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"Small and medium enterprises are a main driver of business and economic exchange in Afghanistan and the ‘Heart of Asia’ region, especially between Afghanistan and Central Asia,” said Mrs Roya Rahmani, Director General of the Regional Cooperation Directorate of the Afghan Ministry of Foreign Affairs. Mr James Hill, Head of Mission, Embassy of Canada, underscored the importance of SMEs in economic growth that can provide a basis for stability in the region.

Both were speaking at a symposium on Small and Medium Enterprises and Regional Trade in Afghanistan and the Heart of Asia Region hosted by the University of Central Asia (UCA) and the Afghan Ministry of Foreign Affairs in Kabul on 23 February 2014.

 

Panelists at the SME Development and Regional Trade in Afghanistan and Heart of Asia Region symposium responding to questions from the floor.

 

The symposium brought together more than 120 representatives from the Afghan government, international organisations, foreign delegates, Afghan and Central Asian businesses, chambers of commerce and industry representatives, civil society, academia and media for two interactive moderated panels and discussion.

 

The first panel was moderated by Mr Sham L. Bathija, Senior Economic Advisor to the President, who provided an overview of the difficult economic situation facing Afghanistan and its significant economic potential that requires decisive action to improve the skills and know-how of entrepreneurial and workforce capacity if  it is to be mobilised.     

 

Mujib Mashal of leading think-tank Afghanistan Research and Evaluation Unit (AREU) addressed the issue of Small and Medium Enterprises Development and Regional Trade in Afghanistan. He offered an insightful analysis of the state of SMEs. He noted that the sector is neglected in government policy, despite its critical role in providing employment, which will grow with the withdrawal of the international military presence and declining aid.

 

UCA's Institute of Public Policy and Administration (IPPA) researchers presented regional and country-specific experiences. IPPA Project Coordinator Dr Roman Mogilevskii’s overview of the Contribution of Micro- and Small and Medium Enterprises (MSMEs) to Regional Trade between Central Asia and Afghanistan concluded that MSMEs are key for poverty reduction and economic diversification. Creating an enabling environment for their participation in regional trade should therefore be a high priority.

 

Dr Nurbek Jenish’s case study, Export-driven SME Development in Kyrgyzstan: The Garment Manufacturing Sector, highlighted critical government decisions that enabled the sector to rapidly expand, and now employ over 100,000 workers. He inquired whether this model of SME growth could be replicated in Afghanistan. Dr Kanat Tilekeyev examined the Recent Development of the MSME Sector in Tajikistan, describing how the sector produces half the gross domestic product (GDP) and employs almost 60 percent of its workers. He examined the positive impact of policy reform and Tajikistan’s accession to the World Trade Organisation on MSME development.

 

The second session moderated by Mrs Rahmani saw lively discussion on  small business development initiated by a panel comprised of H.E. Mr Haqbeen, Governor of Sar-e-Pol province; H.E. Mr Tooryalai Wesa, Governor of Kandahar province; Mr Qaribullah Hijrat, Finance Director of Nangarhar province; Mr Ahmad Zia Sayedkheli, SME Development Director of the Ministry of Commerce; Mr Azrakhsh Hafizi, Chairman of International Affairs Committee of the Afghanistan Chamber of Commerce and Industries, Ms Frishta Hazeq, President of the Royal Advertising and Printing Press; H.E. Mr Sham L. Bathija; and Dr Bohdan Krawchenko, UCA Director General.

 

Panelists recommended strengthened efforts to fight government waste and corruption and moving forward, utilising community networks such as mosques and schools to promote entrepreneurship and counteract misconceptions about the economic viability of SMEs. Panelists supported fostering agricultural SMEs and the greater participation of women. Learning lessons from neighbouring Central Asian countries was recommended. Entrepreneurs from Kyrgyzstan and Tajikistan declared their interest in facilitating imports from Afghanistan. The lively exchange between panelists and the audience included questions about SME access to finance, the impact of an overvalued currency on the competitiveness of Afghan goods and logistical challenges. Mr Mir Ahmad Joyenda, AREU Deputy Director for Communications and Advocacy, summarised the recommendations for strengthening SMEs.

 

Dr Krawchenko closed the event emphasising that “SMEs employ the majority of those in the labour force and account for a significant part of GDP in Afghanistan. Supporting their growth, including through regional trade, should be an important element of national economic policy.”

 

The symposium was held within the Heart of Asia - Istanbul Process regional cooperation framework, as part of Trade Commerce and Investment Opportunities and Education Confidence Building Measures. It was supported by the Government of Canada’s Department of Foreign Affairs, Trade and Development and the Aga Khan Foundation Canada.

 

The University of Central Asia (UCA)’s Regional Cooperation and Confidence Building (RCCB) in Central Asia and Afghanistan project improves the ability of senior public servants in Central Asia, including Afghanistan, Tajikistan, Kyrgyzstan and Kazakhstan, to access and formulate analyses required to develop their governments’ ability to confidently advance regional cooperation agendas.

Building on RCCB Phase I efforts to improve regional cooperation to augment regional stability and security, Phase II of RCCB is currently examining the importance of cross-border trade, particularly the roles of the informal trade sector and small and medium enterprises (SMEs). RCCB research will be published by IPPA and made available on its website. RCCB is being implemented  with financial support from the Government of Canada, through the Department of Foreign Affairs, Trade and Development (DFATD) and the Aga Khan Foundation Canada.

The Institute of Public Policy and Administration provides in-depth analysis of Central Asian economic policies and quality professional development opportunities for civil servants in the region. For more information, please see: http://www.ucentralasia.org/ippa.asp.