Economic Overview & Business Opportunities
Priority Investment Sectors
Agriculture and agriculture-related industries:
Agriculture is a fundamental means of livelihood in Afghanistan, generating 50% of the country’s GDP and supporting 85% of its people. The climate of Afghanistan is well suited for the cultivation of horticultural crops and Afghanistan is the geographic origin of many high-end crops like raisins, pomegranates, pistachios and almonds etc…
Mining, power and water:
The development of the mining sector has clear benefits to the economy of Afghanistan and provides first-mover advantages to investors. The mining sector is crucial to the reconstruction and rehabilitation of Afghanistan. Yet they remain virtually absent of foreign investment due to historic state control of natural resources. Today, many mining resources remain under the control of failed state-owned enterprises (SOE’s). Other mining activities are conducted on a small-scale, mostly illegal, basis. Moreover, experience shows that private operators are, for the most part, more effective in the exploitation and exploration of natural resources and mining.
Construction Material is a good investment sector to improve the supply of quality products within the country. These, if up to international standards, might grow into an export industry and hence have a future that way.
While in the first years of reconstruction it was mainly foreign construction companies who attracted the major construction contracts, it is now the local construction industry which is shaping up to acquire the necessary capacity to take over from their international competitors as they offer a considerable price advantage.
Good quality construction material produced locally will hence be an important and profitable sector to drive the local construction industry.
Transport and Logistics:
Afghanistan’s large and growing market for basic logistics and transportation services, it presents a ground-floor opportunity for new providers. This opportunity is open to domestic and foreign firms of all sizes and origins. While investment in the sector is increasing, the field is virgin territory for many services. The timing is right to cultivate customers and establish a “first mover” advantage. Early investors in the sector report modest start-up costs and relatively low overheads, and even smaller operators are moving large volumes of freight.
Afghanistan is keen on establishing a low-cost, labor-intensive manufacturing sector which absorbs the many unemployed Afghans. Industries suitable for investment are likely to be those which can first supply the local market and later on become an export product. That way these industries can help significantly with off-setting Afghanistan’s trade imbalance. All the manufacturing products imported into Afghanistan are shown in a list published by the Afghan statistics office. This indicates that all these products have a market in the country itself. Out of this list the following are low-end manufacturing products and offer a ready area of investment:
Tools and tool tips, Matches, Plastic Wares, Bicycles, Plastic Carpets, Blankets, Yarns (flax, silk, wool, polyester, fiber, cotton), Footwear (leather and plastic), Clothing, Tires and tubes, Plastic wires, Toilet paper, Soaps and washing powders etc.