Economy of Afghanistan

GDP: purchasing power parity - $27.01 billion (2009 est.)

GDP - real growth rate:

 22.5% (2009 est.)

GDP - per capita: purchasing power parity - $1,000 (2009 est.)[1]

GDP - composition by sector:

 agriculture: 31%
 industry: 26%
 services: 43% (2008 est.)

note: data excludes opium production

Population below poverty line:

 36% (2008/2009)

Household income or consumption by percentage share:

 lowest 10%: NA%

 highest 10%: NA%

Inflation rate (consumer prices): 13% (2007)

country comparison to the world: 183

Labor force: 15 million (2004 est.)

country comparison to the world: 40

Labor force - by occupation: agriculture 78.6%, industry 5.7%,

services 15.7% (2009 est.)

Unemployment rate: 35% (2009)

country comparison to the world: 181

Budget:

 revenues: $890 million

 expenditures: $2.7 billion

Industries: small-scale production

of textiles, soap, furniture, shoes, fertilizer, and cement; handwoven
rugs; natural gas, petroleum, coal, copper, marble

Electricity - production: 839 million kWh (2007)

country comparison to the world: 149

Electricity - production by source:

 fossil fuel: 36.3%

 hydro: 63.7%
 nuclear: 0%
 other: 0% (2001)

Electricity - consumption: 1.418 billion kWh (2007)

country comparison to the world: 137

Electricity - exports: 0 kWh (2007)

Electricity - imports: 608 million kWh (2007)

Oil - production: 0 barrels per day (0 m3/d) (2003 est.)

country comparison to the world: 210

Oil - consumption: 5,036 barrels per day (800.7 m3/d) (2006)

country comparison to the world: 165

Oil - proved reserves: 1,600,000,000 barrels (250,000,000 m3) (2006

est.)[16]

Natural gas - production: 220 million m³ (2001 est.)

Natural gas - consumption: 220 million m³ (2001 est.)

Natural gas - proved reserves: 15.7 trillion cubic feet (2006 est.)[16]

Agriculture - products: opium poppies, wheat,

fruits, nuts, karakul pelts

Exports: $327 million; note - not including illicit exports or reexports

(2007)
country comparison to the world: 175
Exports - commodities: opium, fruits and nuts, handwoven
carpets, wool, cotton, hides and pelts, precious and semi-precious
stones

Exports - partners: United
States 26.47%, India 23.09%, Pakistan 17.36%, Tajikistan 12.51%
(2009)

Imports: $4.85 billion (2007)

Imports - commodities: capital goods, food, textiles and petroleum

products

Imports - partners: Pakistan 26.78%, United States 24.81%, India

5.15%, Germany 5.06%. Russia 4.04% (2009)

Debt - external: $2.7 billion (2008)

Current account balance: -$67 million (2007)

country comparison to the world: 79

Currency: Afghani (AFN)

Exchange rates: Afghanis per one US dollar ($1) - 50.25 (2008), 50

(2007), 46 (2006), 47.7 (2005), 48 (2004)

Fiscal year: 21 March - 20 March

Economy of Pakistan
Economic Comparison of Pakistan 1999-2008 

Per Capita
Gross
US Dollar Inflation Index Income
Year Domestic
Exchange (2000=100) (as % of
Product
USA)

4.76
1960 20,058 Pakistani 3.37
Rupees
 4.76
1965 31,740 Pakistani 3.40
Rupees

4.76
1970 51,355 Pakistani 3.26
Rupees

9.91
1975 131,330 Pakistani 2.36
Rupees

9.97
1978 283,460 Pakistani 21 2.83
Rupees

16.28
1985 569,114 Pakistani 30 2.07
Rupees

21.41
1990 1,029,093 Pakistani 41 1.92
Rupees

30.62
1995 2,268,461 Pakistani 68 2.16
Rupees

51.64
2000 3,826,111 Pakistani 100 1.54
Rupees

2005 6,581,103 59.86 126 1.71

Pakistani
 Rupees

Indicator 1999 2007 2008 2009

$ 185
GDP $ 75 billion $ 160 billion $ 170 billion
billion

GDP Purchasing
$ 475.5 $ 545.6
Power Parity $ 270 billion $ 504 billion
billion billion
(PPP)

GDP per Capita

$ 450 $ 925 $1085 $1250
Income

Revenue Rs. 305 Rs. 708 Rs. 1.05

Rs. 990 billion
collection billion billion trillion

Foreign reserves $ 1.96 billion $ 16.4 billion $ 8.89 billion $ 14 billion

$ 18.45
Exports $ 7.5 billion $ 18.5 billion $ 19.22 billion
billion

Textile Exports $ 5.5 billion $ 11.2 billion - -

$ 26.5
KHI stock $ 75 billion
$ 5 billion at $ 46 billion at billion at
exchange (100- at 14,000
700 points 9,300 points 9,000
Index) points
points
Foreign Direct
$ 1 billion $ 8.4 billion $ 5.19 billion $ 4.6 billion
Investment

External Debt & $ 40.17 $ 50.1

$ 39 billion $ 45.9 billion
Liabilities billion billion

Poverty level 34% 24% - -

Literacy rate 45% 53% - -

Development Rs. 520 Rs. 549.7 Rs. 621

Rs. 80 billion
programs billion billion billion

Why Invest in Afghanistan?

