Temat: Business in Afghanistan

From couple days in the evenings I keep asking myself whether making business in Afghanistan is possible or this are only my illusions. I was checking my notes, keep reminding some events that could have real impact on my idea. I’ve even decided to write it down. Maybe I’ll use it in nearest future. Big cash in Afghanistan – sounds quite weird, but is truth.
First part of this article I had written in 2003 and its briefing was published in June 2003 in Business Centre Club newspaper (number 6/140).
Afghanistan in year of 2003 and 2004 had received from The Worlds Bank about 1,5 billion American dollars per year, but had used only 200 m. Somebody could ask ‘why’? Well, the reason is prosaic – there’s no well educated people, who could present specialist business plan to financial institutions. Ministers, governors or presidents don’t plan any serious infestations in which NGO’s could pump founds into. Summing up facts – local entrepreneurs have serious problems with forming reliable documentation to any project.
Data on the amount of loans, financial aid and cooperation with The Wolds Bank are enumerated in the Internet, especially on the WB website. Apart from it, many useful data are listed on government and non-government organizations websites. Consultations of various investments and ways of their functioning took place in year of 2003 in Kabul. A lot of officials such as Afghani ministries, NGO and charity organizations and quite wide range of national and foreign businessmen took part in this conference.
Ways of possible activity are very wide and in my opinion there would be some areas of activity for Polish companies. For example in construction industry, telecommunication, medical service, energetic, extracting of gas and oil, mining (precious metals), mining precious stones (emerald and rubies), land improvement, ect.
After I’ve came to Kabul and had few conversations with various organs of higher instance I’ve discovered that they spread attractive watchwords like: we need to build new housing development for 1000 families in “such and such” district, hospital in the city center, reconstruction of the airport, construction of new military complex for new formed army and thousands of similar propositions.
As a matter of fact it’s extremely easy to get audience at minister, mayor of the city or governor of the province. They all are very eager to conversation and they all present very colorfully huge problems connected with the land over which they have control. Very often they say that they posses proper founds for realization of their visions but the reality they depart from the truth. The only institution that in reality have founds is The World Bank, that decides: what, who, where and who will get some money.
Coming onto Afghani market is open for the entrepreneurs. However each investor that would like to come onto this market would need to struggle with two main obstacles: with whom to talk and how to talk?
To gain answer for those two questions, in my opinion European or preferably Polish - Afghani expert is needed, who could provide with appropriate help, namely: finding a proper offer, initiating a deal, providing with proper documents and translations, translating all business conversations, dealing with logistic issues such as loggings, hiring local sub-companies (building, transport ones) and additional stuff. During private conversation I had with the general director of The World’s Bank in Afghanistan I got to know that his institution is able to provide all needed financial guarantees for realization of the projects. Conditions that need to be fulfilled seems crystal clear: you need to have your own company with registered office in Afghanistan, approved project by Afghani authorities (all needed documentation), perfect business plan, contractors, financial contribution, confirmed productive abilities of companies involved into the project.
In September 2002 President Karzai signed a new document “Law for the foreign and interior investments ”, permitting foreigners having 100 % of capitals in their hands (so far 51% of contribution needed to be in Afghani hands), international transfer of income, international arbitrage in controversy issues. This solution will solve many juris aspects and facilitate co-operation with all Afghani institutions. In 2003 all investors were exempted from paying duty for gear used to building constructions and any kind of production. In reality charges were rather symbolic. The income tax in 2003 wasn’t executed and there was made a suggestion that it should be only slight, oscillating around 10-15 %. From the moment of coming into force new regulations, in new governmental agency more than 5700 companies were instantly registered. The Afghanistan Investment Support Agency (AISA) is for foreign investors a kind of „one-stop shop”, where they get all required document needed to establish a new company. All data about governmental project are easily available in the Internet.
In 2006 AISA organization on it’s website enclosed information about contract for purchase of ammunition for military and Afghani police worth around 400 m dollars, 250 m dollars for building military barracks, 13-15 m dollars for building section of road, or renovation of barracks in one from the provinces for 20 thousand dollars.
Everyone can find proper field for oneself, all you need to do is just to start.
