Ghaninomics

Afghan President Ashraf Ghani has a vision that could turn Central and South Asia into another East Asian Miracle. He is putting his years of development experience and skills with the World Bank and academia into use, aggressively pushing for a new economic agenda and narrative for Afghanistan and the region.

His bold plans envision Afghanistan as a land bridge between Central and South Asia with huge transit, mineral, and energy potential. According to Ghani, Afghanistan has a clear choice to make: either become the roundabout of trade and energy at the center of the region’s economy or face becoming the region’s cul-de-sac, the dead end of the region’s economy and geopolitical chain. The realization of such a vision and set of economic principles would require a political consensus both inside and outside of Afghanistan.

For the first time in its history, Afghanistan has a president that is prioritizing economics over security. Ghani spends most of his time formulating policies and programs to reverse Afghanistan’s downward economic spiral, and is pushing his cabinet into action. He spends hours lecturing his ministers and other officials to undertake key infrastructure, agricultural, and mineral development projects.

Ghani not only wants to be an active player in the economic architecture of the region but is also presenting ideas and alternative, complementary visions to the already existing regional economic designs such as Eurasian Union and the Silk Road Economic Belt.

As a result of this Ghaninomics, he is being viewed as one of the most knowledgeable and talented heads of state in the region. In private, presidents and prime ministers from the region seek Ghani’s advice and counsel on a range of regional and international issues, including advice on speeches to deliver at international forums.

The essential ingredients of Ghaninomics are regional connectivity, rural and agriculture development, sound and effective public financial management and aid effectiveness, and finally a robust overhauling of the business and investment environment in Afghanistan. Afghanistan is the key to Central and South Asia fully realizing their true energy and trade potential. And Ghani knows this.

In the recent Regional Economic Cooperation Conference on Afghanistan summit held in Kabul in early September, Ghani and his administration presented a list of regional projects which are key to the regional economic and trade integration — projects that would be economically and geographically unfeasible without Afghanistan. Some of these projects, such as CASA 1000 electric line, the Turkmenistan-Afghanistan-Pakistan-India pipeline, and the China-Kyrgyzstan-Tajikistan-Afghanistan-Iran railway project are already underway while others such as the Lapis Lazuli Eurasian trade corridor are still at the conceptual stage. These projects will give the region the much-needed infrastructure and shortest transit route to access Central and South Asian markets and turn Afghanistan into a much-needed energy, minerals, and transit hub.

The Afghan economy is in a dire state. It suffers from a variety of indigenous and exogenous shocks, including the decline in foreign aid, impact of international troop withdrawal, stagnant reforms, and a long electoral process. According to World Bank figures, the rate of economic growth since 2002 has had a double-digit dip from almost 12 percent in 2002 to 2.9 percent forecasted growth in 2015. The crisis of the Afghan economy is essentially that of finding a sustainable indigenous source of growth and revenue generation. Ghaninomics will address this economic slowdown through a combination of short to long-term economic measures. By turning Afghanistan into a regional roundabout tying the Afghan economy to regional trade, Ghani is  laying the foundations of long term growth while at the same time taking short term measures in reviving the stagnant Afghan agriculture and trade sectors.

As for aid effectiveness, Ghani has agreed with the international community on a common framework like the London Conference Realizing Self Reliance paper and the Tokyo Mutual Accountability Framework on two key time-lined priorities: reform in Afghanistan; and transitioning to a multi-year budget cycle. Ghani’s new budget cycle proposal brings predictability and clarity to donors funding the national government. He has also been vigorously pushing to change the face of rural and urban Afghanistan through forming new plans and broadening current ones: the Citizen’s Charter is a new national program aimed at developing rural areas, and the successful National Solidarity Programme, which funded rural development program, being replicated for urban development in main cities of Afghanistan.

Ghani and his partner in the unity government, Chief Executive Abdullah Abdullah are paving the way for robust economic development in Afghanistan and the region. Ghaninomics, Ghani’s tireless efforts to forge a regional economic and trade consensus, has the potential to be a win-win policy for the entire region. What is required now is a regional consensus to turn Afghanistan into a transit roundabout rather than a dead-end cul-de-sac.

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