Afghanistan is not exactly an easy place to undertake a rigorous study on the ease of doing business. And collecting primary data for a micro-based study in Kabul and several Afghan provinces can be a daunting task. Just how daunting is underscored by the fact that the country conducted its most recent census almost 40 years ago, in 1979. Vast tracts of the country remain unsafe and many of its provinces are inaccessible.
Despite the security challenges, our experience from the recently launched Subnational Doing Business in Afghanistan report shows that the barriers to collecting micro data are not insurmountable. The data and related findings can help guide business reforms toward the kind of smart regulations that are imperative for attracting private sector investment to the capital city and beyond. A regulatory environment that enables private enterprise, especially small and medium firms, to function and be creative boosts job creation and is, therefore, good for the economy.
The report, the first of its kind in Afghanistan, benchmarks Kabul and the provinces of Balkh, Herat, Kandahar and Nangarhar across four Doing Business indicators: Starting a Business, Dealing with Construction Permits, Getting Electricity and Registering Property.
The key takeways?
- Kabul leads in two of the areas measured, Starting a Business and Getting Electricity. Kandahar ranks first in Dealing with Construction Permits and Registering Property, while Balkh comes in second in all four areas measured by the report.
- Regulatory quality and efficiency vary considerably among the five locations. Rolling out reforms already implemented in Kabul across all of Afghanistan would improve the business environment for entrepreneurs in the provinces.
- By adopting all the good practices, Afghanistan could move up 11 places in the global Doing Business ranking, to 172.
Doing Business in Afghanistan 2017 was exceptional from the get-go. Unlike many of our other Subnational Doing Business reports, where the focus on the traditional measures of regulatory efficiency, this report measures regulatory quality, which is essential for identifying the most urgent needs, such as increasing transparency and updating the legislative framework. This focus required greater effort in collecting the data and for the research needed to suggest reforms that can help Afghanistan improve its business environment.
Data collection was by far our biggest challenge. Our previous experience gathering primary data in other fragile states, such as in Juba, South Sudan, and Hargeisa, Somalia provided useful guidance. However, because World Bank staff are not allowed to travel beyond the capital, the data were collected on our behalf by Samuel Hall, an international think tank with offices in Kabul. The use of a data collection firm, along with other related costs, such as additional security requirements for field trips to the provinces and the need for a bigger pool of contributors to ensure that we had all the information we needed, significantly increased the overall cost for data collection, compared with a standard Subnational Doing Business report.
In addition, verifying the information was also a time-consuming exercise, requiring consultation with multiple sources: in Afghanistan, while changes in regulation are announced, it is difficult to determine whether those changes have actually been implemented, which is a key measure of the quality of regulation.
Also, the virtual absence of publicly available information and the fact that some local authorities were hesitant to share information through questionnaires meant more time for getting information from government officials. The team overcame this obstacle by organizing face-to-face workshops at which officials could interact directly with the World Bank team.
The Afghan government, for its part, was very supportive of the project. Public entities and national government representatives responded to requests for assistance and provided resources to help overcome some of the logistical and technical challenges. In the end, the data collection was a success and a report containing the data and its analysis was launched in Kabul at an event held at the World’s Bank’s offices. The event was attended by senior representatives from a number of Government agencies, such as the Ministries of Commerce and Industry, Urban Development and Housing, and Energy and Water, the Independent Directorate of Local Governance (IDLG), Afghanistan Independent Land Authority (Arazi), Kabul Municipality, as well as the Afghanistan Chamber of Commerce and Industries (ACCI).
By identifying local good practices in regulation, the report can help Afghan provinces learn from one another about ways to reduce the time, cost and complexity of bureaucratic processes that can unnecessarily stymie private enterprise. And thanks to the baseline it establishes, Afghan provinces can now track their progress over time in improving regulatory quality and efficiency.
Press Release: http://www.worldbank.org/en/news/press-release/2017/05/17/afghan-provinces-can-improve-ease-doing-business-learning
Ease of Doing Business in Afghanistan: http://www.doingbusiness.org/data/exploreeconomies/afghanistan
Doing Business in Afghanistan 2017: http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Subnational-Reports/DB17-sub-afghanistan.PDF