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Transcript of GLOBAL COUNTRY REPORT - Gujarat Technological …gtu.ac.in/ABP/GCSR PDF 2013/811 Afghanistan...
1
GLOBAL COUNTRY
REPORT ON
AFGHANISTAN
BY
SMT. SARALABEN
VASANTBHAI MALAVIYA
SCHOOL OF MANAGEMENT
GONDAL ROAD, RAJKOT
COLLEGE CODE: 811
2
CONTENTS
SR.
NO. PARTICULAR
PAGE
NO.
PART-I ECONOMICS OVERVIEW OF THE SELECTED COUNTRY
1 ECONOMIC OVERVIEW OF THE AFGHANISTAN 6
2 OVERVIEW OF THE INDUSTRIES TRADE AND COMMERCE 11
3 OVERVIEW DIFFERENT ECONOMIC SECTOR OF AFGHANISTAN 15
4 OVERVIEW OF BUSINESS AND TRADE AT INTERNATIONAL LEVEL 22
5 PESTEL ANALYSIS OF THE OVERVIEW OF THE MAJOR INDUSTRY 27
PART- II DIFFERENT SECTOR IN AFGHANISTAN
2 MINING SECTOR 33-52
3 AGRICULTURE AND LIVE STOCK
53-67
4 STEEL SECTOR
68-74
5 TEXTILE SECTORE 75-90
6 ENERGY SECTORE 90-101
7 BIBLIOGRAPHY
101-
103
5
DEMOGRAPHICS OF AFGHANISTAN
Population: 30,419,928 (July 2012 est.)
0-14 years: 42.3% (male 6,464,070/female
6,149,468)
Age structure
15-64 years: 55.3% (male 8,460,486/female
8,031,968)
65 years and over: 2.4% (male 349,349/female
380,051) (2011 est.)
Growth rate: 2.22% (2011 est.)
Birth rate: 39.3 births/1,000 population (2011 est.)
Death rate: 14.59 deaths/1,000 population (July 2011 est.)
Total Population: 49.72 years
Life expectancy: Male: 48.45 years
Female: 51.05 years (2011 est.)
Fertility rate: 5.39 children born/woman (2011 est.)
Total: 121.63 deaths/1,000 live births
Infant mortality rate:
male: 129.51 deaths/1,000 live births
female: 113.36 deaths/1,000 live births (2011
est.)
Age structure:
0-14 years: 42.3% (male 6,464,070/female 6,149,468)
15-64 years: 55.3% (male 8,460,486/female 8,031,968)
65-over: 2.4% (male 349,349/female 380,051) (2011 est.)
Sex ratio:
At birth: 1.05 male(s)/female
Under 15: 1.03 male(s)/female
15-64 years: 1.04 male(s)/female
65-over: 0.87 male(s)/female
Nationality:
Nationality:
noun: Afghan(s)
adjective: Afghan
Major ethnic:
Pashtun 42%, Tajik 27%, Hazara 9%, Uzbek 9%,
Aimak 4%, Turkmen 3%, Baloch 2%, other 4%
Language:
Official:
Afghan Persian or Dari (official) 50%,
Pashto (official) 35%,
Turkic languages (primarily Uzbek and Turkmen)
Spoken:
11%,
30 minor languages (primarily Balochi and Pashai)
4%, much bilingualism
6
Economic Overview Of the Country
Afghanistan is one of the world's poorest countries. Many years of war and political
instability have left the country in ruins, and dependent on foreign aid. The main source
of income in the country is agriculture, and during its good years, Afghanistan produces
enough food and food products to provide for the people, as well as to create a surplus
for export. The major food crops produced are: corn, rice, barley, wheat, vegetables,
fruits and nuts. In Afghanistan, industry is also based on agriculture, and pastoral raw
materials. The major industrial crops are: cotton, tobacco, madder, castor beans, and
sugar beets. Sheep farming is also extremely valuable. The major sheep product
exports are wool, and highly prized Karakul skins. Afghanistan is a land that is rich in
natural resources. There are numerous mineral and precious stone deposits, as well as
natural gas and yet untapped petroleum stores. Some of these resources have been
exploited, while others have remained relatively unexploited.
One of the poorest countries in the world, Afghanistan is the lowest-ranking country
outside Africa on the UN's human development index.
According to the World Bank, economic growth will be about 8.5 per cent in 2010-11
and GDP per capita will reach $609. Much of this is aid driven.
Unemployment is estimated at 40 per cent, and 42 per cent of Afghanistan's population
lives below the poverty line.
7
The government's budget for the current year is $4.8 billion, with almost two-thirds going
toward military and security spending.
By the end of 2009, the international community had pledged over $62 billion in aid
since the fall of the Taliban but most of this has not actually been delivered. Afghanistan
is the No. 1 global aid recipient, receiving about $6.2 billion in aid in 2009, according to
Global Humanitarian Assistance.
Afghanistan's illicit opium trade, which primarily benefits the Taliban and local warlords,
had an estimated value of $2.8 billion in 2009, equivalent to one-quarter of the GDP.
8
HISTORY
Afghanistan, often called the crossroads of Central Asia, has had a turbulent history. In
328 BC, Alexander the Great entered the territory of present-day Afghanistan, then part
of the Persian Empire, and established a Hellenistic state in Bactria (present-day
Balkh). Invasions by the Scythians, White Huns, and Turks followed in succeeding
centuries. In AD 642, Arabs invaded the entire region and introduced Islam.
Arab rule gave way to the Persians, who controlled the area until conquered by the
Turkic Ghaznavids in 998. Following Mahmud's short-lived dynasty, various princes
attempted to rule sections of the country until the destructive Mongol invasion of 1219.
Following Genghis Khan's death in 1227, a succession of petty chiefs and princes
struggled for supremacy until late in the 14th century, when one of his descendants,
Tamerlane, incorporated Afghanistan into his own vast Asian empire.
In 1747, Ahmad Shah Durrani, the founder of what is known today as Afghanistan,
established his rule. A Pashtun, Durrani was elected king by a tribal council after the
assassination of the Persian ruler Nadir Shah at Khabushan in the same year.
Throughout his reign, Durrani consolidated chieftainships, petty principalities, and
fragmented provinces into one country. His rule extended from Mashad in the west to
Kashmir and Delhi in the east, and from the Amu Darya (Oxus) River in the north to the
ArabianSeainthesouth.
GDP (2010est., purchasing power parity): $27.36 billion.
GDP growth (2010-2011): 8.2%.
GDP per capita (2009 est.): $900.
9
Natural resources: Natural gas, oil, coal, petroleum, copper, chromite, talc,
barites, sulfur, lead, zinc, iron ore, salt, precious and semiprecious stones.
Agriculture (estimated 31.6% of GDP): Products--wheat, opium, sheepskins, lambskins,
corn, barley, rice, cotton, fruit, nuts, karakul pelts, wool, and mutton.
Industry (estimated 26.3% of GDP): Types--small-scale production of textiles, soap,
furniture, shoes, fertilizer, cement; hand-woven carpets; natural gas, coal, and copper.
Services (estimated 42.1% of GDP): Transport, retail, and
telecommunications.
Trade (2010-2011): Exports--$252 million (does not include opium): fruits and nuts,
hand-woven carpets, wool, cotton, hides and pelts, precious and semiprecious gems.
Major markets--Central Asian republics, United States, Russia, Pakistan, India.
Imports--$2.9 billion: food, petroleum products, textiles, machinery, and consumer
goods. Major suppliers--Central Asian republics, Pakistan, China, India. Currency: The
currency is the afghani, which was reintroduced as Afghanistan's new currency in
January 2003. As of November 21, 2011, $1 U.S. equaled approximately 48.28
Afghanis.
10
Economy
Since 2002, Afghanistan is in transition from a centrally-planned and heavily regulated
Economy towards an open and free economy based on the market system. The
Economy encountered a structural change over the last decade, when the political shift
Occurred after the fall of Taliban in 2001 and with the adoption of the new constitution in
2004. The new constitution acknowledged ‘market economy’ as the economic system
and guaranteed the promotion and protection of private investment (Article 10 of the
Constitution). The economy has since been highly liberalized and the government has
focused on a private sector-led growth.
The economy has grown at a remarkable pace since 2003; average growth rate over
the period 2003-2011 has been 11.2 percent. Only few countries in the region have
experienced a growth rate above 10 percent in the last decade. For Afghanistan, this is
a remarkable achievement despite the fact that serious security challenges exist in the
country. Real GDP growth is estimated at 5.7 percent in 2011/12 and is projected to
increase to 7.1 percent in 2012/13. Income per capita is estimated by the World Bank at
US $501, which puts Afghanistan in the 175th position among 190 countries in the
world.
Inflation has been on average above 10 percent in the last nine years; the average
inflation rate for the period 2003-2011 is 11.3 percent. However, such a relatively high
inflation rate does not seem to have been a drag on economic growth. Period-average
inflation for the year 1390 (2011/12) has been 10.6 percent, whilst it is forecast to
remain in single digits in 2012/13.
11
Overview of Industries Trade and Commerce
Trade and Industry:
Afghanistan is endowed with natural resources, including extensive deposits of natural
gas, petroleum, coal, copper, silver, gold, cobalt, chromites, talc, barites, sulphur, lead,
zinc, iron ore, salt, rare earth elements, and precious and semiprecious stones.
Unfortunately, ongoing instability in certain areas of the country, remote and rugged
terrain, and an inadequate infrastructure and transportation network have made mining
these resources difficult, and there have been few serious attempts to further explore or
exploit them. The first significant investment in the mining sector is expected to
commence soon, with the development of the Aynak copper deposit in east-central
Afghanistan. This project tender, awarded to a Chinese firm and valued at over $2.5
billion, is the largest international investment in Afghanistan to date. The Ministry of
Mines also plans to move forward with additional tenders in 2012.
The most important resource has been natural gas, first tapped in 1967. At their peak
during the 1980s, natural gas sales accounted for $300 million a year in export
revenues (56% of the total). Ninety percent of these exports went to the Soviet Union to
pay for imports and debts. However, during the withdrawal of Soviet troops in 1989,
Afghanistan's natural gas fields were capped to prevent sabotage by the mujahideen.
Restoration of gas production has been hampered by internal strife and the disruption of
traditional trading relationships following the collapse of the Soviet Union. In addition,
efforts are underway to create Reconstruction Opportunity Zones (ROZs). ROZs
stimulate badly needed jobs in underdeveloped areas where extremists lure fighting-age
young men into illicit and destabilizing activities. ROZs encourage investment by
allowing duty-free access to the U.S. for certain goods produced in Afghanistan.
12
Trade:
Domestic trade: Despite continued conflict and blockades of supply routes in some
parts of the country, domestic trade continues throughout the country. The closure of
the Salang Tunnel has created many difficulties for domestic merchants, as they are no
longer able to bring the agricultural products of the north to Kabul and to other parts of
the country via Kabul. Even in blockaded areas, merchandise continues to move, albeit
in smaller quantities and with more difficulties.
Cross-border trade: Cross-border trade in domestic goods and foreign commodities
has increased between Afghanistan, Pakistan and Turkmenistan over the past several
years. According to a recent newspaper report, there has been an 11 percent increase
in the volume of trade between Afghanistan and Turkmenistan during the last year. In
September 1998, the Taliban authorities signed an agreement with the Government of
Turkmenistan on the import of petrol, diesel and jet fuel. The first consignment of the
fuel reportedly arrived in mid-December via Torghundi. This has, to some extent,
reduced Afghanistan’s dependency on fuel imports from Iran. In December, the Taliban
Government signed another agreement with Turkmenistan for the import of 600 tones of
liquefied natural gas.
With souring relations between the Taliban and Iran, Uzbekistan and Tajikistan, the
border points with these countries have been closed and trade activities have come to a
halt, which has limited Afghanistan’s access to these markets for its exports and
imports. However, the Torghundi border in Herat has remained open as the Taliban
managed to establish a cordial relation with Turkmenistan. In the past, Afghan traders
used to import goods through Bander-Abbas and Islam Qala, while now they have
switched to Bander-Abbas-Turkmenistan and Torghundi, which has increased their
transportation costs.
13
Both Pakistan and Afghanistan benefit from cross-border trade, despite their claim to
have been affected by the existing trading mechanism--i.e. the Afghan Transit Trade.
Under the agreement of the Afghan Transit Trade, Pakistan allows Afghanistan to have
access to the sea and to undertake trade and commerce with the international
community to the extent required by Afghanistan's economy and commerce
requirements. Most of the goods imported under the ATT are reportedly electronics and
other consumer items, which cross Pakistan's territory duty free. Some of these are then
re-exported illegally through smuggling back into Pakistan. On several occasions, the
Government of Pakistan has tried to limit the amount of goods imported under the ATT
by dropping some thirty items from the ATT list. In 1995, for instance, the Government
of Pakistan made a unilateral decision and took seventeen items including artificial silk
fiber and clothing off the list of the ATT. During an interview on 2 January 1999,
Pakistan’s Federal Finance Minister Ishaq Dar said that the government had requested
the Afghan authorities to review their transit trade and agree either to pay duties equal
to those in Pakistan or reduce the quantity of commodities to be imported (The Frontier
Post, 3 January, 1999). The Taliban authorities have not replied to this request.
Despite these efforts by the Government of Pakistan, there are indications that the
volume of re-exports from Afghanistan to Pakistan has increased during the last fiscal
year. After the ban on the ATT, most of these items are imported via Gulf countries to
the Afghan cities of Kandahar and Jalalabad and then re-exported into Peshawar and
Quetta in Pakistan. A recent newspaper report indicates that India-made "Modi" tires
are smuggled into Pakistan through Afghanistan via Central Asia and the Russian ports
of Vladivostok and Odessa since the import of tires under the ATT was banned 1994
(Inter Press Service 20/4/99).
According to a report published by The News (30 December 1998), it was estimated
that goods worth Rs. 23 billion (US$ 500 million) have been imported under the ATT
during the current fiscal year while the same imports for the previous fiscal year
14
amounted to RS 10 billion (approximately US$ 218 million). According to another report,
between July and December 1998, the total trade has increased by around US$ 43
million over the same period in 1997 (Inter Press Service 20/4/99). According to a World
Bank report, the total trade between Afghanistan and Pakistan was estimated to be US$
2.5 billion in 1996/97, of which US$ 1.96 billion was estimated to be the value of re-
exported goods from Afghanistan into Pakistan.