What is the most difficult in realization of a project, but nevertheless not the most important issue is a research of proper Afghani partner. If I were to recommend somebody coming into partnership I would relay more on myself than Afghani websites, especially after new legislation exempting from having such partner.
Polish investor needs to be aware and prepared that 85% of the crew would be Polish. So he will need to prepare for them proper loggings and provide with right security as well.
Trainings Afghani blue collar workers is welcomed and well perceived by local authorities.
Afghanistan has very bad press; it’s being considerate as dangerous country and is very often compared to Iraq. This isn’t so far from the truth. In Afghanistan, especially in Herat and Mazari Sharif, where the first investments will take place is safe, because International Security Assistance Force (ISAF) guarantees peace. Currently, hopefully for investors, around Afghanistan we have medial peace, which might provide them with calm and less concurrency on huge building market.
In Afghanistan, when it comes to investment and production profiles, very strong are represented interests of following countries: U.S, G.B., Pakistan, Turkey and Iran. Even Bangladesh built a bridge on pass of Salang. Turks build huge complex of American embassy, Iraqi bought up the rights to all billboards on following 20 years, and all those nations, being actually their neighbors don’t meet with liking of Afghani.
A company can count for bigger chance for realization of big military contracts after acquiring a NATO certificate. Poland is perceived as a friend and would be welcomed as a strategic partner in various projects at the area of whole country. Maybe this liking comes from the fact that in years of 1976-77 Afghanistan was visited by more than 7000 Polish tourists, that bought about 300 000 sheepskins. That time I was at training on Literature and Social Studies faculty on Kabuli University. Even in a year 2003 in Jode Welojat (“The furcoat Street”) and Chicken Street you could found some merchants still remembering “the invasion” of Poles, knowing even few worlds in Polish. In 2008 bulldozers had razed all small shops to the ground at The Sheepskins Street in order to extend the road from Choroi Sedorat to Ministry of Communications and 5star Kabul Serena Hotel.
Additional Polish trump is a fact, that we are the NATO members and the fact that we have a military base of sappers in Bagram and that we make the best on the world candies called “fudges” and fruit drops “raspberries”.
By the end of 2002 with the introduction of new bills, money becomes more stable. As a consequence the financial discipline of Government improved macroeconomic stability. Realization of the budget and spending reserves had visibly rationalized. Simultaneously there was some progress in management, efficiency, productivity and financial control. The goal of this activity is to support and widen started reforms, especially when it comes to public administration and financial policy. Modernization will directly influence on rise of confidence for the government, particular ministries and leadership of minor political parties.
29.07.2004 The World Bank accepted founds designated for the credit program on insurance protecting against political risk. Solely spotting of such risk by entrepreneurs and bankers was the main obstacle in investments.
The Multilateral Investment Guarantee Agency (MIGA) is one of very few agency insurance investors against political risk in Afghanistan. Risk involve: the risk of restrictions of transfers, inconvertible currency, dispossessions, breaking contracts, civil rumors and war. Introducing to venture MIGA regulations guarantees the acceptance of your project by Ministries and The World Bank. They do believe that such initiatives have positive influence on the development of Afghanistan.
Afghanistan becomes a MIGA member in June 2003.
In 2005 founds designated by the World Bank and G-8 members for investments in Afghanistan were enlarged and currently are around 2,5 bn to 4 bn dollars (data taken from various sources).
In the years of 2002-2009 Kabul has incredibly changed.
When in March 2003 I was traversing the streets of Kabul almost everywhere I saw signs of war. Those signs were very visible. Everywhere gun shoots in walls of homes. In the city center every forth building was burned. Few districts were razed to the ground; gardens Boghe Babur and Paghman were looking so pathetic without its plants and shrubs of roses. Only the road traffic in the streets was bigger than in years of my students time, but those times the amount of habitants were around 400 thousand citizens.
Kabul of 2009 is a completely different city, probably nowadays lives here more over 4 m Afghani. Almost everywhere you can notice 10storey buildings. Glass and aluminum, sophisticated horror, but Kabuli citizens are proud of it, quod libet. Those giants change the overall view and color of Kabul. I started to dislike the streets of the capital together with their come flooding into town new habitants. Old Kabuli are very few. If I were to compare, this would be more less like Warsaw or Krakow from the 50’ – now natives from those two cities almost vanished, and void was fulfilled with the substance of various people from the province.
