GLOBAL COUNTRY REPORT PDF 2013/811 Afghanistan -21-.pdf · 4 overview of business and trade at...

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GLOBAL COUNTRY

REPORT ON

AFGHANISTAN

BY

SMT. SARALABEN

VASANTBHAI MALAVIYA

SCHOOL OF MANAGEMENT

GONDAL ROAD, RAJKOT

COLLEGE CODE: 811

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CONTENTS

SR.

NO. PARTICULAR

PAGE

NO.

PART-I ECONOMICS OVERVIEW OF THE SELECTED COUNTRY

1 ECONOMIC OVERVIEW OF THE AFGHANISTAN 6

2 OVERVIEW OF THE INDUSTRIES TRADE AND COMMERCE 11

3 OVERVIEW DIFFERENT ECONOMIC SECTOR OF AFGHANISTAN 15

4 OVERVIEW OF BUSINESS AND TRADE AT INTERNATIONAL LEVEL 22

5 PESTEL ANALYSIS OF THE OVERVIEW OF THE MAJOR INDUSTRY 27

PART- II DIFFERENT SECTOR IN AFGHANISTAN

2 MINING SECTOR 33-52

3 AGRICULTURE AND LIVE STOCK

53-67

4 STEEL SECTOR

68-74

5 TEXTILE SECTORE 75-90

6 ENERGY SECTORE 90-101

7 BIBLIOGRAPHY

101-

103

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PART- I

ECONOMIC

OVERVIEW OF

AFGHANISTAN

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5

DEMOGRAPHICS OF AFGHANISTAN

Population: 30,419,928 (July 2012 est.)

0-14 years: 42.3% (male 6,464,070/female

6,149,468)

Age structure

15-64 years: 55.3% (male 8,460,486/female

8,031,968)

65 years and over: 2.4% (male 349,349/female

380,051) (2011 est.)

Growth rate: 2.22% (2011 est.)

Birth rate: 39.3 births/1,000 population (2011 est.)

Death rate: 14.59 deaths/1,000 population (July 2011 est.)

Total Population: 49.72 years

Life expectancy: Male: 48.45 years

Female: 51.05 years (2011 est.)

Fertility rate: 5.39 children born/woman (2011 est.)

Total: 121.63 deaths/1,000 live births

Infant mortality rate:

male: 129.51 deaths/1,000 live births

female: 113.36 deaths/1,000 live births (2011

est.)

Age structure:

0-14 years: 42.3% (male 6,464,070/female 6,149,468)

15-64 years: 55.3% (male 8,460,486/female 8,031,968)

65-over: 2.4% (male 349,349/female 380,051) (2011 est.)

Sex ratio:

At birth: 1.05 male(s)/female

Under 15: 1.03 male(s)/female

15-64 years: 1.04 male(s)/female

65-over: 0.87 male(s)/female

Nationality:

Nationality:

noun: Afghan(s)

adjective: Afghan

Major ethnic:

Pashtun 42%, Tajik 27%, Hazara 9%, Uzbek 9%,

Aimak 4%, Turkmen 3%, Baloch 2%, other 4%

Language:

Official:

Afghan Persian or Dari (official) 50%,

Pashto (official) 35%,

Turkic languages (primarily Uzbek and Turkmen)

Spoken:

11%,

30 minor languages (primarily Balochi and Pashai)

4%, much bilingualism

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Economic Overview Of the Country

Afghanistan is one of the world's poorest countries. Many years of war and political

instability have left the country in ruins, and dependent on foreign aid. The main source

of income in the country is agriculture, and during its good years, Afghanistan produces

enough food and food products to provide for the people, as well as to create a surplus

for export. The major food crops produced are: corn, rice, barley, wheat, vegetables,

fruits and nuts. In Afghanistan, industry is also based on agriculture, and pastoral raw

materials. The major industrial crops are: cotton, tobacco, madder, castor beans, and

sugar beets. Sheep farming is also extremely valuable. The major sheep product

exports are wool, and highly prized Karakul skins. Afghanistan is a land that is rich in

natural resources. There are numerous mineral and precious stone deposits, as well as

natural gas and yet untapped petroleum stores. Some of these resources have been

exploited, while others have remained relatively unexploited.

One of the poorest countries in the world, Afghanistan is the lowest-ranking country

outside Africa on the UN's human development index.

According to the World Bank, economic growth will be about 8.5 per cent in 2010-11

and GDP per capita will reach $609. Much of this is aid driven.

Unemployment is estimated at 40 per cent, and 42 per cent of Afghanistan's population

lives below the poverty line.

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The government's budget for the current year is $4.8 billion, with almost two-thirds going

toward military and security spending.

By the end of 2009, the international community had pledged over $62 billion in aid

since the fall of the Taliban but most of this has not actually been delivered. Afghanistan

is the No. 1 global aid recipient, receiving about $6.2 billion in aid in 2009, according to

Global Humanitarian Assistance.

Afghanistan's illicit opium trade, which primarily benefits the Taliban and local warlords,

had an estimated value of $2.8 billion in 2009, equivalent to one-quarter of the GDP.

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HISTORY

Afghanistan, often called the crossroads of Central Asia, has had a turbulent history. In

328 BC, Alexander the Great entered the territory of present-day Afghanistan, then part

of the Persian Empire, and established a Hellenistic state in Bactria (present-day

Balkh). Invasions by the Scythians, White Huns, and Turks followed in succeeding

centuries. In AD 642, Arabs invaded the entire region and introduced Islam.

Arab rule gave way to the Persians, who controlled the area until conquered by the

Turkic Ghaznavids in 998. Following Mahmud's short-lived dynasty, various princes

attempted to rule sections of the country until the destructive Mongol invasion of 1219.

Following Genghis Khan's death in 1227, a succession of petty chiefs and princes

struggled for supremacy until late in the 14th century, when one of his descendants,

Tamerlane, incorporated Afghanistan into his own vast Asian empire.

In 1747, Ahmad Shah Durrani, the founder of what is known today as Afghanistan,

established his rule. A Pashtun, Durrani was elected king by a tribal council after the

assassination of the Persian ruler Nadir Shah at Khabushan in the same year.

Throughout his reign, Durrani consolidated chieftainships, petty principalities, and

fragmented provinces into one country. His rule extended from Mashad in the west to

Kashmir and Delhi in the east, and from the Amu Darya (Oxus) River in the north to the

ArabianSeainthesouth.

GDP (2010est., purchasing power parity): $27.36 billion.

GDP growth (2010-2011): 8.2%.

GDP per capita (2009 est.): $900.

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Natural resources: Natural gas, oil, coal, petroleum, copper, chromite, talc,

barites, sulfur, lead, zinc, iron ore, salt, precious and semiprecious stones.

Agriculture (estimated 31.6% of GDP): Products--wheat, opium, sheepskins, lambskins,

corn, barley, rice, cotton, fruit, nuts, karakul pelts, wool, and mutton.

Industry (estimated 26.3% of GDP): Types--small-scale production of textiles, soap,

furniture, shoes, fertilizer, cement; hand-woven carpets; natural gas, coal, and copper.

Services (estimated 42.1% of GDP): Transport, retail, and

telecommunications.

Trade (2010-2011): Exports--$252 million (does not include opium): fruits and nuts,

hand-woven carpets, wool, cotton, hides and pelts, precious and semiprecious gems.

Major markets--Central Asian republics, United States, Russia, Pakistan, India.

Imports--$2.9 billion: food, petroleum products, textiles, machinery, and consumer

goods. Major suppliers--Central Asian republics, Pakistan, China, India. Currency: The

currency is the afghani, which was reintroduced as Afghanistan's new currency in

January 2003. As of November 21, 2011, $1 U.S. equaled approximately 48.28

Afghanis.

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Economy

Since 2002, Afghanistan is in transition from a centrally-planned and heavily regulated

Economy towards an open and free economy based on the market system. The

Economy encountered a structural change over the last decade, when the political shift

Occurred after the fall of Taliban in 2001 and with the adoption of the new constitution in

2004. The new constitution acknowledged ‘market economy’ as the economic system

and guaranteed the promotion and protection of private investment (Article 10 of the

Constitution). The economy has since been highly liberalized and the government has

focused on a private sector-led growth.

The economy has grown at a remarkable pace since 2003; average growth rate over

the period 2003-2011 has been 11.2 percent. Only few countries in the region have

experienced a growth rate above 10 percent in the last decade. For Afghanistan, this is

a remarkable achievement despite the fact that serious security challenges exist in the

country. Real GDP growth is estimated at 5.7 percent in 2011/12 and is projected to

increase to 7.1 percent in 2012/13. Income per capita is estimated by the World Bank at

US $501, which puts Afghanistan in the 175th position among 190 countries in the

world.

Inflation has been on average above 10 percent in the last nine years; the average

inflation rate for the period 2003-2011 is 11.3 percent. However, such a relatively high

inflation rate does not seem to have been a drag on economic growth. Period-average

inflation for the year 1390 (2011/12) has been 10.6 percent, whilst it is forecast to

remain in single digits in 2012/13.

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Overview of Industries Trade and Commerce

Trade and Industry:

Afghanistan is endowed with natural resources, including extensive deposits of natural

gas, petroleum, coal, copper, silver, gold, cobalt, chromites, talc, barites, sulphur, lead,

zinc, iron ore, salt, rare earth elements, and precious and semiprecious stones.

Unfortunately, ongoing instability in certain areas of the country, remote and rugged

terrain, and an inadequate infrastructure and transportation network have made mining

these resources difficult, and there have been few serious attempts to further explore or

exploit them. The first significant investment in the mining sector is expected to

commence soon, with the development of the Aynak copper deposit in east-central

Afghanistan. This project tender, awarded to a Chinese firm and valued at over $2.5

billion, is the largest international investment in Afghanistan to date. The Ministry of

Mines also plans to move forward with additional tenders in 2012.