These examples indicate that banning the Afghan Transit Trade facility alone does not
help reduce smuggling activities in Pakistan and may have negative repercussions for
Pakistan in the longer term. Once Afghanistan manages to have access to other
neighboring markets, they may retaliate against Pakistan’s unilateral decision and
strengthen their trade relations with other countries where they may have a comparative
advantage.
Realizing the benefit from trade, and upon requests from the business community in
NWFP, the Government of Pakistan issued Statute Regulatory Order (SRO) No. 138 on
3 March 1999, which allows the export of all commodities produced or manufactured in
Pakistan, excluding those produced by manufacturing bond, via land routes to
Afghanistan against Pakistani rupees. These exports will not be entitled to any duty
drawback or zero rating of sales tax (The Frontier Post, 17 March 1999)
15
Overview Different Economic Sector Of Afghanistan
Agriculture:
An estimated 79% of Afghans are dependent on agriculture and related agribusinesses for
heir livelihoods. Opium poppy production and the opium trade continue to have a
significant monetary share of the country’s agricultural economy. Licit commercial
agriculture is playing a significant role in increasing the income of rural populations. The
major food crops produced are: corn, rice, barley, wheat, vegetables, fruits, and nuts. The
major industrial crops are: cotton, tobacco, madder, castor beans, and sugar beets.
Agricultural production is constrained by an almost total dependence on erratic winter
snows and spring rains for water; irrigation is primitive. Relatively little use is made of
machines, chemical fertilizer, or pesticides.
Afghan farmers need financing to buy quality seeds, fertilizer, and equipment. The United
States and the international community are helping to restore banking and credit services
to rural lenders, which now administer loans in nearly two-thirds of the country’s provinces.
As of September 2009, more than 52,300 agricultural loans ranging from approximately
$200 to $2 million had gone to small businesses, with a repayment rate of 94%. Of these,
49% of loans had gone to women-owned businesses, and 27,700 borrowers were women.
The program’s success has encouraged commercial banks to extend revolving loans for
agribusinesses. Funds have been provided for leases and to promote agro-processing and
support for crop exports.
16
In 2009, the United States significantly revised its counter-narcotics strategy for
Afghanistan, ending direct involvement in eradication of poppy and increasing support for
licit agriculture and interdiction. The new strategy puts heavy focus on going after those
targets where there is a strong nexus between the insurgency and the narcotics trade, to
deny resources to the Taliban. Poppy is easy to cultivate and opium is easily
Transported. Afghanistan produces the majority of the world’s illicit opium. However,
poppy cultivation has dropped by over 35% since 2007. Much of Afghanistan's opium
production is refined into heroin and is either consumed by a growing regional addict
population or exported, primarily to Western Europe
Transportation:
Restoration of the “Ring Road” that links Kabul, Kandahar, and Herat with the northern
cities of Mazar-e-Sharif and Kunduz continues. Much of the road has now been
completed, including economically vital stretches linking Kabul, Kandahar, and Herat.
Landlocked Afghanistan has little functioning rail, but the Amu Darya (Oxus) River, which
forms part of Afghanistan's border with Turkmenistan, Uzbekistan, and Tajikistan, has
barge traffic. During their occupation of the country, the Soviets completed a bridge across
The Amu Darya. The Shirkan Bandar bridge, reconstructed with U.S. assistance,
reopened in 2007 and has opened vital trade routes between Afghanistan and Tajikistan.
17
The new Hairatan to Mazar-e-Sharif railway began operation in August 2011. The railway
aims to increase trade between Afghanistan and Uzbekistan, reduce transport costs,
increase vehicle operation savings, and create job opportunities. The railway construction
project improved Hairatan's marshaling yard and railway station, constructed a new single-
track railway line of about 75 km from Hairatan to Mazar-e-Sharif, constructed a new
transshipment terminal facility at Mazar-e-Sharif, installed signaling and
telecommunication systems, developed institutional capacity of the railway sector, and
provided construction supervision and project management consultancy.
Afghanistan's national airline, Ariana, operates domestic and international routes, including
flights to New Delhi, Islamabad, Dubai, Moscow, Istanbul, Frankfurt, and Tehran. Civil
aviation has been expanding rapidly and several private airlines now offer an alternative to
Ariana and operate a domestic and international route network. The first, Kam Air,
commenced domestic operations in November 2003.
Power
For nearly 3 decades, the availability of secure energy supplies in Afghanistan was
significantly disrupted by conflict. Much of the country's power generation, transmission,
and distribution infrastructure was destroyed, and what remained was stretched far
beyond capacity. More than 90% of the population had no access to electricity. In January
2009, with the help of the Asian Development Bank and the Indian Government, electricity
began to flow into Kabul along a newly constructed transmission line running from
neighboring Uzbekistan. For the first time in more than a generation, the majority of the
capital's 4 million people enjoy the benefits of power. In 2001, Afghanistan produced 430
megawatts of electricity. As of 2009, the installed generation capacity had grown to 1,028
Megawatts. International statistics maintained by the World Bank indicate the ratio of gross
domestic product (GDP) growth to electrical production is approximately $1,000 to 300
kWh.
The United States has provided considerable assistance to help develop new electricity
generation capacity and provide 24-hour power in key cities including Kabul, LashkarGah,
18
and Kandahar. Major projects carried out include refurbishment of power generation
capacity at Kajaki Dam in the south and opening the Kabul power plant.
Under the U.S. and partners’ supervision, the Afghan Government has transferred all
assets, liabilities, and personnel from the troubled, state-run power utility Da Afghanistan
BreshnaMosesa (DABM) to the new corporatized national electricity utility Da Afghanistan
BreshnaSherkat (DABS). The move was a significant breakthrough in Afghan Government
and donor efforts to modernize and begin to commercialize the national electricity sector.
Reliable, affordable electricity is vitally important to Afghan economic growth, prosperity,
and stability. The energy infrastructure continues to be a priority for the U.S. and other
donor nations.
Demining:
Landmines and other explosive remnants of war affect virtually every province in
Afghanistan, a tragic legacy of nearly 3 decades of continuous conflict. According to the
Mine Action Coordination Center of Afghanistan, 77 people were injured or killed in the
first quarter of 2011 by landmines and other explosive remnants of war. This represented
a significant decrease compared to the high point of a monthly average of 176 casualties
in 2001-2002. Of the total, 77% were children and 94% of the overall casualties were
caused by explosive remnants of war and unexploded ordnance. As in many countries
struggling to recover from conflicts, landmines and unexploded ordnance inhibit
development, disrupt markets and production, prevent the delivery of goods and services,
19
and generally obstruct reconstruction and stabilization efforts. Removing these deadly
hazards enables socio-economic development that could further the larger goal of
promoting stability and security in Afghanistan and the wider region.
Many Afghan non-governmental organizations (NGOs) such as Organization for Mine
Clearance and Afghan Rehabilitation (OMAR), Afghan Technical Consultants (ATC),
Demining Agency for Afghanistan (DAFA), Mine Clearance Planning Agency (MCPA), and
Mine Detection Center Afghanistan (MDC) have hard-won demining expertise and
experience. The United States works with a wide array of international partners in mine
action efforts in Afghanistan, but the majority of U.S. financial assistance for demining in
Afghanistan goes directly to Afghan-run NGOs, which have pioneered an approach called
“community-based demining.” The United States also works with international NGOs: The
HALO Trust, Swiss Foundation for Mine Action, Marshall Legacy Institute, Clear Path
International, and Danish Demining Group.
In community-based demining, Afghan NGOs recruit, train, and employ local workers, in
close partnership with community leaders, to survey and clear explosives. Training local
Afghan demining technicians offers a new skill, allowing the country to build self-sufficient
capabilities to continue resolving its own issues, as well as lend support to other countries
recovering from conflict in the future.
Community-based demining represents a new and unique opportunity to link Afghan and
U.S. humanitarian, development, and counterinsurgency objectives. It furnishes jobs that
keep young men employed, establishes trust with local leaders, and enables local
personnel to participate in taking back their community, thus reinforcing local governance
and reducing insurgent influence.
Since FY 1997, the United States has provided more than $220 million for humanitarian
mine action in Afghanistan, making it the largest international donor to Afghanistan for this
type of assistance. International and Afghan partners have used these funds to clear more
than 225 million square meters of land and are now extending these efforts through
community-based demining.
20
Education:
Afghanistan has made impressive advances in increasing basic education. More than
10,000 schools are providing education services to over 7 million children, a more than
six-fold enrollment growth since 2001. During the Taliban regime no girls were registered
in schools. Today, 37% of the student population is girls. Similarly, the number of teachers
has increased seven-fold to 142,500, of whom nearly 40,000 are women.
Adult literacy activities increased rapidly in 2009. Learning centers grew from 1,100 to
6,865, and activities expanded from 9 to 20 provinces, bringing literacy and financial
services to over 169,000 beneficiaries (62% female). Ongoing support of literacy and basic
education is paramount, as well as the quality and preparation of teachers in order to close
the literacy gap left by 30 years of conflict. University enrollment has grown to 62,000.
21
Health:
Afghanistan has one of the highest mortality rates in the world: one in five children dies
before the age of five and one out of every eight Afghan women die from causes related to
pregnancy and childbirth each year. Life expectancy is 49 years for both men and women.
While these statistics are tragic, there has been progress. Recent reports indicate that
85% of the population has access to basic health services within 1 hour of travel to a
health facility (68% for those on foot)--up from 9% in 2002. More than 1,650 professional
midwives are employed by the ministry of public health, providing health care and
childbirth services across Afghanistan. This has helped reduce infant mortality rates, and
child mortality has also fallen since 2002. The U.S. through various agencies and in
conjunction with the Afghan Government has implemented health programs to help meet
the immediate health care needs of the population by strengthening the health care
service delivery system; addressing the management leadership and stewardship capacity
of the Afghan health care system at the central, provincial, district, and community levels;
and increasing demand for and access to quality health products and services through the
private sector--60% of the population receive health care from the private sector.
Overview Of Business and Trade at International Level
India and Afghanistan historically have shared close cultural and political ties, and the
complexity of their diplomatic history reflects this fact. India was among the first non
Communist states to recognize the government installed by the Soviet Union after its
1979* invasion of Afghanistan. New Delhi supported successive governments in Kabul
until the rise of the Taliban in the 1990s. But like most countries, India never recognized
the Taliban's assumption of power in 1996 (only Saudi Arabia, Pakistan, and the United
Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.
war in Afghanistan that resulted, ties between India and Afghanistan grew strong once
again. India has restored full diplomatic relations, and has provided hundreds of millions of
dollars in aid for Afghanistan's reconstruction and development. But Pakistan views India's
growing influence in Afghanistan as a threat to its own interests in the region. Experts fear
for Afghanistan's stability as India and Pakistan compete for influence in the war
country.
FOREIGN RELATIONS
Afghanistan is an active me
international community, and has diplomatic
relations with countries around the world. In
December 2002, the six nations that border
Afghanistan signed a 'Good Neighbor'
Declaration, in which they pledged to respect
Afghanistan's independence a
integrity. Neighboring countries, including
regional partners such as Russia, Turkey, and
China, signed the Istanbul.
22
Overview Of Business and Trade at International Level
India and Afghanistan historically have shared close cultural and political ties, and the
ic history reflects this fact. India was among the first non
Communist states to recognize the government installed by the Soviet Union after its
1979* invasion of Afghanistan. New Delhi supported successive governments in Kabul
an in the 1990s. But like most countries, India never recognized
the Taliban's assumption of power in 1996 (only Saudi Arabia, Pakistan, and the United
Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.
tan that resulted, ties between India and Afghanistan grew strong once
again. India has restored full diplomatic relations, and has provided hundreds of millions of
dollars in aid for Afghanistan's reconstruction and development. But Pakistan views India's
growing influence in Afghanistan as a threat to its own interests in the region. Experts fear
for Afghanistan's stability as India and Pakistan compete for influence in the war
Afghanistan is an active member of the
international community, and has diplomatic
relations with countries around the world. In
December 2002, the six nations that border
Afghanistan signed a 'Good Neighbor'
Declaration, in which they pledged to respect
Afghanistan's independence and territorial
integrity. Neighboring countries, including
regional partners such as Russia, Turkey, and
Overview Of Business and Trade at International Level
India and Afghanistan historically have shared close cultural and political ties, and the
ic history reflects this fact. India was among the first non-
Communist states to recognize the government installed by the Soviet Union after its
1979* invasion of Afghanistan. New Delhi supported successive governments in Kabul
an in the 1990s. But like most countries, India never recognized
the Taliban's assumption of power in 1996 (only Saudi Arabia, Pakistan, and the United
Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.-led
tan that resulted, ties between India and Afghanistan grew strong once
again. India has restored full diplomatic relations, and has provided hundreds of millions of
dollars in aid for Afghanistan's reconstruction and development. But Pakistan views India's
growing influence in Afghanistan as a threat to its own interests in the region. Experts fear
for Afghanistan's stability as India and Pakistan compete for influence in the war-torn
23
Declaration in November 2011, reaffirming the ‘Good Neighbor’ Declaration and
committing to the Istanbul Process for continued regional meetings. In addition,
Afghanistan and its South Asia neighbors meet annually at the Regional Economic
Cooperation Conference (RECC), promoting intra-regional relations and economic
cooperation. On December 5, 2011, the international community is scheduled to follow up
on these regional commitments by meeting again in Bonn, 10 years after the first Bonn
conference in 2001 that established Afghanistan's interim government. Participants at the
2011 conference will discuss the international community's long-term engagement in
Afghanistan and support for Afghan security and development.