1. Afghanistan is moving towards economic and political stability, this
has created a favorable business environment for foreign and domestic
investors

2. Afghanistan is once again on the path to take its place in the global
market. The emerging vibrant investment opportunities in Afghanistan
promises significant progress and development in the economic sector

Investment Opportunities and Examples

ÿ Reconstruction: Over the next 3 years, more than US$ 8.4 billion in
reconstruction and humanitarian aid is expected to generate significant
opportunities in construction, construction materials, and related
manufacturing industries.

ÿ Domestic Consumption Growth. Afghanistan’s 27 million people

constitute a
US$ 5 billion GDP economy growing at an annual compound rate of
15-20 %.
This rapid economic growth is driving increased local demand for
goods and
services – from detergent and cellular phones to home construction
and
banking services.

ÿ Afghanistan today is an ideal place for those who want to invest.

ÿ Afghanistan is in need of almost everything, be it consumer goods or
industrial
development.

ÿ Export Revitalization: There are opportunities to export high-value

Afghan –
branded products to the European and US markets, including saffron,
dried
fruit, and basic agribusiness products to neighboring countries.

Examples:
ÿ Two major international hotels have invested in Afghanistan (Hyatt
and Serena)
ÿ Two private phone companies (AWCC and Roshan), backed by
leading
international operators are servicing the country.
ÿ Other Examples:
ÿ DHL
ÿ Leading international banks have opened offices (Afghanistan
International
Bank (AIB), Standard Chartered Bank, National Bank of Pakistan,
Habib
Bank Ltd, The First Microfinance Bank and etc.
ÿ Pepsi-Cola
ÿ Toyota Motors
ÿ Alcatel Trade International
ÿ Coca – Cola
ÿ Marco polo Airlines

An Afghan Culture Overview

Fact file
o Official name – Islamic Republic of Afghanistan
o Population – 33,609,937*
o Official language – Afghan Persian or Dari, Pashtu,
and approx. 30 minor languages
o Currency – Afghani (AFA)
o Capital city – Kabul
o GDP – purchasing power parity $23.03 billion*
o GDP per capita – purchasing power parity $800 *

