Afghan private sector and youth rise to meet economic challenges

By Janey Fugate

December 18, 2019

 

With more than 470,000 youth entering Afghanistan’s workforce each year, coupled with prolonged economic stagnation and lack of skilled labor, the demand for jobs far exceeds the country’s capacity for meaningful employment, particularly in the rural and peri-urban areas.

In the Afghan province of Herat, Creative Associates International and regional co-sponsors convened more than 270 women entrepreneurs, other business owners and youth in a series of forums to discuss the region’s economic future and its challenges.

There is tremendous entrepreneurial spirit and potential among the Afghan private sector committed to forging a better future for this country that will bring more and better jobs to the people of Afghanistan,” said Creative’s CEO and President Leland Kruvant.

Led by in-country experts, the forum’s sessions were designed to address the entrepreneurial and operational needs of women, youth and businesses through specialized workshops.

“Over last few days we’ve met intensely with the private sector, women’s groups and government officials… and what everyone is talking about is the need for job creation,” said Earl Gast, Creative’s Executive Vice President for Programs addressing a group of businessmen and women.   

A key component of the two days of meetings was the Youth Entrepreneurship Roundtable, which was led in part by two Afghan firms BrightPoint Consulting Services and Aghaez Professional Services, bringing together nearly 100 aspiring young business leaders and entrepreneurs from Herat Province to talk about to reducing unemployment by building small and medium-sized businesses through youth-led entrepreneurship.

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Young Afghan entrepreneurs participate in a business development roundtable in Herat.

With more than 68 percent of the Afghan population below the age of 25, mobilizing this demographic is critical to the country’s economic future.

“Through youth-led start-ups and social entrepreneurship, youth present one of the greatest opportunities to contribute not only to economic growth and job creation, but also to find solutions to social and development problems,” said Fahim Didar, Founder and CEO of Aghaez Professional Services and co-sponsor of the Youth Entrepreneurship Roundtable.

Attendees got a chance to express needs specific to their context, as well as ideas for improvement. They also heard from 11 exhibitors speaking on social entrepreneurship in Afghanistan.

Youth expressed the need for exposure to new ideas and initiatives for their businesses. However, they cited a lack of access to financing and business skills development, as well as insecurity, as roadblocks to their advancement.

Startup Grind Afghanistan, part of a worldwide community of startups that works with company founders, facilitated a competition allowing six teams to present business ideas addressing problems in the region. The top honor went to a group that pitched establishing centers for employment and skills development in rural areas around Herat. Designed to be a one-stop shop for resources in isolated communities, this idea touches on a key theme for rural and peri-urban areas: the need for tailored solutions to increase market connectivity and expanded technological capacity.

Similarly, other solutions discussed at the roundtable included training centers that teach youth technical skills that have high demand in the freelance marketplace. Skills like graphic design, web design, coding, mobile app development, data entry, vlogging and content marketing can be learned in a relatively short time amount of time and potentially generate a big return on investment from remote jobs placement, event exhibitors said.

Challenges to growing an export economy

 Job creation is seen as an essential part of promoting sustainable peace in Afghanistan and the broader region. Studies link socio-economic exclusion, religious ideologies, political grievances, poor governance and personal hardships to radicalization and joining violent extremist groups.

Harnessing the potential of Afghanistan’s growing number of employable youth goes hand in hand with the rest of the private sector’s needs and challenges. While youth’s increased participation in the Afghan economy represents a potential catalyst for growth, the persistent lack of jobs and lack of access to professional development services continue to hinder progress.

Representatives from the private sector stressed that market connectivity is an important issue facing local businesses, especially those led and owned by women and youth in rural and peri-urban areas. Without efficient transportation and ways to protect goods in transit, sometimes sellers can’t sell products at the desired price or get to customers at the right time. Delays at the border, insecurity, lack of proper storage facilities and insurance also cause problems for exporters.

Packaging and product development are other barriers for growth. According to businessmen and women at the forum, their packaging often doesn’t meet international market standards. These issues are compounded by government policies not conducive to businesses and bureaucratic red tape slowing down registration processes.

Among the solutions discussed were working with banks to createschemes to provide loans for new entrepreneurs, expanding incubator and business acceleration services and improving communication from government around procedures, laws and other information.

To bring more people into the formal economy, Sayed Abbas, Chairperson of the Afghanistan Exporters Club, said that the region needs to ramp up exports and strengthen value chains.

“Export promotion and competitiveness will create thousands of sustainable jobs along the value chain in rural, peri-urban and urban areas of Afghanistan,” said Abbas.

Building on success

During their time in Herat, Creative’s senior leadership also met with the Department of Women’s Affairs, the Department of Labor and Social Affairs and the governor of Herat, networked with private sector companies and toured marble, granite, saffron and soft drinks processing plants to explore how partnerships can increase job opportunities and expand local export-oriented businesses into international markets.

Creative executives noted how Herat is already well positioned to generate economic opportunities in the region. Home to 400 factories throughout the province, Herat has more marble processing facilities than anywhere else in the country and a reputation for its saffron, cashmere and silk products and carpet weaving industries. Marble, saffron and carpets were designated as priority value chains in the National Export Strategy of Afghanistan and represent an opportunity to increase connectivity with international markets. Business leaders and government officials said they need to build on these strengths and bolster value chains through buyer-led initiatives.

“Manufacturing must be a priority for all. Through manufacturing, we can create thousands of jobs,” said Shirbaz Kaminzada, the chairperson for Afghanistan Chamber of Industries and Mines.

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An Afghan man stands in Herati Cashmere & Leather Processing. Cashmere and leather are a $35 million industry in Afghanistan. Photo by Jim Huylebroek.

Creative leadership toured saffron, marble and soda bottling plants in Herat. There, they saw firsthand how the existing establishments can expand to create more job opportunities, especially for youth entering the workforce. The crux of the issue is matching skills to job requirements.

 “We have cheap labor in Afghanistan that lacks the skills that manufacturing companies need,” said Kaminzada.

Creative hopes to use its past successes in the country to bolster the private sector’s efforts. In 2018, Creative completed the Afghanistan Workforce Development Program that provided technical vocational training to over 48,000 men and women and partnered with over 3,500 private sector enterprises. As a result of the program’s focus on demand driven job training, over 28,000 mid-career and semi-professional Afghans were placed in new jobs or promoted with substantially increased wages in Herat and throughout the country.  

Addressing a group of business owners at the end of two days of events, Gast highlighted how Afghanistan is already on the path to tackling some of its toughest development challenges.

“The private sector is so much more sophisticated than it was before,” said Gast. “All of you are talking about exports, eight years ago not many people talked about exports. Your voices are much stronger than they were before.”  

 

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