� Pakistan
During the war against the Soviet occupation,
Pakistan served as the primary logistical conduit for
the Afghan resistance. Pakistan initially developed
close ties to the Taliban regime, and extended
recognition in 1997. However, after September 11,
2001 Pakistan altered its policy in support of coalition
efforts to remove the Taliban. Although frictions and
suspicions persist, Afghanistan and Pakistan are
engaged in dialogue to resolve bilateral issues such
as border security, immigration, and trade. Regular
meetings are held at the head of state and ministerial levels through a trilateral dialogue
between Afghanistan, Pakistan, and Turkey. The main issue of contention between
Afghanistan and Pakistan is the sanctuary Afghan insurgents enjoy in Pakistan’s
mountainous border regions.
� Iran
Afghanistan's relations with Iran have fluctuated over the years,
the water rights of the Helmand River as the main issue of contention. Following the Soviet
invasion, which Iran opposed, relations deteriorated. Iran supported the cause of the
Afghan resistance and provided financial and milit
pledged loyalty to the Iranian vision of Islamic revolution. Following the emergence of the
Taliban and their harsh treatment of Afghanistan's Shi'a minority, Iran stepped up
assistance to the Northern Alliance. Relation
after Taliban forces seized the Iranian consulate in Mazar
diplomats. Since the fall of the Taliban, Afghanistan's relations with Iran have improved.
Iran has been active in Afghan reconstruction efforts, particularly in the western portion of
the country.
� Central Asia
In order to diversify supply routes to Afghanistan to meet
immediate military needs, U.S. military planners have
adopted the Northern Distribution Network (N
commercially based logistical corridor connecting Baltic
and Black Sea ports with Afghanistan via Russia,
Central Asia, and the Caucasus. Its establishment also
offers an opportunity for intraregional trade. Such
commerce can provide sustainable inc
Afghanistan and Central Asia, deepen Afghanistan's
integration with neighboring States, and contribute to
regional stability.
24
Afghanistan's relations with Iran have fluctuated over the years, with periodic disputes over
the water rights of the Helmand River as the main issue of contention. Following the Soviet
invasion, which Iran opposed, relations deteriorated. Iran supported the cause of the
Afghan resistance and provided financial and military assistance to rebel leaders who
pledged loyalty to the Iranian vision of Islamic revolution. Following the emergence of the
Taliban and their harsh treatment of Afghanistan's Shi'a minority, Iran stepped up
assistance to the Northern Alliance. Relations with the Taliban deteriorated further in 1998
after Taliban forces seized the Iranian consulate in Mazar-e-Sharif and executed Iranian
diplomats. Since the fall of the Taliban, Afghanistan's relations with Iran have improved.
an reconstruction efforts, particularly in the western portion of
In order to diversify supply routes to Afghanistan to meet
immediate military needs, U.S. military planners have
adopted the Northern Distribution Network (NDN), a
commercially based logistical corridor connecting Baltic
and Black Sea ports with Afghanistan via Russia,
Central Asia, and the Caucasus. Its establishment also
offers an opportunity for intraregional trade. Such
commerce can provide sustainable income for
Afghanistan and Central Asia, deepen Afghanistan's
integration with neighboring States, and contribute to
with periodic disputes over
the water rights of the Helmand River as the main issue of contention. Following the Soviet
invasion, which Iran opposed, relations deteriorated. Iran supported the cause of the
ary assistance to rebel leaders who
pledged loyalty to the Iranian vision of Islamic revolution. Following the emergence of the
Taliban and their harsh treatment of Afghanistan's Shi'a minority, Iran stepped up
s with the Taliban deteriorated further in 1998
Sharif and executed Iranian
diplomats. Since the fall of the Taliban, Afghanistan's relations with Iran have improved.
an reconstruction efforts, particularly in the western portion of
25
Over the past few years, Afghanistan and its northern neighbors have sought to
increase trust and economic cooperation. At last count, 122 Afghan enterprises were
registered in Uzbekistan, 39 of which operated with 100% Afghan investment.
Tajikistan and Uzbekistan are in various stages of supplying electricity to northern
Afghanistan and Kabul. Turkmenistan and Afghanistan are seeking closer cooperation
through a broad package of mutual cooperation that includes support for a trans-
Afghan gas pipeline, transit of Turkmen electricity to neighboring countries through
Afghanistan, extension of a Turkmen rail network to Afghanistan, and a common
struggle against narcotics and terrorism.
� UNEfforts
The UN has played an important role in Afghanistan for more than 20 years, assisting in
the repatriation of Afghan refugees and providing humanitarian aid. The UN Assistance
Mission in Afghanistan (UNAMA), launched in October 2001, was instrumental in helping
restore peace and stability in Afghanistan after the fall of the Taliban, organizing the
Afghan presidential elections held in October 2004 and National Assembly elections held
in 2005.
On January 28, 2010, Staffan de Mistura of Sweden was appointed as Special
Representative of the UN Secretary-General for Afghanistan (SRSG). In March 2011, the
UN Security Council renewed UNAMA's mandate until March 2012. UNSC resolutions
authorizing UNAMA have recognized the key role the UN plays in coordinating
international efforts in Afghanistan and the critical support UNAMA provides to the Afghan
Government on matters of security, governance, and regional cooperation. They have
directed that UNAMA and the SRSG continue to lead international civilian efforts on the
rule of law, transitional justice, anti-corruption, realizing the Afghan Government’s
development and governance priorities, and strengthening cooperation between ISAF and
the NATO Civilian Representative to improve civilian-military, coordination.
26
� U.S.-AFGHAN RELATIONS
After the fall of the Taliban, the U.S. supported the emergence of a broad-based
government, representative of all Afghans, and actively encouraged a UN role in the
national reconciliation process in Afghanistan. The U.S. has made a long-term
commitment to help Afghanistan rebuild itself after years of war. The U.S. and others in
the international community currently provide resources and expertise to Afghanistan in
a variety of areas, including humanitarian relief and assistance, capacity-building,
security needs, counter-narcotic programs, and infrastructure projects.
During his December 1, 2009 speech at West Point, President Barack Obama laid down
the core of U.S. goals in Afghanistan: to disrupt, dismantle, and defeat al-Qaeda and its
safe havens in Pakistan, and to prevent their return to Afghanistan. In June 2011,
President Obama announced that the United States would remove 10,000 of its troops
from Afghanistan by the end of 2011 and a total of 33,000 troops by the summer of
2012, fully recovering a surge in personnel that he had announced at West Point. After
this initial reduction, U.S. troops are to continue the phased drawdown at a steady pace
as Afghan security forces move into the lead. By 2014, this transition process will be
complete, and Afghanistan will be responsible for its own security.
28
PESTEL ANALYSIS
In business PESTLE analysis role is very important originally designed as a business
environmental? The PESTLE analysis is an analysis of the external in which a business
operates. These are factors which are beyond the control or influence of a business.
However are important to be aware of when doing product development, business or
strategy planning PESTLE means
P- Political
E- Economical
S- Social
T- Technological
L- Legal
E-Environmental
Overview of Major industries in Afghanistan
Political Factors
Political factors include government regulations and legal issues and define both formal
and informal rules under which the firm must operate. Some examples include:
� trade restrictions and tariffs
� political stability
� Government type and stability
� Regulation and de-regulation trends
� Social and employment legislation
� Tax policy, and trade and tariff controls
� Environmental and consumer-protection legislation
� Likely changes in the political environment
29
� Economic Factors
Economic factors affect the purchasing power of potential customers and the firm's cost of
capital. The following are examples of factors in the macroeconomic:
� economic growth
� interest rates
� exchange rates
� inflation rate
� Stage of business cycle
� Current and project economic growth, inflation and interest rates
� Unemployment and labor supply
� Labor costs
� Levels of disposable income and income distribution
� Impact of globalization
� Likely impact of technological or other change on the economy
� Likely changes in the economic environment
Social Factors
Social factors include the demographic and cultural aspects of the external macro
environment. These factors affect customer needs and the size of potential markets. Some
social factors include:
� health consciousness
� Career attitudes
� Emphasis on safety
� Population growth rate and age profile
� Population health, education and social mobility, and attitudes to these
� Population employment patterns, job market freedom and attitudes to work
� Press attitudes, public opinion, social attitudes and social taboos
30
� Lifestyle choices and attitudes to these
� Socio-Cultural changes
Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient production
levels, and influence outsourcing decisions. Some technological factors include:
� Impact of emerging technologies
� Impact of Internet, reduction in communications costs and increased remote
working
� Research and Development activity
� Impact of technology transfer
Legal Factors
� The Central Government, in consultation with the State Governments, formulates
the legal measures for regulation of mines and minerals in order to ensure basic
uniformity in mineral administration as well as to maintain the pace of development
of mineral resources, in consonance with the national policy goals.
� The Mines and Minerals (Development and Regulation Act, 1957, (‘MMDR’) and
the Mines Act, 1952, together with the rules and regulations framed under them,
constitute the basic laws governing the mining sector in India.
� The National Mineral Policy in 1993 recognized the need for encouraging private
investment, including foreign direct investment and for attracting state-of-the-art
technology in the mineral sector.
31
� Employment law
� Trade and product restrictions
� Health and safety regulations
� International laws
� Monopolies commission
Environmental factors
� Extraction and development of minerals are closely interlinked with other natural
resources like land, water, air and forest. Hence, the management of this precious
resource and its optimal and economical use are matters of national importance.
� The Mining Companies has to take steps in executing the highest standards of
quality, environment health and safety (QEHS) management systems. All its mines
and their support services are to be certified to be compliant with ISO 14001–2004
Environment Management System, ISO 9001-2000 Quality Management System
and OHSAS 18001–1999 Safety and Health Management System compliant.
� The Mining Companies also have to comply with the regulations of the Environment
Protection Act. There are certain restrictions on undertaking new development
projects or expansion and modernization of existing ones, unless prior
environmental clearance has been obtained from the Ministry.
� Pollution problems
� Planning permissions
� Waste disposal
� Noise controls
� Environmental pressure groups
2.1 INTRODUCTION OF THE MINING SECTOR
The mining sector is made up of organizations whose primary activity is the extraction of
naturally occurring mineral solids or natural resources. Examples of these types of
minerals are coal, ores and precious stones. The mining industry also broadly covers
quarrying and well operations. The sector comprises two basic activities: mine operations
and mining support activities.
"Mine operations" involve setting up the mine, quarry or well for the organization, or on
behalf of another organization for a small fee.
"Mining support activities" are those operations that must be carried out before mining
begins; exploration and other services (except site preparation and construction of oil/gas
pipelines).
34
2.1 INTRODUCTION OF THE MINING SECTOR
made up of organizations whose primary activity is the extraction of
naturally occurring mineral solids or natural resources. Examples of these types of
minerals are coal, ores and precious stones. The mining industry also broadly covers
operations. The sector comprises two basic activities: mine operations
"Mine operations" involve setting up the mine, quarry or well for the organization, or on
behalf of another organization for a small fee.
activities" are those operations that must be carried out before mining
begins; exploration and other services (except site preparation and construction of oil/gas
2.1 INTRODUCTION OF THE MINING SECTOR
made up of organizations whose primary activity is the extraction of
naturally occurring mineral solids or natural resources. Examples of these types of
minerals are coal, ores and precious stones. The mining industry also broadly covers
operations. The sector comprises two basic activities: mine operations
"Mine operations" involve setting up the mine, quarry or well for the organization, or on
activities" are those operations that must be carried out before mining
begins; exploration and other services (except site preparation and construction of oil/gas
35
The mining and metal industry is made up of six categories: aluminum, gold, precious
metals, other metal extraction, coal mining and steel. Steel (and iron) is the biggest
segment, as it makes up more than half the market in terms of volume, followed by
aluminum in terms of the global metal market which is focused more in the
The essence of mining in extracting mineral wealth from the earth is to drive an excavation
or excavations from the surface to the mineral deposit. Nor-mally, these openings into the
earth are meant to allow personnel to enter into the underground deposit. However,
boreholes are at times used to extract the mineral values from the earth. These fields of
boreholes are also called mines, as they are the means to mine a mineral deposit, even if
no one enters into the geologic realm of the deposit. Note that when the economic
profitability of a mineral deposit has been established with some confidence, ore or ore
deposit is preferred as the descriptive term for the mineral occurrence. However, coal and
industrial mineral deposits are often not so designated, even if their profitability has been
firmly established. If the excavation used for mining is entirely open or operated from the
surface, it is termed a surface mine.
If the excavation consists of openings for human entry below the earth’s surface, it is called
an underground mine. The details of the procedure, layout, and equip- ment used in the
mine distinguish the mining method. This is determined by the geologic, physical,
environmental, economic, and legal circumstances that pertain to the ore deposit being
mined. Mining is never properly done in isolation, nor is it an entity in itself. It is preceded by
geologic investigations that locate the deposit and economic analyses that prove it
financially feasible. Following extraction of the fuel, industrial mineral or metallic ore, and
the run-of-mine material is generally cleaned or concentrated. This preparation or
beneficiation of the mineral into a higher-quality product is termed mineral processing. The
mineral products so produced may then undergo further concentration, refinement, or
fabrication during conversion, smelting, or refining to provide consumer products. The end
step in converting a mineral material into a useful product is marketing. Quite frequently,
excavation in the earth is employed for purposes other than mining.
36
SOURCES AND TYPES
In 2010, Pentagon officials and American geologists discovered about $1 trillion in
untapped mineral deposits in Afghanistan, enough to fundamentally alter the Afghan
economy and perhaps the Afghan war itself, according to senior American government
officials. According to other reports the total mineral riches of Afghanistan may be worth
over $3 trillion US dollars. "The previously unknown deposits — including huge veins of
iron, copper, cobalt, gold, and critical industrial metals like lithium — are so big and include
so many minerals that are essential to modern industry that Afghanistan could eventually
be transformed into one of the most important mining centres in the world". Ghazni
Province may hold the world's largest lithium reserves.
COPPER
37
No copper mines were active in the country in 2006. In the past, copper had been mined
from Herat Province and Farah Province in the west, Kapisa Province in the east, and
Kandahar Province and Zabul Province in the south. As of 2006, interest was focused on
the Aynak, the Darband, and the Jawkhar prospects in southeastern Afghanistan. Copper
mineralization at Aynak in Logar Province was stratabound and characterized by bornite
and chalcopyrite disseminated in dolomite marble and quartz-biotite-dolomite schists of the
Loy Khwar Formation. Although a resource of 240 million metric tons at a grade of 2.3%
copper had been reported, a number of small ore lenses were potentially not practically and
economically minable. Open pit and underground mining would be needed to exploit the
main ore body, and other infrastructure problems, such as inadequate power and water,
were also likely. The new (2005) Mining Law might favor the development of the deposit by
using public tenders. The Government issued a public tender for the deposit in 2006 with a
deadline of October 28, 2006, and expected the granting of concessions in February 2007.
