Plenty has been researched and written to create a realistic picture of Afghanistan’s political, security-related and economic realities. The continuous negative discernment of Afghanistan has mislead the world about potentials for economic growth, regional transit, benefits of strategic global positioning and the simple human capacities of Afghan people. Afghanistan has been recovering rapidly, despite media buzz and attempts of security destabilization. The country has had an average growth rate of nine to twelve per cent annually over the last few years.
What are the realities in Afghanistan?
Afghanistan has historically been a business promoting and business friendly country. In 1928, King Amanullah visited Siemens in Berlin and invited the company to invest in Afghanistan, which was done with great success and an excellent relationship between both countries developed. The same was offered in 2004 by President Karzai during his visit to Siemens in Berlin, also with great results. The realities in Afghanistan today suggest that the economic, political and even social environment of the nation is changing slowly but surely. Despite the multiplicity of barriers, the private sector has stayed active and has delivered goods and services in the most difficult war times. The Afghanistan National Development Strategy (ANDS) considers the role of the private sector for economic and social development as very essential. By the end of 2007, the government privatised over 65 state-owned enterprises. The country has started accepting major programme changes supported by the international community and is getting closer to meet the prerequisites for doing business internationally. This includes quick business start-up in Afghanistan, visa easement for investors, investment guarantees by the government, acceptance of a series of legal documents that secure the business investment and many more.
The Kabul New City (KNC) mega project as a major national development indicator.
Afghanistan, a fast growing emerging market of strategic importance, located at the crossroads of the east-west trading corridor of the Silk Road and the north-south corridor, is a country of great economic opportunities. These corridors link some of the largest and fastest-growing economies of the world, including China, India, Russia, Pakistan, Turkey, Iran and UAE. They have massive energy resources in Central Asia, Afghan mineral riches worth trillions of dollars, busy South-Asian markets and major sea ports of international trading in the Indian Ocean and the Persian Gulf.
The Afghan capital Kabul, symbolizing the spirit of all Afghans and of international cooperation, sets at the heart of this resourceful region, with great potential to turn into a global business hub. Among the country’s largest development projects is Kabul New City (KNC), which is to accommodate around three million people in the next 30 years. Adjacent to the existing city of Kabul and located between two major airports (Kabul International Airport and Bagram Air Base), the area is one of the most secure regions of the country.
Das Megaprojekt Kabul New City (KNC) als bedeutender nationaler Entwicklungsindikator.
The Kabul New City mega project is a response to the ever-growing need for housing in Kabul. Currently, due to the inflow of residents from other cities, return of expats and population increase at a record rate, Kabul housing supply cannot meet the demand. A two-bedroom apartment unit is being sold at the rate of around 80,000 to 100,000 US dollars, while the annual gross domestic product per Afghan citizen is around 400 dollars. The growing demand for new housing is beyond the capabilities of the Afghan government.
.Great business opportunities exist in almost all sectors in the New City. They include investment in infrastructure, including power generation, transmission and distribution, water management and engineering, snow and rain water reservoirs, water supply and discharge systems, water distribution networks and waste water treatment facilities, transport, health care facilities, educational services, construction, including residential, commercial, industrial and public facilities, banking, agro-industry, industrial activities, trade, food, and services of different kinds such as engineering, public transport, infrastructure, IT and media services.
Barikab agricultural economic zone has great potentials for growing fruit, grains, vegetables, flowers, building green houses and farms for dairy products. A recent major study, carried out by the Japan International Cooperation Agency (JICA), indicates that a strong private sector role in the development of Kabul New City as developers, contractors, investors or service providers will ensure the project success. Therefore the government of Afghanistan assigned an independent board to develop detailed implementation plans for the city’s development affecting approximately 1.5 million people within the next 15 years.
[/animate] Details of the plan.
The master plan includes a major feasibility study of the project, sector study, business plan, implementation plan, environmental considerations and other urban development studies. The master plan will be executed in three phases: phase one from 2010 to 2015, phase two from 2016 to 2020, and phase three from 2021 to 2025.
The objectives of the project are simple and visible to the wider population as well as to the investors. The project aims to meet the ever-growing demand for housing in Kabul, generate large-scale employment, generate wealth from the sales, regulate taxation, customs and employment to suit the population and public service providers and finally to create an environmentally acceptable, ecocentric urban living environment that will preserve the current villages. This objective is impossible to reach without the input and investment from national and international investors. The government of Afghanistan, represented by the Independent Board of Kabul New City Development and the Dehsabz – Barikab City Development Authority (DCDA), plays the facilitator role and supports the private sector in getting access to clean land, primary and secondary infrastructure as well as public facilities. At the same time, it is occupied with the monitoring and evaluation of the city development according to the master plan and operation and maintenance of the city until hand over to a newly established municipality. DCDA as a one-stop shop is a highly qualified engineering and management organisation for the implementation of Kabul New City. It has already started the implementation of the infrastructure and preservation of the villages for phase one with the support from JICA and Asian Development Bank.
Project outputs for the next 15 years.
- The New Kabul City development project will create 500,000 new jobs by 2025; 100,000 in the agricultural sector, 100,000 in the industry sector, and 300,000 in other sectors/services. 250,000 residential units will be built in the New City by 2025.
- Provision of modern infrastructure and public facilities such as roads, electricity, water, sewerage, telecommunication systems, mosques, schools, universities, hospitals, parks, governmental entities.
- Production of construction and light industrial materials and goods in the envisaged industrial parks, provision of all kinds of services.
- Food production for capital city – Barikab has the potential to grow and produce grains, fruits, vegetables, flowers and dairy products.
- Introduction and development of Agricultural Business Technology in Barikab.
Economic Benefits. The economic benefit of this mega project is covering three major areas:
- Benefit to society: this will include end users, small investors, construction companies, labour market and low-income communities.
- Benefit to investors: this will include significant return to companies investing in KNC and reinvesting in the Afghan economy. Both national and international investors will benefit equally.
- Benefit to the government of Afghanistan: this will include increase in tax base, employment, revenue from land sale, more economic activities, solving the housing shortage problem, and providing social housing.
Investment and business opportunities are guaranteed by the government of Afghanistan. Investors can invest through partnership with the national Afghan companies or independently. The Dehsabz – Barikab City Development Authority (DCDA) takes care of land ownership and distribution mechanism.
The phase-one business plan predicts a larger than average annual return for companies investing in KNC. Investing in KNC is not only an opportunity for national and international investors but is an opportunity for the government and people of Afghanistan to continue the business of partnership as well as integration into the world economy. The best way for the international community to support the efforts in Afghanistan is to let the country be a partner rather than a recipient of grants. The KNC project is a winning project for all parties. The Kabul New City mega project is a first come, first serve project. Make your business decision and step up.
The author (born in 1950) is a member of the Independent Board of Kabul New City Development and CEO of Dehsabz – Barikab City Development Authority (DCDA) as well as former CEO and president of Siemens Afghanistan. He earned the bachelor degree at the technical high school in Kabul. He studied mechanical engineering at universities in Kabul and Mannheim.