities depended on the personal taste and choice of each finance minister officeholder who drew up their own economic development plan for Afghanistan and presented it as Afghanistan's set of economic development priorities at new international donors' conferences. -- The tyranny of experts: too many cooks in the kitchen --- Since 2001, each year, millions of dollars in foreign aid is poured into Afghanistan for technical advisors, consultancy projects, and capacity development programs -- all without much achievement. This has created a revolving door of domestic and foreign consultancy industry where consultants, often highly incompetent, come for short-term consultancies, most of which is highly ineffective. These consultants have produced dozens of documents that do nothing more than lay on shelves in Afghan ministries, gathering dust, with little feasibility to implement and relevance to realities on the ground. -- A framework for the inflow and outflow of consultants should be put in place with clear productivity and competency benchmarks for this shadowy industry in Afghanistan. --- Fiscal policy failure: budget deficit and the Dutch disease -- Afghanistan still lacks a basic fiscal policy framework outlining its short, medium, and long-term expenditure and revenue targets to help adjust the aggregate demand and GDP fluctuations in the economy. -- Fiscal policy is constricted by the Afghan National Budget, estimated to be around $7 billion annually. Afghanistan's operating budget is 40 percent funded by the international community and includes the Development Budget, which is completely dependent on foreign aid. -- But the heavy reliance of the Afghan economy on foreign aid has created some major problems. Dutch disease, where the increase in the development of natural resources brings a decline in the manufacturing sector, and aid addiction, has resulted in few Afghan policymakers bothering to invest time and energy in finding domestic, sustainable sources of revenue and economic of growth. --- Monetary policy, central banking and financial markets: strengthening banking and financial sectors -- The Afghan Central Bank, also known as Da Afghanistan Bank (DAB), is the main regulatory body responsible for the banking and financial sectors of the Afghan economy. It is an efficient institution but lacks the sophistication, capacity, skills, and independence of a modern central bank. Like many central banks, DAB was part of the Ministry of Finance until recently when the new constitution changed its status, transforming it into an independent institution. -- DAB's independence is a new phenomenon and the institution lacked the basic skills and capacity to develop and implement an independent monetary policy, even to this day. -- Furthermore, the collapse of Kabul Bank in 2010 and the spread of contagious and risky assets across the financial and banking system of Afghanistan have destroyed the international credibility and reputation of the Afghan financial and banking institutions. -- The Afghan banking and financial sector was on the verge of being blacklisted because Afghan government failed to pass the international banking association's money laundering and anti-terrorism financing regulations. Fortunately, it was approved at the last minute by the Afghan parliament under intense national and international pressure. -- Building a vibrant financial and banking sector requires a capable, competent, and independent central bank that follows a credible and predictable monetary policy. The governor of DAB has a responsibility to draft, approve, and implement a fresh monetary policy for Afghanistan consistent with the economic realities of the country. --- The blessing of geography: Afghanistan, the land bridge of Asia -- For a long time, Afghanistan's geographic location was a liability, making Afghanistan prey to empires from the east and west or a buffer zone between the former USSR and the United States. Today, this calculus can change with smart and visionary leadership. The three major rising economies of the world are Afghanistan's neighbors: China, India, and Russia. None of these countries will want an insecure and unstable Afghanistan which could potentially hamper their own rate of economic growth. -- Despite the decline of the Silk Road trading routes, even today Afghanistan's ability to act as a cross-regional conduit has never entirely faded from collective perception. --- Upstream water and lithium: Afghanistan's oil -- Afghanistan is a high riparian state in the Central and South Asia region. Except for a water-sharing agreement signed between Afghanistan and Iran in the late 1950s, no treaties exist between Afghanistan and its neighbors on water-sharing rights. Because of the lack of water-sharing agreements, many World Bank and Asia Development Bank small and medium hydropower and irrigation projects are on hold. Afghanistan can seize this opportunity and negotiate water-sharing treaties with its neighbors and either sell its water or ask for other incentives in return. -- There are also four geological belts of high quality Lithium deposits, 60 to 70 percent pure, spread across the country. Geologists and the U.S. Geological Survey (USGS) have termed Afghanistan the Saudi Arabia of Lithium. -- Read More, Tamim Asey, http://southasia.foreignpolicy.com/posts/2014/10/16/afghanistan_needs_an_economic_czar