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When the market dries up

As the number of foreign troops starts to reduce, tapering towards the 2014 scheduled withdrawal of the remaining combat forces, Afghan manufacturing and logistic companies are growing anxious about this looming…
10.09.2011  |  Kabul
Thirsty work: US Marines unloading water supplies in Helmand. (Photo: Allen)
Thirsty work: US Marines unloading water supplies in Helmand. (Photo: Allen)

Whether it's for food, fuel or souvenir rugs, steady demand that sustained many Afghan businesses over a decade of cooperation with the international presence is suddenly looking extremely precarious.

While many people still live day-to-day in a country used to turmoil and uncertainty, managers are now anxiously reviewing their production and distribution, wondering how to fill the gap as foreign forces are withdrawn over the next three years.

“More than 30 per cent of our clients are foreigners, if these troops leave Afghanistan it will hit our business hard,” said Mohammad Amin Qanawezian, sales manager for the Maihan Mineral Water brand of bottled water produced by Super Cola.

This is just direct sales. The company produces 500,000 half-litre bottles of mineral water daily, much of which is purchased by units from local bazaars where there was nothing like this in the Taliban era. 

A decade of dependency

The presence of the international forces since 2001 brought many working opportunities. Today, the incomes of tens of thousands of Afghan families are in some way related to the presence of these forces, which currently number around 140,000 troops, as well as to foreign aid channels.

According to a US Senate Foreign Relations Committee June report that cited the World Bank, “an estimated 97 per cent of Afghanistan’s GDP [of 16.3 billion dollars]  is derived from spending related to the international military and donor community presence.” 

Since 2001, around fifty logistics companies sprang into existence to service the military machine, each of them employing on average around 400 people. More than twenty mineral water companies also appeared to cater for a giant collective thirst that appeared in these arid climes.

Nine hundred people work for Super Cola, which produces a range of other drinks as well as water. "We have offices in every province of Afghanistan, and all the international forces as well as many Afghans use our products,” said Qanawezian.

Fuel for the machine

The incomes of thousands of Afghan families will suffer as contracts reduce with troop numbers. Here, truckers rest at a US base in Paktika Province after delivering supplies. (Photo: Allen)

Logistics companies are also under pressure. While many in northern and western Afghanistan are busy with extra work as more NATO supplies get routed through Uzbekistan and Turkmenistan, bosses are number crunching already.

“Part of our work is the transportation of goods for domestic companies but our main job is transporting fuel for NATO forces,” said Mirwais Afghanzai, director of the Herat-based Asia Yousuf Logistics Company.

Founded in 2009, his company’s fleet of tankers moves one thousand loads of NATO fuel a month from the Torghondi border crossing from Turkmenistan to Herat and Kandahar. Loads are delivered to the main US logistics company Supreme, which sub-contracts Afghan firms to deliver locally.

"The departure of the international forces from the country will have a serious impact on our work," Afghanzai said. "We transport a thousand tankers a month and may be reduced to three to four hundred tankers once these forces leave.”

Double-edged policy outcome

To minimise costs but also to help the economy, the International Security Assistance Force (ISAF) has a policy of contracting locally where possible. 

"We use the goods of Afghan manufacturing companies, and in food especially we try to meet our needs using local firms," said Brigadier General Carsten Jacobson, ISAF spokesman in Kabul.  

But while this has sustained many companies over the years, it has also created dependency as many of them failed to diversify in their business development.

"An estimated 97 per cent of Afghanistan’s GDP is derived from spending related to the international military and donor community presence." US Senate report

The blame is partly seen to lie with the direction of the international involvement in Afghanistan. An August report by the Brussels-based International Crisis Group criticized that the military effort had taken priority over governance and financial development, leaving the country dependent on foreign aid for 90 per cent of its spending.

The US Senate report, meanwhile, warned that Afghanistan could be left in the midst of a "severe economic depression" after the 2014 pullout.

Now it's suddenly down to each company to rethink its business model, and quickly. In a bid to compensate for the anticipated drop in water sales, Super Cola, for example, plans to boost exports of juice and other beverages to neighbouring Pakistan, Tajikistan and Turkmenistan.

Small traders are worried too

As well as companies involved in multi-million dollar operations, small traders will also be hit as the troops ship out. Many craftsmen make their living selling trinkets, carpets and audio and video recordings at special bazaar’s on the military bases.

Qais, a shopkeeper on Kabul’s famous Chicken Street tourist drag, sells at bases twice a month like many of his fellow traders. “Shopkeepers bring the favorite goods of the international forces into their camps for sale. Because the soldiers have no time to go the [city] bazaars to shop, they can get what they want from shopkeepers on their own bases.

“Most foreigners buy Afghan handicrafts like rugs, rings set with gems, women’s dresses, and take them home to their families as gifts," said Qais. "It’s a good opportunity for artists and shopkeepers, but we can't rely on this alone now.”

Professional class is already jostling for jobs

From tankers of fuel for military vehicles to barrows with ice to cool soldiers' soda - the local economy has grown organically around the foreign presence, often with little other development. (Photo: Allen)

As well as the miilitary forces, hundreds of international institutions and NGOs also set up since 2001. Many of these will also scale down or terminate their work as the troops go, leaving a mass of experienced local employees out of work.

Mir Hosain, 28, worked in national and international development organizations for several years before project downsizing meant he lost his job training rural school teachers. Having previously earned 700 dollars a month, growing competition on the employment market means he is also trying for jobs in state organizations, where the salary is a third of the amount. 

"As the international forces start leaving the Afghanistan; some organizations are gradually bringing their work to an end," Hosain said. "Many young people who earned high salaries in international organizations are looking for simple jobs now, and they are queuing up at the doors of the ministries. But vacancies are limited, and the job deficit will only continue to grow."