The most important resource has been natural gas, first tapped in 1967. At their peak

during the 1980s, natural gas sales accounted for $300 million a year in export

revenues (56% of the total). Ninety percent of these exports went to the Soviet Union to

pay for imports and debts. However, during the withdrawal of Soviet troops in 1989,

Afghanistan's natural gas fields were capped to prevent sabotage by the mujahideen.

Restoration of gas production has been hampered by internal strife and the disruption of

traditional trading relationships following the collapse of the Soviet Union. In addition,

efforts are underway to create Reconstruction Opportunity Zones (ROZs). ROZs

stimulate badly needed jobs in underdeveloped areas where extremists lure fighting-age

young men into illicit and destabilizing activities. ROZs encourage investment by

allowing duty-free access to the U.S. for certain goods produced in Afghanistan.

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Trade:

Domestic trade: Despite continued conflict and blockades of supply routes in some

parts of the country, domestic trade continues throughout the country. The closure of

the Salang Tunnel has created many difficulties for domestic merchants, as they are no

longer able to bring the agricultural products of the north to Kabul and to other parts of

the country via Kabul. Even in blockaded areas, merchandise continues to move, albeit

in smaller quantities and with more difficulties.

Cross-border trade: Cross-border trade in domestic goods and foreign commodities

has increased between Afghanistan, Pakistan and Turkmenistan over the past several

years. According to a recent newspaper report, there has been an 11 percent increase

in the volume of trade between Afghanistan and Turkmenistan during the last year. In

September 1998, the Taliban authorities signed an agreement with the Government of

Turkmenistan on the import of petrol, diesel and jet fuel. The first consignment of the

fuel reportedly arrived in mid-December via Torghundi. This has, to some extent,

reduced Afghanistan’s dependency on fuel imports from Iran. In December, the Taliban

Government signed another agreement with Turkmenistan for the import of 600 tones of

liquefied natural gas.

With souring relations between the Taliban and Iran, Uzbekistan and Tajikistan, the

border points with these countries have been closed and trade activities have come to a

halt, which has limited Afghanistan’s access to these markets for its exports and

imports. However, the Torghundi border in Herat has remained open as the Taliban

managed to establish a cordial relation with Turkmenistan. In the past, Afghan traders

used to import goods through Bander-Abbas and Islam Qala, while now they have

switched to Bander-Abbas-Turkmenistan and Torghundi, which has increased their

transportation costs.

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Both Pakistan and Afghanistan benefit from cross-border trade, despite their claim to

have been affected by the existing trading mechanism--i.e. the Afghan Transit Trade.

Under the agreement of the Afghan Transit Trade, Pakistan allows Afghanistan to have

access to the sea and to undertake trade and commerce with the international

community to the extent required by Afghanistan's economy and commerce

requirements. Most of the goods imported under the ATT are reportedly electronics and

other consumer items, which cross Pakistan's territory duty free. Some of these are then

re-exported illegally through smuggling back into Pakistan. On several occasions, the

Government of Pakistan has tried to limit the amount of goods imported under the ATT

by dropping some thirty items from the ATT list. In 1995, for instance, the Government

of Pakistan made a unilateral decision and took seventeen items including artificial silk

fiber and clothing off the list of the ATT. During an interview on 2 January 1999,

Pakistan’s Federal Finance Minister Ishaq Dar said that the government had requested

the Afghan authorities to review their transit trade and agree either to pay duties equal

to those in Pakistan or reduce the quantity of commodities to be imported (The Frontier

Post, 3 January, 1999). The Taliban authorities have not replied to this request.

Despite these efforts by the Government of Pakistan, there are indications that the

volume of re-exports from Afghanistan to Pakistan has increased during the last fiscal

year. After the ban on the ATT, most of these items are imported via Gulf countries to

the Afghan cities of Kandahar and Jalalabad and then re-exported into Peshawar and

Quetta in Pakistan. A recent newspaper report indicates that India-made "Modi" tires

are smuggled into Pakistan through Afghanistan via Central Asia and the Russian ports

of Vladivostok and Odessa since the import of tires under the ATT was banned 1994

(Inter Press Service 20/4/99).

According to a report published by The News (30 December 1998), it was estimated

that goods worth Rs. 23 billion (US$ 500 million) have been imported under the ATT

during the current fiscal year while the same imports for the previous fiscal year

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amounted to RS 10 billion (approximately US$ 218 million). According to another report,

between July and December 1998, the total trade has increased by around US$ 43

million over the same period in 1997 (Inter Press Service 20/4/99). According to a World

Bank report, the total trade between Afghanistan and Pakistan was estimated to be US$

2.5 billion in 1996/97, of which US$ 1.96 billion was estimated to be the value of re-

exported goods from Afghanistan into Pakistan.

These examples indicate that banning the Afghan Transit Trade facility alone does not

help reduce smuggling activities in Pakistan and may have negative repercussions for

Pakistan in the longer term. Once Afghanistan manages to have access to other

neighboring markets, they may retaliate against Pakistan’s unilateral decision and

strengthen their trade relations with other countries where they may have a comparative

advantage.

Realizing the benefit from trade, and upon requests from the business community in

NWFP, the Government of Pakistan issued Statute Regulatory Order (SRO) No. 138 on

3 March 1999, which allows the export of all commodities produced or manufactured in

Pakistan, excluding those produced by manufacturing bond, via land routes to

Afghanistan against Pakistani rupees. These exports will not be entitled to any duty

drawback or zero rating of sales tax (The Frontier Post, 17 March 1999)

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Overview Different Economic Sector Of Afghanistan

Agriculture:

An estimated 79% of Afghans are dependent on agriculture and related agribusinesses for

heir livelihoods. Opium poppy production and the opium trade continue to have a

significant monetary share of the country’s agricultural economy. Licit commercial

agriculture is playing a significant role in increasing the income of rural populations. The

major food crops produced are: corn, rice, barley, wheat, vegetables, fruits, and nuts. The

major industrial crops are: cotton, tobacco, madder, castor beans, and sugar beets.

Agricultural production is constrained by an almost total dependence on erratic winter

snows and spring rains for water; irrigation is primitive. Relatively little use is made of

machines, chemical fertilizer, or pesticides.

Afghan farmers need financing to buy quality seeds, fertilizer, and equipment. The United

States and the international community are helping to restore banking and credit services

to rural lenders, which now administer loans in nearly two-thirds of the country’s provinces.

As of September 2009, more than 52,300 agricultural loans ranging from approximately

$200 to $2 million had gone to small businesses, with a repayment rate of 94%. Of these,

49% of loans had gone to women-owned businesses, and 27,700 borrowers were women.

The program’s success has encouraged commercial banks to extend revolving loans for

agribusinesses. Funds have been provided for leases and to promote agro-processing and

support for crop exports.

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In 2009, the United States significantly revised its counter-narcotics strategy for

Afghanistan, ending direct involvement in eradication of poppy and increasing support for

licit agriculture and interdiction. The new strategy puts heavy focus on going after those

targets where there is a strong nexus between the insurgency and the narcotics trade, to

deny resources to the Taliban. Poppy is easy to cultivate and opium is easily

Transported. Afghanistan produces the majority of the world’s illicit opium. However,

poppy cultivation has dropped by over 35% since 2007. Much of Afghanistan's opium

production is refined into heroin and is either consumed by a growing regional addict

population or exported, primarily to Western Europe

Transportation:

Restoration of the “Ring Road” that links Kabul, Kandahar, and Herat with the northern

cities of Mazar-e-Sharif and Kunduz continues. Much of the road has now been

completed, including economically vital stretches linking Kabul, Kandahar, and Herat.

Landlocked Afghanistan has little functioning rail, but the Amu Darya (Oxus) River, which

forms part of Afghanistan's border with Turkmenistan, Uzbekistan, and Tajikistan, has

barge traffic. During their occupation of the country, the Soviets completed a bridge across

The Amu Darya. The Shirkan Bandar bridge, reconstructed with U.S. assistance,

reopened in 2007 and has opened vital trade routes between Afghanistan and Tajikistan.

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The new Hairatan to Mazar-e-Sharif railway began operation in August 2011. The railway

aims to increase trade between Afghanistan and Uzbekistan, reduce transport costs,

increase vehicle operation savings, and create job opportunities. The railway construction

project improved Hairatan's marshaling yard and railway station, constructed a new single-

track railway line of about 75 km from Hairatan to Mazar-e-Sharif, constructed a new

transshipment terminal facility at Mazar-e-Sharif, installed signaling and

telecommunication systems, developed institutional capacity of the railway sector, and

provided construction supervision and project management consultancy.

Afghanistan's national airline, Ariana, operates domestic and international routes, including

flights to New Delhi, Islamabad, Dubai, Moscow, Istanbul, Frankfurt, and Tehran. Civil

aviation has been expanding rapidly and several private airlines now offer an alternative to

Ariana and operate a domestic and international route network. The first, Kam Air,

commenced domestic operations in November 2003.

Power

For nearly 3 decades, the availability of secure energy supplies in Afghanistan was

significantly disrupted by conflict. Much of the country's power generation, transmission,

and distribution infrastructure was destroyed, and what remained was stretched far

beyond capacity. More than 90% of the population had no access to electricity. In January

2009, with the help of the Asian Development Bank and the Indian Government, electricity

began to flow into Kabul along a newly constructed transmission line running from

neighboring Uzbekistan. For the first time in more than a generation, the majority of the

capital's 4 million people enjoy the benefits of power. In 2001, Afghanistan produced 430

megawatts of electricity. As of 2009, the installed generation capacity had grown to 1,028

Megawatts. International statistics maintained by the World Bank indicate the ratio of gross

domestic product (GDP) growth to electrical production is approximately $1,000 to 300

kWh.

