Thursday, June 28, 2012 - 12:19 PM

Americans are not alone in worrying that their
economic futures are headed in the wrong direction. Afghans, too, fear that the
next several years will bring a business tailspin that will see recent
gains eked out by small and medium companies dissolve amid security woes and a
sharp pullback in international largesse and, of course, foreign forces.
The "light of a new day" may be "on the horizon," as President Obama announced
this May from Bagram Air Base, but Afghan entrepreneurs want to make sure their
start-ups survive the changes that will accompany whatever comes
next. This Thursday 50 such business-owners, 12 women among them, will
gather at an investment conference in New Delhi hosted by
the Confederation of Indian Industries with support from the Confederation
of Women Entrepreneurs in India (CWEI).
The goal is to promote private sector investment in Afghan firms that will
increasingly be seen as growth anchors for their country going forward. Companies
descending on India this week in search of dollars range from big mining
entities to smaller but growing entities including software, carpet-making, and
media ventures. Outside Afghanistan few may think of the war-plagued
nation as a small-business or start-up hub, but the resourcefulness of the
dogged entrepreneurs I have covered these past seven years matches that of any
I have interviewed in other countries, rich or poor. Afghan businessmen
and women will need every bit of this determination as they confront the
uncertainty of the coming years. And it is in America's and
NATO's interests that they succeed.
As President Obama noted at Bagram, "Americans are tired of war," and the
military intervention in Afghanistan has plunged to new depths of unpopularity
in the latest public opinion polls. But economic development is critical
to promoting stability and U.S. security interests, and it is essential to
making the President's laudable idea of bringing a "responsible end" to America's longest
war more than just empty words. Research
shows that negative economic shocks of five percent can increase the risk
of a civil war by 50 percent in fragile environments . Bolstering entrepreneurs,
particularly those running small- and medium-size enterprises, is part of
fostering lasting growth that is in both Afghanistan and America's
best interest.
Despite remaining on the list of the world's poorest nations, Afghanistan has
logged economic successes and macroeconomic stability on which to build. The
country's GDP has more than tripled in the last decade, averaging
around nine percent a year, with notable gains in infrastructure,
telecommunications, and financial and business services. The Ministry
of Communications recently began awarding 3G licenses to cellular phone
companies and internet usage is expected to climb as technology improves and
prices drop. Mobile phone penetration has leapt from less than one
percent in 2001 to well above
60 percent today.
And business growth has not been limited to large
firms. Small companies have cropped up across sectors, creating
desperately needed jobs in a country whose unemployment rate is estimated
at well above forty
percent. The non-governmental organization Building Markets,
which ran a business matchmaking service that helped Afghan firms learn of and
apply for international contracts, counted 3,400 companies in its business
database in 2008. By 2012 that number had climbed to 8,300, with nearly
300 owned by women. According to the World Bank's
"Doing Business" report, Afghanistan ranks 30th among 183 economies
when it comes to the ease of starting a business, requiring four procedures and
seven days to register a firm. Training programs such as the
International Finance Corporation's "Business Edge," Goldman Sachs' "10,000
Women," and Bpeace's "Fast Runners" now work with entrepreneurs seeking
management and marketing training. And Afghan export promotion officials
proudly point to recent wins marketing their carpets and dried fruits and nuts
to consumers in Europe and the Middle East.
Yet bad news and economic question marks threaten to swamp the small steps
forward. In 2010, Afghanistan's economy received nearly the same amount in
foreign aid as it counted in GDP, and the assistance tsunami, often routed
around the rickety central government rather than through it, has hardly helped
to bolster the country's already weak institutions. Graft remains
rampant: Afghanistan shared the next-to-last spot with Myanmar in Transparency
International's 2011 "Corruption Perceptions Index." Meanwhile, the
trade deficit looks to top $6 billion and fiscal health remains shaky at
best, with estimates suggesting government revenues will cover only 60 percent
of the Afghan operating budget in 2013.
President Obama pledged in the Strategic
Partnership Agreement he signed with Afghanistan's President Hamid Karzai
that the United States "shall help strengthen Afghanistan's economic
foundation and support sustainable development." This promise was not made
simply because America is a benevolent power, but because an economically
stable and increasingly prosperous Afghanistan connected to the world is
good for the United States. It will soon be up to Congress to decide how much
continued economic aid and development assistance to offer Afghanistan,
and the temptation will be great to follow the Iraq example of ever-smaller
requests met by even smaller authorizations. But shoving Afghanistan off
the economic edge would be both short-sighted and counter-productive. As
the World
Bank noted recently, "international experience and Afghanistan's own
history show that an abrupt cutoff in aid can lead to fiscal crisis, loss
of control over the security sector, collapse of political authority, and
possibly civil war."
America may be drawing down troops and withdrawing militarily from Afghanistan,
but the Afghan entrepreneurs gathering this week in India remain worthy of U.S.
support and investment. They are allies in the American quest to bring
"sustainable stability" to a country and a region that desperately need it.
Gayle Tzemach Lemmon is a fellow at the Council on Foreign Relations and the author of The Dressmaker of Khair Khana.
BAY ISMOYO/AFP/GettyImages
EXPLORE:AFPAK, AFPAK POSTER 11, FLASH POINTS, AFGHANISTAN, AFPAK CHANNEL, BUSINESS, ECONOMICS, FINANCE, U.S. FOREIGN POLICY