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The International Journal
of Not-for-Profit Law

Volume 8, Issue 1, November 2005

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Helping Civil Society Flourish

Toward an Enabling Legal Environment for Civil Society
Statement of the Sixteenth Annual Johns Hopkins International Fellows in Philanthropy Conference, Nairobi, East Africa

Implementation of NGO-Government Cooperation Policy Documents: Lessons Learned
Radost Toftisova

Strengthening Civil Society in the South: Challenges and Constraints - A Case Study of Tanzania
Jared Duhu
Response
Emeka Iheme

Articles

Civil Society Law Reform in Afghanistan
David Moore

Rational Exuberance: An Exploration of the Adaptation by California's Charitable Sector to Changing Governance Standards - Notes from the Field
Thomas Silk

A Common, Global Framework of Nonprofits as Players in Civil Society
Herrington J. Bryce

Forum - Looking Ahead: What is the Future for the Nonprofit World?
Pablo Eisenberg
Responses
Diana Aviv
H. Peter Karoff
Arthur Drache
Susan Raymond
Bill Landsberg

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Civil Society Law Reform in Afghanistan

By David Moore1

On June 15, 2005, President Karzai signed a new Law on Non-Governmental Organizations. The signing of the Law culminates a three-year process of developing a comprehensive new legal framework for NGOs. It marks a significant step toward creating a more conducive environment for NGOs to operate in Afghanistan and toward repairing relations between NGOs and the Afghan Government.

I. The Rocky Road to Reform
A) Poor Public Image

“The three great evils Afghanistan has faced in its history are communism, terrorism, and NGO-ism.” These words, attributed to President Karzai, capture the intense feelings of suspicion and distrust that surround NGOs operating in Afghanistan. Many in the government and among the general public believe that NGOs are engaged in profit-making activities and siphoning foreign aid money away from the Afghans for whom it is intended.2 NGOs have become the scapegoat for a wide range of perceived abuses, from wasting billions of dollars of development aid to driving sports utility vehicles, from hiring the most talented local staff to paying inflated salaries to foreign consultants, from living luxurious lifestyles to throwing wild parties and orgies.

As early as August 2002, Minister for Rural Rehabilitation and Development Hanif Atmar claimed that of 1,100 registered NGOs at the time, only about 100 were legitimate NGOs engaged in not-for-profit missions; the others were allegedly taking profit and siphoning aid money away from those in need. The perception that many if not most organizations registered as NGOs are actually businesses masquerading as NGOs is widespread and deep-rooted.

Since August 2002, the public image of NGOs has only worsened. In December 2004, then-Minister of Planning Ramazan Bachardost announced the Ministry’s intent to terminate nearly 2,000 NGOs, a plan that – though never carried out – was generally welcomed by the general public.3 The Ministry did, however, successfully place a moratorium on the registration of NGOs, which remained in effect for more than six months, until June 2005. Minister of Economy Dr. M. Amin Farhang, who became responsible for NGO registration and supervision in January 2005, soon after described NGOs as “running wild” and repeatedly expressed the need to control their activities.

B) Poor Legal Framework

One source of the difficulties during the transition has certainly been the legal framework governing NGOs, which dates back to 2000, when the Taliban regime issued a Regulation on the Activities of Domestic and Foreign Non-Governmental Organizations in Afghanistan. This Regulation remained in force until June 2005. Not surprisingly, the Regulation contained numerous deficiencies, both from the perspective of international norms and in terms of practical application. For example:

C) Poor Timing

The Government recognized the importance of developing a comprehensive legal framework for NGOs in Afghanistan early on in the reconstruction period. With the support of the United Nations and the Afghan Transitional Government, the International Center for Not-for-Profit Law (ICNL) was invited to assist in drafting a new law. That process was launched in August 2002.4

ICNL secured the support of then-Minister of Planning Mohaqeq to form a legislative drafting group made up of key ministry representatives (Ministries of Planning, Economy, Rural Rehabilitation and Development, Justice, Labor and Social Affairs, Finance, and Foreign Affairs) and representatives of the NGO sector (ACBAR5 and ANCB6, as well as AWN7). Working as an ICNL consultant at the time was Enayat Qasimi, who is currently serving as Minister of Transport. The working group, with ICNL assistance, prepared a progressive draft Law on NGOs, which was circulated widely to NGOs throughout Afghanistan. Based on feedback from NGOs, the draft Law was revised and refined before being submitted to the Ministry of Planning in July 2003. Consequently, the July 2003 draft Law was the product of a broadly inclusive and deeply participatory process, which included both NGOs and government officials. Unfortunately, due in part to the resignation of Minister of Planning Mohaqeq to compete in the presidential elections, and in part to the appointment of Minister of Planning Bachardost, the draft Law was not enacted.