The United States has provided considerable assistance to help develop new electricity

generation capacity and provide 24-hour power in key cities including Kabul, LashkarGah,

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and Kandahar. Major projects carried out include refurbishment of power generation

capacity at Kajaki Dam in the south and opening the Kabul power plant.

Under the U.S. and partners’ supervision, the Afghan Government has transferred all

assets, liabilities, and personnel from the troubled, state-run power utility Da Afghanistan

BreshnaMosesa (DABM) to the new corporatized national electricity utility Da Afghanistan

BreshnaSherkat (DABS). The move was a significant breakthrough in Afghan Government

and donor efforts to modernize and begin to commercialize the national electricity sector.

Reliable, affordable electricity is vitally important to Afghan economic growth, prosperity,

and stability. The energy infrastructure continues to be a priority for the U.S. and other

donor nations.

Demining:

Landmines and other explosive remnants of war affect virtually every province in

Afghanistan, a tragic legacy of nearly 3 decades of continuous conflict. According to the

Mine Action Coordination Center of Afghanistan, 77 people were injured or killed in the

first quarter of 2011 by landmines and other explosive remnants of war. This represented

a significant decrease compared to the high point of a monthly average of 176 casualties

in 2001-2002. Of the total, 77% were children and 94% of the overall casualties were

caused by explosive remnants of war and unexploded ordnance. As in many countries

struggling to recover from conflicts, landmines and unexploded ordnance inhibit

development, disrupt markets and production, prevent the delivery of goods and services,

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and generally obstruct reconstruction and stabilization efforts. Removing these deadly

hazards enables socio-economic development that could further the larger goal of

promoting stability and security in Afghanistan and the wider region.

Many Afghan non-governmental organizations (NGOs) such as Organization for Mine

Clearance and Afghan Rehabilitation (OMAR), Afghan Technical Consultants (ATC),

Demining Agency for Afghanistan (DAFA), Mine Clearance Planning Agency (MCPA), and

Mine Detection Center Afghanistan (MDC) have hard-won demining expertise and

experience. The United States works with a wide array of international partners in mine

action efforts in Afghanistan, but the majority of U.S. financial assistance for demining in

Afghanistan goes directly to Afghan-run NGOs, which have pioneered an approach called

“community-based demining.” The United States also works with international NGOs: The

HALO Trust, Swiss Foundation for Mine Action, Marshall Legacy Institute, Clear Path

International, and Danish Demining Group.

In community-based demining, Afghan NGOs recruit, train, and employ local workers, in

close partnership with community leaders, to survey and clear explosives. Training local

Afghan demining technicians offers a new skill, allowing the country to build self-sufficient

capabilities to continue resolving its own issues, as well as lend support to other countries

recovering from conflict in the future.

Community-based demining represents a new and unique opportunity to link Afghan and

U.S. humanitarian, development, and counterinsurgency objectives. It furnishes jobs that

keep young men employed, establishes trust with local leaders, and enables local

personnel to participate in taking back their community, thus reinforcing local governance

and reducing insurgent influence.

Since FY 1997, the United States has provided more than $220 million for humanitarian

mine action in Afghanistan, making it the largest international donor to Afghanistan for this

type of assistance. International and Afghan partners have used these funds to clear more

than 225 million square meters of land and are now extending these efforts through

community-based demining.

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Education:

Afghanistan has made impressive advances in increasing basic education. More than

10,000 schools are providing education services to over 7 million children, a more than

six-fold enrollment growth since 2001. During the Taliban regime no girls were registered

in schools. Today, 37% of the student population is girls. Similarly, the number of teachers

has increased seven-fold to 142,500, of whom nearly 40,000 are women.

Adult literacy activities increased rapidly in 2009. Learning centers grew from 1,100 to

6,865, and activities expanded from 9 to 20 provinces, bringing literacy and financial

services to over 169,000 beneficiaries (62% female). Ongoing support of literacy and basic

education is paramount, as well as the quality and preparation of teachers in order to close

the literacy gap left by 30 years of conflict. University enrollment has grown to 62,000.

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Health:

Afghanistan has one of the highest mortality rates in the world: one in five children dies

before the age of five and one out of every eight Afghan women die from causes related to

pregnancy and childbirth each year. Life expectancy is 49 years for both men and women.

While these statistics are tragic, there has been progress. Recent reports indicate that

85% of the population has access to basic health services within 1 hour of travel to a

health facility (68% for those on foot)--up from 9% in 2002. More than 1,650 professional

midwives are employed by the ministry of public health, providing health care and

childbirth services across Afghanistan. This has helped reduce infant mortality rates, and

child mortality has also fallen since 2002. The U.S. through various agencies and in

conjunction with the Afghan Government has implemented health programs to help meet

the immediate health care needs of the population by strengthening the health care

service delivery system; addressing the management leadership and stewardship capacity

of the Afghan health care system at the central, provincial, district, and community levels;

and increasing demand for and access to quality health products and services through the

private sector--60% of the population receive health care from the private sector.

Overview Of Business and Trade at International Level

India and Afghanistan historically have shared close cultural and political ties, and the

complexity of their diplomatic history reflects this fact. India was among the first non

Communist states to recognize the government installed by the Soviet Union after its

1979* invasion of Afghanistan. New Delhi supported successive governments in Kabul

until the rise of the Taliban in the 1990s. But like most countries, India never recognized

the Taliban's assumption of power in 1996 (only Saudi Arabia, Pakistan, and the United

Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.

war in Afghanistan that resulted, ties between India and Afghanistan grew strong once

again. India has restored full diplomatic relations, and has provided hundreds of millions of

dollars in aid for Afghanistan's reconstruction and development. But Pakistan views India's

growing influence in Afghanistan as a threat to its own interests in the region. Experts fear

for Afghanistan's stability as India and Pakistan compete for influence in the war

country.

FOREIGN RELATIONS

Afghanistan is an active me

international community, and has diplomatic

relations with countries around the world. In

December 2002, the six nations that border

Afghanistan signed a 'Good Neighbor'

Declaration, in which they pledged to respect

Afghanistan's independence a

integrity. Neighboring countries, including

regional partners such as Russia, Turkey, and

China, signed the Istanbul.

22



ic history reflects this fact. India was among the first non



an in the 1990s. But like most countries, India never recognized


Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.

tan that resulted, ties between India and Afghanistan grew strong once




for Afghanistan's stability as India and Pakistan compete for influence in the war

Afghanistan is an active member of the

international community, and has diplomatic

relations with countries around the world. In

December 2002, the six nations that border

Afghanistan signed a 'Good Neighbor'

Declaration, in which they pledged to respect

Afghanistan's independence and territorial

integrity. Neighboring countries, including

regional partners such as Russia, Turkey, and



ic history reflects this fact. India was among the first non-



an in the 1990s. But like most countries, India never recognized


Arab Emirates recognized the Taliban regime).Following the 9/11 attacks and the U.S.-led

tan that resulted, ties between India and Afghanistan grew strong once




for Afghanistan's stability as India and Pakistan compete for influence in the war-torn

23

Declaration in November 2011, reaffirming the ‘Good Neighbor’ Declaration and

committing to the Istanbul Process for continued regional meetings. In addition,

Afghanistan and its South Asia neighbors meet annually at the Regional Economic

Cooperation Conference (RECC), promoting intra-regional relations and economic

cooperation. On December 5, 2011, the international community is scheduled to follow up

on these regional commitments by meeting again in Bonn, 10 years after the first Bonn

conference in 2001 that established Afghanistan's interim government. Participants at the

2011 conference will discuss the international community's long-term engagement in

Afghanistan and support for Afghan security and development.

� Pakistan

During the war against the Soviet occupation,

Pakistan served as the primary logistical conduit for

the Afghan resistance. Pakistan initially developed

close ties to the Taliban regime, and extended

recognition in 1997. However, after September 11,

2001 Pakistan altered its policy in support of coalition

efforts to remove the Taliban. Although frictions and

suspicions persist, Afghanistan and Pakistan are

engaged in dialogue to resolve bilateral issues such

as border security, immigration, and trade. Regular

meetings are held at the head of state and ministerial levels through a trilateral dialogue

between Afghanistan, Pakistan, and Turkey. The main issue of contention between

Afghanistan and Pakistan is the sanctuary Afghan insurgents enjoy in Pakistan’s

mountainous border regions.

� Iran

Afghanistan's relations with Iran have fluctuated over the years,

the water rights of the Helmand River as the main issue of contention. Following the Soviet

invasion, which Iran opposed, relations deteriorated. Iran supported the cause of the

Afghan resistance and provided financial and milit

pledged loyalty to the Iranian vision of Islamic revolution. Following the emergence of the

Taliban and their harsh treatment of Afghanistan's Shi'a minority, Iran stepped up

assistance to the Northern Alliance. Relation

after Taliban forces seized the Iranian consulate in Mazar

diplomats. Since the fall of the Taliban, Afghanistan's relations with Iran have improved.

Iran has been active in Afghan reconstruction efforts, particularly in the western portion of

the country.

� Central Asia

In order to diversify supply routes to Afghanistan to meet

immediate military needs, U.S. military planners have

adopted the Northern Distribution Network (N

commercially based logistical corridor connecting Baltic

and Black Sea ports with Afghanistan via Russia,

Central Asia, and the Caucasus. Its establishment also

offers an opportunity for intraregional trade. Such

commerce can provide sustainable inc

Afghanistan and Central Asia, deepen Afghanistan's

integration with neighboring States, and contribute to

regional stability.

