Kabul, Afghanistan

Kabul as a political, financial and business center concentrates all business activities, financial flows, offices, etc. Despite the terrorist attacks, it is safer place for business, in comparison with provinces. The country developments affect the business life in Kabul, as government and institutions are there and as major companies head offices are situated there. The sponsors believe that development of infrastructure will support business operations – water, power generation, capacity building, and the transport links to domestic and international markets – roads railways, pipelines. World Bank indicates Afghanistan as the fastest growing economy in South Asia. The major sectors are – agriculture takes around 25 % of total economy – opium, wheat, fruits, nuts; wool, mutton, sheepskins, lambskins; industry is 22 % – production of bricks, textiles, soap, furniture, shoes, fertilizer, clothes, food, juices and mineral water, cement; hand woven carpets; natural gas, coal, copper; services take 53 %. Labor force is 7.5 mln.; unemployment is 30-35 %. Trade exports: $2.8 billion – opium, fruits and nuts, hand woven carpets, wool, cotton, hides and pelts, gems. Pakistan 33.7%, India 23.8%, Tajikistan 8.9%, Russia 5.6%, Bangladesh 5.1%, US 4.1%. Trade imports: $6.4 bln. – Machinery and capital goods, food, textiles, petroleum products, US 31.3%, Pakistan 20.7%, Russia 8.4%, India 5.4%, Germany 4%. Electricity production is close to 1 bln. kWh; consumption is 3.9 bln. kWh; generation capacity is above 0.5 GW, of which 23.5 % fossil, hydro is 76.3%, 0.2% renewable; import coming mainly from northern neighbors, funded by India, ADB, WB, and USAID. Numerous rehabilitation and new construction projects of power plants and grid are going on, financed by banks, donors, states, international organizations. Afghanistan has undeveloped natural resources and deposits estimated at $3 trillion – lithium, copper and gold, iron, lead, zinc and natural gas. Billions are invested in mines, in could support to the country’ economic independence. Chinese and Indian companies mainly bid to develop mineral deposits. Copper mines are the largest investments – China Metallurgical Group & consortium. Gold concessions were given to various international investors and to the local businessman Sadat Naderi, iron – to Steel Authority of India and consortium, together with a mill and a power plant. A Chinese company CNPC explores the Amu Darya oil deposits, with a 25-year contract and plans for refinery construction. Natural gas – production/consumption 160 mln.m3 (2011); reserves estimated to 50 bln.m3. LPG – Ghazanfar holds 70 % of the trade in Afghanistan. Challenges in mine industry are: the longest lead-times, high operating costs, missing water and power generation supportive infrastructure and transport links. Despite the destabilizing factors, the investments process continues, supported by numerous opportunities. Kabul Municipal Development Program ($110 million grant) targets: access to basic municipal services, redesign Municipality’s financial system, and early response to emergency. The Kabul municipality implements the project, that will give benefits to over 700 000 people. Road and sanitation equipment will be installed to combat pollution and improve road services and city environment. Kabul Urban Transport Efficiency Improvement Project ($90.5 million grant), aims to improve the road infrastructure and provision of technical assistance to Kabul Municipality. There are others, targeting the administrative capacity, civil works contracts, implementation of the international construction norms. All those are under supervision and management of foreign specialists, engineers, architects, designers. Foreign investments in electrical network, transport corridors and mining, give chances to local economies. It is not rare case anymore that Afghan companies get projects in important segments of the economy. All this investments, involving local people, give chance to development of the human capacity. A $1 billion project New Kabul City, signed in 2013, is a major residential development of multi-function commercial, historic and cultural complex within the Old City of Kabul. Long discussed projects: TAPI, gas supply from Turkmenistan to India, through Afghanistan; and CASA-1000 a 1,300 MW transmission line(grant of $526.5 million)in Afghanistan, Kyrgyz Republic, Pakistan, and Tajikistan, will support the development of the construction industry, and provide gas and electricity to energy hungry provinces, involving local engineers and increasing the local technological capacity. Those projects create optimism among population, that good development in their country is possible. The threats in the country development are many, as the main one is the local insurgency. There are regions, controlled by insurgents and despite all efforts of the army, supported by NATO troops, the success is not immediate, so providing instability to the whole country and to Kabul, where terrorist attacks are daily. Another threat is the involvement of foreign terrorist organizations, some already well situated in Middle East and some new, looking for ways to be seen. Recently those began fighting each other, bringing more chaos to the situation. Weaknesses of Afghanistan are – corruption and lack of institutional capacity; population consists of several major tribes, who keep own territories; urbanization is very low, that hinders creation of homogeneous society. All those mentioned projects, which are going on, are done mainly by foreign specialists, engineers, architects, by foreign companies. Although many local specialists are gradually involved, it is very insufficient for strong and fast development of a local engineering pool, very much necessary to the country. Strengths of Afghanistan are also numerous – the country practically needs total renovation in each sector, and together with foreign investment, that is supportive to projects. The population accepts development process and participates in it. Thousands of young people study in renowned universities, eager to get personal development, but also to support creation of a future engineering pool. The mining wealth of the country will bring the necessary industrialization to the economy.