April 24, 2014

Afghanistan’s economy victim of Politics – Trying to find hope in hopelessness

By Sayed Jawad - Sat Feb 09 2013, 9:10 am

By: Suleman Fatimie

Kabul Mandawi MarketAfghans face yet another deadline, 2014.  The uncertainty continues. While the Afghan Government’s international partners want to stabilize and create an “Afghan good enough” environment, many wonder how this is possible with everyone running towards the exit doors.  Afghans are faced with a barrage of negative and depressing news about their future, with grim predictions for years to come. Signing strategic agreements cannot be considered a commitment to and a promise of relative stability beyond 2014.   If Afghanistan is to sustain and build on the achievements of the past 10 years, it is imperative that serious attention and resources are mobilized to get the country’s economy on its feet.  Real economic growth and development, even if modest, will create greater employment opportunities, better security, and most critically better living standards for Afghan people; items that should be on the top of our agendas.

Afghanistan’s economy at this moment is donor driven with over 90% of our licit GDP funded through bilateral and multilateral donors.  And with the scaling down of international presence and 2014 deadline looming, unless we take concrete steps and bold decisions, Afghanistan’s economy is headed for severe turbulence with the possibility of crash landing.

In 2005, Financial Times fDi published a magazine titled ‘Courage Rewarded – Afghanistan’s President Hamid Karzai Leads the Reforms’.  The publication focused on opportunities and challenges in Afghanistan but with a positive and encouraging message. “It is true that investing in Afghanistan is not for the faint-hearted but the opportunities are almost limitless.  Those who feel their nerve slipping need only look to the optimism of the country’s government and its citizens,” James Eedes reported in the magazine.  The magazine reported that ‘key ministers and a small team of technocrats – a wafer-thin layer of competent bureaucracy – are working to remove the many obstacles to private sector development’.

The question that needs to be asked now is, what happened to the optimism and reforms initiated to create a pro-business environment?  The answer is that some of the sound reforms have been stalled or reversed, administrative and non-tariff business barriers both at national and provincial levels have increased, and corruption has soared, making it almost impossible to get anything done without paying a bribe. No wonder existing and potential investors are reluctant to expand/re-invest and consider Afghanistan for business opportunities respectively.  It is very difficult to see certainty and the potential for the future.  Most importantly, Afghanistan does not provide a business friendly environment.  In 2006 Afghanistan was considered one of the leading reformers of its business environment and between 2004 and 2007 it steadily improved its ranking in the Doing Business Indicators.  But since then, Afghanistan’s ranking has deteriorated due to lack of a clear vision, lack of understanding of relevant bodies of the reforms and conflicted agendas.  

In 10 years, we could not define what ‘market economy’ means in the context of Afghanistan’s constitution and prevailing economic situation.  While the concept of market economy has been the focus of continuous and elaborate discussions inside Afghanistan, the relevant government and non-government bodies fail and/or ignore to address the core reasons for why we have yet to establish the administrative and legal framework for market economy to function in the context of Afghanistan.  We are still focusing on the symptoms instead of the causes.

We still do not have a sound, practical and implementable national economic vision and policy.  Several national documents claim to have these elements, but none could be implemented because the so-called national economic vision and strategies are not based on ground realities, challenges and opportunities.  Preference has been to deal with economic trends and challenges on ad hoc basis, which has led to laws, regulations and procedures complicating the system even further and creating layers and layers of bureaucracy, obstacles and red-tape.

The encouraging news is that there are still many Afghans interested or already doing business in Afghanistan. These are Afghans who have endured over 30 years of war and uncertainty.  They have every reason to give up, but they are coming back and doing business even if under very difficult circumstances.  Why take the chance if you did not believe in the future?  Therefore it is vital that we keep the hope alive and generate optimism in the future.

Afghans’ entrepreneurial spirit and resilience should be nurtured and, through a collective Afghan driven process, devise plans and actions to deal with the economic turbulence once the donor money starts to dry up.  The government has the mandate and responsibility to at least create a transparent business friendly environment if it cannot ensure certainty beyond 2014.  The government keeps claiming that the private sector is the engine of growth while currently the private sector is choked due to the cumbersome business environment.

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