24

Afghanistan's relations with Iran have fluctuated over the years, with periodic disputes over



Afghan resistance and provided financial and military assistance to rebel leaders who



assistance to the Northern Alliance. Relations with the Taliban deteriorated further in 1998

after Taliban forces seized the Iranian consulate in Mazar-e-Sharif and executed Iranian


an reconstruction efforts, particularly in the western portion of

In order to diversify supply routes to Afghanistan to meet

immediate military needs, U.S. military planners have

adopted the Northern Distribution Network (NDN), a

commercially based logistical corridor connecting Baltic

and Black Sea ports with Afghanistan via Russia,

Central Asia, and the Caucasus. Its establishment also

offers an opportunity for intraregional trade. Such

commerce can provide sustainable income for

Afghanistan and Central Asia, deepen Afghanistan's

integration with neighboring States, and contribute to

with periodic disputes over



ary assistance to rebel leaders who



s with the Taliban deteriorated further in 1998

Sharif and executed Iranian


an reconstruction efforts, particularly in the western portion of

25

Over the past few years, Afghanistan and its northern neighbors have sought to

increase trust and economic cooperation. At last count, 122 Afghan enterprises were

registered in Uzbekistan, 39 of which operated with 100% Afghan investment.

Tajikistan and Uzbekistan are in various stages of supplying electricity to northern

Afghanistan and Kabul. Turkmenistan and Afghanistan are seeking closer cooperation

through a broad package of mutual cooperation that includes support for a trans-

Afghan gas pipeline, transit of Turkmen electricity to neighboring countries through

Afghanistan, extension of a Turkmen rail network to Afghanistan, and a common

struggle against narcotics and terrorism.

� UNEfforts

The UN has played an important role in Afghanistan for more than 20 years, assisting in

the repatriation of Afghan refugees and providing humanitarian aid. The UN Assistance

Mission in Afghanistan (UNAMA), launched in October 2001, was instrumental in helping

restore peace and stability in Afghanistan after the fall of the Taliban, organizing the

Afghan presidential elections held in October 2004 and National Assembly elections held

in 2005.

On January 28, 2010, Staffan de Mistura of Sweden was appointed as Special

Representative of the UN Secretary-General for Afghanistan (SRSG). In March 2011, the

UN Security Council renewed UNAMA's mandate until March 2012. UNSC resolutions

authorizing UNAMA have recognized the key role the UN plays in coordinating

international efforts in Afghanistan and the critical support UNAMA provides to the Afghan

Government on matters of security, governance, and regional cooperation. They have

directed that UNAMA and the SRSG continue to lead international civilian efforts on the

rule of law, transitional justice, anti-corruption, realizing the Afghan Government’s

development and governance priorities, and strengthening cooperation between ISAF and

the NATO Civilian Representative to improve civilian-military, coordination.

26

� U.S.-AFGHAN RELATIONS

After the fall of the Taliban, the U.S. supported the emergence of a broad-based

government, representative of all Afghans, and actively encouraged a UN role in the

national reconciliation process in Afghanistan. The U.S. has made a long-term

commitment to help Afghanistan rebuild itself after years of war. The U.S. and others in

the international community currently provide resources and expertise to Afghanistan in

a variety of areas, including humanitarian relief and assistance, capacity-building,

security needs, counter-narcotic programs, and infrastructure projects.

During his December 1, 2009 speech at West Point, President Barack Obama laid down

the core of U.S. goals in Afghanistan: to disrupt, dismantle, and defeat al-Qaeda and its

safe havens in Pakistan, and to prevent their return to Afghanistan. In June 2011,

President Obama announced that the United States would remove 10,000 of its troops

from Afghanistan by the end of 2011 and a total of 33,000 troops by the summer of

2012, fully recovering a surge in personnel that he had announced at West Point. After

this initial reduction, U.S. troops are to continue the phased drawdown at a steady pace

as Afghan security forces move into the lead. By 2014, this transition process will be

complete, and Afghanistan will be responsible for its own security.

27

Overview of Major industries in Afghanistan

28

PESTEL ANALYSIS

In business PESTLE analysis role is very important originally designed as a business

environmental? The PESTLE analysis is an analysis of the external in which a business

operates. These are factors which are beyond the control or influence of a business.

However are important to be aware of when doing product development, business or

strategy planning PESTLE means

P- Political

E- Economical

S- Social

T- Technological

L- Legal

E-Environmental

Overview of Major industries in Afghanistan

Political Factors

Political factors include government regulations and legal issues and define both formal

and informal rules under which the firm must operate. Some examples include:

� trade restrictions and tariffs

� political stability

� Government type and stability

� Regulation and de-regulation trends

� Social and employment legislation

� Tax policy, and trade and tariff controls

� Environmental and consumer-protection legislation

� Likely changes in the political environment

29

� Economic Factors

Economic factors affect the purchasing power of potential customers and the firm's cost of

capital. The following are examples of factors in the macroeconomic:

� economic growth

� interest rates

� exchange rates

� inflation rate

� Stage of business cycle

� Current and project economic growth, inflation and interest rates

� Unemployment and labor supply

� Labor costs

� Levels of disposable income and income distribution

� Impact of globalization

� Likely impact of technological or other change on the economy

� Likely changes in the economic environment

Social Factors

Social factors include the demographic and cultural aspects of the external macro

environment. These factors affect customer needs and the size of potential markets. Some

social factors include:

� health consciousness

� Career attitudes

� Emphasis on safety

� Population growth rate and age profile

� Population health, education and social mobility, and attitudes to these

� Population employment patterns, job market freedom and attitudes to work

� Press attitudes, public opinion, social attitudes and social taboos

30

� Lifestyle choices and attitudes to these

� Socio-Cultural changes

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production

levels, and influence outsourcing decisions. Some technological factors include:

� Impact of emerging technologies

� Impact of Internet, reduction in communications costs and increased remote

working

� Research and Development activity

� Impact of technology transfer

Legal Factors

� The Central Government, in consultation with the State Governments, formulates

the legal measures for regulation of mines and minerals in order to ensure basic

uniformity in mineral administration as well as to maintain the pace of development

of mineral resources, in consonance with the national policy goals.

� The Mines and Minerals (Development and Regulation Act, 1957, (‘MMDR’) and

the Mines Act, 1952, together with the rules and regulations framed under them,

constitute the basic laws governing the mining sector in India.

� The National Mineral Policy in 1993 recognized the need for encouraging private

investment, including foreign direct investment and for attracting state-of-the-art

technology in the mineral sector.

31

� Employment law

� Trade and product restrictions

� Health and safety regulations

� International laws

� Monopolies commission

Environmental factors

� Extraction and development of minerals are closely interlinked with other natural

resources like land, water, air and forest. Hence, the management of this precious

resource and its optimal and economical use are matters of national importance.

� The Mining Companies has to take steps in executing the highest standards of

quality, environment health and safety (QEHS) management systems. All its mines

and their support services are to be certified to be compliant with ISO 14001–2004

Environment Management System, ISO 9001-2000 Quality Management System

and OHSAS 18001–1999 Safety and Health Management System compliant.

� The Mining Companies also have to comply with the regulations of the Environment

Protection Act. There are certain restrictions on undertaking new development

projects or expansion and modernization of existing ones, unless prior

environmental clearance has been obtained from the Ministry.

� Pollution problems

� Planning permissions

� Waste disposal

� Noise controls

� Environmental pressure groups

32

PART- II

DIFFERENT

SECTOR IN

AFGHANISTAN

33

MINING SECTOR IN

AFGHANISTAN

2.1 INTRODUCTION OF THE MINING SECTOR

The mining sector is made up of organizations whose primary activity is the extraction of

naturally occurring mineral solids or natural resources. Examples of these types of

minerals are coal, ores and precious stones. The mining industry also broadly covers

quarrying and well operations. The sector comprises two basic activities: mine operations

and mining support activities.

"Mine operations" involve setting up the mine, quarry or well for the organization, or on

behalf of another organization for a small fee.

"Mining support activities" are those operations that must be carried out before mining

begins; exploration and other services (except site preparation and construction of oil/gas

pipelines).

34


made up of organizations whose primary activity is the extraction of



operations. The sector comprises two basic activities: mine operations


behalf of another organization for a small fee.

activities" are those operations that must be carried out before mining



made up of organizations whose primary activity is the extraction of



operations. The sector comprises two basic activities: mine operations


activities" are those operations that must be carried out before mining


35

The mining and metal industry is made up of six categories: aluminum, gold, precious

metals, other metal extraction, coal mining and steel. Steel (and iron) is the biggest

segment, as it makes up more than half the market in terms of volume, followed by

aluminum in terms of the global metal market which is focused more in the

The essence of mining in extracting mineral wealth from the earth is to drive an excavation

or excavations from the surface to the mineral deposit. Nor-mally, these openings into the

earth are meant to allow personnel to enter into the underground deposit. However,

boreholes are at times used to extract the mineral values from the earth. These fields of

boreholes are also called mines, as they are the means to mine a mineral deposit, even if

no one enters into the geologic realm of the deposit. Note that when the economic

profitability of a mineral deposit has been established with some confidence, ore or ore

deposit is preferred as the descriptive term for the mineral occurrence. However, coal and

industrial mineral deposits are often not so designated, even if their profitability has been

firmly established. If the excavation used for mining is entirely open or operated from the

surface, it is termed a surface mine.

