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Afghan aid encouraged corruption harmed local businesses

Afghan aid encouraged corruption harmed local businesses

Some of the findings of the report, Private Sector Development and Economic Growth: Lessons from the U.S. experience in Afghanistan:

Afghan private sector development efforts didn’t reflect the reality of the country’s economic and security environment, the capacity of its institutions, its relations with its neighbors, or the impact of corruption.
Optimistic projections for the pace and level of progress did not reflect the realities of the Afghan economy and operating environment, the ongoing conflict, and the capacity constraints of Afghan and U.S. institutions.
Afghanistan’s early economic gains were largely due to an immediate post-conflict recovery and the large infusion of foreign spending, and therefore were not sustainable at those initial levels.
U.S. financial aid practices, at times, encouraged corruption, complicated the challenges of coordination within and between U.S. agencies, and kept non-viable Afghan enterprises afloat.
The U.S. government and stakeholders failed to understand the relationships between corrupt strongmen and powerholders, and the speed at which Afghanistan could transition to a Western-style market economy.
The implicit toleration of corruption and often unintentional U.S. support for corrupt officials undermined support for private sector development initiatives from the Afghan population.
An unrealistic view of what was possible in a conflict environment encouraged the setting of unrealistic goals, which in turn resulted in an inefficient use of resources on projects that did not deliver on their objectives.
Senior technical experts often lack expertise in Afghanistan or even in post-conflict or developing economies, and were unable to provide effective guidance and support.
The simple existence of laws and regulations is insufficient; it is how they are implemented by courts, government officials, and police that matters. Many laws introduced to promote economic activity were not accompanied by plans to build or modify the institutions needed to apply them, and Afghanistan’s weak judicial system left even the best-crafted laws vulnerable to manipulation.
The U.S. government’s provision of direct financial support to enterprises sometimes created dependent, commercially nonviable entities, as well as disincentives for businesses to use local financial and technical services.