More than 70 Afghan businessmen and women in Kabul on Dec. 11 to discuss Afghanistan’s export strategy and how the private sector can tackle challenges associated with export competitiveness, sales and access to international markets.
Convened by Creative Associates International and eight co-sponsors, the Afghanistan Exporters Roundtable was one of several business-focused events held in Kabul and Herat from Dec. 8 to 13 to hear from entrepreneurs and established firms about economic solutions.
“Across Afghanistan, entrepreneurial and hardworking Afghans are launching new companies, expanding traditional products and creating much needed jobs as the economy recovers,” said Creative CEO and President Leland Kruvant during the opening of the roundtable on Dec. 11.
The Afghanistan Exporters Roundtable is a sign of recognizable progress after decades of instability and economic stagnation. The Chairperson of the Afghanistan Exporters Club, one of the cosponsors of the Dec. 11 roundtable, recognized that the larger number of businesses at the event demonstrates that firms are looking to build markets outside of the country as a way to boost sales and increase employment.
“I am very honored to participate in this roundtable organized by Creative at a time when exports, regional connectivity and access to international markets is a top priority,” said Syed Abbas, the Chairperson of the Afghanistan Exporters Club.
Creative’s Executive Vice President, Earl Gast, said promoting public-private partnerships is one of several effective methods to address many of Afghanistan’s economic challenges, and that the dialogue held at the roundtable and the connections made there will translate to actionable solutions, increasing export sales and generating hundreds of thousands of jobs.
Creating an enabling environment for trade
Exporters at the roundtable discussed value chain pain points in a productive environment. They stressed the need for updated, pro-trade policies and regulations and a better way to process international deals. Since there are few banks in Afghanistan that handle international transactions, conducting transactions in foreign currencies remains a challenge.
Businesses also suffer from poor infrastructure, barriers to accessing to finance, restrictive tax laws and lack of access to market information and technical advice in areas like negotiating contracts with international buyers.
Unfortunately, imports currently exceed the country’s exports.
“We have $9 billion in imports every year that includes furniture, basic stationary, apparel and other needs. We have to categorize our industries and start with production of basic items,” said Shirbaz Kaminzada, Chairperson of the Afghanistan Chamber of Industries and Mines (ACIM). “We have a cheap labor in Afghanistan that lacks skills manufacturing companies need.”
Despite obstacles, the government and private sector are making significant strides toward creating an environment more conducive to trade and economic growth.
“We applaud the leadership of the Government of Afghanistan for enacting a groundbreaking National Export Strategy, a unified national roadmap for trade growth and competitiveness to boost exports to $2 billion by 2023 and support sustainable economic growth,” said Kruvant.
Among the recommendations discussed were providing technical assistance for the government and private sector to establish and manage export hubs that expedite documentation at airports specifically, increasing women owned businesses’ participation in the economy and holding niche-specific product exhibitions and trade shows. Educating exporters on how to enter new markets, improving financial literacy and supporting women to improve their management and financial systems were other key points.
Building on strong momentum
The Exporters Roundtable was initiated in part to examine findings and collect feedback from participants in the 2017, 2018 and 2019 Passage to Prosperity: India-Afghanistan International Trade and Investment Shows (P2P) and build on the events’ momentum. Sponsored by the U.S. Agency for International Development, the international forum was designed to promote Afghan business and investment opportunities in India, bringing together over 4,100 attendees from Afghan, Indian, U.S. and other international businesses in Mumbai and Delhi. Collectively, the P2P events generated almost $600 million pre-contract signed agreements (MOUs) and more than $131 million in contracts signed.
P2P helped introduce Afghan products to international markets, some for the first time, and facilitated business-to-business matchmaking between Afghan exporters and Indian buyers. The marble and granite, carpets, saffron, gems and jewelry, silk, and dried fruit and nuts value chains benefited the most from the increased visibility and trade advances gained at the trade show. Around 50 percent of the memorandums of understanding signed at the P2P events were acted upon, and the forum allowed Afghan exporters to open regular pop-up booths in major supermarkets in New Delhi and Mumbai, solidifying their presence in India.
However, business representatives and traders at the roundtable in Kabul reported that obtaining visas on time was a big challenge, even with support from USAID. The use of unapproved agrochemicals, the lack of quality and food safety certifications, dearth of trade information and poor logistics limited Afghan traders’ participation in international markets.
Participants also shared that some products, like precious stones, aren’t allowed for export in raw and semi-processed states. Without proper processing machinery and skills, these products get stalled on their way to markets.
Packaging and labeling that don’t comply with international standards also prevent exporters from reaching buyers, as well as inadequate dry and cold storage facilities. Exporters discussed investing in packaging companies to improve their products’ overall quality and investigating better storage solutions. They also discussed the need for finance institutions to expand to rural areas and modify their loan products, as well as develop new loan products, to support rural borrowers.
Collaboration is key
Separate from the Afghanistan Exporters Roundtable, Creative’s senior leadership met with government officials to consider ways to generate economic opportunity for vulnerable groups. Creative leadership also met with the Ministry of Refugees and Repatriation to discuss solutions to widespread unemployment in at-risk populations. Specific interventions targeted for former insurgents, returnees, youth and internally displaced persons are critical in a holistic strengthening of the Afghan economy.
At the roundtable and throughout its meetings, Creative discussed providing a comprehensive approach to bringing more women into the formal economy and fostering the necessary conditions for achieving and maintaining peace.
The roundtable participants and Creative’s partners in Kabul displayed an eagerness to be innovative, inclusive and competitive in the way they build a stronger economy in Afghanistan. Kruvant said this is why designing local-led initiatives is essential to achieve development objectives.
“Creative Associates understands that designing effective and sustainable solutions to export promotion is done best by establishing local partnerships and developing locally based solutions,” said Kruvant.