If the excavation consists of openings for human entry below the earth’s surface, it is called

an underground mine. The details of the procedure, layout, and equipment used in the

mine distinguish the mining method. This is determined by the geologic, physical,

environmental, economic, and legal circumstances that pertain to the ore deposit being

mined. Mining is never properly done in isolation, nor is it an entity in itself. It is preceded by

geologic investigations that locate the deposit and economic analyses that prove it

financially feasible. Following extraction of the fuel, industrial mineral or metallic ore, and

the run-of-mine material is generally cleaned or concentrated. This preparation or

beneficiation of the mineral into a higher-quality product is termed mineral processing. The

mineral products so produced may then undergo further concentration, refinement, or

fabrication during conversion, smelting, or refining to provide consumer products. The end

step in converting a mineral material into a useful product is marketing. Quite frequently,

excavation in the earth is employed for purposes other than mining.

36

SOURCES AND TYPES

In 2010, Pentagon officials and American geologists discovered about $1 trillion in

untapped mineral deposits in Afghanistan, enough to fundamentally alter the Afghan

economy and perhaps the Afghan war itself, according to senior American government

officials. According to other reports the total mineral riches of Afghanistan may be worth

over $3 trillion US dollars. "The previously unknown deposits — including huge veins of

iron, copper, cobalt, gold, and critical industrial metals like lithium — are so big and include

so many minerals that are essential to modern industry that Afghanistan could eventually

be transformed into one of the most important mining centres in the world". Ghazni

Province may hold the world's largest lithium reserves.

COPPER

37

No copper mines were active in the country in 2006. In the past, copper had been mined

from Herat Province and Farah Province in the west, Kapisa Province in the east, and

Kandahar Province and Zabul Province in the south. As of 2006, interest was focused on

the Aynak, the Darband, and the Jawkhar prospects in southeastern Afghanistan. Copper

mineralization at Aynak in Logar Province was stratabound and characterized by bornite

and chalcopyrite disseminated in dolomite marble and quartz-biotite-dolomite schists of the

Loy Khwar Formation. Although a resource of 240 million metric tons at a grade of 2.3%

copper had been reported, a number of small ore lenses were potentially not practically and

economically minable. Open pit and underground mining would be needed to exploit the

main ore body, and other infrastructure problems, such as inadequate power and water,

were also likely. The new (2005) Mining Law might favor the development of the deposit by

using public tenders. The Government issued a public tender for the deposit in 2006 with a

deadline of October 28, 2006, and expected the granting of concessions in February 2007.

Nine mining companies from Australia, China, India, and the United States were interested

in the prospect.

In November 2007, a 30-year lease was granted the development of a copper mine at Mes

Aynak in Logar Province to the China Metallurgical Group for $3 billion, making it the

biggest foreign investment and private business venture in Afghanistan’s history. It is

believed to contain the second-largest reserves of copper ore in the world and the deposits

are estimated to be worth up to $88 billion. It is also the site of one of Afghanistan's most

important archaeological sites and, although there are desperate efforts being made to

save as much as possible, the main Buddhist monastery and other remains are due to be

bulldozed to make way for the mine.

GEMSTONES

Afghanistan is known to have exploited its precious and semiprecious gemstone dep

These deposits include aquamarine, emerald, fluorite, garnet, kunzite, ruby, sapphire,

semiprecious lapis lazuli, topaz, tourmaline, and varieties of quartz. The four main

gemstone-producing areas are those of Badakhshan, Jegdalek, Nuristan, and the

Valley. Artisanal mining of gemstones in the country used primitive methods. Some

gemstones were exported illicitly, mostly to India (which was the world’s leading import

market for colored gemstones and an outlet for higher quality gems) and to

Pakistan market.

LITHIUM

Lithium is a vital metal that is mostly used in the manufacture of rechargeable batteries for

mobile phones, laptops and electric cars. It is believed that Afghanistan has plenty of

lithium.

38

Afghanistan is known to have exploited its precious and semiprecious gemstone dep



producing areas are those of Badakhshan, Jegdalek, Nuristan, and the



market for colored gemstones and an outlet for higher quality gems) and to



Afghanistan is known to have exploited its precious and semiprecious gemstone deposits.



producing areas are those of Badakhshan, Jegdalek, Nuristan, and the Panjshir



market for colored gemstones and an outlet for higher quality gems) and to the domestic



39

GOLD

As of 2006, gold was mined from the Samti placer deposit in Takhar Province in the north

by groups of artisanal miners. Badakhshan Province also had occurrences of placer gold

deposits. The deposits were found on the western flanks of the mountains in alluvium or

alluvial fan in several river valleys, particularly in the Anjir, the Hasar, the Nooraba, and the

Panj Valleys. The Samti deposit is located in the Panj River Valley and was estimated to

contain between 20 and 25 metric tons of gold. The southern regions of Afghanistan are

believed to contain large gold deposits, particularly the Helmand Province. There is an

estimated $30 billion in gold and copper deposits in the Zana Khan, an area of the

Zarkashan skarn deposit in Ghazni province.

40

IRON ORE

The best known and largest iron oxide deposit in Afghanistan is located at Hajigak in

Bamyan Province. The deposit itself stretches over 32 km and contains 16 separate

zones, up to 5 km in length, 380 m wide and extending 550 m down dip, seven of which

have been studied in detail. The ore occurs in both primary and oxidized states. The

primary ore accounts for 80% of the deposit and consists of magnetite, pyrite and minor

chalcopyrite. The remaining 20% is oxidized and consists of three hematitic ore types. The

deposit remained unmined in 2006. The presence of coking coal nearby at Shabashak in

the Dar-l-Suf District and large iron ore resources made the deposit viable for future

development of an Afghan steel industry. Open pit mining and blast furnace smelting

operations were envisioned by an early feasibility study. The Hajigak also includes the

unusual niobium, a soft metal used in the production of superconducting steel.

41

Role of Mining sector in economy of Afghanistan

According to analysts, the mining and excavation of Afghanistan’s precious minerals and

natural resources hold the potential to catalyze massive economic growth and enhance

the livelihoods of tens of thousands of Afghans across the country. However,

transparency, organization, and investment are needed to push forward this growth.

Afghanistan anticipates that mining and the excavation of its minerals will significantly

boost economic development at a critical time, as the country faces foreign troop

withdrawal in 2014 and the international community begins to draw down development

assistance. The Afghan government reports that internal revenues have increased thanks

to mining and excavation, but to ensure a stable and upward trajectory, the extractive

industry in Afghanistan needs foreign investment, organized transport, strong

infrastructure, and above all, security.

Based on several geological surveys of the Ministry of Mines, Afghanistan has gold, silver,

copper, iron, azure and other precious minerals and stones which hold tremendous

potential in the development of the country’s feeble economy. The U.S. Department of

Defense has already estimated the value of Afghanistan’s mines at up to a trillion U.S.

dollars.

The Afghan government has already taken several major steps in the development of the

country’s mining industry. The government has completed the bidding and contracting

process of the Aynak Copper Deposit, the Hajigak Iron Deposit, and the Amoo area’s fuel

and gas reserves.

Mining of the Aynak Copper Deposit was contracted to a Chinese company [MCC] in

2007. According to geological surveys, with approximately 100 million tons of copper,

Aynak is the ninth richest copper mine in the world.

Given that Afghanistan does not have the existing infrastructure and capital to excavate its

resources on its own, this emerging industry will, for now, rely on foreign investment.

“Afghanistan would reap the total rewards from the mines if the government itself were

able excavate them,” said Ahmad Shah Faizi, head of the Geology Department at the

Afghanistan Science Academy. “To some extent the country will benefit from the foreign

excavation. There are several multi

should be carefully considered during the bidding and contracting process.”

Abdul Rayees Alani, member of the Afghanistan Science Academy asserts that the

extractive industries alone cannot make Afghanistan economically self

Economic stability and growth in Afghanistan requires multi

development.

Alani further asserts that investment in industrial factories and geological higher education

institutes is key to tapping into the potential of this economic development.

“Contractors should have financial solvency,

sufficient human resources, quali

professionals, and modern machinery in order to

receive a contract,” said

spokesperson for the Ministry of Mines. “These

types of contracts benefit Afghanistan.”

42



hanistan Science Academy. “To some extent the country will benefit from the foreign

excavation. There are several multi-minerals mines in Afghanistan, so the multi

should be carefully considered during the bidding and contracting process.”

ayees Alani, member of the Afghanistan Science Academy asserts that the

extractive industries alone cannot make Afghanistan economically self

Economic stability and growth in Afghanistan requires multi-industry diversification and


institutes is key to tapping into the potential of this economic development.

“Contractors should have financial solvency,

sufficient human resources, qualified

professionals, and modern machinery in order to

receive a contract,” said Omar Jawad,

spokesperson for the Ministry of Mines. “These

types of contracts benefit Afghanistan.”



hanistan Science Academy. “To some extent the country will benefit from the foreign

minerals mines in Afghanistan, so the multi-mineral

ayees Alani, member of the Afghanistan Science Academy asserts that the

extractive industries alone cannot make Afghanistan economically self-sufficient.

industry diversification and


43

2.2 Structure, Function and business activity of Mining Sector

Privatization of Afghanistan’s state-owned companies, which controlled many of the

country’s mineral resources, was ongoing but not complete. Investment in the mining

sector by private domestic companies and foreign investors was encouraged by the

Government, which had offered the first contract for development of the Aynak copper

project to two Chinese companies in 2007. The Government also issued the tenders for

the development of the Hajigak iron ore project in 2009 and tenders for oil and gas

exploration in 2010. The Ministry of Mines is involved in the exploration for and

development, exploitation, and processing of minerals and hydrocarbons. The Ministry is

also responsible for protecting the ownership and regulating the transportation and

marketing of mineral resources in accordance with the country’s new laws. Regulations to

clarify the country’s environmental laws were scheduled for adoption in 2010.

