Afghanistan Market Opportunities

Afghanistan Market Opportunities

Afghanistan was not affected by the covid-19 pandemic with such intensity as, for example, neighboring Iran, but its consequences were nevertheless reflected in the macroeconomic indicators for 2020. The national economy, less than half of whose income comes from foreign aid, showed a five percent decrease over the past year. In 2021, stabilization accompanied by moderate growth (1.5-4% of GDP) is expected. In addition to the effects of the pandemic, Afghanistan will face the risk of adverse natural events in the form of drought and floods this year.

In connection with the development of peace negotiations, a period of political transition is expected on the one hand, and on the other hand, the end of the international presence of the Decisive Support mission forces on September 11, 2021, to which a number of services and jobs are linked. The creation of a safe and stable environment is a fundamental and at the same time a high-risk factor for the implementation of development plans. However, the Afghan government plans to carry out a large-scale economic recovery, providing significant opportunities for Czech companies.

In 2020, the government presented an overarching recovery and development plan for the period 2021-2025, called the Afghanistan National Peace and Development Framework, within which it plans, in accordance with the so-called Sustainable Development Goals (SDGs), to implement a peaceful arrangement of political conditions, build a state and the market. Planned inclusion in regional investment and infrastructure cooperation incl. supply chains, the government aims to make Afghanistan a trade-investment hub of regional importance.

In the economic field, a program to support the private sector “Private Sector Development National Priority Program” was approved for the period 2018-2023, in which the government aims to increase support for the business environment and investments. The private sector is not yet sufficiently developed in Afghanistan, so either working directly with it or engaging in government incentives represents potential in a number of sectors. These include in particular the construction of the transport network and infrastructure (road and railway routes, airports and logistics centers, public transport), energy (photovoltaics, transmission systems, power plants) and waste treatment.

With regard to the world’s significant reserves of Afghanistan’s mineral wealth, Afghan companies and state institutions demand the supply of engineering equipment and technological units of the mining and metallurgical industry. The focus of economic recovery and investment opportunities is concentrated in the metropolis: the so-called Capital Region (the city and province of Kabul, adjacent districts of the provinces of Lógar, Vardak, Kapísá and Parván).

Post-COVID-19 opportunities

Transport industry and infrastructure

Due to its central location in the region, Afghanistan attaches due importance to the completion of the railway and highway network, therefore there is a significant demand in the transport sector for partners with relevant know-how and technological capacities. Due to the inaccessible terrain in a large part of the country, air transport is also gaining importance, for the efficient operation of which the government plans to reconstruct airports and modernize their technological equipment, including the training of qualified air traffic controllers.

This segment is important for the state not only because of the non-negligible income resulting from the number of air connections handled, but also because of the reduction in the ability to control the airspace, which until now was primarily provided by members of the Decisive Support mission.

The Office of the Mayor of Kabul and the Office of Regional Development of the Metropolitan Area (CRIDA) are interested in supplying Czech trolleybuses (electric buses) to Kabul, where Czechoslovak trolleybuses were successfully operated until the 1990s. In recent years, studies on the restoration of trolleybus traffic have been handed over to Afghanistan, but the contract has not yet been implemented.

According to allcountrylist, CRIDA also plans to transform Kabul and adjacent districts into a modern metropolitan agglomeration in the next five years, including the construction of four logistics-industrial centers (BAEZ – Barikab, SEZ – Sarob, MSEZ – Maidan Shahr, MAEZ – Muhammad Agha), interconnected by highways networks and located in the vicinity of the capital. The total value of the projects for the given period is USD 160 million.

Mining, mining and oil industry

Exploitation of Afghanistan’s diverse mineral wealth is currently limited by a number of factors: underdeveloped infrastructure, insufficient mining technology and state regulation. However, the gradual relaxation of mining limits will bring a sharp increase in the extractable volume of raw materials, which will place high demands on the supply of quality components for the service and replacement of mining technological units, and on the other hand for transport and further industrial processing of the mined material.

In Afghanistan, there are significant deposits of high-quality talc, a rock with versatile uses: including in construction, healthcare and modern technologies. The main export market is China, but the capacity of mining companies can meet much more demand. Talc can be exported both in its raw state (boulders) and partially processed (ground). The high quality of Afghan talc was confirmed by an independent expert analysis of the Institute of Geonics of the Academy of Sciences of the Czech Republic.

Energy industry

Afghanistan is energy insecure and imports most of its electricity, placing significant demands on the high-voltage transmission grid, which becomes a target for sabotage and is therefore unable to supply electricity to all the country’s residences. As a result of these complications, there are planned shutdowns of deliveries to cities and their districts so that other cities can be supplied.

Completing the transmission system and achieving energy self-sufficiency represent a long-term challenge for the Afghan government. Considerable expectations are placed on renewable sources, i.e. hydro and solar power plants. Gas power plants are also a sought-after alternative to outdated heat sources or cross-border transport of electricity from neighboring states.

Water management and waste industry

A significant business opportunity is represented by “green” technologies for the processing and recycling of municipal waste and its energy use. In Kabul and larger cities, especially in the winter, air pollution with emissions from local heating plants, where municipal waste is burned, reaches high values. Waste is not stored in a controlled manner and there is no centralized collection system.

The local administration is aware of this problem and is trying to find a systemic solution and introduce a long-term sustainable and ecological way of processing and recycling waste, which is still lacking in Afghanistan. The know-how and financial assistance of non-governmental non-profit organizations, such as People in Need, op s., successfully contribute to improving the situation in the given sector through the construction of plastic purchase and processing facilities, which are then handed over to Afghan operators.

Afghanistan Market Opportunities