Overview
Afghanistan is a landlocked country situated at the crossroads of the
major regions of Asia. Ancient civilisations, stretching back at least
3,000 years, have passed through the country, with trade and invasion
routes crossing its territory and carrying with it a plethora of
traditions, cultures and religion. As a result, Afghanistan is a cultural
and ethnic mosaic of linguistic and racial diversity. While diverse
languages and cultures co-exist, the people of Afghanistan share
fundamental beliefs, values and qualities, which should be identified
and
understood by any organisation wishing to conduct business in the
country.
Afghan Culture - Key Concepts and Values
Islam - Afghanistan is one of the most solidly Muslim countries in the
world. Across the
various ethnic groups, religion is the strongest common bond. A great
many Afghans adhere
to Islamic principles and practise traditional rituals on a daily basis. For
them, Islam is a way
of life and governs aspects of behaviour, politics, moral values and
how one should dress.
There are varying degrees to which Islam impacts on the daily lives of
Afghans, however it is
vital to remember its influence when working alongside your Afghan
business colleagues.
Indirect Communication - Afghan culture has a particularly indirect
communication style
relying heavily on nonverbal cues and figurative forms of speech,
where information is not
explicitly stated. For Afghans, indirect communication relates closely to
saving face and
respecting an individual’s honour. A direct refusal to a proposal for
example, may be
interpreted as impolite. Therefore, when conducting business
discussions with your Afghan
colleagues you should avoid responding with a direct “no”, and be
prepared to interpret
seemingly indefinite comments and gestures.
Hospitality – A vital element of Afghan culture is the notion of
hospitality. In Afghanistan,
hospitality is a deeply rooted tradition that is closely linked to honour
and reputation. Open
displays of generosity and welcoming behaviour are essential qualities
for measuring an
Afghan’s good reputation and character. When offered such hospitality,
whether in a
business or personal setting, it is important to accept it, thus
maintaining the individual’s
sense of honour. Doing Business in Afghanistan © Communicaid
Group Ltd. 2009
Afghanistan Today
The modern state of Afghanistan emerged during the eighteenth
century from the political
expansion of Pashtun tribes. Afghanistan’s recent history has been
dominated by centuries of
warfare, foreign occupation and civil unrest. In 1973, a military coup
overthrew the monarchy
and the country was declared a republic. A decade of Soviet
occupation and economic
manipulation then followed leaving the nation torn by civil war. In
1996, an Islamic
fundamentalist movement, the Taliban, captured the city of Kabul and
established a
notorious regime that was later toppled in 2001. This led to the
adoption of a new constitution
and the reconstruction of the country’s economy through international
assistance. Today,
Afghanistan’s continued efforts in reviving and maintaining political
and economical stability
are gaining interest from foreign investments and opening up the
country to international
business opportunities.
Afghanistan Business Part 1 - Working in Afghanistan (Pre-departure)
o Working practices in Afghanistan
• The concept of time in Afghanistan is not measured as strictly as
time in western
countries. Therefore, even though your Afghan counterparts may not
arrive to
business meetings on time, punctuality will be expected of foreigners.
• The Afghan working week begins on Sunday and ends on Thursday.
Friday is the
Muslim holy day and considered part of the weekend. However, it is
not
uncommon for some businesses to also close on a Thursday.
• Afghanistan is predominantly Muslim and for this reason time must
be allocated
during the working day for prayer. This may interrupt the daily
business schedule;
therefore you should take this into consideration when making
business
appointments.
o Structure and hierarchy in Afghan companies
• Afghan business culture dictates a strict hierarchical structure where
leaders
separate themselves from the group and power is distributed from the
top.
• There is generally only one key decision maker - the most senior
person in the
company. Those in a more subordinate position represent the business
during
meetings but do not have the authority to make decisions.
o Working relationships in Afghanistan
• Establishing close personal contacts is key to all business dealings in
Afghanistan.
Afghans prefer to get to know a person before entering into business
with them
and committing themselves to business decisions.
• Afghans place great emphasis on respect and dignity, and are
therefore cautious to
maintain each other’s honour. For this reason, younger colleagues in
particular,
must address their business counterparts with the appropriate title and
act in a
respectful manner at all times. Doing Business in Afghanistan ©
Communicaid Group Ltd. 2009
Afghanistan Business Part 2 - Doing Business in Afghanistan
o Business practices in Afghanistan
• In Afghan business etiquette, initial introductions tend to follow an
informal
procedure. First, as a reflection of the importance of hospitality in
Afghan culture,
there is a drink of tea. Then there follows some general conversation
in which
business is not typically mentioned or discussed. This process is vital
for
establishing trust and getting to know your Afghan counterparts on a
more
personal level.
• The exchanging of business cards is not a widely practised part of
Afghan business
culture. However, if you are given a business card, it is customary to
accept it using
your right hand, study it carefully and place it somewhere respectful,
for example,
on the table in front of you or in a card holder.
• Generally speaking, business meetings in Afghanistan are somewhat
unstructured
and open to variation. Afghans take a more relaxed approach to start
times, topics
for discussion and length of meetings. In addition, it is not uncommon
for others to
walk in and out of the meeting or for your Afghan associates to take
phone calls
during business discussions.
• The negotiation process in Afghanistan is one based on building
strong
relationships and establishing company benefit. Forging a deal with
your Afghan
counterparts will take time and persistence, since Afghans generally
negotiate
using a bartering system that relies on a stronger and weaker party
being involved.
o Afghan Business Etiquette (Do’s and Don’ts)
DO shake hands with your Afghan colleagues when arriving and
leaving business
discussions. Should an Afghan place their right hand over their heart
after shaking
hands, it is appropriate to reciprocate this gesture. When greeting a
female
colleague however, you should always wait for her to initiate the
handshake.
DO show respect towards your Afghan business associates by taking
a sensitive
approach to proper behaviour and cultural gestures. Using the left
hand to pass
something to an Afghan, for example, could bring shame to the
individual and
should be avoided.
DO dress suitably and in a conservative manner. This is especially
important for
businesswomen, who must wear modest clothing that covers the arms
and legs in
particular. A headscarf is also advisable.
DON’T correct or criticise your Afghan associates in front of other
business
colleagues, as this may cause embarrassment and harm the
individual’s sense of
honour.
DON’T inquire too much about a male colleague’s wife or female
relatives during
initial business introductions. To a traditional Afghan male, this is not
considered a
topic for public conversation but rather a private matter and as such
could be taken
offensively.
DON’T be surprised if during business conversation your Afghan
counterpart
stands closer to you than usually acceptable. An Afghan’s sense of
personal space
is less compared to most westerners. Doing Business in Afghanistan
© Communicaid Group Ltd. 2009
Afghanistan Culture Quiz - True or False
1. During the holy month of Ramadan, foreign visitors to Afghanistan
are not permitted
to eat, drink, smoke or chew gum in public.
2. If you are unable to accommodate the needs of your business
associates it is best to
refuse them with a direct answer.
3. When meeting your Afghan counterparts for the first time, direct
eye contact between
men and women should generally be avoided.
4. If attending an Afghan wedding, you should wrap your gift in the
colour green.
5. In Afghanistan, one conducts a business meeting in order to collect
ideas and discuss
future possibilities.
Cultural Quiz - Answers
1. True. Although visitors are not required to fast.
2. False. Responding in an indirect way that shows an effort will be
made is usually
more appropriate, for example “I’ll see what I can do”.
3. True. Even between men, this exchange should not be prolonged.
4. True.
5. False. In general, business meetings are convened so that you may
exchange
information and finalise decisions that have already been made.