AFGHANISTAN STRUCTURE OF THE MINERAL INDUSTRY IN 2010

Commodity Company Location

Aluminium coatingQader najib Ltd Kabul

Copper Aynak Minerals Co. Ltd. (China Metallurgical Aynak, Logar 180,000 group Corp., 75%, and Jiangxi Copper Co. Ltd., 25%)

Aynak, Logar

fertilizer, urea Kud Bergh fertilizer Ltd Qala Jangi near Mazar-i-

sharif

Lapis-lazuli government owned sary-

sang

Badakhshan

steel, manufacture Khalil najeeb steel Mills Ltd. Jalalabad, Kabul

44

The Mining Process

Open pit mining requires close attention to geology, geotechnical planning, scheduling of

earthmoving equipment, drill and blast technology and safety. Through constant

monitoring and improvement, each aspect of open pit mining aims to control and reduce

costs and improve the extraction of ore from the ground in the safest, most efficient

manner.

A planned sequence of events is involved in mining a pit:

Identifying the resource extracting it is treating the material in a mill to produce gold

bullion.

Step1. Designing the mining layout and blasts

Before any hole is drilled or rock mined, much planning goes into making sure the mining

sequence runs smoothly and safely as possible. The mine planning engineers, in

conjunction with geologists, drill and blast engineers and voids officers, design the size

and shape of the blasts. This takes into account location of the ore on the bench presence

and intensity of old workings ore requirements of the Fimiston Mill. Plans and schedules

are checked by all relevant parties and, when agreed upon, mining begins.

Step2. Marking out old underground workings.

The location of old workings in the pit is known through plans obtained from the original

companies, and drilling information from the resource definition stage. Voids officers are

responsible for determining where these old workings are and designing safety zones

around them to warn employees of the danger.

45

These zones are flagged with red and white, or black and white striped tapes, depending

on whether the old working is considered a real threat or only a potential one. Points for

these zones are given to the surveyors who mark them up on the ground. Once marked,

the bench is released for general operations personnel to enter although they must stay

outside of these zones, unless precautions are taken

Step 3. Probe Drilling

Once the old workings have been marked, probe drills are sent in to confirm their

locations. These are special drills designed to reach into potentially unstable ground, while

remaining on solid ground. This minimizes the risk of damage or injury as a result of an old

working opening up under a machine. Void officers design a series of probe holes,

generally ranging from 16 to 25m deep. These are pegged by surveyors. Probe drills then

work along the zones, drilling these holes until they reach the old workings. By knowing

where a hole was drilled; what angle it was drilled at and what depth it hit the old workings,

void officers can adjust the danger zones, either shrinking them where the old workings

have been satisfactorily filled or by expanding them where the old workings have

expanded through self mining. This process may be repeated until the exact locations of

the old workings are known.

Business activity of mining sector in Afghanistan

It is estimated that forty million years ago the tectonic plates of India-Europe, Asia and

Africa collided in a massive disturbance. This upheaval created the region of towering

mountains that now includes Afghanistan. This diverse geological foundation has resulted

in a significant mineral heritage with over 1,400 mineral occurrences recorded to date,

including gold, copper, lithium, uranium, iron ore, cobalt, natural gas and oil. Afghanistan's

resources could make it the richest mining region on earth In 2010, Pentagon officials and

American geologists discovered about $1 trillion in untapped mineral deposits in

Afghanistan.

46

Afghanistan has over 90 rich mineral fields with an easy extraction and utilization

possibility, according to information published by Persian Encyclopedia of Economics and

Management. Based on the information most of Afghan mines are still intact. With the

biggest rich mines of lapis, gold, turquoise, coal, copper, lithium, iron, barite and as well as

oil and gas fields. Afghanistan is one of the countries with the richest and biggest intact

mines in the world. There are six big lapis mines in Afghanistan with the biggest one

located in northern Badakhshan province. Badakhshan is also home to one of the biggest

gold mines in the country. Based on the information there are around 12 copper mines in

Afghanistan including the Aynak copper deposit located in Logar province. Afghanistan's

significance from an energy standpoint stems from its geographical position as a potential

transit route for oil and natural gas exports from Central Asia to the Arabian Sea. This

potential includes the possible construction of oil and natural gas export pipelines through

Afghanistan.

3.1 Comparative Position of Mining sector of Afghanistan with

Gujarat/India

The Mining industry in India is a major economic activity which contributes significantly to

the economy of India. The GDP contribution of the mining industry varies from 2.2% to

2/5% only but going by the GDP of the total industrial sector it contributes around 10% to

11%. Even mining done on small scale contributes 6% to the entire cost of mineral

production. Indian Mining Industry provides job opportunities to around 700,000

individuals.

47

(Source: www.wikipedia.com)

MINRALS

Along with 48.83% arable land, India has significant sources of coal (fourth-largest

reserves in the world), bauxite, titanium ore, chromites, natural gas, diamonds, petroleum,

and limestone. According to the 2010 Ministry of Mines estimates: 'India has stepped up

its production to reach the second rank among the chromites producers of the world.

Besides, India ranks 3rd in production of coal & lignite, 2nd in barites, 4th in iron ore, 5th in

bauxite and crude steel, 7th in manganese ore and 8th in aluminum

India accounts for 12% of the world's known and economically available thorium. It is the

world's largest producer and exporter of mica, accounting for almost 60 percent of the net

mica production in the world, which it exports to the United Kingdom, Japan, and United

States of America etc. As one of the largest producers and exporters of iron ore in the

world, its majority exports go to Japan, Korea, Europe and the Middle East. Japan

accounts for nearly 3/4 of India's total iron ore exports. It also has one of the largest

deposits of manganese in the world, and is a leading producer as well as exporter of

48

manganese ore, which it exports to Japan, Europe (Sweden, Belgium, Norway, among

other countries), and to a lesser extent, the United States of America.

Indian Mining Sector

India is endowed with significant mineral resources. India has rich resources in coal, iron

ore, bauxite and limestone, chromites, manganese, only to mention the major ones.

Mineral production in India is dominated by bauxite, chromites, copper, iron ore, lead,

manganese, limestone and zinc. India is the world’s leading producer of mica; it ranked 3d

in the production of barite, chromites, and coal and lignite; 4th in iron ore; 6th in bauxite;

and 7th in manganese ore. Other than the fuel minerals, iron ore and limestone are the

major contributors in the value of mineral production in India. During 2009-10 out of a total

value of Rs. 70884 crore, while fuel minerals had the major share with 85%, of the

remaining 15%, iron ore had a share of 9% and limestone 2%.

3.2 Present position and trend of mining sector with Gujarat

Gujarat was the sole producer of chalk and fluorite (concentrate) and the leading producer

of Kaolin, Marl and clay (others) in the country. The State was also the second largest

producer of lignite and petroleum (crude) and sole producer of fluorite (concentrate) in the

country during 2009-10. Production of lignite got increased by 4.17%, ball clay (378.08%),

fireclay (30.71%), Ochre (132.14%),

The production value of minor minerals was estimated at `725.67 croes for the year 2009-

10. The number of reporting mines in the State was 433 in 2009-10 as compared to 439 in

the previous year. The index of mineral production in Gujarat (base 1993-94=100) was

112.12 in 2009-10 as against 113.27 in the previous year.

49

4.1 Policy and norms of Mining industry of Afghanistan

In Afghanistan, the existing legal and policy framework supporting social and economic

development of the communities in the projects areas provides a strong basis for a more

comprehensive and focused social policy framework for mining sector in the country.

Afghanistan National Development Strategy (ANDS) mentions the potential of the mining

industry to generate employment and accelerate development in rural areas. To develop

the huge mineral potential, Government of Afghanistan has adopted a new policy

direction, transferring the task of exploitation of the country’s natural resources from the

state to the private sector. The Hydrocarbons Law (2009) and revised Minerals Law and

Mining Regulations (2009) are important steps towards providing a strong legislative

framework to encourage private sector investment in the extractive industry in

Afghanistan. Social development and environmental safeguards have been included in the

legal and policy frameworks to encourage development to proceed in a sustainable and

equitable manner.

Further the Law on Managing Land Affairs (2008) is aimed at creating a unified, reliable

land management system to resolve the problems and issues caused by the different land

management and title systems which were followed during different regimes. This Law

also aims to provide a standard system for land titling, land segregation and registration,

prevent illegal land acquisition and distribution, access of land to people; and create

conditions for appropriation of lands. The Land Expropriation Law as amended in 2005

has important provisions related to acquisition of land for public interest and compensation

at fair value based on the current market rates. It also provides for factors like value of

land, value of houses, buildings and the land, values of trees, orchards and other assets

on land to be considered for compensation in case of land acquisition. Afghan Land Policy,

a comprehensive policy was approved by cabinet in 2007. However, it is yet to be

operational zed. This policy envisions the maximization of social and economic benefits to

the Afghan society based upon the orderly and sustainable use of its most important

natural resource-land. The underlying principle of the land policy is to ensure a flexible,

50

equitable and transparent policy that serves the diverse interests of the Afghan society.

Afghan Labor Law (2007) includes provisions which need to be adhered to by the

companies for the fulfillment of rights of mine workers and the social protection of their

families. Some of these provisions relate to fixing maximum hours of work, vocational

training and skill development of employees, proper health and occupational safety

conditions, provisions for not recruiting women and youth in underground mines and social

protection provisions and an important provision of participation of the employees in

production and development, social services, cultural and livelihood discussions in the

companies and to give their suggestions for improvement.

4.1.1 EXPORT POLICY

The Export Policy 1997-2002 has been designed to operate in the imperative And

opportunity of the market economy with a view to maintaining growth of export and

narrowing down the gap between import payment and export earnings.

