In-depth Business Intelligence
Books on Afghanistan
Update No: 046 - (27/09/05)
Sunday's 18 September elections continued to stir controversy in a country
which is not used to electoral democracy. The main issue throughout the first
half of September was the participation of warlords and militia commanders, in
theory banned under electoral regulations. Some candidates were banned from
running under these regulations, but the majority of those affiliated with armed
militias managed to get through. They could still be disqualified after the
elections, but of course if any of them won, a disqualification could be even
more controversial. In some areas of Afghanistan there were also complaints
about the participation of former communists, including an ex-minister of the
interior. In part, the complaints were due to the resurgent popularity of late
President Najibullah, the last communist head of state, which might favour some
of the candidates on the left wing of the political spectrum. Several candidates
are using Najibullah's images in their campaign, including some who had opposed
him from within the party.
GSM for everybody
In September the government assigned two new licences for GSM mobile
services. The highest bidder was Investcom Consortium, followed by Watan Mobile
Afghanistan Consortium. Both bidders will pay over US$40 million each for their
licenses, a substantial amount in a country where government revenue struggles
to reach US$300 million yearly. Investcom is a Lebanese company, which allied
with an Afghan one, Alokozai, which so far had specialised in importing tea and
tobacco to Afghanistan. Investcome hold a 60% in the consortium. The Watan
Mobile consortium is instead formed by two US companies (CellularOne and Globe
Comm), one Saudi (Al Houbi Telecom) and one Afghan (Watan Mobile).
Uncertainty about reforms
Despite the strong pressure coming from the private business sector and some
international partners, the Afghan government has been slow in addressing many
issues, including the privatisation of state industries. Most of these factories
are inactive, but all of their staff (almost 19,000) still gets paid. Government
companies also play a major role in the import-export business, importing goods
for several hundreds US$ million and controlling the export of most of
Afghanistan's fresh and dried fruit. The government is clearly fearful of
sacking the workers before the parliamentary elections.
On the other hand, the government can afford to be more dynamic in the case of
new businesses. In September the Ministry of Mines and Industries invited
bidding on the leasing out of two copper and iron mines, the first such example
out of about 300 mines which are estimated to exist in Afghanistan.
The Afghan government is still intent on making Pakistan pay the full price for
its integration in the region. While discussing the large regional pipeline
projects with India, Kabul also asked the Pakistani one in September to allow
transit trade between Afghanistan and India. In September again President Karzai
complained about the Pakistani inability (or unwillingness) to prevent
anti-government guerrillas from infiltrating into Afghan territory. Pakistan's
uneasiness was demonstrated by the replacement of its ambassador in Kabul at the
end of August, after just one month in office. India, on the other hand, was
doing well strengthening its influence in Afghanistan further. The Indian Prime
Minister visited Afghanistan in August and pledged another US$50 million in
Narcotics: justified optimism?
UN figures released during the summer endorsed at least in part the
government optimism earlier in the year with regard to the reduction of the
poppy harvest. Although the reduction in the harvested area did not reach the
30-40% claimed by the government, it was still a substantial 21% decline.
Unfortunately, because of the good weather, the actual harvest declined by just
2.4%. So much for statistics! It will now have to be seen whether the reduction
in the harvested area can continue next year.