WASHINGTON, May 3, 2011 ─ The World Bank today approved a $22 million IDA grant to help revitalize Afghanistan’s private sector. The Afghanistan New Market Development Project will pilot a business development program in the four urban centers of Kabul, Mazar-e-Sharif, Jalalabad, and Herat, which are the major hubs of economic activity. It will help enterprises in these centers to gain market knowledge, improve the quality of their products, boost their productive capacity, acquire new technologies, and develop and implement business plans to increase their presence in both the domestic and export markets.
The Afghanistan private sector is today dominated by small and medium enterprises (SMEs) that are mainly engaged in the agro-processing of dried fruits and nuts as well as in traditional artisanry including textiles, handicrafts, and carpet weaving.
“Afghans have traditionally been a very entrepreneurial people who have long traded their goods with countries of the region and the world,” said Nicholas Krafft, World Bank Country Director for Afghanistan. “The project aims to revive and further develop these once-vibrant private enterprises that are critical for providing jobs for the people and boosting the country’s economic growth.”
Nearly three decades of civil conflict have exacted a heavy toll on the operations of private sector firms in Afghanistan. Afghan SMEs lost their competitiveness as well as their market share for the country’s traditional exports and were unable to develop new products and markets. According to a 2008 World Bank survey of over 1,000 Afghan firms, these enterprises desire and require business development services to learn about new market opportunities, improve the quality of their products in compliance with international standards, build their competitiveness, and recapture their lost market presence.
The Afghanistan New Market Development Project specially aims to support approximately 750 enterprises and 10 business associations through a cost sharing facility to access business development services. The project is expected to create around 1,500 jobs in the short term with much higher job growth expected over the long term.
The project will be implemented by Afghanistan’s Ministry of Commerce and Industries (MoCI) over a period of four years. A Project Steering Committee chaired by MoCI and composed of representatives of the Afghanistan Investment Support Agency (AISA) and the Afghanistan Chamber of Commerce and Industry (ACCI) will provide project oversight and set the strategic direction of the project.