Starting a business in Afghanistan

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For any aspiring entrepreneur, the challenges in rebuilding [Afghanistan's] society are many. Three decades of war destroyed Afghanistan’s infrastructure, ravaging the country’s roads and power grid. Security concerns make some regions difficult to reach. And skilled labour is in short supply, meaning companies such as Ms Nawabi’s often struggle to find enough workers. Most of the time they have to import skilled labour from neighbouring Iran or Pakistan. Capital, like electricity, is limited and expensive. A recent World Bank report on business climates ranked Afghanistan 153 out of 154 when it comes to securing credit.

Ms Nawabi’s case bears out the numbers. She and her partner used $20,000 of their own funds to start the firm. With interest rates above 20 per cent and demands for collateral high, they have relied upon reinvested revenues to fund the business. Lack of capital has limited the firm’s growth. It turned down a $6m road contract in 2005 because there was not enough money to secure a performance bond to guarantee the project’s satisfactory completion.

Gayle Tzemach’s article also highlights the important role of women entrepreneurs in Afghanistan and the obstacles they face. Also see the summary bullets at the end of the article.

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