Interestingly, during this process and afterward, certain officials within the Afghan Government prepared and issued alternative draft laws governing NGOs (e.g., in 2002, in March 2003, May 2003, and November 2004). Each alternative draft was woefully inadequate and indeed little better than the existing Taliban Regulation. As time passed without any changes to the regulation of NGOs, tension and distrust grew between the sectors, making it more difficult to approach reform rationally.

The newly elected Afghan Government placed priority on the enactment of a new NGO law. The Ministry of Economy – now responsible for the regulation of NGOs – issued a new draft law in February 2005. The draft Law was based in part on the ICNL-assisted draft of July 2003, but also included significant differences that sought to control and sometimes stifle NGO activity.

The Ministry invited ICNL to assist in further developing the draft Law. ICNL worked closely with local partners, including ACBAR and the NGO community in Afghanistan, to highlight the problems and shortcomings in the draft Law and to recommend improvements. Through meetings with NGO representatives, ICNL worked with ACBAR to ensure that the comment process was as open and inclusive as possible. Through multiple meetings with ministry officials and a series of comments provided over four months, ICNL supported local efforts to improve the draft Law. As a result of this process, the draft Law underwent a series of revisions between February and June 2005. Among the most significant improvements were the following:

It was the bidding exclusion – as contained in a late March draft backed by the Cabinet – that brought the draft NGO law into the spotlight (see below for greater detail on this provision). Whatever the intent, the provision (Article 8.8) caused a storm of controversy. With the Afghanistan Development Forum scheduled on April 4 to 6, President Karzai reacted quickly and appointed a joint task force, consisting of government officials and international donor representatives, to develop final recommendations regarding Article 8.8 and the draft law generally.

In early May, the task force recommendations were submitted to the Government. The Government, however, declined to adopt most of the recommendations – nearly all of which were designed to improve the transparency and accountability of NGO activities – and instead revised only a few provisions in the draft. Article 8.8 was among the few affected provisions; as noted above, the article removed the blanket prohibition on NGO bidding but included a prohibition on NGO participation in construction projects. U.S. Ambassador Zalmay Khalilzad, in one of his last acts as ambassador, reportedly asked President Karzai to reconsider the task force recommendations. Apparently it was too late: President Karzai had already signed the new Law, which became effective immediately upon his signature.

II. The New Framework
A) Civil Society Context

It is important to recognize that the legal form of “NGO” is one of several kinds of civil society organization in Afghanistan. A recent assessment of Afghan civil society concluded that there are three broad categories8:

  1. Village organizations, which are local aid committees formed by donors to advise or oversee the administration of a particular form of assistance. Village organizations include community development councils, educational committees, or other development committees. The number of village organizations has increased dramatically in recent years due to the Afghan Government’s National Priority Programs (NPP). Foremost among the National Priority Programs is the National Solidarity Program (NSP), a mechanism intended to provide a block grant of up to $200 per family to communities for infrastructure-related community improvement projects. Applications for the block grants must come through community development councils (CDCs); in response, more than 5,000 CDCs have been created. The CDCs receive registration certificates from the Ministry for Rural Rehabilitation and Development (MRRD). While the MRRD “registration” supports the NSP mechanism, the “registration” is not based on legislation, and such organizations are not necessarily bound by not-for-profit constraints.
  2. Shuras/Jirgas, which are traditional local councils that villages or tribes establish, usually for the purpose of self-government but also to represent a community’s interests to other parts of society. Shuras/Jirgas are local decision-making bodies that are arguably the most traditional building block of civil society in Afghanistan. They generally consist of the village elders and operate on an informal basis (that is, as un-registered groups). Any Shura that wants to become eligible for a grant will generally register as a social organization under the Law on Social Organizations.
  3. Organizations registered as legal entities, either in the form of “non-governmental organizations” or in the form of “social organizations,” as defined by two separate pieces of legislation.