Nine mining companies from Australia, China, India, and the United States were interested
in the prospect.
In November 2007, a 30-year lease was granted the development of a copper mine at Mes
Aynak in Logar Province to the China Metallurgical Group for $3 billion, making it the
biggest foreign investment and private business venture in Afghanistan’s history. It is
believed to contain the second-largest reserves of copper ore in the world and the deposits
are estimated to be worth up to $88 billion. It is also the site of one of Afghanistan's most
important archaeological sites and, although there are desperate efforts being made to
save as much as possible, the main Buddhist monastery and other remains are due to be
bulldozed to make way for the mine.
GEMSTONES
Afghanistan is known to have exploited its precious and semiprecious gemstone dep
These deposits include aquamarine, emerald, fluorite, garnet, kunzite, ruby, sapphire,
semiprecious lapis lazuli, topaz, tourmaline, and varieties of quartz. The four main
gemstone-producing areas are those of Badakhshan, Jegdalek, Nuristan, and the
Valley. Artisanal mining of gemstones in the country used primitive methods. Some
gemstones were exported illicitly, mostly to India (which was the world’s leading import
market for colored gemstones and an outlet for higher quality gems) and to
Pakistan market.
LITHIUM
Lithium is a vital metal that is mostly used in the manufacture of rechargeable batteries for
mobile phones, laptops and electric cars. It is believed that Afghanistan has plenty of
lithium.
38
Afghanistan is known to have exploited its precious and semiprecious gemstone dep
These deposits include aquamarine, emerald, fluorite, garnet, kunzite, ruby, sapphire,
semiprecious lapis lazuli, topaz, tourmaline, and varieties of quartz. The four main
producing areas are those of Badakhshan, Jegdalek, Nuristan, and the
Valley. Artisanal mining of gemstones in the country used primitive methods. Some
gemstones were exported illicitly, mostly to India (which was the world’s leading import
market for colored gemstones and an outlet for higher quality gems) and to
Lithium is a vital metal that is mostly used in the manufacture of rechargeable batteries for
mobile phones, laptops and electric cars. It is believed that Afghanistan has plenty of
Afghanistan is known to have exploited its precious and semiprecious gemstone deposits.
These deposits include aquamarine, emerald, fluorite, garnet, kunzite, ruby, sapphire,
semiprecious lapis lazuli, topaz, tourmaline, and varieties of quartz. The four main
producing areas are those of Badakhshan, Jegdalek, Nuristan, and the Panjshir
Valley. Artisanal mining of gemstones in the country used primitive methods. Some
gemstones were exported illicitly, mostly to India (which was the world’s leading import
market for colored gemstones and an outlet for higher quality gems) and to the domestic
Lithium is a vital metal that is mostly used in the manufacture of rechargeable batteries for
mobile phones, laptops and electric cars. It is believed that Afghanistan has plenty of
39
GOLD
As of 2006, gold was mined from the Samti placer deposit in Takhar Province in the north
by groups of artisanal miners. Badakhshan Province also had occurrences of placer gold
deposits. The deposits were found on the western flanks of the mountains in alluvium or
alluvial fan in several river valleys, particularly in the Anjir, the Hasar, the Nooraba, and the
Panj Valleys. The Samti deposit is located in the Panj River Valley and was estimated to
contain between 20 and 25 metric tons of gold. The southern regions of Afghanistan are
believed to contain large gold deposits, particularly the Helmand Province. There is an
estimated $30 billion in gold and copper deposits in the Zana Khan, an area of the
Zarkashan skarn deposit in Ghazni province.
40
IRON ORE
The best known and largest iron oxide deposit in Afghanistan is located at Hajigak in
Bamyan Province. The deposit itself stretches over 32 km and contains 16 separate
zones, up to 5 km in length, 380 m wide and extending 550 m down dip, seven of which
have been studied in detail. The ore occurs in both primary and oxidized states. The
primary ore accounts for 80% of the deposit and consists of magnetite, pyrite and minor
chalcopyrite. The remaining 20% is oxidized and consists of three hematitic ore types. The
deposit remained unmined in 2006. The presence of coking coal nearby at Shabashak in
the Dar-l-Suf District and large iron ore resources made the deposit viable for future
development of an Afghan steel industry. Open pit mining and blast furnace smelting
operations were envisioned by an early feasibility study. The Hajigak also includes the
unusual niobium, a soft metal used in the production of superconducting steel.
41
Role of Mining sector in economy of Afghanistan
According to analysts, the mining and excavation of Afghanistan’s precious minerals and
natural resources hold the potential to catalyze massive economic growth and enhance
the livelihoods of tens of thousands of Afghans across the country. However,
transparency, organization, and investment are needed to push forward this growth.
Afghanistan anticipates that mining and the excavation of its minerals will significantly
boost economic development at a critical time, as the country faces foreign troop
withdrawal in 2014 and the international community begins to draw down development
assistance. The Afghan government reports that internal revenues have increased thanks
to mining and excavation, but to ensure a stable and upward trajectory, the extractive
industry in Afghanistan needs foreign investment, organized transport, strong
infrastructure, and above all, security.
Based on several geological surveys of the Ministry of Mines, Afghanistan has gold, silver,
copper, iron, azure and other precious minerals and stones which hold tremendous
potential in the development of the country’s feeble economy. The U.S. Department of
Defense has already estimated the value of Afghanistan’s mines at up to a trillion U.S.
dollars.
The Afghan government has already taken several major steps in the development of the
country’s mining industry. The government has completed the bidding and contracting
process of the Aynak Copper Deposit, the Hajigak Iron Deposit, and the Amoo area’s fuel
and gas reserves.
Mining of the Aynak Copper Deposit was contracted to a Chinese company [MCC] in
2007. According to geological surveys, with approximately 100 million tons of copper,
Aynak is the ninth richest copper mine in the world.
Given that Afghanistan does not have the existing infrastructure and capital to excavate its
resources on its own, this emerging industry will, for now, rely on foreign investment.
“Afghanistan would reap the total rewards from the mines if the government itself were
able excavate them,” said Ahmad Shah Faizi, head of the Geology Department at the
Afghanistan Science Academy. “To some extent the country will benefit from the foreign
excavation. There are several multi
should be carefully considered during the bidding and contracting process.”
Abdul Rayees Alani, member of the Afghanistan Science Academy asserts that the
extractive industries alone cannot make Afghanistan economically self
Economic stability and growth in Afghanistan requires multi
development.
Alani further asserts that investment in industrial factories and geological higher education
institutes is key to tapping into the potential of this economic development.
“Contractors should have financial solvency,
sufficient human resources, quali
professionals, and modern machinery in order to
receive a contract,” said
spokesperson for the Ministry of Mines. “These
types of contracts benefit Afghanistan.”
42
“Afghanistan would reap the total rewards from the mines if the government itself were
able excavate them,” said Ahmad Shah Faizi, head of the Geology Department at the
hanistan Science Academy. “To some extent the country will benefit from the foreign
excavation. There are several multi-minerals mines in Afghanistan, so the multi
should be carefully considered during the bidding and contracting process.”
ayees Alani, member of the Afghanistan Science Academy asserts that the
extractive industries alone cannot make Afghanistan economically self
Economic stability and growth in Afghanistan requires multi-industry diversification and
Alani further asserts that investment in industrial factories and geological higher education
institutes is key to tapping into the potential of this economic development.
“Contractors should have financial solvency,
sufficient human resources, qualified
professionals, and modern machinery in order to
receive a contract,” said Omar Jawad,
spokesperson for the Ministry of Mines. “These
types of contracts benefit Afghanistan.”
“Afghanistan would reap the total rewards from the mines if the government itself were
able excavate them,” said Ahmad Shah Faizi, head of the Geology Department at the
hanistan Science Academy. “To some extent the country will benefit from the foreign
minerals mines in Afghanistan, so the multi-mineral
ayees Alani, member of the Afghanistan Science Academy asserts that the
extractive industries alone cannot make Afghanistan economically self-sufficient.
industry diversification and
Alani further asserts that investment in industrial factories and geological higher education
43
2.2 Structure, Function and business activity of Mining Sector
Privatization of Afghanistan’s state-owned companies, which controlled many of the
country’s mineral resources, was ongoing but not complete. Investment in the mining
sector by private domestic companies and foreign investors was encouraged by the
Government, which had offered the first contract for development of the Aynak copper
project to two Chinese companies in 2007. The Government also issued the tenders for
the development of the Hajigak iron ore project in 2009 and tenders for oil and gas
exploration in 2010. The Ministry of Mines is involved in the exploration for and
development, exploitation, and processing of minerals and hydrocarbons. The Ministry is
also responsible for protecting the ownership and regulating the transportation and
marketing of mineral resources in accordance with the country’s new laws. Regulations to
clarify the country’s environmental laws were scheduled for adoption in 2010.
AFGHANISTAN STRUCTURE OF THE MINERAL INDUSTRY IN 2010
Commodity Company Location
Aluminium coatingQader najib Ltd Kabul
Copper Aynak Minerals Co. Ltd. (China Metallurgical Aynak, Logar 180,000 group Corp., 75%, and Jiangxi Copper Co. Ltd., 25%)
Aynak, Logar
fertilizer, urea Kud Bergh fertilizer Ltd Qala Jangi near Mazar-i-
sharif
Lapis-lazuli government owned sary-
sang
Badakhshan
steel, manufacture Khalil najeeb steel Mills Ltd. Jalalabad, Kabul
44
The Mining Process
Open pit mining requires close attention to geology, geotechnical planning, scheduling of
earthmoving equipment, drill and blast technology and safety. Through constant
monitoring and improvement, each aspect of open pit mining aims to control and reduce
costs and improve the extraction of ore from the ground in the safest, most efficient
manner.
A planned sequence of events is involved in mining a pit:
Identifying the resource extracting it is treating the material in a mill to produce gold
bullion.
Step1. Designing the mining layout and blasts
Before any hole is drilled or rock mined, much planning goes into making sure the mining
sequence runs smoothly and safely as possible. The mine planning engineers, in
conjunction with geologists, drill and blast engineers and voids officers, design the size
and shape of the blasts. This takes into account location of the ore on the bench presence
and intensity of old workings ore requirements of the Fimiston Mill. Plans and schedules
are checked by all relevant parties and, when agreed upon, mining begins.
Step2. Marking out old underground workings.
The location of old workings in the pit is known through plans obtained from the original
companies, and drilling information from the resource definition stage. Voids officers are
responsible for determining where these old workings are and designing safety zones
around them to warn employees of the danger.
45
These zones are flagged with red and white, or black and white striped tapes, depending
on whether the old working is considered a real threat or only a potential one. Points for
these zones are given to the surveyors who mark them up on the ground. Once marked,
the bench is released for general operations personnel to enter although they must stay
outside of these zones, unless precautions are taken
Step 3. Probe Drilling
Once the old workings have been marked, probe drills are sent in to confirm their
locations. These are special drills designed to reach into potentially unstable ground, while
remaining on solid ground. This minimizes the risk of damage or injury as a result of an old
working opening up under a machine. Void officers design a series of probe holes,
generally ranging from 16 to 25m deep. These are pegged by surveyors. Probe drills then
work along the zones, drilling these holes until they reach the old workings. By knowing
where a hole was drilled; what angle it was drilled at and what depth it hit the old workings,
void officers can adjust the danger zones, either shrinking them where the old workings
have been satisfactorily filled or by expanding them where the old workings have
expanded through self mining. This process may be repeated until the exact locations of
the old workings are known.
Business activity of mining sector in Afghanistan
It is estimated that forty million years ago the tectonic plates of India-Europe, Asia and
Africa collided in a massive disturbance. This upheaval created the region of towering
mountains that now includes Afghanistan. This diverse geological foundation has resulted
in a significant mineral heritage with over 1,400 mineral occurrences recorded to date,
including gold, copper, lithium, uranium, iron ore, cobalt, natural gas and oil. Afghanistan's
resources could make it the richest mining region on earth In 2010, Pentagon officials and
American geologists discovered about $1 trillion in untapped mineral deposits in
Afghanistan.
46
Afghanistan has over 90 rich mineral fields with an easy extraction and utilization
possibility, according to information published by Persian Encyclopedia of Economics and
Management. Based on the information most of Afghan mines are still intact. With the
biggest rich mines of lapis, gold, turquoise, coal, copper, lithium, iron, barite and as well as
oil and gas fields. Afghanistan is one of the countries with the richest and biggest intact
mines in the world. There are six big lapis mines in Afghanistan with the biggest one
located in northern Badakhshan province. Badakhshan is also home to one of the biggest
gold mines in the country. Based on the information there are around 12 copper mines in
Afghanistan including the Aynak copper deposit located in Logar province. Afghanistan's
significance from an energy standpoint stems from its geographical position as a potential
transit route for oil and natural gas exports from Central Asia to the Arabian Sea. This
potential includes the possible construction of oil and natural gas export pipelines through
Afghanistan.
3.1 Comparative Position of Mining sector of Afghanistan with
Gujarat/India
The Mining industry in India is a major economic activity which contributes significantly to
the economy of India. The GDP contribution of the mining industry varies from 2.2% to
2/5% only but going by the GDP of the total industrial sector it contributes around 10% to
11%. Even mining done on small scale contributes 6% to the entire cost of mineral
production. Indian Mining Industry provides job opportunities to around 700,000
individuals.
47
(Source: www.wikipedia.com)
MINRALS
Along with 48.83% arable land, India has significant sources of coal (fourth-largest
reserves in the world), bauxite, titanium ore, chromites, natural gas, diamonds, petroleum,
and limestone. According to the 2010 Ministry of Mines estimates: 'India has stepped up
its production to reach the second rank among the chromites producers of the world.
