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Afghanistan's private sector struggles with overwhelming corruption
Agence France Presse - November 29, 2009
Lynne O'Donnell, Kabul – Afghanistan's tiny business community is hardly brimming with optimism as the government struggles to deal with levels of graft that make the country one of the most corrupt in the world.
"Right now, I'm not optimistic," said Mohammad Qurban Haqjo, an independent trader educated partly in Germany who heads the country's 35,000-member Chamber of Commerce and Industries.
"But I am hopeful," said the 32-year-old, sitting in his modern office on the northeastern edge of Kabul, arguing the government had little choice but to reform or face collapse.
President Hamid Karzai, who began a second five-year term on November 19, promised to end the corruption that infects every level of his government and all aspects of Afghan life.
Corruption – from traffic police to officials involved in the three-billion-dollar-a-year opium industry – is so rife that Transparency International ranks Afghanistan as second only to Somalia on its table of most graft-ridden countries.
"Corruption directly affects the private sector, it is costly. You want a licence, you have to pay; you want to pay your tax, it will cost you; you want to pay your electricity bill, you pay a bribe even to do that," Haqjo said.
He said corruption and insecurity, as the country battles a Taliban-led insurgency, were the major barriers to private-sector growth along with a lack of rule of law, access to capital and understanding of market economics.
The government is plagued by central planners who mistrust the market, a hangover from the influence of the former Soviet Union, Haqjo said.
Ahead of the Eid al-Adha festival, the state-owned airline was once again granted the monopoly to transport Afghanistan's quota of 30,000 pilgrims to Mecca in Saudi Arabia, he noted."Either they [ministers and officials] don't understand the market properly, or can't implement it properly. Old, out-dated thinking is still in place, acting as a barrier to developing a private economy.
"We see government interfering in the market, becoming a competitor to private enterprise when it should deal with security and corruption, and be a regulator and policy maker."
The August election – marred by massive fraud, most of it in Karzai's favor – plunged Afghanistan into months of political paralysis that froze much economic activity.
"In the past six months investment has fallen, imports have fallen, exports have fallen. Government revenues have fallen each month by one billion Afghanis [$20 million] during and after the election," Haqjo said.
Only three percent of infrastructure projects were awarded in the first quarter beginning March 21 and "the second quarter is even worse because it was during the election", he said. "Right now there is chaos in the ministries, everyone is waiting to hear their destiny – will they still have their jobs when the new cabinet is announced.
"This has had a huge impact. "Many Afghans decided to go abroad, put their children in overseas schools, not come back because of the security and investment situation, so they are earning here and spending outside.
"This is bad for the economy of Afghanistan. When you ask they why they are not coming back, they say security; kidnapping goes on in Kabul, Mazar, Herat, Kandahar; corruption; promises to the private sector have not been fulfilled.
"Eight years after the Taliban were overthrown, the scale of the challenge is immense.
"The government of Afghanistan cannot operate for one week without international help and support. No one will invest if the US says it will go," Haqjo said.
When there is a functioning state able to enforce the rule of law and provide basic services, he said, "then we can become optimistic".
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