While there is much literature on aid modalities, including MDTFs; and on police reform – there is little that discusses the use of trust funds to pay security forces salaries. This helpdesk research report focuses primarily on the Law and Order Trust Fund for Afghanistan (LOTFA), which is profiled most frequently in the literature that does address this area.
LOTFA was set up in 2002 as a multi-donor mechanism to facilitate police salary payments and support law enforcement authorities. The UNDP was asked to administer the trust fund and took on the payment verification role, which incorporated an oversight function in a very risky fiduciary situation. Pooled LOTFA funds were paid to the Ministry of Finance Treasury department on a reimbursement basis, which allowed for police salaries to be kept on budget from early on and for the Afghan government to include such recurrent costs in fiscal frameworks and planning. The Fund has five priority activities: payment of police salaries nationwide; procurement of non-lethal equipment, and covering other recurrent expenditure such as fuel and maintenance costs;rehabilitation of facilities; training; and Institutional development.
Component 1, paying police salaries, has largely been delivered. Pay packages are being delivered more punctually; and the rollout of the electronic payment system is a key reform within the Ministry of Interior that is being driven largely by the LOTFA funding and technical support. While numerous donors contribute to the fund, it is highly dependent on donations from the European Community (EC) and the United States.
Some key challenges and lessons of the LOTFA – and of trust funds to pay public servant salaries (including security forces), more generally – include:
- short time frames and unpredictable funding
- fiscal sustainability
- accountability and monitoring
- institutional reform
- capacity development
- cross-cutting and context analysis
- sector integration
- harmonisation.