4.1.1.1 Objectives of Export Policy:

i. Diversify the range of exports and improve their quality;

ii. Set up backward-linkage industries and services and promote use of local

inputs in export products to maximize value addition particularly in textile

Sector;

iii. Extend fiscal and other incentives to attract entrepreneurs both local and

Foreign to invest in export-oriented industries;

iv. Consolidate existing market and explore and develop new ones.

v. Take advantage of the post Uruguay Round liberalized and globalize

International market

vi. Develop an export infra-structure

vii. And develop trained human resources in export sector.

51

4.1.1.2 Strategy of Export Policy

The main elements of the long term export strategy are as follows:

� Remove all bottlenecks to achieve the objectives of export policy;

� Provide policy support to private sector operator s on a continuous basis to ensure

competitiveness.

� Strengthen support services and infrastructure for exports and export t- Oriented

industries;

� Priority will be given to build such infrastructure;

� Develop managerial and entrepreneurial skills through HRD programmes;

� Design an app. opiate export development program to broaden and diversify the

country‘s export base which is central to the export strategy;

� Duild long ter m capability to export by developing new products through

Adaptation and increased R&D activities;

� Maximize utilization of financial and other assistance extended by WTO to The

LDCs;

� Ensure maintenance of ecological balance and pollution free environment in the

production of exportable goods;

� Extend technical and marketing assistance for development of new Products and

their marketing.

52

CONCLUSION

The Government of Afghanistan supports a mining sector strategy that encourages

legitimate and transparent private investment in the sector.

Afghanistan is a country abundantly rich in natural resources. There are currently more

than 1,400 mineral deposits that have been identified including energy minerals such as

oil, gas and coal and other metallic and non-precious minerals such as lead, cement-grade

limestone, gemstones, copper, iron, gold, salt, and industrial minerals (for use in the glass,

ceramic, construction, chemical and fertilizer industries). Known precious, semi-precious

stones. Afghanistan’s iron and copper deposits are of world-class quality.

The hydrocarbons (petroleum and natural gas) industry provides great investment

potential for Afghanistan, both financially and as a means for energy production.

Recent findings in March 2011 indicate that the Afghan-Tajik and Amu Darya Basins

contain 18 times the oil and triple the natural gas reserves previously determined.

The Government of Afghanistan ratified the Minerals Law in 2005 and ratified the

Hydrocarbons Law (2006), which governs the natural gas and petroleum industries in the

energy sector. These two laws are major initial steps in addressing how to create a

regulatory framework for the development of these sectors and, most importantly, enable a

suitable environment to attract and retain private investment.

53

SUGGESTION

� As the government continues to build capacity and institutional efficiency in mineral

resource tenders, the Aynak experience has brought to light a number of

preliminary lessons learned and areas for improvement for the Ministry of Mines.

� The government’s policy should include provision of alternative options for

encouraging the development of resource corridors and shared regional

infrastructure, such as rail linkages. This will increase the linkages and economic

benefits from new minerals projects.

� The Ministry of Mines and the IMC might consider using a two stage bidding

process to finalize the RFP for Hajigak with continued use of separate technical and

financial bids in the second stage. The model mineral contract and terms and

conditions should be published.

� Actions for the Ministry of Mines to consider would include using a more select

group of technical bid evaluators, working in concert with observers from other

government agencies, civil society, and the community. At the same time, the

absolute number of technical evaluators and observers should remain manageable.

� Actions for the IMC to consider would include establishing a secretariat as an

institutional resource for technical expertise, in recognition of the fact that

representation on the IMC changes frequently.

� Actions involving other ministries might include greater attention to information

presentation and dissemination in appropriate and culturally acceptable formats to

the local communities. All government agencies need to be more inclusive of civil

society in working with local communities and building local capacity on complex

development issues.

54

AGRICULTURE AND

LIVE STOCK

SPECIFIC STUDY OF

AFGHANISTAN

55

INTRODUCTION OF AGRICULTURE AND LIVE STOCK

The afghan economy has always been agricultural, despite the fact that only 12% of its

total land is available less than 6% currently is cultivated. Agriculture production is

constrained by an almost total dependence on unpredictable winter snows and spring

rains for water. As of 2007, the country's fruit and nut exports were at $113 million per year

but could grow to more than $800 million per year in 10 years given the proper investment.

Afghanistan is known for producing some of the finest fruits, especially pomegranates,

apricots, grapes, melons, and mulberry. Several provinces in the north of the country (i.e.

bad his and Namangan) are famous for pistachio cultivation but the area currently lacks

proper marketing and processing plants. It is claimed that some Indian companies buy

afghan pistachios for a very low price, process them in India and sell to western countries

as Indian products. However, the afghan government is planning to build storage facilities

for pistachios since receiving bumper crops in 2010.

FISHING

The nation has plenty of water reserves and suitable climate for fish farming. Fishing takes

place in the lakes and rivers, such as in Sarobi and Mahipar area. Fish constitute a smaller

part of the Afghan diet today because fish farmers are unable to produce enough fish to

keep up with the demands of customers. Using explosives for fishing, called dynamite

56

fishing, became popular in the 1980s and is still practiced by some even though it is illegal

today. The annual catch was about 900 tons in 2003. Most fish and seafood is imported

from neighboring Pakistan, Iran, the United Arab Emirates and other countries. In recent

years, USAID has helped many Afghans in establishing fish farms across the country.

There are about 300 fish farms throughout the country and the largest one is at the

Qargha, which supplies fish eggs to the other ones.

FORESTRY

Afghanistan's timber has been greatly depleted, and since the mid-1980s, only about 3%

of the land area has been forested, mainly in the east. Significant stands of trees have

been destroyed by the ravages of the war. Exploitation has been hampered by lack of

power and access roads. Moreover, the distribution of the forest is uneven, and most of

the remaining woodland is presently found only in mountainous regions in the southeast

and south. The natural forests in Afghanistan are mainly of two types: dense forests of

oak, walnut, and other species of nuts that grow in the southeast, and on the northern and

northeastern slopes of the Suleiman ranges; and sparsely distributed short trees and

shrubs on all other slopes of the Hindu Kush. The dense forests of the southeast cover

only 2.7% of the country. Round wood production in 2003 was 3,148,000 cubic meters,

with 44% used for fuel. The destruction of the forests to create agricultural land, logging,

forest fires, plant diseases, and insect pests are all causes of the reduction in forest

coverage. Illegal logging and clear-cutting by timber smugglers have exacerbated this

destructive process.

57

TRADE AND INDUSTRY

The current trade between Afghanistan and other countries is at us$5 billion a year. In

1996, legal exports (excluding opium) were estimated at $80 million and imports estimated

at $150 million per year. Since the collapse of the Taliban government in 2001, new trade

relations are emerging with the united states, Pakistan, Iran, Turkmenistan, the EU, Japan,

Uzbekistan, India and other countries. There is trade between Afghanistan and the US. It

is beginning to grow at a fast pace, reaching up to approximately $500 million per year.

The Afghan hand-woven rugs are one of the most popular products exported from the

country. Other products include hand crafted antique replicas as well as leather and furs.

NATIONAL ACCOUNTS

The majority of the following information is taken from, or adapted from the world fact book

GDP: purchasing power parity $29.74 billion (2011 est.), with an exchange rate at $18.02

billion (2011 est.)

GDP - real growth rate:

• 5.8% (2011 est.)

GDP - per capita: purchasing power parity - $1,000 (2011 est.)

GDP - composition by sector:

• Agriculture: 34.9%

• Industry: 25%

• Services: 40%

Population below poverty line:

• 36% (2009)

58

Household income or consumption by percentage share:

• Lowest 10%: 3.8%

• Highest 10%: 24%

Inflation rate (consumer prices): 0.9% (2009)

country comparison to the world: 19

Labor force: 17 million (2009)


Labor force - by occupation: agriculture 78.6%, industry 5.7%, services 15.7% (2009)

Unemployment rate: 35% (2009)


Budget:

• Revenues: $1.58 billion

• Expenditures: $3.3 billion

Industries: small-scale production of textiles, soap, furniture, shoes, fertilizer, apparel,

food-products, non-alcoholic beverages, mineral water, cement; hand-woven carpets;

natural gas, coal, copper

Electricity - production: 913.1 million kWh (2009 EST.)

Country comparison to the world: 150

Electricity - production by source:

• Fossil fuel: 23.5% of total installed capacity (2009 est.)

• Hydro: 76.5% of total installed capacity (2009 est.)

• Nuclear: 0% of total installed capacity (2009 est.)

• Other: 0% (2001)

59

Electricity - consumption: 2.226 billion kWh (2009 est.)


Electricity - exports: 0 kWh (2010 est.)

Electricity - imports: 1.377 billion kWh (2009 est.)

Oil - production: 0 barrels per day (1 m3/d) (2009)


Oil - consumption: 5,036 barrels per day (800.7 m3/d) (2009)


Oil - proved reserves: 1,600,000,000 barrels (250,000,000 m3) (2009)

Natural gas - production: 320 million m³ (2009)

Natural gas - consumption: 340 million m³ (2010)

Natural gas - proved reserves: 19.7 trillion cubic feet (2010 est.)

Agriculture - products: opium poppies, wheat, fruits, nuts, karakul pelts

Exports: $2.625 billion (2010 est.)


Exports - commodities: opium, fruits and nuts, hand-woven carpets, wool, cotton, hides

and pelts, and gemstone

Exports - partners: Pakistan 33.7%, India 23.8%, Tajikistan 8.9%, Russia 5.6%,

Bangladesh 5.1%, US 4.1% (2011)

Imports: $9.152 billion (2010 est.)

