“The (beginning of) security takeover by Afghan forces in 2011 can be successful, if we put necessary attention to issues related to economic development.”

Dr. Ashraf Ghani Ahmadzai, April 12^th, 2011 in a closed door meeting with the business community

The leadership of Afghanistan Chamber of Commerce & Industries as well as representatives of the private sector met with Dr. Ashraf Ghani Ahmadzai, Chairman of Afghan Transition Coordination Commission (TCC) to discuss the economic dimensions of the security transition process.  TCC is mandated to help the government develop its 2011-2014 strategy for a full transition of security and development policies to Afghan institutions.

Dr. Ahmadzai, elaborating the importance of the private sector participation in security transition said that, “(USD) $5 billion is supposed to be spent to strengthen the Afghan security forces in the next two years and according to the agreement between Afghan and foreign authorities, Afghans will be considered first in the implementation of those projects.”

Dr. Ahmadzai, a close advisor to President Hamid Karzai, called on private sector contractors to build their capacity to meet higher quality standards for buildings so as to fully Afghanize the award of impending security-related contracts.  Separately, he also agreed to cooperate with the business community to resolve long-standing problems with different government departments and to personally communicate these problems to the relevant Ministers and to follow-up accordingly.

According to Dr. Ahmadzai, from an economic perspective, the following improvements are needed for a successful security transition:

1. The problem of access to land for Afghan entrepreneurs in four major cities (Kabul, Herat, Nangerhar and Mazar-e-Sharif) must be resolved;
2. Afghan exports, especially the export of dried and fresh fruits, must be increased;
3. The Afghan First Policy must be considered for contracts awarded by coalition forces; and
4. Afghanistan must enter into the following long-term arrangements with the international community:

• A security cooperation agreement especially with the United States of America
• The development of an economic cooperation framework to include  comprehensive economic development programs for a ten-year period starting in 2014 and ending in 2024
• Increased trade agreements and a higher-level of foreign direct investment
• Development of a framework for cooperation between Afghanistan and Islamic countries

Following his comments, Mohammad Qurban Haqjo, CEO of Afghanistan Chamber of Commerce & Industries expressed his thankfulness to Dr. Ahmadzai for his attention to the role of the private sector in economic development issues of Afghanistan and then proceeded to present the major (continuing) problems that impact private sector growth; these are:

1. The lack of security in the cities and highways resulting in incidences of abduction and extortion;
2. Absence of economic policies in some sectors as well as the contradiction between the policies and actions of government agencies;
3. Infrastructure deficiencies such as access to land and continuous electrical power;
4. Rampant corruption in government agencies; and
5. Limited capacity in the private sector to implement projects in accordance with contractual obligations.

Despite these problems, Mr. Haqjo noted that the private sector’s financial motivation means that it can and has shown the flexibility and capacity to adapt to conditions requiring higher contractual standards of performance.  He gave assurances that the business community will be ready to implement projects of the required quality.

He further suggested that an international conference should be organized specifically related to the development of the economy of Afghanistan and to link development programs specifically to the private sector.  Mr. Haqjo offered that the Afghan private sector will be ready to take the lead in organizing such an event.

In closing, it was agreed that Dr. Ashraf Ghani Ahmadzai would meet with the representatives of construction sector to discuss how to overcome the capacity deficiency issue to implement potential projects to be awarded by coalition forces.