“Social organizations (communities and associations)” are defined as “the voluntary unions of natural persons, organized for ensuring social, cultural, educational, legal, artistic and vocational objectives” (Article 2, Law on Social Organizations). Social organizations must seek registration with the Ministry of Justice and consist of not less than 10 members (Article 6(1)). While not specifically defined as not-for-profit organizations, the Law does limit the use of their assets to “achieving the goals of the organization” (Article 16). Significantly, however, the Law does not include the non-distribution constraint, which would prohibit social organizations from distributing organizational profit or assets as profit to anyone. Moreover, the Law does not prohibit conflicts of interest, private inurement, or self-dealing. Approximately 300 social organizations are now registered in Afghanistan.

NGOs are defined broadly in the new Law on Non-Governmental Organizations (enacted June 2005) to include both domestic and foreign non-governmental organizations. Unlike the 1977 Afghan Civil Code, however, domestic organizations are not defined according to their specific organizational forms, such as associations and foundations, or their membership and non-membership status. Instead, a domestic NGO is simply “a domestic non-governmental organization which is established to pursue specific objectives” (Article 5.2). To establish a domestic NGO, the Law requires at least two founders, but again makes no reference to specific forms. Thus, the Law seems to leave the door open to a variety of underlying forms, provided they meet the broad definition of non-governmental, not-for-profit organization under the Law.9 At the time of the enactment of the new Law, more than 2,300 NGOs (including both foreign and domestic) had been registered in Afghanistan.10

B) The New Law Itself

The new Law on NGOs replaces the previous Taliban-era Regulation on the Activities of Domestic and Foreign Non-Governmental Organizations in Afghanistan from 2000.11 Unlike the Taliban Regulation, the new Law complies with international standards and good regulatory practices in a number of critical areas:

Despite these improvements, the new Law still contains gaps, ambiguities, and problematic provisions that could create difficulties for both the Government and NGOs. Foremost among these problems are the following:

Article 8.8: An organization shall not perform the following activities: … Participation in construction projects and contracts. More than any other provision, Article 8.8 stirred controversy before the enactment of the Law. The language in the original draft (February 2005) excluded NGOs from bidding altogether. The meaning of “bidding” was unclear: Was the intent to exclude NGOs from bidding on Government of Afghanistan projects only or on all donor-supported projects? Did the exclusion apply to bidding for grants or contracts or both? A revised draft issued in early March limited the bidding exclusion to construction projects. Then, in late March, the Cabinet of Ministers issued a new draft, which restored the original language and contained the blanket exclusion from bidding. It was this draft – with Cabinet-level backing – that led to such a strong reaction from NGOs and the international donor community. The joint task force created by President Karzai to address the issue strongly urged the Government to limit the bidding exclusion to bidding on construction projects – and preferably, only to construction projects tendered by the GOA. Thus, it came as a surprise to find language in the final Law that barred NGO “participation” in construction projects – rather than bidding on construction projects.

NGOs engaged in construction activity – especially community redevelopment projects that include the building of a wells, health clinics, or schools – are deeply concerned about this limitation. Although the Law does provide an escape hatch (“In exceptional cases, the Minister of Economy may issue special permission at the request of the Chief of the Diplomatic Agency of the donor country”), it is narrow and exceptions are not based on objective criteria. Moreover, the Minister of Economy has expressed his disinclination to grant exceptions to the prohibition.

Article 23.1: Prior to the commencement of work, and after the examination and assessment of the line department, an organization shall submit committed project documents to the Ministry of Economy for verification and registration. The requirement of advance project approval is deeply troubling. Nor is it clear how this approval process will work in practice. Such a requirement runs counter to good regulatory practices and to international standards. Typically, after registration, there is no further requirement of advance approval. Through regular reports, the government may gather information about NGO activities. To require advance project approval, however, will place a tremendous burden on both NGOs and the Government, and lead to inevitable delays in project implementation. If each of 2,300 registered NGOs has 10 projects, then the Government would have to approve 23,000 projects before they could be initiated. Reconstruction efforts would be hindered significantly. The Government is right to be concerned with coordinating reconstruction efforts, but the means chosen in the Law will only hinder reconstruction.

