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.