Abstract

The World Bank ceased operation after the Taliban takeover of Kabul, where posed sanctions by the United States made significant difficulties in processing international transactions due to the Central Bank’s restrictions on capital outflows. Unavailability of the fund and physical cash for running of health projects pushes the country into significant health and humanitarian crises. According to a contract between Global Fund and NGOs, the UNDP intended to transfer 80% of the fund in the first week of the month; however, NGOs could receive only 10% of the contract price and withdraw approximately 1.5% of the contract price in three weeks. The paper used a scoping review method to review all past and possible theories in the funding of the Afghanistan health system. The study considers a metatheory that involves funding mechanisms and theories, and feasible practices in the contexts of Afghanistan. We have found some main approaches in the humanitarian support projects since 1996. They are cash-based theory in all transactions in the absence of banking system, cash-based and banking theory during the transition and Islamic republic government, banking theory in the very last period through Afghanistan Reconstruction Trust Fund, and back to cash-based and hawala system under the current Taliban regime. The scoping review proposes using both banking and cash-based approaches. The theory suggests that donors transfer a certain amount of funds through bank transfer to the NGO, where NGOs also use transfers to procure necessary supplies and services. Meanwhile, it suggests that donors deposit (in cash) a certain amount of funds to the NGO to allow procurement at the provincial levels where local markets require money in exchange for their goods and services.

1. Introduction and Background

Afghanistan reversed once again to a stone age after the fall out of the government to the Taliban. According to reference ¹, Afghanistan’s economic growth was slow until August 2021, resulting from a worsening security situation and severe drought conditions. The current political situation pushed the financial system into a crisis. However, the country is struggling to handle the third wave of Covid-19, many other problems raised since then. A pan system failure and system collapse occurred in the country where sectors such as economy and health are critical in delivering services to the people suffered more. The World Bank ceased operation after the Taliban takeover of Kabul, where posed sanctions by the United States made significant difficulties in processing international transactions due to the Central Bank’s restrictions on capital outflows. In a report ² explained that Afghanistan’s banks face an uncertain future after the Taliban swept to power. They added that Afghanistan’s banking system is now in a state of collapse, and people are running out of money.

In the field, the banks allow the firms and NGOs to withdraw only 5% of their balance in a weak. Also, they have stopped all international transfers from the country, and only individual to individual transfers or transfers between commercial accounts are possible at Afghanistan International Bank (AIB). It is limited to other banks such as Azizi Bank, New Kabul Bank, etc. Liquidity had already been an issue in the run-up to the bank closures as people scrambled to withdraw cash ². According to Afghanistan’s Banks’ recent announcement, individuals can withdraw amounts limited to 200 USD per month.

After World Bank ceased its operation in Afghanistan in August 2021, the health NGOs faced a critical problem in continuing the current projects over the country. The government doesn’t have sufficient resources to support the projects and keep them running. From July 2021 to the end of September 2021, there was no commitment from donors or international agencies to continue the current health projects. National and international NGOs responsible for implementing health projects barely managed this period by taking loans from the markets and the suppliers. After many debates with donors and international organizations, the health NGOs could attract the support of the Global Fund for funding the current project for a month. It is a short alternative funding mechanism to revive the health sector somehow. It stepped in the role of UN agencies in managing funds from Global Fund to NGOs as the principal implementer and as a new funding theory. According to the theory, it was supposed that UNDP would transfer 80% of one month contract of NGOs at the beginning of November 2021 to support procurement of necessary and emergency supplies to the health centers. The mechanism could transfer the fund only about 10% of the contracts. But still, the problem is the procurement of goods to the health centers from the local market because they cannot receive more than 5% of their transferred amount in a week. The local market is now not accepting transfers and asks for cash payments in each supply. The donors, including the UN, do not accept cash-based theory for the project’s transactions even in a system collapsed country.

When the Taliban took over the country’s capital for the first time in 1996, the UN agencies and international NGOs intended to help people inside the country, often faced with distrust of the Taliban ³. The distrust escalated when the United Nations imposed sanctions on the regime in 1999. After a year, the UN found that many individual Afghans felt victimized by the sanctions, believing that the UN had set out to harm rather than help Afghans. NGOs and UN agencies provided humanitarian relief in Afghanistan during that period while the country did not experience banking systems. NGOs and UN agencies made all transactions in cash, a cash-based theory, which the country context required at that time. According to researcher ⁴, Afghanistan’s formal financial system was virtually non-existent and relied on hawala, a centuries-old informal money exchange system providing domestic and international transfers. In 2002, the United States facilitated the development of effective counter-terrorist financing policies in Afghanistan.

