The Nature of Statistical Data About The Afghan Economy and Their Problems   By: Prof. M. Siddieq Noorzoy   February, 25, 2013   Abstract Afghanistan has gone through much devastation and one of the areas suffering has been the loss of statistical information on the country. A new process of information construction began in 2002 which was not based on surveys of conditions or reconstructing historical information. The resurrected Central Statistics Organization with the help of IMF assumed this challenge in rebuilding the needed information system for use by analysts and policy makers. In the mean time lack of proper information may be one reason why economic policies have been failing. Introduction The availability of reliable and consistent statistics forms the basis for any useful analysis especially for time series analysis. In addition this is required for informed policy formulations. Given the history of Afghanistan for the past four decades these issues have been critical for some time. With the background of two recent invasions ( 1979 and 2001) and several civil wars the history of statistical information on Afghanistan can be broadly divided into the following periods applying the criteria of availability and reliability of the statistical data: 1) Pre-communist period until the coup de tat of April, 1978. 2) The years of communist rule 1978-1992. 3) The period of civil wars 1992-2001. 4) Post US lead invasion since 2002- onward. For more than a generation during 1950-1977 information collection and understanding of the workings of the Afghan economy and Afghan institutions were gathering pace and widely increasing due to the works that the Afghan governments of the period and international organizations such as the various agencies of the UN, World Bank, IMF, ILO, and other organizations such as the Asian Development Bank were doing during the 1950’s to the mid 1970’s. These decades were peaceful during which a series of five year plans were launched by the Afghan governments and supported by the international community, but, more specifically by the former communist Soviet Union and capitalist US in competition with each other. Discussions and analyses of the economic and social problems were carried out by independent scholars also which offered refinements and broadening of analyses applying the available information with new insights. Statistical information was gradually being improved especially during the planning years, both the collection and refinement of data had become a major concern of the central government to the extent that a special statistical office ( the Central Statistic Office ), was set up for this purpose and a Statistical Law was passed in 1975 for implementing the goals of the government under President Mohammad Daoud. What Followed These budding processes were upset by the start of the civil war following the communist coup de tat on April 27, 1978, and then by the Soviet invasion on December 25, 1979. During the period of 1978-1992 statistical information was being generated by the communist regimes in Kabul, but, by comparison with the previous period the statistics had to be used with much more caution for they were subject to political manipulations. With the fall of the last communist regime in April 1992 and the lack of agreement to form a stable government in 1992 by the coalition of the mujahideen and remnants of the communist parties, followed by the devastating civil war of 1992-1996 among these groups ( that formed the so-called Northern Alliance in November 1996 in Khenjan), the process of gathering and publishing statistical information disappeared altogether. The institutions had collapsed and the staff had been dislodged. During September, 1996- October, 2001 a period of continuous civil war there were hardly any statistical information coming out of Afghanistan due to the disintegration of the institutions. Even though the Taliban governed Kabul for over five years between September 26,1996- and November 13, 2001 under tight control with full security they lacked the necessary skills and resources to rejuvenate the government institutions and economic information gathering to restart the program of generating statistical information on the economy. The Afghan economy was in a state of disrepair and disintegration. When the Taliban regime was toppled in November 2001 in the post US lead invasion a new phase began with the international policy makers facing the problem of a disintegrated economy for which they had no information. The Afghan economy was suddenly going to receive a large infusion of foreign personnel, military and civilian, along with large sums of funds in the post invasion period. This necessitated recreating a whole host of new official statistical information for the explicit purpose of explaining and at the same time promoting the effects of the newly imposed policies on Afghanistan and its economy. The US policy makers and those of NATO, aside from the CIA and equivalent intelligence agencies of NATO, depended on international organizations such as the UN, IMF and the World Bank to provide statistical information on Afghanistan. These organizations in turn conventionally derived their country accounts from national sources of the respective countries. For Afghanistan the unavailability of statistical data between 1992-2001 provided a challenge. The Statistical Law of 1975 and the Central Statistics Office established in 1976 for applying the law for the purpose of collecting and normalizing national data no longer functioned and the various ministries as the actual sources of the statistics were also in a state of dysfunction. Thus, this challenge was taken up by the IMF to generate new statistics on the Afghan economy. The web site of the newly regenerated Central Statistics Organization ( CSO) of the Islamic Republic of Afghanistan acknowledges this beginning from the period of mid 2002 (1). The CSO is in essence a rebirth of the Central Statistics Office of the 1976 except that the Central Statistics Organization is trying to regenerate new data whereas the former institution was building on the statistical data that had been gathered during the many years of planning. CSO compiles the estimates