What should the West do now in Afghanistan?

What should the West do now in Afghanistan?

By Anton Colella,
CEO, Moore Global

The alarming scenes of airlifts at Kabul Airport suggest that Afghanistan may descend once again into chaos and civil war.  The country remains on a knife-edge and decisions taken now by the Taliban and Western governments could derail hopes of building a just and prosperous society in the months and years ahead.

However, the pictures beamed to the world tell only part of the story. While two decades of progress in education, women’s rights and civic freedoms are now uncertain, not all Afghans are mourning the passing of an aid-based economy.

Moore Afghanistan is a key player in this unfolding drama as it is the only major professional services firm still operating normally in the country. Having provided financial services to 700 international organisations for 12 years, Moore has acknowledged expertise in building and running nationwide systems that are efficient and free of corruption.

From our unique business perspective, however, we have seen first-hand how many elements of aid packages over the years were well-intentioned but often proved counter-productive.

For example, diesel generators were flown in for Kabul’s electricity but Afghanistan’s climate, topography and plentiful water are ideal for investment in pollution-free solar, hydro and wind power that could satisfy local demand and be exported to neighbouring countries.

In agriculture, generators installed at state-of-the-art cold storage units were intended to make businesses more efficient and profitable but ended up costing farmers more than the revenue they earned selling their chilled fruit.

So, what is to be done?

With the dust of military retreat settling, it is time for pragmatists to step forward with practical solutions for dispersing urgently needed food aid and freeing up the financial system so workers can be paid and normal business can resume.

People in the new government have already contacted our team on the ground for advice on tax and fiscal policy. However, unless foreign governments engage as financial partners, Afghans face the prospect of mass starvation and other serious effects of economic collapse.

Donors pledged more than $1.1 billion to help Afghanistan at a recent United Nations summit, much needed support as the World Food Programme warned 14 million people are on the brink of starvation.

A complication is that several members of the interim cabinet are on international terrorist wanted lists, so anti-money laundering laws and other regulatory obstacles will make forming commercial partnerships with the Taliban difficult.

If Western governments cannot engage directly with the new government, they could look at ways of working through the United Nations and non-governmental organisations (NGOs) to assist ministries that are crucial to helping ordinary Afghans get back to normal life.

Unfreezing parts of Kabul’s financial system that oil the local economy should also be a priority. The currency, the Afghani, has been kept afloat by regular shipments of hard currency from the US to support the central bank. That is a recipe for instability if the tap is turned off, or Afghanistan’s legitimate assets abroad remain frozen. Long-suffering citizens risk losing their life savings and being unable to afford day-to-day needs because their money would be worthless.

Bankers in Afghanistan face another worry. The foreign-based correspondent banks, which provide services such as currency exchange and money transfers for thousands of families, may have to cut ties if sanctions are imposed.

While it is true that relatively few Afghans hold bank accounts – only 183 out of every 1,000 people in the country, according to the International Monetary Fund – those that do have money in banks tend to be the aspirational middle classes and entrepreneurs. In short, exactly the sort of people the country will rely on to create jobs and wealth.

Of course, pragmatism has to be shown on both sides. The final shape of the new government is still a work in progress and how it approaches the education and employment of women will be crucial in building trust.

Despite the harrowing images of death and destruction that have dominated the Western media for the past few weeks, Afghanistan need not necessarily be a failed state: and there is good reason to believe that the economy could flourish if the Taliban and the West can reach an accommodation.

Around 70% of the Afghan population is under the age of 25 and those young people are better educated than ever before.

The IT sector has been one of the country’s successes, expanding to cater for the needs of these young consumers. A report by the Ministry of Communications and Information Technology three years ago found there were 62 internet service providers and mobile phone subscription jumped from 50,000 in 2002 to almost 24 million in 2018.

Moore’s team believe Afghanistan’s location in the heart of Asia makes it a prime candidate to be a regional logistics hub for goods transport. The same is true of gas pipelines, electricity pylons and fibre for fast broadband. The new administration has signalled that it supports these connectivity projects and has publicly declared its support for the Trans-Afghanistan Pipeline (TAPI) linking natural gas fields in Turkmenistan with Pakistan and India.

There are also traditional strengths in agriculture. Helping farmers with new equipment will create bigger, more efficient agri-businesses that generate better returns, feed the whole population and reduce the temptation to turn to growing poppies for the heroin trade. The new administration has told farmers to stop growing poppies, the raw material in the drug-making process.

Another strength of Afghanistan, and one that has not been exploited, is its huge reserves of natural resources.

The country could be sitting on the world’s largest lithium reserves – crucial for electric car batteries – as well as huge quantities of the strategic metals that are important in the development of green technologies. The new administration has also publicly called on China to resume its copper and oil initiatives in Afghanistan and has signalled a willingness to work with others.

Clearly, the rule of law and transparent administrative systems must be established. But if pragmatism prevails and certain conditions are met, there is scope for a post-war economic boom that would benefit all 38.9 million citizens in a country that deserves some good fortune.