Besides, India ranks 3rd in production of coal & lignite, 2nd in barites, 4th in iron ore, 5th in
bauxite and crude steel, 7th in manganese ore and 8th in aluminum
India accounts for 12% of the world's known and economically available thorium. It is the
world's largest producer and exporter of mica, accounting for almost 60 percent of the net
mica production in the world, which it exports to the United Kingdom, Japan, and United
States of America etc. As one of the largest producers and exporters of iron ore in the
world, its majority exports go to Japan, Korea, Europe and the Middle East. Japan
accounts for nearly 3/4 of India's total iron ore exports. It also has one of the largest
deposits of manganese in the world, and is a leading producer as well as exporter of
48
manganese ore, which it exports to Japan, Europe (Sweden, Belgium, Norway, among
other countries), and to a lesser extent, the United States of America.
Indian Mining Sector
India is endowed with significant mineral resources. India has rich resources in coal, iron
ore, bauxite and limestone, chromites, manganese, only to mention the major ones.
Mineral production in India is dominated by bauxite, chromites, copper, iron ore, lead,
manganese, limestone and zinc. India is the world’s leading producer of mica; it ranked 3d
in the production of barite, chromites, and coal and lignite; 4th in iron ore; 6th in bauxite;
and 7th in manganese ore. Other than the fuel minerals, iron ore and limestone are the
major contributors in the value of mineral production in India. During 2009-10 out of a total
value of Rs. 70884 crore, while fuel minerals had the major share with 85%, of the
remaining 15%, iron ore had a share of 9% and limestone 2%.
3.2 Present position and trend of mining sector with Gujarat
Gujarat was the sole producer of chalk and fluorite (concentrate) and the leading producer
of Kaolin, Marl and clay (others) in the country. The State was also the second largest
producer of lignite and petroleum (crude) and sole producer of fluorite (concentrate) in the
country during 2009-10. Production of lignite got increased by 4.17%, ball clay (378.08%),
fireclay (30.71%), Ochre (132.14%),
The production value of minor minerals was estimated at `725.67 croes for the year 2009-
10. The number of reporting mines in the State was 433 in 2009-10 as compared to 439 in
the previous year. The index of mineral production in Gujarat (base 1993-94=100) was
112.12 in 2009-10 as against 113.27 in the previous year.
49
4.1 Policy and norms of Mining industry of Afghanistan
In Afghanistan, the existing legal and policy framework supporting social and economic
development of the communities in the projects areas provides a strong basis for a more
comprehensive and focused social policy framework for mining sector in the country.
Afghanistan National Development Strategy (ANDS) mentions the potential of the mining
industry to generate employment and accelerate development in rural areas. To develop
the huge mineral potential, Government of Afghanistan has adopted a new policy
direction, transferring the task of exploitation of the country’s natural resources from the
state to the private sector. The Hydrocarbons Law (2009) and revised Minerals Law and
Mining Regulations (2009) are important steps towards providing a strong legislative
framework to encourage private sector investment in the extractive industry in
Afghanistan. Social development and environmental safeguards have been included in the
legal and policy frameworks to encourage development to proceed in a sustainable and
equitable manner.
Further the Law on Managing Land Affairs (2008) is aimed at creating a unified, reliable
land management system to resolve the problems and issues caused by the different land
management and title systems which were followed during different regimes. This Law
also aims to provide a standard system for land titling, land segregation and registration,
prevent illegal land acquisition and distribution, access of land to people; and create
conditions for appropriation of lands. The Land Expropriation Law as amended in 2005
has important provisions related to acquisition of land for public interest and compensation
at fair value based on the current market rates. It also provides for factors like value of
land, value of houses, buildings and the land, values of trees, orchards and other assets
on land to be considered for compensation in case of land acquisition. Afghan Land Policy,
a comprehensive policy was approved by cabinet in 2007. However, it is yet to be
operational zed. This policy envisions the maximization of social and economic benefits to
the Afghan society based upon the orderly and sustainable use of its most important
natural resource-land. The underlying principle of the land policy is to ensure a flexible,
50
equitable and transparent policy that serves the diverse interests of the Afghan society.
Afghan Labor Law (2007) includes provisions which need to be adhered to by the
companies for the fulfillment of rights of mine workers and the social protection of their
families. Some of these provisions relate to fixing maximum hours of work, vocational
training and skill development of employees, proper health and occupational safety
conditions, provisions for not recruiting women and youth in underground mines and social
protection provisions and an important provision of participation of the employees in
production and development, social services, cultural and livelihood discussions in the
companies and to give their suggestions for improvement.
4.1.1 EXPORT POLICY
The Export Policy 1997-2002 has been designed to operate in the imperative And
opportunity of the market economy with a view to maintaining growth of export and
narrowing down the gap between import payment and export earnings.
4.1.1.1 Objectives of Export Policy:
i. Diversify the range of exports and improve their quality;
ii. Set up backward-linkage industries and services and promote use of local
inputs in export products to maximize value addition particularly in textile
Sector;
iii. Extend fiscal and other incentives to attract entrepreneurs both local and
Foreign to invest in export-oriented industries;
iv. Consolidate existing market and explore and develop new ones.
v. Take advantage of the post Uruguay Round liberalized and globalize
International market
vi. Develop an export infra-structure
vii. And develop trained human resources in export sector.
51
4.1.1.2 Strategy of Export Policy
The main elements of the long term export strategy are as follows:
� Remove all bottlenecks to achieve the objectives of export policy;
� Provide policy support to private sector operator s on a continuous basis to ensure
competitiveness.
� Strengthen support services and infrastructure for exports and export t- Oriented
industries;
� Priority will be given to build such infrastructure;
� Develop managerial and entrepreneurial skills through HRD programmes;
� Design an app. opiate export development program to broaden and diversify the
country‘s export base which is central to the export strategy;
� Duild long ter m capability to export by developing new products through
Adaptation and increased R&D activities;
� Maximize utilization of financial and other assistance extended by WTO to The
LDCs;
� Ensure maintenance of ecological balance and pollution free environment in the
production of exportable goods;
� Extend technical and marketing assistance for development of new Products and
their marketing.
52
CONCLUSION
The Government of Afghanistan supports a mining sector strategy that encourages
legitimate and transparent private investment in the sector.
Afghanistan is a country abundantly rich in natural resources. There are currently more
than 1,400 mineral deposits that have been identified including energy minerals such as
oil, gas and coal and other metallic and non-precious minerals such as lead, cement-grade
limestone, gemstones, copper, iron, gold, salt, and industrial minerals (for use in the glass,
ceramic, construction, chemical and fertilizer industries). Known precious, semi-precious
stones. Afghanistan’s iron and copper deposits are of world-class quality.
The hydrocarbons (petroleum and natural gas) industry provides great investment
potential for Afghanistan, both financially and as a means for energy production.
Recent findings in March 2011 indicate that the Afghan-Tajik and Amu Darya Basins
contain 18 times the oil and triple the natural gas reserves previously determined.
The Government of Afghanistan ratified the Minerals Law in 2005 and ratified the
Hydrocarbons Law (2006), which governs the natural gas and petroleum industries in the
energy sector. These two laws are major initial steps in addressing how to create a
regulatory framework for the development of these sectors and, most importantly, enable a
suitable environment to attract and retain private investment.
53
SUGGESTION
� As the government continues to build capacity and institutional efficiency in mineral
resource tenders, the Aynak experience has brought to light a number of
preliminary lessons learned and areas for improvement for the Ministry of Mines.
� The government’s policy should include provision of alternative options for
encouraging the development of resource corridors and shared regional
infrastructure, such as rail linkages. This will increase the linkages and economic
benefits from new minerals projects.
� The Ministry of Mines and the IMC might consider using a two stage bidding
process to finalize the RFP for Hajigak with continued use of separate technical and
financial bids in the second stage. The model mineral contract and terms and
conditions should be published.
� Actions for the Ministry of Mines to consider would include using a more select
group of technical bid evaluators, working in concert with observers from other
government agencies, civil society, and the community. At the same time, the
absolute number of technical evaluators and observers should remain manageable.
� Actions for the IMC to consider would include establishing a secretariat as an
institutional resource for technical expertise, in recognition of the fact that
representation on the IMC changes frequently.
� Actions involving other ministries might include greater attention to information
presentation and dissemination in appropriate and culturally acceptable formats to
the local communities. All government agencies need to be more inclusive of civil
society in working with local communities and building local capacity on complex
development issues.
55
INTRODUCTION OF AGRICULTURE AND LIVE STOCK
The afghan economy has always been agricultural, despite the fact that only 12% of its
total land is available less than 6% currently is cultivated. Agriculture production is
constrained by an almost total dependence on unpredictable winter snows and spring
rains for water. As of 2007, the country's fruit and nut exports were at $113 million per year
but could grow to more than $800 million per year in 10 years given the proper investment.
Afghanistan is known for producing some of the finest fruits, especially pomegranates,
apricots, grapes, melons, and mulberry. Several provinces in the north of the country (i.e.
bad his and Namangan) are famous for pistachio cultivation but the area currently lacks
proper marketing and processing plants. It is claimed that some Indian companies buy
afghan pistachios for a very low price, process them in India and sell to western countries
as Indian products. However, the afghan government is planning to build storage facilities
for pistachios since receiving bumper crops in 2010.
FISHING
The nation has plenty of water reserves and suitable climate for fish farming. Fishing takes
place in the lakes and rivers, such as in Sarobi and Mahipar area. Fish constitute a smaller
part of the Afghan diet today because fish farmers are unable to produce enough fish to
keep up with the demands of customers. Using explosives for fishing, called dynamite
56
fishing, became popular in the 1980s and is still practiced by some even though it is illegal
today. The annual catch was about 900 tons in 2003. Most fish and seafood is imported
from neighboring Pakistan, Iran, the United Arab Emirates and other countries. In recent
years, USAID has helped many Afghans in establishing fish farms across the country.
There are about 300 fish farms throughout the country and the largest one is at the
Qargha, which supplies fish eggs to the other ones.
FORESTRY
Afghanistan's timber has been greatly depleted, and since the mid-1980s, only about 3%
of the land area has been forested, mainly in the east. Significant stands of trees have
been destroyed by the ravages of the war. Exploitation has been hampered by lack of
power and access roads. Moreover, the distribution of the forest is uneven, and most of
the remaining woodland is presently found only in mountainous regions in the southeast
and south. The natural forests in Afghanistan are mainly of two types: dense forests of
oak, walnut, and other species of nuts that grow in the southeast, and on the northern and
northeastern slopes of the Suleiman ranges; and sparsely distributed short trees and
shrubs on all other slopes of the Hindu Kush. The dense forests of the southeast cover
only 2.7% of the country. Round wood production in 2003 was 3,148,000 cubic meters,
with 44% used for fuel. The destruction of the forests to create agricultural land, logging,
forest fires, plant diseases, and insect pests are all causes of the reduction in forest
coverage. Illegal logging and clear-cutting by timber smugglers have exacerbated this
destructive process.
57
TRADE AND INDUSTRY
The current trade between Afghanistan and other countries is at us$5 billion a year. In
1996, legal exports (excluding opium) were estimated at $80 million and imports estimated
at $150 million per year. Since the collapse of the Taliban government in 2001, new trade
relations are emerging with the united states, Pakistan, Iran, Turkmenistan, the EU, Japan,
Uzbekistan, India and other countries. There is trade between Afghanistan and the US. It
is beginning to grow at a fast pace, reaching up to approximately $500 million per year.
The Afghan hand-woven rugs are one of the most popular products exported from the
country. Other products include hand crafted antique replicas as well as leather and furs.
NATIONAL ACCOUNTS
The majority of the following information is taken from, or adapted from the world fact book
GDP: purchasing power parity $29.74 billion (2011 est.), with an exchange rate at $18.02
billion (2011 est.)
GDP - real growth rate:
• 5.8% (2011 est.)
GDP - per capita: purchasing power parity - $1,000 (2011 est.)
GDP - composition by sector:
• Agriculture: 34.9%
• Industry: 25%
• Services: 40%
Population below poverty line:
• 36% (2009)
58
Household income or consumption by percentage share:
• Lowest 10%: 3.8%
• Highest 10%: 24%
Inflation rate (consumer prices): 0.9% (2009)
country comparison to the world: 19
Labor force: 17 million (2009)
country comparison to the world: 39
Labor force - by occupation: agriculture 78.6%, industry 5.7%, services 15.7% (2009)
Unemployment rate: 35% (2009)
country comparison to the world: 180
Budget:
• Revenues: $1.58 billion
• Expenditures: $3.3 billion
Industries: small-scale production of textiles, soap, furniture, shoes, fertilizer, apparel,
food-products, non-alcoholic beverages, mineral water, cement; hand-woven carpets;
natural gas, coal, copper
Electricity - production: 913.1 million kWh (2009 EST.)
Country comparison to the world: 150
Electricity - production by source:
• Fossil fuel: 23.5% of total installed capacity (2009 est.)
• Hydro: 76.5% of total installed capacity (2009 est.)
• Nuclear: 0% of total installed capacity (2009 est.)
• Other: 0% (2001)
59
Electricity - consumption: 2.226 billion kWh (2009 est.)
Country comparison to the world: 137
Electricity - exports: 0 kWh (2010 est.)
Electricity - imports: 1.377 billion kWh (2009 est.)
Oil - production: 0 barrels per day (1 m3/d) (2009)
country comparison to the world: 210
Oil - consumption: 5,036 barrels per day (800.7 m3/d) (2009)
country comparison to the world: 165
Oil - proved reserves: 1,600,000,000 barrels (250,000,000 m3) (2009)
Natural gas - production: 320 million m³ (2009)
Natural gas - consumption: 340 million m³ (2010)
Natural gas - proved reserves: 19.7 trillion cubic feet (2010 est.)
Agriculture - products: opium poppies, wheat, fruits, nuts, karakul pelts
Exports: $2.625 billion (2010 est.)
Country comparison to the world: 164
Exports - commodities: opium, fruits and nuts, hand-woven carpets, wool, cotton, hides
and pelts, and gemstone
Exports - partners: Pakistan 33.7%, India 23.8%, Tajikistan 8.9%, Russia 5.6%,
Bangladesh 5.1%, US 4.1% (2011)
Imports: $9.152 billion (2010 est.)
