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Ebb and flow of the (in)security market

Afghanistan Today writers
Conflict and exploding bombs will harm the economy of any city, either by causing direct damage or through their wider impact on trade and services. But for security equipment companies working the market in Kabul,…
10.10.2011  |  Kabul
Concertina wire, or razor wire, is a must for any secured object or installation. (Photo: ISAF Media)
Concertina wire, or razor wire, is a must for any secured object or installation. (Photo: ISAF Media)

That war means big business is a lamentable fact of life. In Kabul, a vast security equipment sector is consequently thriving as the armed conflict marks its tenth year, while other areas of the market are feeling the pinch.

“Increasing insecurity and instability means the price of our equipment goes up, as does the number of customers,” said Qais Ayoubi, sales manager at the Kabul-based company Grand Security Suppliers, which like most in the sector has a broad list of products: “We deal in everything from small security devices like cameras to armoured vehicles.”

Add to these items others that are readily sought these days, like razor wire, reinforced doors, blast walls and blast-proof glass, alarm systems, metal detectors, body armour, uniforms and walkie-talkies, to name a few, and you have a billion-dollar industry.

And as in any line of goods, security items are varyingly priced for a wide spending bracket.

In Kabul, a passenger vehicle that has been specially armoured to withstand gunfire and blasts can cost between 65,000 and 120,000 US dollars, and security cameras from 700 to 6,000 dollars.

But contrary to possible expectations, each successive attack - and there have been several major ones in the Afghan capital in recent weeks, does not necessarily precipitate a deluge of orders.

Business is increasing steadily, say the firms. But it also shows a peculiar elasticity, a general ebb and flow of orders that makes turnover hard to predict.

“Our revenue figures also depend on customer needs of course,” Ayoubi added. “We can average at a turnover of 10,000 dollars a month for a while, and then this can spike to a million dollars or more. [So] it’s not always the case that security threats increase our sales. Usually sales are done through contracts with companies and organizations."

And this is also not an industry or a clientele that tends to panic. Despite upheavals caused by such incidents as the September attack on the US Embassy and NATO headquarters in Kabul, there are not sudden queues for particular items, and especially not physically larger security solutions.       

"The more the security threats increase, the more the clients for these items will leave the country."

A main defence against bomb attacks is concrete barriers, or T-wall, named after it’s shape. Used extensively in Afghanistan and Iraq, these three-, twelve- or even twenty-foot sections are craned into lines to make a solid and virtually impregnable perimeter.

"Concrete barriers are things that we cannot have a warehouse full of, so we always supply to demand,” said Kazeem Pervez of the Green Concrete Company.

But under long-term contracts, business is ticking over steadily, he added: “Our sales depend on our production, which according to our contracts brings in revenues of 50,000 to 100,000 US dollars a month, or around a million dollars a year.”

Too much insecurity is bad for your security business

But continuing insecurity can reach a tipping point where it would then erode the market for the companies, points out Sayed Masood, an economics lecturer at Kabul University.

“The rise in prices of security equipment is for a short period of time, because the more the security threats increase, the more the clients for these items will also leave the country. Consequently there will be less potential customers,” Masood said.

Knock-on effects

A harbinger for this outcome is perhaps the fluctuating staff presence in large organizations and companies.

Police station or army barracks? No, Kabul guest house entrance. (Photo: Rohullah Rahimi)

Many of these subject their staff to ‘lockdown’, restricting them to their accommodation, during periods of crisis like the aftermath of an attack in the capital or other cities and regions. Some even send staff out of the country altogether until conditions improve.

Other knock-on effects of security alerts are expensive 'no-shows' by larger organizations during this time. This can mean cancelled or postponed meetings and conferences, for which reservations must still be paid, regardless of the cause of the absence.

“It’s a risk our organization has to accept,” said Mir Ahmad Farhad,  an employee at UNICEF, which has stringent precautions for staff safety during security emergencies.

But if the large hotels and hosting venues expect full payment once reservations are made, the effects of security alerts is felt more acutely further down the chain of operation, like at Kabul’s many guest houses. 

Naweed Farhad, the owner of one guest house with 50 bedrooms, said each incident or scare severely dents his business: "We have relationships with international organizations and accommodate foreign guests as well. And each time there is a critical moment in the security situations we lose up to 25 per cent of our guests.”

Extrapolate these tendencies and you must contemplate the broader contraction of the market, regardless of the solid revenues of the security firms, notes the economist Masood.

“As insecurity increases, the impact causes decreasing investments, closure of business centres and NGO’s, which all amounts to a big threat to the economy of any country.”

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This piece was researched and assembled by Afghanistan Today writers Mir Sediq Zaliq, Rahmat Alizada, Massoud Ahmadi and Rohullah Rahimi as a timed story writing exercise during Afghanistan Today's September training workshop in Kabul.