Originally posted at CIPE Development Blog

The inaugural meeting of Afghanistan’s Parliamentary Business Caucus

By CIPE Kabul Staff

Entrepreneurs and businesspeople in Afghanistan face one of the most difficult business environments in the world, so close cooperation between the private sector and government is essential to putting the country’s economy back on track.

On November 16, CIPE capped off more than two years of work by organizing the inaugural meeting of Afghanistan’s Parliamentary Business Caucus, which brings together business-friendly members of parliament (MPs) and representatives of the private sector. This new body will provide a platform to discuss issues of concern to the business community and ways in which the private sector and MPs can work together to make sure that Afghanistan passes key legislation to spur private sector development.

The first meeting brought together 18 MPs, including leading parliamentarians and members of relevant committees, with eight representatives of leading business associations: FACT (the Federation of Afghanistan Craftsmen and Traders), the Afghan Builders’ Association, the Industrialists’ Association, the Fruit Exporters’ Association, the Carpet Exporters’ Guild, the Afghan Chamber, and the Peace Through Business Network – a new women’s association.

“The promotion of the private sector is critical for creating employment opportunities, economic growth and the development of Afghanistan,” said Andrew Wilson, CIPE Deputy Director for Strategic Planning. Wilson affirmed CIPE’s support for, and cooperation with, the Business Caucus. CIPE Kabul staff – Mohammad Nasib, Mohammad Naim, and Ibrahim Hassan – served as moderators, discussing the CIPE-supported National Business Agenda (NBA) and the effort to create the Caucus.

Mirwais Yasini, First Deputy Speaker of Parliament, spoke about the need to break down the many barriers facing the business community and raised the idea of the Business Caucus organizing a debate on the economic agendas of leading presidential candidates prior to the upcoming elections, something which has never been done in Afghanistan. He also pledged his support in cracking down on the illegal export of goods by traders who have not cleared the necessary customs.

The private sector participants spoke about specific challenges they face, including problems with industrial parks, transport, security, corruption, and certification of the standards of goods. They also spoke about measures suggested in the NBA that have yet to be implemented, specifically regarding taxation and access to credit. Haji Mohammad Hassan, president of the Fruit Exporters Association, offered a number of concrete issues to tackle, for example the lack of industrial parks for processing fresh and dried fruits, difficulties transporting fresh fruits to markets in Gulf countries, and the problem of extortion. He suggested that the government help arrange air cargo facilities and revive the defunct Afghanistan Exporters Bank to help fruit growers reach new markets.

Mohammad Hassan Sepahi, Chairman of FACT pointed out that “although the relevant authorities have implemented 70 percent of the NBA recommendations, there are still some major obstacles to the private sector’s growth.”  He suggested amending tax laws to create a fixed rate and simplifying tax-paying procedures, improving access to credit for SMEs by reviving the Industrial Bank, and helping craftsmen with cross-border transit problems to spur the export of carpets and other handicrafts to neighboring Central Asian countries.

Haji Jabar, President of the Industrialists Association, said that per Article 10 of the Afghan Constitution, the government should encourage and support investment into the country. Despite establishing 1,320 factories and providing jobs to more than 220,000 people, the government has failed to provide the necessary facilities and support for the industrial sector to grow. He noted a number of problems, such as the fact that the government has failed to implement an approved tax exemption on domestic products, has not yet come up with a pledged $100 million for investment into industry, and includes only 20 percent of raw materials in a list of products that are meant to be tax-exempt. He also suggested that government could help by bringing down high electricity rates and reviving the Industrial Bank in order to provide credit businesses.

In concluding the meeting, Yasini said, “We, the MPs and members of the Business Caucus, are answerable to the people of Afghanistan, particularly the business community. We have learned about some of the problems and challenges facing the private sector, and on behalf of the Business Caucus I assure the representatives of the private sector that we will continue to hold joint meetings and invite the relevant government authorizes to participate. We will address the problems of the private sector and improve the business climate in the country.”

The next meeting of this new and important body is planned for early December in Kabul.