Imports - commodities: machinery and other capital goods, food, textiles, petroleum
products
60
Imports - partners: united states 31.3%, Pakistan 20.7%, Russia 8.4%, India 5.4%,
Germany 4% (2011)
Debt - external: $1.28 to $2.3 billion total (2011)
• Russia - $987 million
• Asian development bank - $ 596 million
• World bank - $435 million
• International monetary fund - $114 million
• Germany - $18 million
• Saudi development fund - $47 million
• Islamic development bank - $11 million
• Bulgaria - $51 million
• Kuwait development fund - $22 million
• Iran - $10 million
• Opec - $1.8 million
Current account balance: - $736 million (2010 est.)
Country comparison to the world: 132
Currency: Afghani (afn)
Exchange rates: Afghanis (afa) per us dollar - 47 = $1
• 46.75 (2011)
• 46.45 (2010)
Fiscal year: 21 march - 20 march
61
STRUCTURE, FUNCTIONS AND BUSINESS ACTIVITIES OF
AFGHANISTAN IN AGRICULUTURE AND LIVE STOCK
The land resources of Afghanistan are briefly described on the basis of Dupree’s
(1973/1980) eleven geographic zones, with additional information from other references
and from field observations, which are described follow:
1- Washman
2- Badakhshan
3- Central mountains
4- Eastern mountains
5- Southern mountains and Foothills
6- Northern Mountains and Foothills
7- Turkistan Plains
8- Herat-Farah Lowlands
9- Helmand Valley-Sustain Basis
10- Western Stony Deserts
11- Southwestern Sandy Deserts
COMPARATIVE POSITION OF AGRICULTURE AND LIVE STOCK
WITH INDIA
Challenges facing New Delhi in shaping its Afghan policy have become increasingly
sharper as the US and its allies make a volte face in their policy by extending an
olive branch to the Taliban and concede that a military victory is likely to remain
elusive. Soaring poppy cultivation, Norco trafficking, lack of development, endemic
corruption in the government and a steady rise in civilian deaths has helped the
Taliban to effectively channel popular discontent. With a potential return of Taliban
in Kabul, New Delhi’s options will shrink, for it has made political investments by
backing the Karzai government. Targeting Indian interests in Afghanistan has
become a consistent feature; the dastardly car- bombing of the Indian embassy in
Kabul on 7 July, 2008 was a part of this larger strategy. In particular, two issues are
significant in this attack; first, targeting of Brigadier Mehta, who owing to his
62
extensive experience in counter insurgency operations in Kashmir and the
Northeast had been selected to coordinate Indian efforts to provide training and
logistical support to the Afghan National Army. Striking the right balance is an
immediate challenge facing New Delhi. The near collapse of Pakistan’s state
machinery in its frontier region not only accentuates the crisis across the border in
Afghanistan but 1 Gazette and Schmitt, “Pakistani’s Aided Attack in Kabul, US
Officials Say,” New York Times, 1August 2008 also drives the extremist threat much
closer home. In the Afghan regional matrix, Pakistan remains a key challenge for
India. Should India place its boots on the ground? To what extent can India
continue to expand its diplomatic and economic profile in Afghanistan without an
appropriate security apparatus in place? The emerging political and military
situation makes it imperative for India to evolve a clear policy, to establish a
meaningful presence in the region and realize some of its larger interest.
PRESENT POSITION AND TREND OF BUSINESS WITH INDIA
Afghanistan Balance of Trade
Afghanistan recorded a trade deficit of 6014 USD million in the fiscal year 2011-12.
Balance of trade in Afghanistan is reported by the central statistics organization of
Afghanistan. Historically, from 2003 until 2012, Afghanistan balance of trade
averaged -2916.1 USD million reaching an all time high of -1660.9 USD million in
March of 2005 and a record low of -6014.0 USD million in March of 2012.
Afghanistan has been running increasingly large trade deficits as imports have
surged due to the reconstruction effort. Afghanistan mostly exports raisins, carpets,
63
liquorices, herbs, almonds, animal hides, pistachios and dried apricot.Afghanistan
recorded a Current Account deficit of 6519 USD Million in the fiscal year 2010-11.
Current Account in Afghanistan is reported by the Da Afghanistan Bank.
Historically, from 2003 until 2011, Afghanistan Current Account averaged -4782.1
USD Million reaching an all time high of -1371.5 USD Million in March of 2003 and
a record low of -6977.0 USD Million in March of 2010. Current Account is the sum
of the balance of trade (exports minus imports of goods and services), net factor
income (such as interest and dividends) and net transfer payments.Afghanistan
Current Account to GDPCurrent Account to GDP in Afghanistan is reported by the
Da Afghanistan Bank. Historically, from 2003 until 2011, Afghanistan Current
Account to GDP averaged -54.6 Percent reaching an all time high of -38.5 Percent
in March of 2011 and a record low of -75.2 Percent in March of 2006. The Current
account balance as a percent of GDP provides an indication on the level of
international competitiveness of a country. Usually, countries recording a strong
current account surplus have an economy heavily dependent on exports revenues,
with high savings ratings but weak domestic demand. On the other hand, countries
recording a current account deficit have strong imports, a low saving rates and high
personal consumption rates as a percentage of disposable incomes.Afghanistan
ExportsExports in Afghanistan decreased to 375.85 USD Million in the fiscal year
2011-12 from 388.50 USD Million in the fiscal year 2010-11. Exports in Afghanistan
are reported by the Central Statistics Organization of Afghanistan. Historically, from
2000 until 2012, Afghanistan Exports averaged 352.9 USD Million reaching an all
time high of 837.0 USD Million in March of 2001 and a record low of 69.1 USD
Million in March of 2002. Agricultural products account for the majority of
Afghanistan’s exports. Afghanistan mostly exports raisins, carpets, liquorices,
herbs, almonds, animal hides, pistachios and dried apricots. Afghanistan’s main
exports partners are Pakistan, India, Russia, Iran, Iraq, Turkey, Finland and China.
64
Afghanistan Imports
Imports in Afghanistan increased to 6390.31 USD Million in the fiscal year 2011-12 from
5154.25 USD Million in the fiscal year 2010-11. Imports in Afghanistan are reported by the
Central Statistics Organization of Afghanistan. Historically, from 2003 until 2012,
Afghanistan Imports averaged 3267.7 USD Million reaching an all time high of 6390.3
USD Million in March of 2012 and a record low of 1966.1 USD Million in March of 2005.
Afghanistan mostly imports oil and lubricants, vehicles, metals, wheat, cement, electronic
appliances, machinery and spare parts, polyester fabric, cigarettes and tea. Afghanistan’s
main imports partners are Pakistan, Russia, Uzbekistan, Iran, China, Japan,
Turkmenistan, Kazakhstan, Germany, Tajikistan and the United Arab Emirates.
POLICY AND NORMS OF AFGHANISTNA FOR AGRICULTURE AND
LIVE STOCK LICENSING, TAXATION ETC...
Applicability
2.1. All activities related to production and supply of seed, corollary and supporting
operations thereto, and components thereof, conducted by Government agencies
and/or the domestic and/or international private sector, conducted wholly or in part
within the national territory, shall be governed by the provisions of this National
Seed Policy.
Quality Orientation
3.1. Government recognizes that planting value of seed depends on its quality, as
measured by internationally-established procedures. Seed activities shall focus on
providing the highest-quality seed (genetic, physical, physiological, and python-
sanitary quality components) which is economically feasible. To ensure maximum
benefits to farmers, all seed offered for sale shall comply with all applicable quality
requirements, and all seed operations and activities shall seek to provide seed of
maximum quality.
FORMAL AND INFORMAL SEED SECTORS
65
4.1. Government recognizes that there is an essential role for both the .formal seed
sector. and the .informal seed sector.. Government activities, controls, and support
shall be tailored to the needs of the sector to which they apply, help the sector
operate efficiently and best serve the needs of farmers while ensuring THE
maximum seed quality which is economically feasible.
SUGGESTION
Government has to provide the responsibility to establish pilot operations, initiate
development, and ensure that essential activities/components are established and
operated. Give the maximum benefit to peoples. Awareness is very beneficial for
people, so knowledge about both sectors is very useful for peoples.
Improved water resource management is vital to sustainability of the agricultural
sector, particularly with regards to food security. It is suggested that government
action is needed to achieve investment, technological advancement and strategic
programs aimed at off-farm income generation. Training rural communities on the
distribution of water and on-farm irrigation management is also necessary.
Increase agriculture crop production and make the country self sufficient in food
production .Increase livestock productivity throughout the country. Generate income
and employment opportunities in agriculture and livestock related activities
Government should provide more subsidies for modern technology in Agriculture.
Last few years live stock is decline at the Afghanistan, so government take the step
for save the live stock.
66
CONCLUSION
Through global country report we get maximum knowledge about agriculture and
live stock sector. According to our point of view Afghanistan get maximum benefit
from the agriculture and live stock sector. By their best techniques India has also so
many opportunities but not proper utilization of resource in India.
Agriculture sector is very important part of all the countries. More than Afghani
peoples are dependent by agriculture, so agriculture development is very
necessary.
Agricultural is a basic means of livelihood in Afghanistan, generating 36% of the
country’s GDP and supporting 85% of the total population in Afghanistan. The
climate of Afghanistan is well suited for the cultivation of horticultural crops and
Afghanistan is the geographic origin of many high-end crops like raisins,
pomegranates, pistachios and almonds. There are approximately 1 million farms in
Afghanistan and more than 2,000 wholesalers for horticulture products.
Livestock is an inseparable part of agriculture there are small numbers of frames
who do not have livestock .in livestock sector there are different kinds of products
such as wool, milk, and mills products, meat, skin, and fat. Based on over project
reports the livestock is impotent in agriculture. In Afghanistan number of animals
has increased by 6.5%
The decade of before 2001 there has been no systematic collection and analysis of
agriculture statistic internal war and insecurity have made slow the collection and
analysis of agriculture record and registration bringing gape in data which can be
overcome through conducting agriculture census and surveys.
Afghani peoples are more focus on the live stock, so more employment taking
through the live stock. But some problems are also arrived at the live stock.
67
This sector contributes the most to national income and personal livelihoods,
increased investment in the agro-business and agriculture areas will have a direct
positive impact on the lives of thousands of Afghans. Intensive commercial farming
increases sustainable economic growth in rural areas, encourages competition,
contributes to regional development and helps sustain the growth of private
businesses.
.
Afghanistan benefits from low labour and irrigation costs by regional comparison
and high value cash crops provide vital food security and an alternative to poppy
cultivation in the country.
69
Introduction of The Steel Sector And it’s Role in The
Economy of Afghanistan
• Introduction of Steel
Steel is an alloy of iron, usually containing carbon. The common carbon content in steel is between
0.2% and 2.1% by weight, depending on the grade. Other alloying elements used are manganese,
chromium, nickel, vanadium and tungsten, usually in addition to carbon. Carbon and other
elements act as a hardening agent, preventing dislocations in the iron atom crystal lattice from
sliding past one another. Varying the amount of alloying elements and the form of their presence
in the steel (solute elements, precipitated phase) controls qualities such as the hardness, ductility,
and tensile strength of the resulting steel. Steel with increased carbon content can be made
harder and stronger than iron, but such steel is also less ductile than iron.
Alloys with a higher than 2.1% carbon content are known as cast iron because of their
lower melting point and good castability. Steel is also distinguishable from wrought iron,
which can contain a small amount of carbon, but it is included in the form of slag
inclusions.
• INTRODUCTION OF STEEL SECTOR
It is common today to talk about "the iron and steel industry" as if it were a single entity, but
historically they were separate products. The steel industry is often considered to be an indicator
of economic progress, because of the critical role played by steel in infrastructural and overall
economic development
In 1980, there were more than 500,000 U.S. steelworkers. By 2000, the number of steelworkers
fell to 224,000.
The economic boom in China and India has caused a massive increase in the demand for steel in
recent years. Between 2006 and 2011, world steel demand increased by 6%. Since 2000, several
70
Indian and Chinese steel firms have risen to prominence like Tata Steel (which bought Corus
Group in 2008), Shanghai Baosteel Group Corporation and Shagang Group. ArcelorMittal is
however the world's largest steel producer.
In 2009, the British Geological Survey stated China was the top steel producer with about one-
third of the world share; Japan, Russia, and the US followed respectively.
In 2011, steel began trading as a commodity on the London Metal Exchange. At the end of 2011,
the steel industry faced a sharp downturn that led to many cut-backs.
Comparative Position of Steel Sector Product With India
& Gujarat
Financial performance of major and other major producers 2011-12
Company Sales PAT Capital
Employed
PAT/CAP.
Employed%
Sales /CAP.
Employed%
Essar steel 9006.57 435.52 10449.02 4.17 4.84
Ispat industries 8423.44 -10.26 9338.85 -0.11 -0.12
JSW steel 9297.26 1291.89 9412.5 13.73 13.96
SAIL 39312.59 6202.29 19684.28 35.51 15.78
TATA steel 27437.29 4165.61 37680.64 11.06 15.18
(Source: www.Steel.govt.org)
Present Position and Trand of Bussines (Import /Export)
With India/Gujarat During Last 3 to 5 Year
India trade in finished steel
(Source: www.Steel.govt.org)
0
1
2
3
4
5
6
2007-08 2008-09
1.77 1.83
5.28
5.89
3.51
4.06
Years Import
2007-08 1.77
2008-09 1.83
2009-10 2.60
2010-11 4.81
2011-12 5.30
71
resent Position and Trand of Bussines (Import /Export)
With India/Gujarat During Last 3 to 5 Year
India trade in finished steel
In millions tones
(Source: www.Steel.govt.org)
2009-10 2010-11 2011-12
2.6
4.81
5.34.97
5.19
5.91
4.06
2.36
0.380.61
Import Export Net
5.28 3.51
5.89 4.06
4.97 2.36
5.19 0.38
5.91 0.61
resent Position and Trand of Bussines (Import /Export)
With India/Gujarat During Last 3 to 5 Year
Import
Export
Net
Imports as a percentage of consumption of steel
Category 2007
Bars and Rods
0.76
Structural’s
1.54
Plates
18.73
HR Coils/Skelp/Strips/sheets
4.57
CR Coil/Sheets/TMBP
9.48
GP/GC Sheets
7.26
Others
27.54
Grand Total
5.42
0
10
20
30
40
50
60
2007-08 2008-09
72
Imports as a percentage of consumption of steel
2007-08 2008-09 2009-10 2010-11
0.51 0.84 2.25
0.51 1.66 2.21
18.73 18.50 14.90 22.19
4.83 8.69 15.58
8.04 9.12 12.26
6.04 5.49 6.54
27.54 29.88 38.86 51.62
5.27 6.70 11.05
2009-10 2010-11 2011-12
11 2011-12
1.54
1.76
2.87
13.11
13.41
8.13
50.40
10.64
12
bars and rods
structurals
plates
hr coils
cr coils
GP/GC
others
total
73
CONCLUSION AND SUGGESTIONS
The government of India organizes a large international trade exhibition for Afghan export
products in this country. Cherain Thomas, Head of the Indian Council in northern Balkh province of
Afghanistan following a press conference said, the motive of organizing a trade exhibition in India
is to boost trade ties between Afghanistan and India.
