The economic sector in Afghanistan has experienced noticeable progress in the last five years, especially considering the condition of extreme decay and the devastation caused by over 23 years of war and isolation.
Two decades of conflict have not affected the traditional Afghan entrepreneurial spirit, also fueled by the return of the Diaspora.
Since 2002, the Gross Domestic Product of the Country has grown by over 73%, with yearly average rates above 8%, an inflation rate in constant decrease and active accounts with third Countries.
Thanks to the intervention of foreign enterprises, sectors such as mobile telephony, (four millions users and four telephone companies), airline companies (four currently) and the fragile but rapidly growing banking system, have considerably improved. The Afghan capital Kabul and the main cities of the Country are filled with signs of commercial activity.
The majestic effort made by the Afghan Government and by the international community, aimed at promoting the reconstruction and economic development of the Country, clashes however with relevant criticism, especially the hazardous situation related to security, still highly instable and precarious in a number of regions of the Country.
Other than all this, the infrastructural equipment is still insufficient and the blurry and scarcely transparent legal system in terms of regulation of commercial activities might discourage the initiative of economic subjects and foreign investments.
Afghanistan is however crossing a delicate stage of transition; the legal framework is in rapid evolution with a number of ongoing reforms that should be able to provide the potential investors with a tangible improvement of the operative conditions and thus stimulate the creation of a propitious environment for national and international entrepreneurs.
Concerning investments, in the last two years a number of reforms were issued in order to encourage foreign investments.
AISA (the Afghan Investment Support Agency, www.aisa.org.af), created in 2003, is an agency which serves as a “one stop-shop” for investors to gather necessary information and documents, and provides assistance for launching an investment venture in Afghanistan.
The Afghan Ministry of Commerce has published an Investor's Guide which offers a comprehensive overview of the legislative framework and the investment climate in the Country.
Despite its criticism and the structural weakness of its economy, and thanks to its characteristics, natural resources and strategic location, the Country has the potential to become again a bridge between Asia, the Middle East and Europe and a vital trade and transit hub for the South-Central Asia region.
Afghanistan is more and more integrated in the regional economy and is now part of the main Asiatic organizations designed to promote trade and economic cooperation. Moreover, bilateral agreements with its neighbours, together with EBA (Everything but Arms) and GSP (General System of Preferences) agreements provide preferential trading relations with the EU and regional countries.
The process of reconstruction offers substantial opportunities for foreign business to participate in the country’s progress. Hundreds of organizations – national and international, governmental and non governmental – are involved in this enormous effort. Since Afghanistan needs to completely renovate its infrastructures, and particularly all the communication links (roads, airports, etc.), a huge operation of renovation and construction of new infrastructures is underway.
The Agricultural sector, a fundamental means of livelihood in Afghanistan and the main economic activity of the Country, is a great investment opportunity, with particular reference to the preservation/processing industry.
Although demand for Afghan agricultural goods is high, Afghanistan lacks a functional packaging industry. Some 20-40% of post-harvest horticulture products goes to waste because of poor packaging. Construction materials (with particular reference to the excellent quality of marble), cashmere, silk, saffron, precious stones, mineral and natural resources represent other significant investment opportunities (a Chinese multinational recently won a major investment bid to develop and mine the Aynak copper deposits in Afghanistan, probably one of the world's largest copper mine. The Chinese firm will invest $3 billion into this project).
The Afghan Government is also seeking public and private sector capital to rehabilitate and improve its energy sector with important infrastructural projects ongoing with the support of neighbouring Countries and the International Community.
Considering the need of a continuous monitoring of the security situation in the Country, the Embassy of Italy in Kabul is promoting a range of initiatives to facilitate an investment-friendly environment for the Italian business community and to meet the Afghan requests to improve economic and commercial bilateral relations.
- Beginning dialogues for the eventual finalization of bilateral agreements between Italy and Afghanistan in order to promote and protect bilateral investments and to prevent double fiscal taxation;
- Field analysis of investment opportunities and economic complementarities between Italy and Afghanistan, with particular reference to the areas of Kabul and Herat; Promotion of B2B contacts between the business communities of our two Countries, assistance for an eventual mission to Italy of an Afghan business delegation and for the possible establishment of a bilateral business Council;
- "Business package" for Italian entrepreneurs including first hospitality inside the Embassy and assistance to facilitate direct contacts with institutional and private Afghan counterparts.
For further information please do not hesitate to contact Mr. Umberto Bernardo, the Commercial Second Secretary of the Embassy (firstname.lastname@example.org, email@example.com).
All those interested in doing business in Afghanistan are invited to contact the Embassy of Italy in Kabul in order to obtain detailed information about the economic sectors of interest and to be updated about the security situation.
Government of Afghanistan
Afghan Business Associations
International Donors and UN agencies