A Roadmap for Afghanistan’s Economic Future

Most discussions about the immediate future of Afghanistan center on security. A consideration just as important, says Professor Tarun Khanna, is rebuilding the embattled country's economy.
by Tarun Khanna

Discussions about the withdrawal of US troops from Afghanistan are frequent these days, with an emphasis on the importance of post-war security. But what's usually missing is an even more difficult consideration—that embattled country's economy. A recent conference at Harvard, organized by the Future of Diplomacy Project and Harvard University's South Asia Institute, brought together diplomats, security experts, and entrepreneurs in a conversation that ought to occur more often.

Celebrate, on the one hand, the dramatic rise in the number of Afghan children in school (from under a million in 2001 to 9 million today), especially girls. But the bad news is they have no jobs to look forward to. Although stability and security facilitate investing for the long term, they are not enough. Afghans must have credible information about all sorts of things we take for granted in the West. For example, how will a would-be entrepreneur know about the prices of various cash crops that might replace otherwise tried-and-true opium production? How can would-be investors, even in a small-scale enterprise, locate suitable talent for their venture?

In less traumatized societies, a network of specialized intermediaries emerges over decades to address these issues. There might be auction houses for the wholesaling of goods, companies that specialize in gathering price data for various commodities, others that authenticate the quality of such information, and testing agencies that identify the nature and value of the skill sets brought by each would-be young worker. Each of these is a viable organization that needs time to develop.

Another requirement for economic development is trust. But that's a rare thing among the fragmented ethnic groups that dominate Afghan society—Tajik, Hazara, and Pashtun. Without trust, people are far more likely to work or invest only with only "their own kind" rather than with any Afghan. This skews investment toward relatively inefficient opportunities and thereby limits job creation.

“Afghans must have credible information about all sorts of things we take for granted in the West”

Lack of jobs is a likely cause of rising addiction rates, with their myriad attendant pathologies and costs. Whereas Afghanistan once just grew poppies, its inhabitants are now increasingly addicted to opium. This, along with the absence of the rule of law, precipitates joblessness, which leads to more addiction and disorder—the quintessential vicious cycle.

The Kabul of the pre-1970s Soviet onslaught was the Paris of Central Asia, successful in agriculture, tourism and hospitality. Post-war Kabul of the future could be an energy hub, connecting Tajik and Uzbek energy and gas to India in particular.

So, how can a job-creating infrastructure be created efficiently to reverse the country's precipitous decline?

First, leverage existing successes. Roshan, for example, is a rags-to-riches mobile phone operator and the leader among entrepreneurs responsible for the deployment of cell phones to two-thirds of Afghans. My research shows that throughout the developing world successful organizations like Roshan must inevitably take on more tasks than their counterpart firms in more advanced economies to compensate for the inadequacies of their business environment. By doing so, they benefit not only their own shareholders and stakeholders but their homeland. Thus, these firms must be encouraged to act as incubators, spawning new ventures that provide outlets for talented workers.

Second, coordinate the efforts of multiple entities, recognizing that the United States isn't the only or even the most significant player in extending a helping hand to Afghanistan. Wealthy Europeans are assisting government agencies considerably. Roshan itself was coaxed into being by the Aga Khan Development Network. India has also been particularly active in providing development grants for schools and hospitals and in catalyzing for-profit investments to jump-start growth as it attempts to be more constructively proactive in the region.

This enhanced role for incumbent organizations and coordinated efforts across countries will allow impressive but currently tiny efforts to grow. As a result, the efforts of Bpeace (Business Council for Peace), a nonprofit network of business professionals, to encourage entrepreneurs in Afghanistan and other conflict-ridden regions, will benefit, as will the nascent businesses of numerous Afghan computer entrepreneurs. Such entrepreneurship is also the best way to allow marginalized groups such as women and those outside the existing power circles to gain a foothold in tomorrow's Afghanistan.

The dénouement of the multi-stage Afghan war drama is not yet upon us. But the contours of two dramatically different outcomes are now visible. The trajectory Afghanistan is now on pays too little attention to new enterprise and job creation and is predictably dismal. The alternative scenario I've described has a brighter outcome. It amplifies the individual initiatives represented by so many Afghan entrepreneurs, akin to President George H. W. Bush's "thousand points of light."

Fittingly, Roshan is Persian for "light." Hopefully, that's a good sign for Afghanistan's future.

    • Hugh Quick
    • home, none
    I am a foreigner and recognise that different countries, different communities, have different principles. Why have so many countries, including both Britain and the USA, interferred in Afghanistan's domestic affairs?
    • Curt
    • CSO, SRS
    Most efforts at entrepreneurship encouragement and development are well-intentioned, but inadequate and ineffective when looked at in terms of money spent. Most of these are what I call "drive-by" trainings and consultations. They are bandages on systemic infections. They miss almost completely the mindset-level shifts that are necessary in entrepreneurs in emerging and, especially, post-conflict markets. Survival mindsets and zero-sum views on power and resources render entrepreneurs less than optimally effective. A few weeks of skills trainings layered on these unresourceful mindsets are a waste of money. Working at the mindset and belief levels first and then adding skills is a recipe for real and lasting change. But this takes a whole different level of commitment. (FYI, I was part of the first management team for Roshan)
    • Hugh Quick
    • home, none
    Policy in Afghanistan raises the wider issue of whether one community (or country) should interfere in the domestic affairs of another. I say "No" but many will disagree with me.