Attracting investment in AfghanistanBy Abdul Rashid Faizi

The economic and political situation of Afghanistan is unacceptable.  It is more than unacceptable; it is an ongoing disaster.  Currently, According to the World Bank Afghanistan has the lowest Gross Domestic Product (GDP) in the region and it comes in 107th place in the world with an average per capita annual income of less than $670.  In Afghanistan near the presidential palace we see poor people who do not have food and shelter.  In addition, unemployment is a sad fact of the economy.  Unemployment rate is very high;thousands of people are hopeless of finding a job.  Moreover, Inflation and illiteracy rates are around 7 and more than 50 percent respectively.

Consequently, in order to improve the economy in this very underdeveloped country, it is needed to place economic growth on the core of the public policies.  The focus on economic growth is an important policy toward resolving the aforementioned problems.It leads to higher GDP, more employment opportunities, more educated and healthy people, as well as creating a strong and well financed government. All in return contribute to the achievement of a successful and stable nation.

Foreign investment is one of the ways that could lead to economic growth.  It is having many positive effects on the economy. Studies have found out that, there are several positive effects of investments for growth and well-being of the economy.  Recently, the president of national unity government, Ashraf Ghani has sent a message to the world that: “Afghanistan should not be approached as a charity, but as an investment.” Furthermore, he has stated that:  “aid has not made a single country rich. It’s investment and trade”.  One of the mechanisms that the world could help Afghanistan is through investment, as he has suggested.  However, at this stage this policy will not work for Afghanistan and there is need for seeking other productive policies.

A number of fundamental questions arearising out of this policy:

Is Afghanistan ready for attraction of foreign investments?

Is focusing on this policy useful?

It seems that, at this stage Afghanistan is lacking the appropriate businessenvironment for foreign investors.  It is mainly because; the country is suffering from problems such as: Insurgency, Political unrest,absence of transparency and accountability, corruption, extreme lack of economic and financial development.

Moreover, currently the capital is flying out of the country; Afghan investors are investing their money outside the country.  We do not have safe environment for our own investors.  They are threatened, kidnapped or killed every day, regardless of the many other difficulties which they face in their daily business.

Considering this situation, in the short run it is impossible for foreign investors to consider Afghanistan for investment.  Hence, following this policy will not help our economy,at the current stage. The focus should be on seeking more productive and useful policies for overcoming the aforementioned challenges.


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