Research

Private Sector Development

  • The Private Sector Development reports look at the Aynak and Amu Darya projects as opportunities to trigger the development of the Afghan private sector, especially the construction and civil works sectors.
  • With a focused and early program of capacity building, domestic Afghan firms could reach quality levels sufficient to supply around $800 million priority goods and services needed to construct the Aynak copper mine and the Amu Darya oil blocks. These local firms could also provide about $151 million worth of operational goods and services representing about 22 percent of the total expenditures.
  • Many local companies are keen to work in mining and oil and gas, but need better access to information and business connections so they can more strategically invest in the capabilities needed to reach sufficient quality levels.
  • Local procurement faces challenges of a) quality and availability of goods and services; b) insufficient information leading to uncertainty to assess revenues/ borrow at equity stakes; c) poor information flows to the private sector regarding available services; d) potential political and economic risks given the upcoming 2014 withdrawal of foreign forces and uncertainty about the timing of extractive industry investments.
  • The suggested support program would focus on local businesses that are already viable, established and have strong management. It would require active participation from multilateral and bilateral donors, the Aynak and Amu Darya investors, the Ministry of Mines, the Afghanistan Chamber of Commerce and Industries (ACCI) and other associations, investors and local businesses.
  • The proposal is to create enterprise centers that provide multiple services to local businesses in order to address some of these issues. The governing and coordination body would collect all procurement needs from private sector investors and distribute the information to suppliers through the development of a traditional and virtual marketplace.
  • These offices would also link local businesses and potential investors through conferences and communication campaigns as well as manage the capacity and skills development program provided by technical mentors from extractive industry investors, business mentors and independent bodies.
  • In addition, it would help integrate investment plans to upgrade local supply into work plans designed for companies meeting thresholds of capability to upgrade quality. The combination of mentorship and investment from funds, grants or private equity partners would result in an improvement of local production through increased capacity and better quality.
  • The program would be monitored and evaluated rigorously to assess effectiveness.

Updated September 16, 2013