There’s a plan to build new Kabul, just like they done in 1969 in Pakistan in Islamabad and in Brazil with Brasilia. I’m not very sure weather this idea is right. I wasn’t in Brazil, however Islamabad isn’t pretty nor interesting to me.
Some informations about the myths of New Kabul are spreading around. Kabul-e-Dżadid, Kabul-e-Naw,Kabul-e-Kabir or Kabul-e-Toza are only the synonyms of the vision of New Kabul. It should be a sign hear near Vistula River to start Afghani investments. However I’m not really sure what does our “Distinguished authorities” think about it, because so far they were deterrent only by the fact of looking on Afghanistan affairs. Such situation is directly created by mass medias mainly press and television.
Allegedly Duchess send to Iraq 85 (eighty five) soldiers and signed contracts for 500 m dollars. But they are the nation of merchants and sailors, moreover all their live they spend on Big Depression.
Maybe the time has come to inform public opinion that in Afghanistan 4000 km of roads. In northern borders, where there were always they wind in wire entanglements and control towers of “the only correct political system”, German companies and Aga Khan organization build couple of bridges. Thanks to this bridge transport of the military devices for U.S army was possible. All, because Pakistan was too dangerous.
Maybe information about Afghani farmer from the countryside Egzak near Sheberan that wants to buy Polish cows for 45 thousand dollars will realize Polish people that situation in Afghanistan isn’t as bad as presented by mass media.
What’s more gas stations in Kabul and in northern Afghanistan are equipped with Polish pumps. It should widen narrow circle of Polish-Afghani entrepreneurship.
Polish business with its activity can stabilize the political and social situation. Workplaces and regular income stops men at their homes. Master Kapuściński told me typical for him golden thought: “We don’t realize how poor and hungry people can act”. That was 30 years ago in Teheran.
I hope that presence of Polish companies will result in liking of Polish soldiers that won’t be perceived any more as occupiers. I would wish myself that Polish army would be the guarantor of peace and calm. Perhaps thanks to such activity the number of hospital attacks on our soldiers will lessen and Taliban influenced cut down on force.
Coming onto the Afghani market we need to bear in our minds that this is merely terra incognita and living there without good cicerone may result in catastrophe. Prior making investment on SAINT MUSLIM LAND we need to recognize local attitude to foreigners. In “propaganda’s rumors” Taliban and their henchmen are forcing the theory that “infidels” wants to ruin Islam and their believers.
I’d advise everyone who wants to act peacefully in Afghanistan to reserve some amount of money for renovation or building rural mosques, schools or center, equipped with 1-2 computers. The cost of rural building oscillates around between 3 to 7 thousand dollars and 3-4 computers are quite inexpensive.
Primo, building construction or renovation of Muslim house of praying is an activity deserving for the biggest glory. What’s more the news about it will spread all around with flight of lightning in all district and after in whole country.
Secundo, aforementioned activity will be the arm in fight with orthodox and fundamentalists. Investor this way may show his respect to Islam and customs ruling in Afghanistan. At the same time it disprove the myth of “infidel” and reminds to the locals that ahle ketob “the people of saint book” (here The Bible) are recognized as people of faith.
Tertio, the access to the Internet opens the window for the world and gives the possibility to the youths, that the world doesn’t end on Kabul.
The most reasonable solution would be opening the Polish-Afghan Trade Chamber Office or the post similar with its character to Office Commercial Counsel (BHR), independent from Polish Embassy. Such office should be placed in safe and sound district. Far away from Ministries, embassies and military objects, that sometimes is the goal of “God’s maniacs”. The cost of such post depends on investors reserves. I RECOMMAND CLOSE BUSINESS CO-OPERATION and I suggest that few of entrepreneurs together found it.
Each shareholder will get full information from AISA with short analyses of planned projects by the The World Bank and government in Kabul.
I’m convinced that after few months of hard working, the office will find many contracts for Polish investors.
All we need to do is to create small pied-à-terre and just start to work.

Tomasz Kamiński

Orientalist, former grand holder of Kabuli University, Persian certified translator and author of the book “Afghanistan; parwa nist”.
taktomasz@o2.pl

Translation: Agnieszka Kozłowska