5 Ways to Increase Afghan Exports

Daniel Vose | Shoukat Khurram
April 24, 2018 | 3 Minute Read
Economic Growth and Trade | Business Enabling Environment | Entrepreneurship and Enterprise Development
Exports are a promising opportunity to improve Afghanistan's economy. Here are five strategies to bolster Afghanistan’s exports to India, countries of the Gulf Cooperation Council (GCC), and beyond.

Earlier this month, Afghanistan’s High Economic Council, which is chaired by President Mohammad Ashraf Ghani, approved the highly anticipated National Export Strategy. This strategy, which was developed in wide consultation with the public and private sectors in Afghanistan, highlights the importance of exports to increase revenue, create jobs, and support long-term peace and prosperity.

To understand how best to translate this strategy into tangible results, we set out to take stock of what opportunities and constraints Afghan businesses face and how future programming can complement the National Export Strategy and build on previous donor investments. To do this, we convened a group of Afghan exporters in Kabul to discuss opportunities to increase high-value exports from Afghanistan. By bringing together businessmen and women from a range of sectors — gemstones, fruit and nuts, carpets, and stone — we found reasons for optimism as well as a common set of challenges. Here we summarize five opportunities to support export growth in Afghanistan.

1. Look Beyond the Region.

In recent years, Afghan exporters have made significant gains accessing other regional markets such as India and the countries of the Gulf Cooperation Council (GCC). India, in particular, represents a significant opportunity for many exporters given their growing taste for high-value products like dried fruit, nuts, and precious stones. However, Indian buyers often prefer to import these products with minimal processing, relying on domestically available, low-cost labor and processing capacity before selling to consumers. Yet with the right technical support, Afghan producers and exporters can market finished products — such as cut stones and processed agricultural products — to buyers within and beyond the region, generating increased revenue.

2. Don’t Forget Reform.

To support long-term growth, Afghanistan needs continued improvement in trade policies and an enabling environment that builds on previous donor investment and leverages forward-thinking Afghan leadership. As one gemstone exporter clearly stated, “the major player in stone is the government.” Reforms can significantly increase export potential in this sector. For example, investments made to formalize international standards by bolstering the Afghan National Standards Authority will allow exporters to access higher-value markets. Donors and implementers can take a private sector-led approach to reform by working through private sector organizations such as the Afghan Exporters Club, the Afghanistan Chamber of Commerce, the Afghanistan Chamber of Industries and Mining, and the Afghanistan Women’s Chamber of Commerce and Industries.

3. Focus On Finance.

Improved access to finance has the potential to increase revenue and productivity throughout export value chains. Each exporter we spoke with highlighted ways that increased access to finance could help expand his or her business. For example, large traders need access to short-term financing to cover the cost of inputs and shipping. Smaller suppliers, particularly outside of urban centers, would benefit significantly from tailored sharia-compliant loans. Future programming can look toward introducing new products and sector reforms, such as purchase order financing and secured transaction reform, to unlock growth.

Once businesses are introduced to buyers, they will find a way to make deals.

4. Build Up Business Development Services.

We heard multiple examples of how the right expertise could help businesses increase export revenue. As we have seen in many other contexts, donor assistance can unlock specific export opportunities and be the key to developing a sustainable marketplace for business development services (BDS) and technical assistance. For example, initial investments in BDS could focus on helping the marble exporter train his employees to use complicated Italian machinery or certifying the organically grown produce one fruit exporter told us he currently has to sell as non-organic. Beyond targeted investments, donors and implementing partners can drive sustainable results — and create additional jobs — by investing in a BDS industry that will further enhance exports.

5. “Guide Us Somewhere and We Will Find a Way.”

As one exporter said so succinctly, one of the biggest challenges is simply getting to know a new market. But once businesses are introduced to buyers, they will find a way to make deals. We saw this with our own eyes at last year’s Passage to Prosperity trade show in India, which resulted in more than $240 million in agreements. In addition, these business owners made it clear to us that permanent market representation has the potential to drive sales year-round by connecting businesses with importers and consumers and helping to establish increased demand for Afghan products. Donors can support sustainable approaches to market representation through targeted support. For example, by tapping into the new class of Afghan commercial attachés who will be placed in strategic regional and international markets or by providing the initial investment in fee-for-service market representatives.

In addition to these findings and recommendations, there was another clear takeaway from our discussion with these exporters. If you are looking to invest in Afghanistan, this is a good time. When we asked if their exports would increase over the next year, there was only one answer: Yes!

About Daniel Vose

Daniel Vose is Chemonics’ director of business development for Afghanistan.

About Shoukat Khurram

Shoukat Khurram is a technical advisor and former deputy team lead for trade facilitation under the USAID Afghanistan Trade and Revenue (ATAR) project.