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About Afghanistan

Frequently Asked Questions



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

 

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