of the GDP on the basis of the UN System of National Accounts starting from 2002 onward. GDP is estimated by the expenditure category rather than income ( factor costs) as the sum of expenditures on final commodities through the estimations of consumption ( for households and government), gross capital formation and exports less imports. When there are no national accounts available such as in the case of Afghanistan the UN Statistics Division provides in-house country estimates based on the 1993 internationally accepted standards of statistics which occasionally is updated or refined through international mechanisms set up for this purpose, the latest review was undertaken in 2008 which continued to use the 1993 base. However, the statistical data presented by the IMF and other international sources since 2002 for Afghanistan present their own challenge to data users since a certain bias is present, and this is dramatically demonstrated in the case of the high growth rates reported for GDP under the conditions of extreme distortions present in the Afghan economy. It seems the creation of new statistics for Afghanistan embodying a certain policy bias for the purpose of conveying impressions of policy successes. Such new statistics are not based on comprehensive surveys of the conditions in Afghanistan or its economy. There are other issues of allowing for the massive distortions such as the presence of large number of refugees and IDPs, extreme unemployment, subsistent living by most Afghans, slow progress toward the reconstruction of the infrastructure, and the allocation of external funding to areas which the Afghan economy has not shown comparative advantage, but such allocations are done mostly to meet new demand conditions such as for services by the large foreign contingents. Furthermore, the creation of new statistics was apparently done in Kabul where contingents of foreign personnel were seen behind computers in 2002 presumably cranking up new statistical data by individuals not familiar with previous works or information available on Afghanistan. For example, there is no reference to the statistical information available in the two volume Seven Year Plan issued in 1976 which brought together the developments of the statistical gathering information on Afghanistan from previous decades and made projections for the future of the country under the Seven Year Plan (2). There is no reference in the discussions and reporting about the Afghan economy which the UN sponsored works of the Operation Salam based in Geneva, Switzerland, had done and the survey of progress in the publications of that organization about reconstruction in the Afghan economy covering years 1988-1993. Whether the CSO as a new institution of the post 2002 period will synthesize the new information with the previous information of the past decades which would be needed for time series analysis of the kind done in the past remains to be seen. One of the major issues discussed as part of the post war reconstruction in the post Soviet retreat of 1989 was the necessity of a careful policy of gradual repatriation of more than seven million refugees as part of reconstruction policy which was discussed at the three day seminar in Geneva organized during May 5-7, 1989 by Operation Salam(3). The failure of the post 2001 invasion policies to take this highly important consideration in to account shows up in the extreme unemployment figures persistent since 2002 when the refugees were encouraged to come home under the “enduring freedom” slogan coined by the Bush Administration and 4.37 million Afghan refugees returned from Pakistan and Iran during 2002-2008 finding total absence of the availability of their needs from shelter, food, healthcare, schools and jobs. Most of them are facing the same conditions in many areas including Kabul with five million residents in 2012, to which are added the 500,000 Internally Displaced Afghans seeking refuge from the US and NATO bombardments and night rids of their homes and areas of living in Kandahar, Helmand, Uruzgan and other provinces in the south and eastern Afghanistan. The need for the creation of the statistical data in 2002 was obvious to the policy makers in the post invasion period. The several hundred thousand foreign military and civilian personnel along with others such as contractors, spies, mercenaries, bodyguards, were followed by a large crowed of NGOs (over 3,000). Those concerned with policy making issues and others using policy outputs each with their own level of expertise or lack thereof along with advisors including those giving advice on the Afghan economy ,both Afghan and foreign, and other fortune seekers who apparently were not aware of the needs of the Afghan people and were asking Afghans ‘what can we do’ according to many sources entered the country. The level of war destructions were not known and not surveyed in different areas. But, these conditions did not prevent many chasing the free flow of foreign funds to give advice about issues they had no knowledge about. They had no idea what the Afghan economy was like in terms of its historical structure and performance before the decades of wars, and what had been achieved and what had actually happened to the country and its economy during years of conflict and finally where were the sources of statistical information and what were their degrees of reliability, etc. for comparisons to be made in order to generate new policies for reconstruction on a whole host of areas. It is interesting that discussions on Afghan satellite television networks from Kabul on economic issues raise questions about the reliability of the statistics used by those in the regime in Kabul and outside Afghanistan in Washington and in European capitols since 2002. Afghan commentators have become aware of the nature of the problems, but, apparently not the policy makers making decisions. A long term process of reevaluation and refinements of the data collected since 2002 is necessary as collection of statistics become routine again in essence repeating the processes of the 1970’s which built on the efforts of the prior decades of the 1950’s and 1960’s in this field. In critical areas surveys of the facts and prevailing