2. Literature Review

I searched the Trident University database for the topic and used "fund transfer mechanism in an emergency" for the primary search. The search engine found a total of 2850 research papers. Narrowing the searching by scholarly and peer-reviewed articles with the last five years considering all languages at the public health discipline, the total number of papers decreased to 86. Among them, 12 research articles were helpful that included at least our research topics and keywords. Among them, only five articles discussed issues related to the topic. In the areas with high-security concerns, insecurity affected the service provision and the institutional ability of the government ⁵. NGOs with a close relationship with the community could manage the continuation of health services in insecure areas. In the lack of institutional ability of the government, such as the banking system, the role of NGOs in the provision of health services is essential, especially in a post-conflict and fragile situation. The literature explained that when the legal system, banking system, and government procedures fail to respond to the institutional needs of the program, the contracting requirement is difficult to follow ⁵. In the absence of registered money transfer agencies and the collapse of the banking system in Syria, humanitarian actors relied on local money transfer (Hawalah), and NGOs transferred money (in-cash) from the NGO to their staff and local partners (suppliers) to carry the activities ⁶. The insecurity and unavailability of banking systems in the Syrian border localized the service provision mechanism through the local NGOs. Another research explains the windows of opportunity for change in the context where institutional capacity and domestic financing faces constraints ⁷. In a post-conflict or crisis, the typical institutional systems compromise and need a change to ensure operation at the field level. Supply support during a major emergency is an essential activity that requires extensive involvement of socialized organizations and forming cooperative relationships to strengthen the ability to manage emergencies ⁸. Supply systems are more efficient based on social needs during mass emergencies or a post-conflict and failed system. Cash transfer programs decrease the consumption inequality, deliver assets, and enhance the capacity of poor and vulnerable groups ⁹. The researchers also explained the social protection program as a vital tool in crisis management and highlighted the role of cash to the beneficiaries in managing the crisis and emergencies. None of the papers in the literature explained a similar situation as in my article. Therefore, the review will contribute an essential role in the field of study.

3. Problem Statement

Unavailability of the fund and physical cash for running of health projects pushes the country into significant health and humanitarian crises. The health agencies received a commitment of funding the current projects by Global Fund through UN agencies, an alternative mechanism, for a month. According to the contract, the UNDP transfers 80% of the fund in the first week of the month to enable NGOs to procure necessary supplies and goods to the health centers; however, only 10% of the contract amount was transferred in three weeks. The NGOs faced serious restrictions in their capacity to procure when they could withdraw only 5% of the transferred amount in a week (approximately 0.5% of the total contract price). It vividly demonstrates that the mechanism doesn’t work in the context of country-level emergencies and system failure. Therefore, the donors need to consider another mechanism contemplating the current crisis and lock-down of the country. The present paper proposes an alternative and feasible mechanism, a metatheory, by conducting a scoping review of funding mechanisms at different periods of political change.

4. Methodology

The paper used a scoping review (scoping research) method to review all past and possible theories in the funding of the Afghanistan health system. Due to the unique political and economic situation of Afghanistan, we reviewed the mechanisms only in Afghanistan. The study considers a meta-theory from all the available funding theories in the contexts of Afghanistan involving funding mechanisms and theories and feasible practices in the field. Metatheory reveals a system approach with a universal cause and effect relationship when applying the idea in a particular context ¹⁰. It is a broad perspective that explicit the nature of reality through overarching many other theories ¹¹. The paper reviewed humanitarian funds during the Taliban government in 1996, funding after the Taliban regime during transition government and Islamic republic government, and the last World Bank funding mechanism through Afghanistan Reconstruction Trust Fund. Given the fact that Afghanistan reversed back to the stone age, another theory, metatheory, will be sought to facilitate procurement of humanitarian and health system projects in the current situation in Afghanistan.

5. Findings of the Scoping Review

We found some main theories in the humanitarian support projects since 1996. They are cash-based theory in all transactions in the absence of banking system in the country, cash-based and banking theory during the transition and Islamic republic government, banking theory in the very last period through Afghanistan Reconstruction Trust Fund, M-Paisa in the latest technology to foster financial inclusion by expanding Afghans’ access to financial services and banking ¹², and back to cash-based and hawala system under the current Taliban regime.

In 1996 and 2001, NGOs and UN agencies provided humanitarian assistance in different parts of the country when the Taliban had control of most of the provinces, including the capital of Afghanistan. The implementers used only a cash-based system to implement the projects in Kabul and the provinces. There was no banking system available in the country except the central bank of Afghanistan that was partially active. NGOs made their transactions in a cash-based system, and documentation was not much more complicated. In 2002 and 2012, systems have been developed, including the rise of the banking system in the country. Most of the donors favored the banking system instead of a cash-based mechanism for any transaction. The donors wanted to improve transparency, efficiency and record-keeping, and reporting, among others. The NGOs gradually used the banking system, but the cash-based theory was still valid because, in most provinces, the banking system was not available.

