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Potential game-changers of Afghanistan’s economy

By Nargis Nehan

February 28, 2020   |   0 comments

Women continue to be the most marginalized segment of Afghanistan’s male-dominated society. Most of the restrictions that control women are traditional and have no religious basis, despite claims to the contrary. The 40 years of conflict has further added to the deteriorated condition of women, especially during Taliban period, when women had no social mobility.

Since the intervention of the international community, a significant amount of assistance has been earmarked for women’s empowerment, from governance to entrepreneurship. Besides financial support to specific programs, Afghan women have also enjoyed relatively greater political and diplomatic support. Together, with the hard work and struggle of Afghan women, their lives have significantly improved and their position in society has been transformed.

Literacy among adolescent girls has increased literally from none 18 years ago to 37 percent—an amazing leap in less than a generation. Maternal mortality has decreased from 1,600 per 100,000 to 400 per 100,000. Women have significant roles in all three branches of government, including at senior levels such as deputy minister, director general, and even minister. This includes the so-called “hard” ministries, such as Labors and Social Affairs and Mining.

Thousands of women are emerging as politicians, activists and business owners. Today, women’s presence in the public, private and social sectors and their contribution in development and economic growth is undeniable.

Despite these impressive gains for women, Afghanistan continues to be a male-dominated society where more than 50 percent of the population lives in poverty.

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Hasina Mahboubi Manufacturing Co. in Balkh province has 30 women, many of them widows, who learn skills that allow them to supplement or support their families. Photos by Jim Huylebroek.

Since the beginning of reconstruction in 2002, international donors worked with the Afghan government on development activities. Starting around 2014, the government and aid community ramped up their initiatives to fight corruption, generate more tax revenue and transition Afghanistan from donor dependency to self-reliance.

The Afghan government has set a 2024 target to replace international support for its operational budget with domestic revenue. That is an aggressive goal that will be difficult to achieve—but setting high targets will help to move the country forward.

A key component to the success of this aggressive goal: women. Their participation in every layer of the formal economy is vital not only for the advancement of women themselves, but also for rapid economic growth given the need for a more skilled and productive labor force.

As is already known from experiences in Southeast Asia, Africa and Latin America, bringing women into the formal economy increases productivity, expands the use of modern technology, diversifies the labor force and helps to attract new industry such as light manufacturing. By increasing disposable household income, a country improves the health and education of their next generation workforce.

In Afghanistan and elsewhere, those who have the financial and political resources have a voice and make the decisions. While women’s contribution is more than men’s if we count their cashless work, the formal economy is not accounting for such activities unfortunately.

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Marghuba Safi, founder an CEO of a company called Peshraft Zanan, pours natural soap into molds. Safi’s company employs 20 women to produce soap, and she has supported many other over the years to start their own businesses.

Therefore, it is important that women understand the challenges and opportunities of Afghanistan emerging economy, build their capacity, expand their networks and focus on formalization, expansion and advancement of their businesses. Already several good initiatives have been taken for the economic empowerment of women. The adoption of the National Women’s Economic Empowerment Program by the government, the establishment of the Afghan Women Chamber of Commerce and Industries by businesswomen and a variety of economic empowerment programs funded by donors such as the U.S. Agency for International Development are all making contributions to this goal. Creative has organized a number of activities in Herat, Kabul and Washington, D.C, to focus on these issues.

Although the formal economy has historically been male-dominated, what we see today is the fact that these initiatives have created the space for women to initiate different economic activities and, through small and medium scale businesses, created jobs for thousands of other women..

However, it has not been an easy journey for women. When you talk to each businesswoman, they are still facing a lot of problems and they still feel marginalized when they compare their challenges with those of their male fellows. At this important juncture of time, it is important that all initiatives for economic empowerment of women be reviewed and coming initiatives are designed and implemented to remove the barriers that businesswomen are facing.

They will need targeted support to take their businesses to another level. Following are some of the key recommendations:  

Legal framework is key to any effective formal economy

It is important to improve the legal environment to remove the gender-based legal barriers and gaps that are restricting women’s mobility. While the Afghanistan constitution treats men and women as equals, the reality is different. In order to enable women to compete in free market where men have been active for centuries, it is important that we have some incentivized provisions within the regulations to support them.

The best example is the procurement law that is giving 5-point preference to bidding companies owned by women. We should have such provisions in all laws that support the growth of women-owned businesses. With appropriate safeguards to prevent fraud, for example, we can give two years tax holiday for newly established companies owned by women.

Produce gender-segregated data from all institutions which will help us compare the data and monitor the changes

For example, the National Procurement Authority is reporting on regular basis the number of contracts that are awarded. What is missing from this important data is the percentage of contracts awarded to women-owned companies. The data will not be satisfactory in the beginning but will be a good reminder to all that women meaningful inclusion in formal economy needs more attention and support.

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Nargis Nehan

Monitoring and verification of women-owned business licenses by the Afghan Women Chamber of Commerce

Unfortunately, many businesses are registered only using women’s names and pictures to get contracts. The Chamber should be given a larger role to the support the monitoring and verification of information use in public contracting.

Make credit access easier to access

The Central Bank should issue a circular to all private banks that require discounted loans to women-owned businesses. While banks can have their own loan policies and procedures, the Central Bank should develop specific benchmarks for banks that have considered special provisions in their loans for women-owned companies. The government can also support this process of encouraging banks to provide credit to women by ensuring that women have easy access to all of their legal documents such as birth certificates, e-tazkeeras, divorce certificates and property titles in their own name.

Lastly, while donors’ economic empowerment programs have been providing financial packages for women running small to medium enterprises, financial packages for large scale enterprises are all going to male-owned companies

It is important that donor programs, while continuing to support small to medium scale businesses of women, also have a special window which encourages women to pool resources and build partnerships for starting large scale business and receive financial packages.  Coupling credit access with low-cost, credible business management advice would go a long way towards leveling the playing field in this area and thereby increasing the overall productivity of the Afghan economy.

Nargis Nehan, named the Iron Woman of Kabul by Bloomberg for her reform and women rights related activities, is the former Minister of Mines and Petroleum, the first woman to hold this position in Afghanistan. Nehan has a master’s in business administration.  She is also the founder of the NGO EQUALITY for Peace and Democracy.

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