conditions are necessary such as for estimating the population ( where recent attempts are made), total labor force, number of unemployed, child labor, wage and income data, success and failures among businesses especially in new industries, in farms and the service sector and other areas such as the trade sector, including the trade in illegal drugs where much smuggling has existed historically especially since 2002, where firm and reliable information is not available. Clearly much work lies ahead in this field. The failures of the foreign imposed policies on the Afghan economy since 2002, can be directly related to these conditions and lack of developments that followed just as much as to the motivations of the foreign policy makers which largely ignored the needs of the country and the people telling them one thing and doing entirely some thing else (4). At the same time the occupation policies supported those individuals who were not only corrupt, but, showed little knowledge and competence in formulating needed policies for the Afghan economy. These trends have been reflected by the absence of concern about the results of their policies in all donor conferences between 2002-2012. It is nearly impossible to explain the presence of high double digit unemployment ranging between 40-60% of the labor force for twelve years when large amounts of funds ( $89 billion from the US alone for the 2002-2011 period in addition to the $552 billions spent by the US military with spell over effects in to the Afghan economy ) that have been allocated in the name of Afghanistan which essentially had come and gone through and around the system of governance created in Afghanistan. At the same time with the latest news from Kabul indicating that during 2012 some $4.6 billion had been taken out of Afghanistan through the Kabul airport as reported by the Bank Millie, which leaves the question unanswered where have the rest of the funds gone to an is there any accountability? No attempts have been made to help solve the critical unemployment problem through new policies, which has resulted in continued high levels of poverty, and other national issues have also been neglected such as the high child labor problem, high and growing drug use among the population where some 1.3 million Afghans have become drug users among other important problems such as the high mental health problem reported by the Ministry of Health. Changing policies and replacing the corrupt and incompetent individuals running the affairs of Afghanistan are required. Unfortunately, the very survival of these individuals in the power structure of the regime in Kabul has been the central strategy of the US and NATO policy. If these individuals are held accountable by the Afghan people, and by the taxpayers of the donor countries, then international policy makers in Afghanistan are also accountable. History may judge differently as more research is done on the events in Afghanistan and the invasion and occupation of the country for more than eleven years, but, it is unlikely to change the core issues as discussed here. Conclusion Afghanistan has many problems and they all require long term solutions with new policies and dedicated individuals armed with the knowledge and skills to bring on the solutions. Many of these problems have been the result of long years of war. At the same time many of the problems are either neglected or the wrong policies and personnel are involved so that no solutions have been applied. The central focus of this article has been the effect of the unavailability of consistent and reliable statistical data for solving the economic problems of the country. However, the existence of such critical tool is a requirement in any field for analysis and for policy formulations. The resurrected Central Statistics Organization ( Office) has its duties cut out for it. In the regenerating of the statistical data since 2002 with the help of IMF the discission in this article points out to the need to for these organizations to look in to the historical data in many areas available in historical documents in order to get a correct perspective of what Afghanistan had achieved and where the shortcomings in the statistical data may be to fine the information. Notes: (1) A Google search under the Islamic Republic of Afghanistan turns up the needed results for CSO which also includes the re-established Central Statistics Office. (2) See, First Seven Year Economic and Social Development Plan March 1976-March 1983, Ministry of Plan, 1976, Government of the Republic of Afghanistan Vol. I Text, Vol. II Annex, which has the statistical data. (3) See, M.Siddieq Noorzoy, “ Issues on and Problems of Social and Economic Reconstruction and Recovery in Afghanistan”, Seminar on the Potential for Recovery in Afghanistan and the Role of International Assistance, Operation Salam, May 5-7, 1989 , Geneva ( GE.89-01370). See also, United Nations Humanitarian and Economic Assistance Programs Relating to Afghanistan, (UNOCA) Operation Salam reports 1988-1991, Office of the Coordination of UNOCA, Geneva, Switzerland, also with branch offices in Kabul ,Islamabad , Tehran and Termez. Unfortunately, UNOCA faced difficulties due to the crisis in Kabul in 1992 following the failing to establish a stable government. It developed problems of mismanagement in the Geneva office which forced the UN to close it. The UNOCA publications were useful in their surveys of conditions for planning (post war) reconstruction which was also needed in 2002. (4) George W. Bush talked about a Marshall Plan type reconstruction for Afghanistan on April 18, 2002 at the Virginia Military Institute which found endorsement. See, Chicago Tribune News, April 20, 2002. But, his Administration soon found it difficult to follow up as it did not include a budget for 2003 for assistance to Afghanistan and the Senate had to step in to offer $300 million. There was opposition in the Bush Administration to the idea of nation building as he had advocated. However, since the idea was abandoned so soon it may be that the purpose was political rather than the need for addressing economic reality in Afghanistan requiring comprehensive planning for reconstruction and funding such an effort.