Afghan officials and some of their major global trading partners insist the war-ravaged country is open to business, especially in the agricultural and fruit and nut export sectors. Repeated World Bank reports have argued that rural finance is crucial to reconstruction efforts, and has encouraged more FDI into the Afghan heartland.
But progress remains slow: the Afghan Rural Finance Company has only made roughly 50 loans totalling $14m with an average loan size of about $250,000 since its founding in 2007. According to microloan specialists the Aga Khan Development Network, the microfinance sector still only reaches just over 200,000 people in the country, less than 1% of the adult population.
Indian companies have made gains in advancing regional trade networks, but largely by capitalising on infrastructure that has made transporting standard agricultural products easier. At a Usaid-sponsored event, Passage to Prosperity: India-Afghanistan Trade and Investment Show, in mid-2018, Afghanistan’s then-ambassador to the US Hamdullah Mohib praised the India-Afghan bilateral relationship and said it would be worth more than $2bn by 2020.
The opening of an air cargo route between Afghanistan and India would guarantee this collaborative arrangement. India has become a loyal development partner to Afghanistan, thanks mainly to the contribution of more than $3bn in economic assistance, road construction, dams and infrastructure, said Mr Mohib, now Afghanistan’s national security adviser, largely because of Usaid assistance.
Raisins to be cheerful
Mohammed Salangi, who served as police chief in Kabul and is now deputy minister for security in the ministry of the interior, also exports nuts from Afghanistan. The nut business will likely continue to attract investment after the US withdrawal, and as more Afghan producers connect with the global economy.
Change is already occurring in the raisin business, for example: Afghans were responsible for 20% of the global raisin business for decades until the 1970s, according to the International Finance Corporation (IFC), which is now supporting the family-owned Rikweda Fruit Processing Company to build a processing plant in Kabul province. According to the IFC, it will boost income and production for 3000 small-scale raisin farmers.
A $190m World Bank loan, in addition to the IFC funds, aims to “ultimately revitalise Afghanistan’s raisin industry”. The World Bank support is crucial, the IFC said in a June 2018 report, because this is its first investment in agribusiness in Afghanistan and “there would be almost no financing options for the greenfield project otherwise”.
The competition in what has become a $1bn-a-year business is heating up fast; in December 2018, Afghanistan’s ministry of agriculture announced that as much as 1000 tonnes of pine nuts might be exported to China each month via the country’s new air routes. In January, at a Kabul conference devoted specifically to the pine nut industry, minister of agriculture Nasir Ahmad Durrani said Afghanistan could produce as much as 35,000 tonnes of pine nuts a year, with $1.5bn in export value.
Atiqullah Nusrat, head of the Afghanistan Chamber of Commerce and Industries, added two caveats: Afghan authorities have to crack down on smugglers taking the nuts to neighbouring Pakistan where they are exported more cheaply,and foreign investors must recognise the necessity of building the processing, packaging, branding and labelling sectors.