Opium is a major source of credit for many households in Afghanistan. It is used to lease land, purchase agricultural inputs and meet the cost of education and health services. Household dependence on opium cultivation for accessing services, and the opium debt which results from using opium as credit, are a growing problem in Afghanistan. Micro-finance can make an important contribution to addressing this problem and helping to promote alternative livelihoods to opium in Afghanistan. In 2005 the Department for International Development provided £5 million to Afghanistan's Micro-Finance and Investment Support Facility (MISFA) to introduce a special funding window to promote and enable the expansion of micro-finance in poppy-growing provinces. This financial support is helping Micro-Finance Institutions develop financial products that better meet the financing needs for alternative livelihoods and the problem of indebtedness. Moreover, the MISFA programme is providing a source of legal credit to the poor and people on low incomes to access services, thus reducing the demand for credit from opium and therefore reducing the risk of Afghan households losing assets or land due to opium indebtedness.
At present some 80 per cent. of the population of Helmand are engaged in farming and a significant number are engaged in opium cultivation. The main contributing factors to opium production in Helmand result from the devastating impact of three decades of war. The conflict led to increasing poverty; a severe decline in investment in essential infrastructure such as roads and the Helmand irrigation system; insecurity and the lack of the rule of law; and the absence of a credible Government providing basic services. As a result, the people of Helmand have become increasingly dependent on illegal opium cultivation for income to meet basic needs.
The Afghan Government are looking to improve the situation for farmers in Helmand, but progress has been hampered by problems delivering Government development programmes there. To help address this problem, the Department for International Development will be spending £30 million over the next three years in Helmand through the Helmand Agriculture and Rural Development Programme. This programme will deliver assistance through the Afghan Government's National Programmes in the province. These aim to extend the Afghan Government's authority and demonstrate that they can be a credible provider of public services, such as the provision of safe drinking water, credit for investment in agricultural business and essential investment in much needed infrastructure, particularly irrigation. These are all essential elements for increasing the number of legal employment opportunities available to households and reducing the dependence on opium cultivation.
Afghanistan has made significant political progress since 2001. Parliamentary and provincial elections were successfully held in September 2005. Parliament went into Session in December. Most Cabinet Ministers are approved and the budget endorsed. Afghan Government influence is increasing throughout the country with assistance from the International Security Assistance Force and the UN. As part of our efforts in southern Afghanistan, we are working to support Afghan-led reconstruction.