In 2012 and 2021, the government of Afghanistan tried to centralize all humanitarian funds under the Afghanistan Reconstruction Trust Fund, a theory of centralized banking mechanism. The World Bank made all its support to the government through this system. In addition, international agencies and the UN tried to stop all cash-based systems and institutionalize banking mechanisms for every individual transaction.

And finally, after collapsing all the systems, including the banking system in the country in August 2021, the problem of banking transfer, cash-withdrawal, and international transactions remained uncertain. It is time that UN agencies and international donors explore a mechanism to transfer funds and procure goods inside the country. However, banks are not capable of handling such a massive demand for the beneficiaries. The problem escalated when local markets demanded physical cash in exchange for their supplies, especially in the provinces where NGOs provide health-related projects.

6. Discussion

After the World Bank ceased its financial support to Afghanistan, the national NGOs, health consortium, Alliance of Health Organizations (AHO), and international agencies requested an alternate funding mechanism. The Global Fund answered the call for support through the UN agency. The GF support through UNDP is for one month and exclusively upon banking theory. The main reason of proponents of banking theory was to improve transparency, efficiency and record-keeping, and proper reporting between implementers and donors. The pre-Taliban government has also tried to keep everything centralized and promote the use of ARTF for channeling donors’ funds, especially the World Bank support to the implementing national and international NGOs. Although the ARTF was a good theory for the government, it had some disadvantages for the smooth implementation of the projects. Funds always reached NGOs accounts after a quarter of performance of the activities and sometimes after more than a quarter. The delay in fund transfer has major adverse effects on the implementation of the project; among them, a low level of staff satisfaction, insufficient capacity building programs, and improper renovation and infrastructural activities are the major impacts.

When the Taliban took over the country’s capital for the first time in 1996, NGOs and UN agencies provided humanitarian relief in Afghanistan during that period while the country did not experience banking systems. NGOs and UN agencies made all transactions in cash, a cash-based theory, which the country context required at that time. NGOs had received Funds in cash mode and in the same way expensed in the local market. The mechanism addressed most of the problems adequately. Besides, at that time, the banking system was not available. Now there are lots of banks that have probably liquidities, but due to the monetary policy of the Taliban government, they cannot give its customers the amount they want, which is very costly for the Banks. Under the current policy, the Banks do not produce required profits from the transactions they would otherwise have made. In the current situation, the mechanism can also address NGOs’ field-level issues with the local market. Under the theory, donors suggested depositing (in cash) some funds to NGOs while transferring the rest of the funds through the banking system.

The metatheory in this paper explains the benefits of banking theory and the assumption of field reality that the banking system is collapsed and incapable of providing services to the customers, enriching its applicability in the use of cash-based theory. The scoping review proposes using both banking and cash-based approaches to overcome the problem stated and facilitate the proper implementation of the project as the health system in the country. Although ARTF and the Central Bank of Afghanistan are not available anymore, NGOs and supporters can use the available banking system as much as possible, supporting with cash-based mechanism, especially in the provinces for local markets. The theory proposes that donors transfer a certain amount of funds through bank transfer to the NGO, where NGOs also use transfers to procure necessary supplies and services. Meanwhile, it suggests that donors deposit (in cash) some certain amount of funds to the NGO to enable procurement at the provincial levels where local markets are requiring money in exchange for their goods and services.

7. Conclusion

The paper used a scoping review (scoping research) method to review all past and possible theories in the funding of the Afghanistan health system. The study considers a meta-theory from all the available funding theories in the contexts of Afghanistan, consisting of banking theories and feasible practices in the field. We found some main theories in the humanitarian support projects since 1996. They are cash-based theory, cash-based and banking theory, only banking theory, and back to cash-based and hawala system in different periods of Afghanistan political paradigm. The study concluded the use of banking and cash-based approaches to overcome the current problems in properly implementing of health projects in the country. The theory proposes that donors transfer a certain amount of funds through bank transfer to the NGO, where NGOs also use transfers to procure necessary supplies and services. Meanwhile, it suggests that donors deposit (in cash) a certain amount of funds to the NGO to enable procurement, especially at the provincial levels where local markets are requiring money in exchange for their goods and services. The paper proposes further research on the use and feasibility of the voucher system as a form of transfer to enable communities to purchase services from the private for-profit providers and M-Paisa to improve access to healthcare services and health outcomes.

References