8th Annual U.S.-Afghanistan Business Matchmaking Conference 2012 December 4, 2012; 10:05-10:25 am “Seeking Stability – Government, Military and Business Community Collaboration” Hugh Haworth, Senior Economics Advisor, B Bureau ureau for Economic Growth, Education, and Environment, United States Agency for International Development (USAID)
Good Morning. I would like to thank you, Congressman Ritter Ritter, and the Afghan American Chamber of Commerce Commerce, for inviting me today and hosting this event bringing together all of you here: the business owners,, investors and potential investors, who by engaging in Afghanistan are the future of Afghanistan’s economic growth. The Chamber and USAID have shared a common commitment to rebuilding Afghanistan. We have both worked to attract investment, generate employment, and expand market linkages. We, at USAID, recognize the primacy of the private sector’s ability to create economic change, and more particularly, the role business enterprises play in creating the sustainable jobs that fuel that growth. Just months ago, I returned from serving in Afghanistan as the Director of USAID’s Office of Economic Growth. In that role I had the distinct pleasure of working with key leaders from the public and private sectors on the economy and the investment climate. A small handful of the specific initiatives, on which we, from the Mission in Kabul, Kabul lent a supporting hand were: the restoration of Kabul Bank, improvements to the Doing Business Indicators, expansion of field research for mining, and expediting customs and border procedures. I should note that I continue to work, most assiduously, on Afghanistan from Washington. I have taken on more of a focus on advancing the private sector role in the Afghan economy. Before I talk about USAID’s commitment to Afghanistan -- and what programs we will continue continu to support - - let me remind you why Afghanistan is worth investing invest in. Afghanistan has seen incredible economic and development gains over the last decade. o
Average GDP growth over 8% annually. annually
Per capita income growing from less than $200 to $500 today, today an indicator of how far Afghanistan has come and the opportunities that are beginning to emerge.
More than 8 million children and young adults enrolled in school, building a talented workforce.
Thousands of kilometers of new ew and improved roads along with thousands of mega watts of new power generation has substantially ly increased business opportunities and job creation.
Cell phone coverage has reached 60%. This growth in telecommunications has also translated into increased government revenues. And, Afghanistan now has a digital business infrastructure. infrastructure
More recently, wheat yields have increased by 50-70% 50 in the post-drought drought period.
The results of the 2012 Asia Foundation tion comprehensive opinion poll reinforce this good economic news. More than half of those surveyed in the poll say that Afghanistan is moving in the right direction. Reasons easons for fo optimism cited include: o
an active, improving Afghan National Army and National Police;
improvements in education, including for girls; and,
reconstruction of the shattered infrastructure.
I know that many of you are risk takers – people that see the opportunity even where others sees uncertainty. But I want to assure you that while there are many uncertainties about the future in Afghanistan; one thing that you can be assured assure of is that the e United States is committed to standing with the Afghan people. While hile our military colleagues and allied forces are working toward handing over full responsibility for security to Afghanistan by the end of 2014, the United States has committed to an e enduring nduring relationship with Afghanistan as a outlined in the Strategic Partnership Agreement. President Karzai and President Obama signed the Agreement in May which provides a long long-term framework for a normalized relationship between the United States and Afghanistan A with further details being finalized. finalized The Agreement also outlines a long-term term economic partnership, one built on Afghan progress in fighting corruption, carrying out reforms, and providing good governance with strong support secured for the first several years of the “transformation decade” beginning in 2015. USAID will be a major part of that enduring relationship. We anticipate being in Afghanistan for the long term to help solidify the progress made and continue to help facilitate viable, enduring, and sustainable economic growth. growth And the United States is not the only country. More than 70 countries came together over the summer in Tokyo and pledged $16 billion in economic support for Afghanistan. As we approach transition at the end of 2014 USAID is focused on partnering with our Afghan counterparts to build up their capacity to develop, implement, and manage their own development initiatives. USAID continues to focus on and implement projects that will generate sustainable, long-term long economic growth and regional trade and foster resilient linkages between the national and sub-national national governments. We are committed, along with the Afghan government government, to social and economic development, and strengthening Afghan institutions and democratic governance. USAID has been working toward transition – recognizing the fiscal impact of military drawdown on the economy. We are focused on supporting the Afghans so they can continue the progress accomplished over the last decade. For example:
We have shifted away from erecting large infrastructure projects to training, advising and assisting the Afghans to maintain the gains achieved already in this area over the last decade.
USAID has worked with the Afghan power utility, DABS, to help them develop the capability to effectively collect revenue to cover its operation, maintenance, ma and expansion costs. DABS has increased revenues over 200% subsidy of $130 million/year ar dropped to less than $40m. $40m
Likewise, we’re assisting the Ministry of Public Works to establish an official entity with responsibility for maintaining roads ro and to collect tolls or other tariffs that can pay for repair and maintenance of public service infrastructure. It is important to note in this regard that Afghan businesses have on their own already started shifting from the dependence on military and donor contracts and started shifting to the new opportunities being presented. For instance, the building of agriculture food chains, totally within Afghanistan, thus supplying stores with Afghan produced products. The marble industry is taking off. It does not depend at all on military contracts. Likewise, the rapid development of telecommunications, ons, the internet, and the fiber fiber-optic optic cable backbone, all are testimony to the new paths of growth that carry Afghanistan through the Transition and beyond beyond. USAID is also investing in the region and focused on increasing regional economic integration. There here are huge business opportunities within the wider region to trade across borders which entrepreneurs as well as established businesses should consider. The future stability of Afghanistan requires progress with economic development to gain pace. Afghanistan lies at the heart of long established, traditional trading routes in Asia and is the gateway to the lucrative and growing markets of India and SE Asia from Eastern Europe and Central Asia. There is huge potential therefore to improve the the trade and transit revenue opportunities for Afghanistan. Whilst Afghanistan’s own trade begins to develop, transit revenues for goods crossing Afghanistan territory can make significant contributions to public sector finances and thereby to delivering services and growing the economy.
Other trading nations are already looking at the potential â€“ India, China, Turkey â€“ are actively seeking opportunities to increase trade â€“ from Central Asia to Afghanistan, from China through Central Asia to Afghanista Afghanistan and from Pakistan to Kazakhstan. USAID is working in Afghanistan, with Pakistan and with Central Asian countries to facilitate efficient border management that will facilitate trade across borders. Cutting bureaucracy at borders, cutting waiting times, having smarter lorry inspection regimes, gimes, facilitating the border management procedures and coordinating these between countries are key aspects of what is being put in place. Trade in energy is a great regional opportunity. Central Asia has reserves which can meet the needs of countries countrie to the East including Afghanistan, Pakistan and India and much effort is going into getting regional energy markets to work efficiently and to support countries to negotiate trade in energy. International Financial Institutions are playing an important role in coordinating these efforts and the US Government supports these international coordinated initiatives. An example of how this is paying off is the Hairatan Customs Depot in northern Afghanistan, a new customs facility at the border, that is facilitating greater trade with trucks and trains from Uzbekistan arrive in Afghanistan daily. Now is the time. USAID is staying to work side by side with Afghans through and well beyond the Transition Transition. We all can make a difference. Now is the time to truly explore the investment opportunities that are available in Afghanistan. From my experience erience working in Afghanistan, I do see the progress and the pace of progress have ha generated considerable momentum. The foundation of a market--oriented, private-sector ector led economy is in place. There is no question. Yes, the U.S. security role will be reduced.. But, Afghan businesses have already started to capitalize on new opportunities and have moved away from dependence on military contracts. It is a time for all of us to maintain the momentum, to continue moving forward. Let us do it together. Thank you.