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Government of Afghanistan: World Bank’s $22 Million Grant Aims At Boosting Private Sector Development

July 3, 2011

KABUL, July 03, 2011 ─ Afghanistan’s Ministry of Finance and the World Bank today signed a $22 million grant from the World Bank’s International Development Association (IDA) for the Afghanistan New Market Development Project. The grant will help revitalize Afghanistan’s nascent private sector which is mainly dominated by small and medium enterprises.

“Developing the private sector is an integral part of the government’s strategy to ensure a prosperous and economically stable Afghanistan,” said HE Dr.  Omar Zakhilwal, Minister of Finance, Islamic Republic of Afghanistan“We hope the project will help boost the development of Afghanistan’s private enterprises and open new markets.”

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 in the country. The project 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.

“Despite many challenges, including access to finance, infrastructure and security, Afghanistan’s private sector has developed on many fronts,” said HE Dr. Anwarul Haq Ahady, Minister of Commerce and Industry, Islamic Republic of Afghanistan. “Today, many Afghan small and medium enterprises are producing goods and providing services for the Afghan people.  However, these enterprises need support to increase their productivity, spur innovation, expand into new markets and build a competitive market presence. We hope this project will help meet the needs of many Afghan enterprises in the four major cities.”

Nearly three decades of civil conflict have exacted a heavy toll on the operations of private sector firms in Afghanistan. Small and medium Afghan enterprises 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 World Bank has a long history of similar projects in many countries including Ecuador, Tunisia, West Bank and Gaza, South Eastern Europe, and Indonesia,” said Nicholas Krafft, World Bank Country Director for Afghanistan.  “The project is based on our successful experience in these countries and is mainly aimed at reviving and further developing private enterprises that are critical for providing jobs for Afghans and boosting the country’s economic growth.”

The project specifically aims to support approximately 750 enterprises (300 firms in Kabul, 150 firms in Jalalabad, 150 firms in Mazar-e-Sharif and 150 firms in Herat) as well as 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 run.

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