He also expressed optimisms for finding new ways of boosting trade ties between the two
countries by organizing such exhibitions. While pointing towards the close political ties after the
two countries signed a strategic cooperation agreement, Mr. Thomas said, we welcome the
Afghan merchants to take part in India’s largest commercial exhibition which is going to be held
from 7 November 2011 to 27November 2011.
He also emphasized for the participation of Afghan merchants to take part in India’s small and
medium technology and industrial exhibitions which will help Afghans to improve Afghanistan’s
small and medium industrial sector by bring the technologies in the country.
Meanwhile deputy provincial governor for Balkh province, Zahir Wahdat while India’s cooperation
to Afghanistan said, we expect closed commercial ties with India as we are already having India’s
cooperation in other fields.
Head of Afghan chamber of commerce and industries in northern Balkh province Mohammad
Mohsin Mostaqeem said, Afghanistan and India are having historical trade ties and Afghanistan
had 60% commercial ties with India before Pakistan was formed.
According to reports the first Afghanistan and India trade agreement was signed in 1949 and
Afghanistan for the first time participated in Agricultural exhibition which was held by India in
1958.
Currently Afghanistan exports around 27 different types of Afghan products to India.
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TEXTILE SECTOR
OF AFGHANISTAN
INTRODUCTION OF THE TEXTILE INDUSTRY
Textiles are formed by weaving, knitting, crocheting, knotting, or pressing fibers together
(felt).A textile or cloth is a flexible woven material consisting of a network of natural or
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artificial fibers often referred to as thread or yarn. Yarn is produced by spinning raw fibers
of wool, flax, cotton, or other material to produce long strands.
Textile refers to any material made of interlacing fibers. Fabric refers to any material made
through weaving, knitting, spreading, crocheting, or bonding that may be used in
production of further goods (garments, etc.). The words fabric and cloth are used in textile
assembly trades (such as tailoring and dressmaking) as synonyms for textile.
However, there are subtle differences in these terms in specialized usage. Cloth may be
used synonymously with fabric but often refers to a finished piece of fabric used for a
specific purpose (e.g., table cloth). The production of textiles is a craft whose speed and
scale of production has been altered almost beyond recognition by industrialization and
the introduction of modern manufacturing techniques.
However, for the main types of textiles, plain weave, twill, or satin weave, there is little
difference between the ancient and modern methods.
Incas have been crafting quips (or khipus) made of fibers either from a protein, such as
spun and plied thread like wool or hair from came lids such as alpacas, llamas, and
camels or from a cellulose like cotton for thousands of years. Khipus are a series of knots
along pieces of string. They have been believed to only have acted as a form of
accounting, although new evidence conducted by Harvard professor, Gary Urton, indicates
there may be more to the khipu than just numbers.
SOURCES AND TYPES
Textiles can be made from many materials. These materials come from four main sources:
animal (wool, silk), plant (cotton, flax, jute), mineral (asbestos, glass fiber), and synthetic
(nylon, polyester, acrylic).
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In the past, all textiles were made from natural fibers, including plant, animal, and mineral
sources. In the 20th century, these were supplemented by artificial fibres made from
petroleum.
Textiles are made in various strengths and degrees of durability, from the finest gossamer
to the sturdiest canvas. The relative thickness of fibres in cloth is measured in deniers.
Micro fibre refers to fibres made of strands thinner than one denier.
SYNTHETIC TEXTILES
A variety of contemporary fabrics. From the left: even weave cotton, velvet, printed cotton,
calico, felt, satin, silk, polycotton. Woven tartan of Clan Campbell, Scotland. Embroidered
skirts by the Alfaro-Nunez family of Cocas, Peru, using traditional Peruvian embroidery
methods.
All synthetic textiles are used primarily in the production of clothing.
• Polyester fibre is used in all types of clothing, either alone or blended with fibres
such as cotton.
• Aramid fibre (e.g. Twaron) is used for flame-retardant clothing, cut-protection, and
armor.
.
• Nylon is a fibre used to imitate silk; it is used in the production of pantyhose.
Thicker nylon fibres are used in rope and outdoor clothing.
• Spandex (trade name Lycra) is a polyurethane product that can be made tight-fitting
without impeding movement. It is used to make active wear, bras, and swimsuits.
• Olefin fibre is a fibre used in active wear, linings, and warm clothing. Olefins are
hydrophobic, allowing them to dry quickly. A sintered felt of olefin fibres is sold
under the trade name Tyke.
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• In geo is a poly lactide fibre blended with other fibres such as cotton and used in
clothing. It is more hydrophilic than most other synthetics, allowing it to wick away
perspiration.
• Lurex is a metallic fibre used in clothing embellishment.
• Milk proteins have also been used to create synthetic fabric. Milk or casein fibre
cloth was developed during World War I in Germany, and further developed in Italy
and America during the 1930s. Milk fibre fabric is not very durable and wrinkles
easily, but has a pH similar to human skin and possesses anti-bacterial properties.
It is marketed as a biodegradable, renewable synthetic fibre.
• Carbon fibre is mostly used in composite materials, together with resin, such as
carbon fibre reinforced plastic. The fibres are made from polymer fibres through
carbonization.
ANIMAL TEXTILES
Animal textiles are commonly made from hair, fur or skin.
Woolen refers to the hair of the domestic goat or sheep, which is distinguished from other
types of animal hair in that the individual strands are coated with scales and tightly
crimped, and the wool as a whole is coated with a wax mixture known as lanolin (aka wool
grease), which is waterproof and dirt proof [citation needed].
Silk is an animal textile made from the fibres of the cocoon of the Chinese silkworm which
is spun into a smooth fabric prized for its softness. There are two main types of the silk:
‘mulberry silk’ produced by the Bomb ox Mori, and ‘wild silk’ such as Tussah silk.
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Silkworm larvae produce the first type if cultivated in habitats with fresh mulberry leaves for
consumption, while Tussah silk is produced by silkworms feeding purely fed on oak
leaves. Around four fifths of the world’s silk production consists of cultivated silk.
Woolen refers to a bulkier yarn produced from carded, non-parallel fibre, while worsted
refers to a finer yarn which is spun from longer fibres which have been combed to be
parallel. Wool is commonly used for warm clothing. Cashmere, the hair of the Indian
Cashmere goat, and mohair, the hair of the North African angora goat, are types of wool
known for their softness.
Other animal textiles which are made from hair or fur are alpaca wool, vicuna wool, llama
wool, and camel hair, generally used in the production of coats, jackets, ponchos,
blankets, and other warm coverings. Angora refers to the long, thick, soft hair of the
Angora rabbit. Qiviut is the fine inner wool of the musk ox. Wadmal is a coarse cloth made
of wool, produced in Scandinavia, mostly 1000~1500CE.
PLANT TEXTILES
Grass, rush, hemp, and sisal are all used in making rope. In the first two, the entire plant is
used for this purpose, while in the last two, only fibres from the plant are utilized. Coir
(coconut fibre) is used in making twine, and also in floor mats, doormats, brushes,
mattresses, floor tiles, and sacking.
Straw and bamboo are both used to make hats. Straw, a dried form of grass, is also used
for stuffing, as is kapok. Fibres from pulpwood trees, cotton, rice, hemp, and nettle are
used in making paper.
Lyocell is a man-made fabric derived from wood pulp. It is often described as a man-made
silk equivalent and is a tough fabric which is often blended with other fabrics – cotton for
example Fibres from the stalks of plants, such as hemp, flax, and nettles, are also known
as 'bast' fibres.
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Cotton, flax, jute, hemp, modal and even bamboo fibre are all used in clothing. Piña
(pineapple fibre) and ramie are also fibres used in clothing, generally with a blend of other
fibres such as cotton. The use of milkweed stalk fibre has also been reported, but it tends
to be somewhat weaker than other fibres like hemp or flax. Acetate is used to increase the
shininess of certain fabrics such as silks, velvets, and taffetas.
Seaweed is used in the production of textiles. A water-soluble fibre known as alginate is
produced and is used as a holding fibre; when the cloth is finished, the alginate is
dissolved, leaving an open area.
MINERAL TEXTILES
Metal fibre, metal foil, and metal wire have a variety of uses, including the production of
cloth-of-gold and jewelry. Hardware cloth (US term only) is a coarse weave of steel wire,
used in construction.
Asbestos and basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels
and siding, acoustical ceilings, stage curtains, and fire blankets. Glass fibre is used in the
production of spacesuits, ironing board and mattress covers, ropes and cables,
reinforcement fibre for composite materials, insect netting, flame
fabric, soundproof, fireproof, and insulating fibre.
STRUCTURE OF TEXTILE INDUSTRY
The industry is made up of two sectors namely well organized (i.e. textile
and unorganized or decentralized sector.
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basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels
and siding, acoustical ceilings, stage curtains, and fire blankets. Glass fibre is used in the
production of spacesuits, ironing board and mattress covers, ropes and cables,
reinforcement fibre for composite materials, insect netting, flame-retardant and protective
fabric, soundproof, fireproof, and insulating fibre.
STRUCTURE OF TEXTILE INDUSTRY
The industry is made up of two sectors namely well organized (i.e. textile mills)
and unorganized or decentralized sector.
basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels
and siding, acoustical ceilings, stage curtains, and fire blankets. Glass fibre is used in the
production of spacesuits, ironing board and mattress covers, ropes and cables,
retardant and protective
mills)
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The textile industry consists of two categories in the organized sector.
Spinning mills : Producing yarn only
Composite mills : Engaged in the both spinning & weaving Activities
These mills can be again classified as
i) Course and Medium Composite mills and
ii) Fine and superfine composite mills
The Textile Manufacturing Process
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COMPARATIVE POSITION OF TEXTILE INDUSTRY AFGHANISTAN WITH
INDIA/GUJARAT
In the past one year, there has been a massive upsurge in the textile industry of India. The
industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07.
During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23
billion to USD 30 billion. The export market increased from USD 14 billion to USD 19
billion in the same period.
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The textile industry is one of the leading sectors in the Indian economy as it contributes
nearly 14 percent to the total industrial production. The textile industry in India is claimed
to be the biggest revenue earners in terms of foreign exchange among all other industrial
sectors in India. This industry provides direct employment to around 35 million people,
which has made it one of the most advantageous industrial sectors in the country.
TABLE-2.1:INDIA’S IMPORT FROM AFGHANISTAN
Some of the important benefits offered by the Indian textile industry are as follows:
• India covers 61 percent of the international textile market
• India covers 22 percent of the global market
• India is known to be the third largest manufacturer of cotton across the globe
• India claims to be the second largest manufacturer as well as provider of cotton
yarn and textiles in the world
• India holds around 25 percent share in the cotton yarn industry across the globe
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• India contributes to around 12 percent of the world's production of cotton yarn and
textiles
The Role of Textile Industry in India GDP had been undergoing a moderate increase till
the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been
witnessing a robust growth and reached almost USD 17 billion during the same period
from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent
share in the total textile production across the globe and 3 percent share in the export
production of clothing. The growth in textile production is predicted to touch USD 19.62
billion during 2006-07. USA is known to be the largest purchaser of Indian textiles.
TABLE 2.2: INDIA’S EXPORT TO AFGHANISTAN
Following are the statistics calculated as per the contribution of the sectors in
Textile industry in India GDP:
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• India holds 22 percent share in the textile market in Europe and 43 percent share in
the apparel market of the country. USA holds 10 percent and 32.6 percent shares in
Indian textiles and apparel.
• Few other global countries apart from USA and Europe, where India has a marked
presence include UAE, Saudi Arabia, Canada, Afghanistan, China, Turkey and
Japan
• Readymade garments accounts for 45 percent share holding in the total textile
exports and 8.2 percent in export production of India
• Export production of carpets has witnessed a major growth of 42.23 percent, which
apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in
the year 2006-07. India holds 36 percent share in the global textile market as has
been estimated during April-October 2007
• The technical textiles market in India is assumed to touch USD 10.63 billion by
2007-08 from USD 5.09 billion during 2005-06, which is approximately double. It is
also assumed to touch USD 19.76 billion by the year 2014-15
• By 2010, India is expected to double its share in the international technical textile
market
• The entire sector of technical textiles is estimated to reach USD 29 billion during
2005-2010
The Role of Textile Industry in India GDP also includes a hike in the investment flow both
in the domestic market and the export production of textiles. The investment range in the
Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion within three
years, from 2004 to 2007. It has been assumed that by the year 2012, the investment ratio
in textile industry is most likely to touch USD 38.14 billion.
TEXTILES IN GUJARAT
The textile Industry is one of the oldest and the most important sectors of the Indian
economy. Gujarat’s textile industry contributes in a big way to the industrialization of the
State. About 33 percent of cotton production in the country is from Gujarat and the State
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contributes to about 35 percent of the woven fabrics from the organized sector in India.
