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Trade and Tradition: Afghan Businesses Enter the World Stage

June 12, 2019

Category
Region
  • Middle East & North Africa
Technical Area
  • Agriculture & Economic Growth

As Afghanistan works to bolster its economy, the time is right for local businesses to broaden their global reach and for the world to access what the Afghan market has to offer from high quality marble to unique semi-precious stones to handmade carpets and more. Trade with India has increased 44% in recent years, and with China dominating a number of industries, many companies are seeking business opportunities in ‘emerging markets’ like Afghanistan.

Yet the Afghan private sector faces several barriers to growth. Shipping and storage infrastructure cannot currently support significant increases in exports. Basic services such as health and accessible and reliable energy are lacking. Even obtaining visas can be a major obstacle to Afghan traders.

In this all too challenging climate, Dexis is working in partnership with Davis Management Group to help Afghan businesses expand their reach via the USAID Afghanistan Trade Show Support (TSS) Activity. Through export-oriented events around the world, TSS connects Afghan businesses to new markets which allows Afghans to promote their products and service and supply needs directly to potential partners and to make new, lasting business connections that can serve them well into the future.

Image

P2P2 Showcased Afghan Businesses from a range of sectors including agriculture. Photo by Elizabeth Muir.

To showcase Afghan businesses to regional markets, TSS organized the second annual Passage to Prosperity: India-Afghanistan International Trade and Investment Show (P2P2) in Mumbai last September. More than 2,000 Afghan, Indian, U.S., and other international businesses attended the four-day event, as did Dr. Abdullah Abdullah, the Chief Executive Officer of the Islamic Republic of Afghanistan.

P2P2 showcased Afghan businesses from a range of sectors including energy, aviation, agriculture, extractives, gems & jewelry, media, law, health, among others and resulted in more than 166 confirmed deals and the signing of over 600 memorandums of understanding (MOUs). Several deals launched in the health, energy, and aviation sectors can eventually transform the business environment with expanded access to energy and shipping services.

In just one example, an agreement initiated between Da Afghanistan Breshna Sherkat (DABS), Afghanistan’s government-owned power company, and TATA Power Delhi Distribution Limited (TATA-DDL) could result in reliable electricity and significant expansion into underserved regions, which would in turn have a multiplier effect on companies’ ability to do business.

In addition to organizing trade shows, TSS also provides access to existing industry events. For example, TSS recently helped bring 28 Afghan carpet companies to Hannover, Germany for DOMOTEX, the world’s leading showcase for carpets and floor coverings. Over 1,400 exhibitors gathered from more than 60 countries, creating a powerful opportunity for the Afghans to highlight their wares and promote the Afghan carpet industry to the global market.

Supporting Afghans’ attendance at DOMOTEX was decidedly worthwhile. As a result of the event, businesses in the Afghan National Pavilion had a combined $11 million in deals agreed upon at the trade show, with more coming as a result of the trade show. In addition, one business bought the Afghan contingent’s entire stock of carpets, turning a profit for the sellers and sparing them the expense of shipping cargo back to Afghanistan.

In Dexis’ role of assessing outcomes, we found that the immediate results of these trade shows are impressive. However, the way economic activities are typically measured in global development can be too narrow in breadth and in time and ignore how such interventions position businesses for long-term success. True impact cannot be captured during a standard project lifecycle, as closing a deal is a lengthy process and building a productive business relationship that can yield commercial or bulk sales takes time to mature.

In the case of Afghanistan, stereotypes must be overcome for relationships to flourish. For example, follow-up interviews with Indian businesses after P2P2 revealed significant improvement in perceptions. Respondents stated that before attending the event their views were fueled by simplistic media representations that Afghanistan is a “terrorist country” devoid of a commercial ecosystem. One health company was unaware that Afghanistan had proper hospitals. Yet, over the course of a few days, Indian businesses now saw Afghan companies as viable business partners.

In addition, participants in trade shows acquire valuable learning through exposure to competition, understanding clientele preferences, and improving sales techniques. Afghans in the carpet industry, for example, learned the tastes and preferences of European and American markets and were able to examine a range of modern and creative carpet styles to integrate into next year’s production. While harder to quantify than sales or MOUs, this intelligence gathering is crucial for Afghan businesses to market themselves successfully to global buyers, sellers, and investors.

Increased investment in trade shows has the potential to grow independent Afghan businesses, which in turn contributes to Afghanistan’s economic stability and helps the country move away from its current dependence on dwindling sources of foreign aid, all while normalizing relationships with their international counterparts.

Yet to properly understand economic growth projects’ impact, learning methods should take a longitudinal approach and consider broader impacts, such as the effects in-person meetings might have on improved social cohesion and how trade affects normalization of relations within the region. It is important to measure and assess long-term results and how private sector development affects other development objectives in order to effectively evaluate the full impact these initiatives are having on Afghanistan’s future.

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