by Jana Nelhybel
Afghanistan Reconstruction Task Force, Trade
Development
from Export America
Strategically located along the historic Silk Road linking
Asia with Europe, Afghanistan is becoming better positioned
to reconnect old trade routes. After more than two decades of
war, Afghanistan is in the midst of political, economic, and
social transition. During the years of international and internecine
conflict, much of Afghanistan's infrastructure was destroyed.
Today only 17 percent of Afghanistan's 3,700-mile road system
remains in good condition. Rebuilding the physical infrastructure
is a key priority of the Afghan government. Restoring the road
network within Afghanistan and to neighboring countries is critical
to reviving Afghanistan's economy. Construction and refurbishing
of schools, homes, medical facilities, and government buildings
is under way throughout Afghanistan, but there is much more
to do.
U.S. companies interested in Afghanistan must be prepared to
think long-term in pursuing commercial opportunities. Challenges
include the lack of a banking system, proper telecommunications,
and a functioning legal system. The Afghan government, working
with the international community, has made progress in addressing
these issues. In September 2002, an investment law was passed,
and more than 2,000 businesses have registered with the Afghan
High Commission on Investment. In January of this year, the
Afghan government successfully completed the introduction of
a new currency. The U.S. government is creating provincial reconstruction
teams (consisting of U.S. Army Civil Affairs units and representatives
from the U.S. State Department and U.S. Agency for International
Development) to assist with reconstruction activities while
enhancing security through-out Afghanistan.
Afghanistan Reconstruction Task Force
In February 2002, U.S. Secretary of Commerce Donald L. Evans
created the Afghanistan Reconstruction Task Force to serve as
the commercial coordinator for rebuilding Afghanistan. One of
the roles of the task force is to act as a liaison with the
U.S. business community. The task force works closely with the
U.S. embassy in Kabul, other U.S. government agencies, and international
organizations to provide U.S. companies with counseling on the
latest developments in and opportunities for rebuilding Afghanistan.
U.S. companies interested in information about reconstruction
activities in Afghanistan and major project tenders can sign
up to receive alerts by sending an e-mail to afghaninfo@ita.doc.gov.
For business counseling on opportunities, call the task force
at (202) 482-1812, or visit www.export.gov/afghanistan.
According to the U.S. embassy in Kabul, best prospects for
U.S. companies include:
- Architectural, construction, and engineering services;
- Building materials for both residential and commercial
properties;
- Heavy equipment, including trucks,trailers, buses, motor
graders, concrete mixers, dumpers, paving finishers, and bulldozers;
- Irrigation planning and technologies;
- Road upgrades, lighting, and signage;
- Civil aviation sector and airport construction.
About one-fourth of urban housing has been damaged or destroyed
by the two decades of war. Many houses, factories, businesses,
and apartment buildings are being built or refurbished in Kabul.
Most of the construction is small in scale and includes one-to-three
story new buildings using old machinery and methods. After the
Soviets pulled out of Afghanistan, most heavy equipment was
either destroyed or sold, with much going to Pakistan. Due to
the lack of finances, there is a need for rented or used equipment.
Since most building materials in Afghanistan are of poor quality,
there are great opportunities for U.S. suppliers. Much of Afghanistan's
lumber was once purchased locally, but lumber is scarce and
the Afghan government is trying to reduce illegal cutting of
trees. Afghanistan once produced its own cement, but now only
a few small cement factories remain and they require extensive
rehabilitation. Currently, Pakistan and Iran are the major suppliers
of cement in Afghanistan.
Short-term opportunities in Afghanistan are related to reconstruction
projects led by U.S. agencies and international donors. Such
projects and sources of financing are available through the
World Bank, Asian Development Bank, U.S. Agency for International
Development, U.S. Trade and Development Agency, and the Overseas
Private Investment Corporation. Information about these sources
and how to pursue the opportunities is available on the Afghanistan
Reconstruction Task Force Web site.
The World Bank
In the construction and infrastructure sector, the World Bank
provides financing and technical assistance for infrastructure
development at the village and provincial levels, as well as
in urban areas. It also provides assistance for national highways.
The World Bank recently approved $108 million in funding for
the Emergency Transport Rehabilitation Project, which includes
rehabilitating roads, bridges, and tunnels as well as civil
aviation construction. The World Bank's Emergency Public
Works and Community Project includes grants for small-scale
rehabilitation projects.
Asian Development Bank
The Asian Development Bank (ADB) plays an important role in
rebuilding the transportation network in Afghanistan. In December
2002, the ADB approved a $150-million loan for an emergency
infrastructure rehabilitation and reconstruction project to
rebuild crucial infrastructure in the transportation and energy
sectors. This will restore much of the northern section of Afghanistan's
so-called ring road or highway.
U.S. Agency for International Development
In September 2002, President George W. Bush pledged $80 million
through the U.S. Agency for International Development (USAID)
to help rebuild the road linking Kabul, Kandahar, and Herat.
Additional funding is coming from Japan and Saudi Arabia. About
one-third of this road is nothing more than gravel or dirt,
and it can take days to travel the 600 miles from Kabul to Herat.
In addition to rehabilitating the highway, the project calls
for infrastructure development along the road. This project,
managed by the Louis Berger Group, holds many opportunities
for U.S. companies, including the following:
- Roadwork;
- Irrigation systems;
- Water and sanitation;
- Power transmission;
- Construction of schools, medical centers, administrative
centers, and bridges
U.S. companies interested in serving as a subcontractor or
supplier should visit the Louis Berger site (www.bergerafghanistan.com).
The Afghanistan Reconstruction Task Force can also counsel interested
U.S. companies.
U.S. Trade and Development Agency
The U.S. Trade and Development Agency funds feasibility studies
and definitional missions that support the development of modern
infrastructure and an open trading environment. The U.S. Trade
and Development Agency has approved funding of more than $2
million for Afghanistan that includes an assessment of the hotel
sector and a definitional mission for the aviation sector.
Overseas Private Investment Corporation
The Overseas Private Investment Corporation (OPIC) plays an
important role in financing and is active in the construction
sector. OPIC offers a $100-million line of credit for projects
that demonstrate substantial U.S. participation and ensure significant
benefits to the economic and social development of Afghanistan.
In February 2003, OPIC announced that it would provide up to
$35 million in financing and political risk insurance to build
the Hyatt Regency Kabul, a 200-room, five-star hotel.
Afghanistan Reconstruction Conference
U.S. companies seriously interested in doing business in Afghanistan
should attend the Afghanistan Reconstruction Conference, which
is co-sponsored by the U.S. Department of Commerce and the U.S.
Trade and Development Agency. Taking place June 8–10 in
Chicago, the conference will include the presentation of projects
by Afghan officials and offer participants the opportunity for
one-on-one meetings with Afghan officials as well as U.S. government
officials. About $3 billion worth of projects will be presented.
The conference will highlight many construction projects, including
the USAID/Louis Berger road and infrastructure project, the
Hyatt Regency Hotel construction project, and the World Bank
transportation project. For more information about the conference,
visit www.trademeetings.com.
Although there are many challenges still to be overcome in Afghanistan,
the commercial climate is improving and there are various opportunities
for U.S. companies to help rebuild Afghanistan. For more in-depth
information about the construction sector in Afghanistan, read
The Afghan Construction Sector: Opportunities and Obstacles,
available at www.export.gov/afghanistan.
Construction in Bamiyan Province, northwest of Kabul.
Photo courtesy of Afghanistan Reconstruction Task Force.
Back to top