The city of Surat alone contributes to 40 percent of art silk fabric produced in India and is
the largest production base for man-made fabrics. Further, 23 percent of the State GDP
comes from textiles. Gujarat contributes around 20 percent of textile exports from India
and 6 percent of garments export in India. In the early 1990s, Gujarat saw a dramatic
change in the textile industry scenario with the entry of denim manufacturing. Arvind Mills,
Soma Textiles, Modern Denim started manufacturing denim in Gujarat, and soon the State
was known as ‘India’s land of denim’.
3.2 IMPORT AND EXPORT TREND BETWEEN INDIA &
AFGHANISTAN
TABLE 2.3: EXPORT OF INDIAN & AFGHANISTAN
EXPORT DURING 2000-2006
Country Year
2000 2001 2002 2003 2004 2005 2006
Afghanistan 60.3 49 44.4 64.1 87.4 102.1 125.3
India 1822 2082 2601 3918 4416 5273 6789
Sources: Direction of trade statistics year book,2007.IMF
TABLE: 2.4 IMPORT OF INDIA & AFGHANISTAN
IMPORT DURING 2000-2006
Country Year
2000 2001 2002 2003 2004 2005 2006
Afghanistan 169.5 196.9 307.9 590.9 684.8 1333.0 1648.6
India 473.0 533.0 544.00 664.0 891.0 1297.0 1763.0
Sources: Direction of trade statistics year book,2007.IMF
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TABLE 2.5: INDIA’S EXPORT TO AFGHANISTAN
TRENDS IN INDIA’S EXPORT TO AFGHANISTAN 2002-03 TO 2007-08
Country Year
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Afghanistan 60.89 145.37 16537 142.65 181.57 175.70
TABLE 2.6 INDIA’S IMPORT FROM AGHANISTAN
TRENDS IN INDIA’S IMPORT FROM TO AFGHANISTAN 2002-03 TO 2007-08
Country Year
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Afghanistan 18.49 40.54 46.99 58.41 34.48 74.10’
Sources: Ministry of commerce& industry, government of india-april,2007
TABLE 2.7: FOREIGN TRADE STATISTICS,1389
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SUMMARY AND CONCLUSIONS
After analyzing Afghanistan’s carpet or textile industry, it is clear that investment
opportunities exist. Certainly, these opportunities come complete with the risk associated
with doing business in a post-conflict country, but for the size of the potential investment,
the possible returns are high. There are three reasons for this:
The Afghan government and international donors perceive carpet production as one area
where Afghanistan can make a relatively quick impact on the global market. All parties
involved are very interested in assisting investors with the 20 development of production
and finishing facilities that will increase the quality, marketability and sale of Afghan
carpets.
Unlike in many other sectors of its economy, Afghanistan has a massive skilled labor force
in the area of carpet production. With the integration of new designs, weaving techniques
and market access, this labor force can greatly increase the volume of production.
Currently there is virtually no production capacity (in a factory setting) in Afghanistan’s
carpet industry. With this being the case, the establishment of a production facility can fill a
niche that is needed in order for the sector to increase its market access. There are also
few finishing facilities currently operational in Afghanistan, which provides an opportunity
for investors.
Even in light of these natural advantages, investors in the carpet or textile sector should
consider the following as they consider their strategy in Afghanistan:
� Investors may want to consider partnering with an Afghan individual or company as
a minority stakeholder. Any investor considering a site in an industrial park is
required to have an Afghan partner. This is especially important for investors that
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do not have a background in the carpet sector, as it will provide them the technical
expertise necessary to increase the likelihood of success.
� Investors should strongly consider having a representative on the ground in
Afghanistan in order to address the many issues that will arise with government and
private sector stakeholders.
� While investment in the carpet sector is less resource-intensive than many others,
investors should consider it to be a long-term commitment.
� Because of significant cultural differences, doing business in Afghanistan is
different than in most other areas of the world. Many investors find out too late that
culture and religion play primary roles in every facet of society. Investors should not
anticipate managing a production operation in Afghanistan the way they would in
most other areas of the world, which is why it is important to have a local partner
that understands the best way to conduct business operations within Afghan
society.
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Energy in Afghanistan is primarily provided by hydropower. Two decades of warfare have left the
country's power grid badly damaged. As of 2012, approximately 36% of the total Afghan population
has access to 24-hour electricity but in the capital Kabul the number is 70%. Afghanistan
generates around 600 megawatts (MW) of electricity mainly from hydropower followed by fossil
fuel and solar. Officials from Da Afghanistan Breshna Sherkat (DABS) estimate that the country
will need around 3,000 MW to meet its needs by 2020. The Afghan National Development Strategy
has identified alternative energy, such as wind and solar energy, as a high value power source to
develop. Alternative energy projects are already being tested across the country, from wind
turbines in Panjshir Province to micro hydro dams in Badakhshan, to family-size biogas digesters
throughut the country.
SOURCES AND TYPES OF ENERGY SECTOR OF AFGHANISTAN
Hydroelectricity
Hydroelectric plants were built between the 1950s and the mid 1970s, which included the Sarbobi
hydroelectric power plant in Kabul Province, the Naghlu in the eastern Nangarhar Province, the
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Kajaki in Helmand Province and a number of others. Other hydroelectric facilities that were
operational as of 2002 included plants at Puli Khumri, Darunta in Nangarhar Province, Dahla in
Kandahar Province, and one in Mazar-i-Sharif. Also in operation was the Breshna-Kot Dam in
Nangarhar, which had a generating capacity of 11.5 MW. Construction of two more power stations,
with a combined capacity of 600 kW, was planned in Charikar City.
Micro Hydro Power
Due to absence of electricity in the area, the populations have to utilize kerosene as their main source
of lighting and wood as their main source of energy for cooking, heating and baking. This involves
health hazards, is enormously time consumption, and lead to environmental degradation. Electricity
will contribute towards decreasing each of these disadvantages
The essence of this program has been initiating a number of micro hydropower units, which are paid
for and owned by the community. Attached to these power units are small scale agro processing
factories, which enable the processing of agricultural products and help to upgrade the living
conditions of the people. In addition to this, they help in generating employment opportunities for the
landless people in the area.
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Natural gas and oil
Natural gas was Afghanistan's only economically significant export in 1995, going mainly to Uzbekistan via pipeline de marde. Natural gas reserves were once estimated at 140 billion cubic metres. Production started in 1967 with 342 million cu m but had risen to 2.6 billion cubic metres by 1995. In 1991, a new gas field was discovered in Chekhcha, Jowzjan Province. Natural gas was also produced at Sheberghan and Sar-e Pol. As of 2002, other operational gas fields were located at 38 Djarquduk, Khowaja Gogerdak, and Yatimtaq, all in Jowzjan Province. In 2002, natural gas production was 1.77 billion cubic feet.
94
Solar energy
WIND
At least one wind farm was successfully completed in Panjshir Province in 2008, which
has the potential to produce 100 kW of energy. United States Agency for International
95
Development has teamed up with the United States National Renewable Energy
Laboratory to develop a wind map of Herat province. They have identified approximately
158,000 megawatts of untapped potential wind energy. Installing wind turbine farms in
Herat could provide electricity to much of western Afghanistan. Smaller projects are wind
pumps that already have been attached to water wells in several Herat villages, along with
reservoirs for storing up to 15 cubic meters of water.
Biogas
Besides wind and sun, potential alternative energy sources for Afghanistan include biogas
and geothermal energy. Biogas plants are fuelled by animal dung, and produce a clean,
odourless and smokeless fuel. The digestion process also creates a high-quality fertilizer
which can benefit the family farm. Family-sized biogas plants require 50 kilograms of
manure per day to support the average family. Four to six cows are required to produce
this amount of manure, or eight to nine camels, or 50 sheep/goats. Theoretically,
Afghanistan has the potential to produce about 1,400 million cubic meters of biogas
annually. A quarter of this amount could meet half of Afghanistan‟s energy needs,
according to a January 2011 report from the United States National Renewable Energy
Laboratory
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Geothermal
An area of vast untapped potential lies in the heat energy locked inside the earth in the
form of magma or dry, hot rocks. Geothermal energy for electricity generation has been
used worldwide for nearly 100 years. The technology currently exists to provide low-cost
electricity from Afghanistan‟s geothermal resources, which are located in the main axis
areas of the Hindu Kush. These run along the Herat fault system, all the way from Herat to
the Wakhan corridor in the North. With efficient use of the natural resources already
abundantly available in Afghanistan, alternative energy sources could be directed into
industrial use, supply the energy needs of the nation and build economic self-sufficiency
Investment Opportunities in Energy Sector Energy is a critical input to economic growth. Energy projects support agricultural growth and improve management of water resources. The energy infrastructure projects included here will increase power supplies and contribute to expanded irrigation and rural development. Energy provides essential power supplies needed for private sector development, job creation and poverty reduction. Investment in the sector will create direct employment opportunities in the development of power plants, oil, gas and coal fields, the construction of grid systems and the commercial operations of the sector. The development of small energy installations will also contribute to local economic development, particularly in rural areas. Investment opportunities exist in the energy/electricity industry in: • Generation
• Transmission
• Distribution Including:
• Hydroelectric
• Gas Fired
• Coal Fired
• Solar
• Wind
• Geothermal
• Bio-butanol/ethanol
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Scale of operations: Micro, small, medium and large scale production Potential. Market:
Mass and niche energy markets, primarily domestically but with limited regional market
potential. Generating capacity is mainly hydro-based with total hydro potential estimated to
be about 23,000 megawatts (MW). Thus, hydro potential is large, with opportunities for
export over the long-term, which would lessen both Afghanistan's reliance on imported fuel
and electricity, as well as more expensive gas-based generation in neighboring countries.
Domestic Market: Afghanistans per capita power consumption (as measured from grid
supply) is among the lowest in the world at about 27 kWh per year. Less than 10% of the
population currently has access to electricity. Over 85% of the country fuel needs are met
by burning wood. International Market: The Pakistani domestic market offers huge
potential as a market for Afghan energy exports. Monetary Returns: Monetary returns,
and risks, vary according to the type of activity and location. There are opportunities
offering rates of return that would warrant private sector investment. Social Returns: The
investment program will bring direct and indirect positive social impacts. The reject will
directly contribute to economic growth and will reduce poverty, by lowering household
energy costs and by removing energy constraints to enterprises that offer employment
opportunities for the poor.
Type of Assistance Requested There is need to established private sector firms familiar with the international energy market in terms of generation, transmission and distribution. Technical assistance and advice is required. Technical advice required relates to, advice on selecting and establishing specific investments and the operation and maintenance of facilities that will be established. There are opportunities for private sector operations to build and operate facilities. This area of activity requires substantial funds and technical skills. Local Advantage Northern Afghanistan has proven and probable natural gas reserves of about 5 Tcf. With perhaps up to 100 million barrels of medium-gravity recoverable crude oil reserves. More than 15 oil and gas fields in northern Afghanistan have been identified, but only three gas fields -- Khwaja Gogerdak, jarquduk, and Yatimtaq have been developed. Afghan natural gas production at its peak had reached 385 million cubic feet per day (Mmcf/d) in the mid-1970s. At the regional level, India and Afghanistan are participating in an important energy
98
CONCLUSION & SUGGESTIONS
Today, Afghanistan stands at the crossroads. The country has not yet stabilized, security
transition is in the process, and political transition is also due next year. International
support for the democratization process in the country has been gradually increasing;
however, political and social fragility remains a major concern. India‟s approach seems to
be cautiously optimistic towards Afghanistan. However, Kabul will remain high on the
priorities of Indian foreign policy agenda not only for security but also for natural resources
and regional trade as well as connectivity with Central Asia, which is considered as India‟s
„extended neighbourhood‟.
New Delhi‟s economic engagement with Kabul will depend on security scenario in
Afghanistan in the aftermath of ISAF drawdown in 2014. The current political and
economic conditions in Afghanistan appear favourable for Indian businessmen. President
Karzai has promised a „red-carpet‟ welcome for Indian business community in
Afghanistan. The promise needs to be translated into action on the ground. Afghanistan
needs to undertake measures to improve governance and enhance security in order to
boost investment prospects in the country. The Afghan government should promote
transparency in all business deals it enters into with foreign and domestic companies
The government of India organizes a large international trade exhibition for Afghan
export products in this country. Cherain Thomas, Head of the Indian Council in northern
Balkh province of Afghanistan following a press conference said, the motive of organizing
a trade exhibition in India is to boost trade ties between Afghanistan and India.
He also expressed optimisms for finding new ways of boosting trade ties between the two
countries by organizing such exhibitions. While pointing towards the close political ties
after the two countries signed a strategic cooperation agreement, Mr. Thomas said, we
welcome the Afghan merchants to take part in India’s largest commercial exhibition which
is going to be held from 7 November 2011 to 27November 2011.
99
He also emphasized for the participation of Afghan merchants to take part in India’s
small and medium technology and industrial exhibitions which will help Afghans to improve
Afghanistan’s small and medium industrial sector by bring the technologies in the country.
Meanwhile deputy provincial governor for Balkh province, Zahir Wahdat while
India’s cooperation to Afghanistan said, we expect closed commercial ties with India as we
are already having India’s cooperation in other fields.
Head of Afghan chamber of commerce and industries in northern Balkh province
Mohammad Mohsin Mostaqeem said, Afghanistan and India are having historical trade
ties and Afghanistan had 60% commercial ties with India before Pakistan was formed.
According to reports the first Afghanistan and India trade agreement was signed in
1949 and Afghanistan for the first time participated in Agricultural exhibition which was
held by India in 1958.
Currently Afghanistan exports around 27 different types of Afghan products to India.
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• Title: The Politics of Social Transformation in Afghanistan, Iran, and Pakistan (Contemporary Issues in the Middle East) Author: Ali Banuazizi (Editor), Myron Weiner Publisher: Syracuse Univ Press
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• www.communicaid.com
• http://www.acci.org.af/
• http://www.commerce.gov.af/
• http://www.moec.gov.af/index_eng.aspx
• http://www.epaa.org.af/
• http://www.mof.gov.af/ http://doingbusiness.org/data/exploreeconomies/afghanistan
• http://mom.gov.af/Content/files
• http://articles.timesofindia.indiatimes.com/2012-11-15/india
• http://info.worldbank.org/governance
• http://www.theodora.com/wfbcurrent/afghanistan/afghanistan_economy.html