FAQ: Business and Investment
What major achievements in economic development have been made by the Government of Afghanistan since October 2001?
Nearly three decades of war devastated Afghanistan’s economy. Despite limited human resources, Afghanistan has managed to dramatically improve the national economy and attract investments from around the world. GDP growth has remained robust: 30% in 2002, 23% in 2003, 16% in 2004, and 13.8% in 2005. The value of Afghanistan’s economy has increased to $7.3 billion, up from $2.4 billion in 2002. Last year, two way trade with the United States reached $330 million, 33% more than 2004. More than 70 American companies have registered in Afghanistan since 2003, representing $75 million in potential investment, and more than 15 foreign and domestic banks have opened their doors in Afghanistan. Afghanistan’s national income per capita has doubled since 2001, reaching approximately $356. Over 100,000 Afghans have been able to start small businesses thanks to micro-credit loans; 76% of these loans were given to women. Afghanistan was selected as the 2005 US Trade and Development Agency “Country of the Year,” while the World Bank ranked the ease of starting a new business in Afghanistan 16th in the world and lists Afghanistan as the 2006 top performer on business entry. Since 2001, more than 55,000 businesses have been registered, allowing Afghans to dream of a better future for their children for the first time in 30 years. Inspired by major success stories, Ford, 3M, and Boeing are examining business opportunities in Afghanistan, and Coca-Cola has opened a $25 million bottling plant in Kabul, which employs approximately 500 Afghans.
What are Afghanistan’s major industries?
Agriculture and animal husbandry account for nearly
38% of Afghanistan’s economy. Other major industries include
the booming telecom sector, insurance, construction, cement,
carpets and textiles, mining and extraction of minerals and
gemstones, food and beverage processing, and handicrafts.
Within the agriculture sector, fruits, nuts and
wheat are Afghanistan’s major products. The major animal
products are wool, mutton, sheepskins and lambskins.
Some of the key sectors for investment include:
- Agriculture and agro processing
- Architectural, construction and engineering services 
- Building and construction materials
- Power generation and transmission
- Oil and gas exploration
- Telecommunications
- Food processing
- Manufacturing
- Textiles and carpets
- Education services
- Consumer electronics
- Transportation
- Equipment and machinery sales and leasing
- Irrigation technology
- Leather and leather processing
- Precious and semi-precious stones
- Marble and other industrial stones
- Chemical and pharmaceutical products
Which international companies are investing
in Afghanistan?
The Afghanistan Investment Support Agency (AISA),
as a “one-stop shop” for foreign and domestic investment
licensing, reports that 754 foreign companies from 25 countries
have registered investments valuing at $1.3 billion in various
industrial sectors including telecommunications, transportation
and logistics, food processing, banking, tourism and trade.
Of this, 70 have been registered from the U.S., totaling $75
million in investment.
Turkey is the largest foreign investor in Afghanistan
followed by Germany, India and Pakistan. In terms of industrial
sectors, telecommunication is the biggest success story, experiencing
phenomenal growth and revolutionizing how business is done in
Afghanistan.
International companies investing in Afghanistan
include Coca-Cola; Tourism Promotion Services; Standard Chartered
Bank; First MicroFinance Bank of Afghanistan; Roshan; and Areeba
Afghanistan. Many others are in the planning and researching
phases of investment.
What currency is used in Afghanistan?
The Afghani is the currency used in Afghanistan.
The conversion rate is approximately 1 US Dollar = 50 Afghanistan
Afghanis
My organization is interested in doing business
in Afghanistan; where can I find information on the investment
climate?
In April 2005, the World Bank conducted a comprehensive
study of Afghanistan’s investment climate. In it,
the Bank says
“Most important from the investor’s
point of view should not so much be the current situation, (which
has already significantly improved from recent years), but rather
the dynamic movement of the country’s economic and security
realities, and the future opportunities created for business.
As the findings make clear, and as is true across many sectors,
investors entering Afghanistan now will benefit from being “first
movers” in a virgin market that is highly pro-business”
(7).
Another World Bank investment
climate study conducted in December 2005 stated
“Afghanistan has taken tremendous strides toward reestablishing
itself as a politically and economically viable state”
(i).
“Economic growth, which has received far
less international attention than has Afghanistan's political
process, has been dramatic during the recent recovery”
(i).
“A stable macroeconomic environment has
been established and a number of steps taken to foster trade”
(i).
The U.S. Department of Commerce Afghanistan Investment
and Reconstruction Task Force has a page on their website devoted
to the business
climate in Afghanistan. Their resources include industry
information, the legal environment, and key documents.
The Investment
Network of Afghanistan Business Gateways provides a sense
of current investment projects registered on the website. This
is also an excellent way to create investment partnerships.
How can I get started doing business in
Afghanistan?
First and foremost, make good use of the Embassy’s
Business & Investment Resource Guide. It is full of descriptions
of and contact information for individuals, companies, government
agencies, multilateral organizations, and non-profit organizations
currently operating in Afghanistan. In other words, it is a
guide to “who is doing what” in Afghanistan, both
on the ground in the country, and here in the U.S.
The Embassy’s Commerce
Department may also be of help in introducing interested
parties to individuals or companies relevant to their enterprise.
They can be contacted by email here: commerce department
What laws do I need to be aware of as
I do business in Afghanistan?
The Afghan government has been extremely proactive
in passing laws since 2001. Among them are the:
Anti-Money
Laundering Law
Central
Bank Law
Environmental
Act
Hydrocarbons
Law
Income
Tax Law
Insurance
Law
Insurance
Amendment
Investment
Law
Minerals
Law
Tax Incentives
for Investors