Article 24.4: In recruiting foreign workers, an organization shall obtain prior permission from the relevant authorities and shall inform the Ministry of Foreign Affairs in writing of their arrival, commencement and termination of work. The purpose of this provision is unclear. The government should regulate issues relating to foreigners and to hiring practices through immigration law and/or the labor code. With visa requirements established through separate immigration laws and regulations, the government is sufficiently protected from the infiltration of foreign workers. Article 24.4 creates additional burdens without solving any actual problem.

C) Hope for the Future

The enactment of a sound law is only the first step toward an improved operating environment for NGOs. The challenge now becomes the implementation of the Law. In the first four months since its enactment, NGOs have raised numerous questions and concerns, regarding the re-registration process and the issues highlighted above. Implementing regulations issued by the Ministry in the wake of the signing of the Law were prepared by the Ministry without any outside consultation, and they bring additional confusion rather than clarity to many aspects of both the registration process and NGO activity.

To assist both the NGO Department and the NGO community, ICNL has prepared NGO Re-registration Guidelines for NGOs pursuing re-registration. In addition, ICNL has conducted training for the NGO Department staff and is planning additional training for both the Ministry staff and for the NGO community throughout Afghanistan. These implementation and capacity building activities will be ongoing for at least the next two to three years.

Furthermore, other aspects of the regulatory environment will need to be addressed, including taxation and NGO-government cooperation. Thus, while the signing of the Law on NGOs does indeed mark the culmination of the three-year drafting process, equally daunting challenges loom ahead. Nonetheless, one can hope that a corner has been turned and the new Law represents progress toward improved state-NGO relations and a healthier civil society in Afghanistan.

Notes

1 David Moore is Program Director for Central and Eastern Europe for the International Center for Not-for-Profit Law.

2 According to Ministry of Finance information, between January 2002 and September 2004, 45.5% of donor funding went directly to the UN; 28.5% went directly to the Afghan Government; 16.4% went directly to private contractors; and 9.6% went directly to NGOs. These statistics do not reveal the total percentage of donor assistance that ultimately went to NGOs, as the UN or Afghan Government will often re-program funding through NGOs.

3 Days after his announcement, on December 13, 2004, Ramazan Bachardost resigned from his post as Minister of Planning. Bachardost told reporters that he decided to resign once he realized that
President Hamid Karzai would not support his decision to shut down nearly 2,000 NGOs.

4 ICNL’s initial involvement was made possible through funding provided by the Open Society Institute. Continued involvement was financed, in addition, by the Center for International Cooperation, RONCO Consulting Corporation, and the Arca Foundation. ICNL’s work in Afghanistan is currently funded by the U.S. Agency for International Development (USAID).

5 ACBAR is the Agency Coordinating Body for Afghan Relief, one of the primary umbrella groups in Afghanistan, based in Kabul. Its nearly 100 members include both foreign and local NGOs.

6 ANCB is the Afghan NGOs’ Coordination Bureau, an umbrella group made up of some 300 to 400 local NGOs.

7 AWN is the Afghan Women’s Network, an umbrella group of women’s organizations.

8 See Afghan Civil Society Assessment Report 2005, prepared by Counterpart International and available on Counterpart’s website (www.counterpart.org).

9 Interestingly, the Afghan Government, whether consciously or not, followed more of a common law than civil law approach in defining an NGO. Civil law systems generally define NGOs according to their organizational characteristics as membership or non-membership entities (hailing back to the Roman law concepts of universitas personarum and universitas rerum). Common law systems, by contrast, take little interest in legal forms and use a more functional approach, whereby groups can “incorporate” as not-for-profit entities. How this approach will be implemented remains to be seen.

10 The new Law requires all previously registered organizations to undergo a re-registration process within six months of the enactment of the new Law.

11 When the new Parliament is elected and formed, it will have 30 days to review and approve all existing Cabinet-approved legislation.

 

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ISSN: 1556-5157