Afghanistan’s Economy, a Victim of Politics
By Suleman Fatimie
If Afghanistan is to sustain and build on the achievements of the past 10 years, it is imperative that serious attention and resources are mobilised to get the country’s economy on its feet, Suleman Fatimie writes.
Afghans face yet another deadline: 2014. The uncertainty continues. While the Afghan government’s international partners want to stabilise 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 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 mobilised 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 percent of our 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 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 wrote. He continued 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 investors are reluctant to expand or re-invest and potential investors fail to consider Afghanistan for business opportunities. Afghanistan simply 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 to address or ignore the core reasons for why we have yet to establish the administrative and legal framework for a 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. 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 would they take this chance if they did not believe in the future? It is vital that we maintain this hope and generate even more optimism.
Afghans’ entrepreneurial spirit and resilience should be nurtured and, through a collective Afghan-driven process, plans devised and executed to deal with the economic turbulence once the donor money starts to dry up.
The government has the mandate and responsibility to create a transparent business-friendly environment. If it cannot ensure certainty beyond 2014, then the government must at least ensure the private sector, which it claims is the engine of growth, is no longer choked by the current cumbersome business processes.