The need for Investment in Afghanistan has never been greater
The World Bank has ranked Afghanistan, as the 177th easiest country in which to do business with in the world. Unfortunately that was out of 188 economies. Here’s a quick barrage of some more dismal figures… In 2014 Afghanistan’s economy lost a third of its value, and annual economic growth slowed from 14% down to 1.5% where it hovers around today. 70% of Afghans currently live in chronic poverty, and Afghanistan’s tax revenues astonishingly account for less than 10% of its GDP. All of this, combined with an increasingly fragile security situation, means that Afghans currently form around 20% of those refugees entering Europe, making them the second largest group of refugees behind Syrians.
This unpleasant gulp of statistics might explain why we believe there is a glaring social need for foreign companies to invest money in Afghanistan’s economy. However, it doesn’t explain why I’m talking about investment and not aid.
Why more Aid is not the solution
Ready for another unpalatable gulp? The US has singlehandedly spent well over $100 billion of aid in Afghanistan since 2001. That’s more than the US spent on the Marshall Plan to reconstruct Europe following World War Two. While this Aid has helped the country make notable progress in areas such as healthcare and education, unfortunately these gains seem disproportionately small when compared to the amount of money spent.
Looking at the bigger picture aid has done a great deal of harm to Afghanistan: fuelling debilitating corruption throughout the government and creating an aid dependent nation where Afghans, from government officials right the way down to labourers, are disincentivised to perform.
Working in Afghanistan we saw everyday how the psychology of dependency was stifling the entrepreneurial spirit of talented artisans. Of course it is not in NGO’s interests to see the businesses they support fail – and yet this knowledge means that businesses performing poorly are propped up long after markets would have forced them to close.
This is why the involvement of the private sector is so important for development in countries like Afghanistan. When we buy a product from a craftsmen they know we are buying that product for one reason only: we think it is a beautiful, high quality product. They also know that if they don’t perform on an order, we will use other suppliers. Get competitive, or lose out - there are no blurred lines, and that clarity is what businesses need to grow.
The need for NGOs & the Private Sector to work in Tandem
Without NGOs private sector development would be almost impossible. NGOs such as the Turquoise Mountain Foundation have rescued Afghanistan’s crafts from the brink of extinction, and given craftsmen world-class training and infrastructure support which the private sector would never and could never provide.
However, now trained and equipped, what craftsmen need above everything else is sustainable sales. This is where we come in. As a business we believe we will be able to generate sales in a way that is difficult for NGO’s to do. We are light on our feet, close to our customers in Europe, and unbridled by NGO law we are able to make quick commercial decisions.
By working together with NGOs such as Turquoise Mountain we hope to harness the strengths of both the public and private sector to build a better, brighter, more sustainable future for Afghanistan.