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

products

60

Imports - partners: united states 31.3%, Pakistan 20.7%, Russia 8.4%, India 5.4%,

Germany 4% (2011)

Debt - external: $1.28 to $2.3 billion total (2011)

• Russia - $987 million

• Asian development bank - $ 596 million

• World bank - $435 million

• International monetary fund - $114 million

• Germany - $18 million

• Saudi development fund - $47 million

• Islamic development bank - $11 million

• Bulgaria - $51 million

• Kuwait development fund - $22 million

• Iran - $10 million

• Opec - $1.8 million

Current account balance: - $736 million (2010 est.)


Currency: Afghani (afn)

Exchange rates: Afghanis (afa) per us dollar - 47 = $1

• 46.75 (2011)

• 46.45 (2010)

Fiscal year: 21 march - 20 march

61

STRUCTURE, FUNCTIONS AND BUSINESS ACTIVITIES OF

AFGHANISTAN IN AGRICULUTURE AND LIVE STOCK

The land resources of Afghanistan are briefly described on the basis of Dupree’s

(1973/1980) eleven geographic zones, with additional information from other references

and from field observations, which are described follow:

1- Washman

2- Badakhshan

3- Central mountains

4- Eastern mountains

5- Southern mountains and Foothills

6- Northern Mountains and Foothills

7- Turkistan Plains

8- Herat-Farah Lowlands

9- Helmand Valley-Sustain Basis

10- Western Stony Deserts

11- Southwestern Sandy Deserts

COMPARATIVE POSITION OF AGRICULTURE AND LIVE STOCK

WITH INDIA

Challenges facing New Delhi in shaping its Afghan policy have become increasingly

sharper as the US and its allies make a volte face in their policy by extending an

olive branch to the Taliban and concede that a military victory is likely to remain

elusive. Soaring poppy cultivation, Norco trafficking, lack of development, endemic

corruption in the government and a steady rise in civilian deaths has helped the

Taliban to effectively channel popular discontent. With a potential return of Taliban

in Kabul, New Delhi’s options will shrink, for it has made political investments by

backing the Karzai government. Targeting Indian interests in Afghanistan has

become a consistent feature; the dastardly car- bombing of the Indian embassy in

Kabul on 7 July, 2008 was a part of this larger strategy. In particular, two issues are

significant in this attack; first, targeting of Brigadier Mehta, who owing to his

62

extensive experience in counter insurgency operations in Kashmir and the

Northeast had been selected to coordinate Indian efforts to provide training and

logistical support to the Afghan National Army. Striking the right balance is an

immediate challenge facing New Delhi. The near collapse of Pakistan’s state

machinery in its frontier region not only accentuates the crisis across the border in

Afghanistan but 1 Gazette and Schmitt, “Pakistani’s Aided Attack in Kabul, US

Officials Say,” New York Times, 1August 2008 also drives the extremist threat much

closer home. In the Afghan regional matrix, Pakistan remains a key challenge for

India. Should India place its boots on the ground? To what extent can India

continue to expand its diplomatic and economic profile in Afghanistan without an

appropriate security apparatus in place? The emerging political and military

situation makes it imperative for India to evolve a clear policy, to establish a

meaningful presence in the region and realize some of its larger interest.

PRESENT POSITION AND TREND OF BUSINESS WITH INDIA

Afghanistan Balance of Trade

Afghanistan recorded a trade deficit of 6014 USD million in the fiscal year 2011-12.

Balance of trade in Afghanistan is reported by the central statistics organization of

Afghanistan. Historically, from 2003 until 2012, Afghanistan balance of trade

averaged -2916.1 USD million reaching an all time high of -1660.9 USD million in

March of 2005 and a record low of -6014.0 USD million in March of 2012.

Afghanistan has been running increasingly large trade deficits as imports have

surged due to the reconstruction effort. Afghanistan mostly exports raisins, carpets,

63

liquorices, herbs, almonds, animal hides, pistachios and dried apricot.Afghanistan

recorded a Current Account deficit of 6519 USD Million in the fiscal year 2010-11.

Current Account in Afghanistan is reported by the Da Afghanistan Bank.

Historically, from 2003 until 2011, Afghanistan Current Account averaged -4782.1

USD Million reaching an all time high of -1371.5 USD Million in March of 2003 and

a record low of -6977.0 USD Million in March of 2010. Current Account is the sum

of the balance of trade (exports minus imports of goods and services), net factor

income (such as interest and dividends) and net transfer payments.Afghanistan

Current Account to GDPCurrent Account to GDP in Afghanistan is reported by the

Da Afghanistan Bank. Historically, from 2003 until 2011, Afghanistan Current

Account to GDP averaged -54.6 Percent reaching an all time high of -38.5 Percent

in March of 2011 and a record low of -75.2 Percent in March of 2006. The Current

account balance as a percent of GDP provides an indication on the level of

international competitiveness of a country. Usually, countries recording a strong

current account surplus have an economy heavily dependent on exports revenues,

with high savings ratings but weak domestic demand. On the other hand, countries

recording a current account deficit have strong imports, a low saving rates and high

personal consumption rates as a percentage of disposable incomes.Afghanistan

ExportsExports in Afghanistan decreased to 375.85 USD Million in the fiscal year

2011-12 from 388.50 USD Million in the fiscal year 2010-11. Exports in Afghanistan

are reported by the Central Statistics Organization of Afghanistan. Historically, from

2000 until 2012, Afghanistan Exports averaged 352.9 USD Million reaching an all

time high of 837.0 USD Million in March of 2001 and a record low of 69.1 USD

Million in March of 2002. Agricultural products account for the majority of

Afghanistan’s exports. Afghanistan mostly exports raisins, carpets, liquorices,

herbs, almonds, animal hides, pistachios and dried apricots. Afghanistan’s main

exports partners are Pakistan, India, Russia, Iran, Iraq, Turkey, Finland and China.

64

Afghanistan Imports

Imports in Afghanistan increased to 6390.31 USD Million in the fiscal year 2011-12 from

5154.25 USD Million in the fiscal year 2010-11. Imports in Afghanistan are reported by the

Central Statistics Organization of Afghanistan. Historically, from 2003 until 2012,

Afghanistan Imports averaged 3267.7 USD Million reaching an all time high of 6390.3

USD Million in March of 2012 and a record low of 1966.1 USD Million in March of 2005.

Afghanistan mostly imports oil and lubricants, vehicles, metals, wheat, cement, electronic

appliances, machinery and spare parts, polyester fabric, cigarettes and tea. Afghanistan’s

main imports partners are Pakistan, Russia, Uzbekistan, Iran, China, Japan,

Turkmenistan, Kazakhstan, Germany, Tajikistan and the United Arab Emirates.

POLICY AND NORMS OF AFGHANISTNA FOR AGRICULTURE AND

LIVE STOCK LICENSING, TAXATION ETC...

Applicability

2.1. All activities related to production and supply of seed, corollary and supporting

operations thereto, and components thereof, conducted by Government agencies

and/or the domestic and/or international private sector, conducted wholly or in part

within the national territory, shall be governed by the provisions of this National

Seed Policy.

Quality Orientation

3.1. Government recognizes that planting value of seed depends on its quality, as

measured by internationally-established procedures. Seed activities shall focus on

providing the highest-quality seed (genetic, physical, physiological, and python-

sanitary quality components) which is economically feasible. To ensure maximum

benefits to farmers, all seed offered for sale shall comply with all applicable quality

requirements, and all seed operations and activities shall seek to provide seed of

maximum quality.

FORMAL AND INFORMAL SEED SECTORS

65

4.1. Government recognizes that there is an essential role for both the .formal seed

sector. and the .informal seed sector.. Government activities, controls, and support

shall be tailored to the needs of the sector to which they apply, help the sector

operate efficiently and best serve the needs of farmers while ensuring THE

maximum seed quality which is economically feasible.

SUGGESTION

Government has to provide the responsibility to establish pilot operations, initiate

development, and ensure that essential activities/components are established and

operated. Give the maximum benefit to peoples. Awareness is very beneficial for

people, so knowledge about both sectors is very useful for peoples.

Improved water resource management is vital to sustainability of the agricultural

sector, particularly with regards to food security. It is suggested that government

action is needed to achieve investment, technological advancement and strategic

programs aimed at off-farm income generation. Training rural communities on the

distribution of water and on-farm irrigation management is also necessary.

Increase agriculture crop production and make the country self sufficient in food

production .Increase livestock productivity throughout the country. Generate income

and employment opportunities in agriculture and livestock related activities

Government should provide more subsidies for modern technology in Agriculture.

Last few years live stock is decline at the Afghanistan, so government take the step

for save the live stock.

66

CONCLUSION

Through global country report we get maximum knowledge about agriculture and

live stock sector. According to our point of view Afghanistan get maximum benefit

from the agriculture and live stock sector. By their best techniques India has also so

many opportunities but not proper utilization of resource in India.

Agriculture sector is very important part of all the countries. More than Afghani

peoples are dependent by agriculture, so agriculture development is very

necessary.

Agricultural is a basic means of livelihood in Afghanistan, generating 36% of the

country’s GDP and supporting 85% of the total population in Afghanistan. The

climate of Afghanistan is well suited for the cultivation of horticultural crops and

Afghanistan is the geographic origin of many high-end crops like raisins,

pomegranates, pistachios and almonds. There are approximately 1 million farms in

Afghanistan and more than 2,000 wholesalers for horticulture products.

Livestock is an inseparable part of agriculture there are small numbers of frames

who do not have livestock .in livestock sector there are different kinds of products

such as wool, milk, and mills products, meat, skin, and fat. Based on over project

reports the livestock is impotent in agriculture. In Afghanistan number of animals

has increased by 6.5%

The decade of before 2001 there has been no systematic collection and analysis of

agriculture statistic internal war and insecurity have made slow the collection and

analysis of agriculture record and registration bringing gape in data which can be

overcome through conducting agriculture census and surveys.

Afghani peoples are more focus on the live stock, so more employment taking

through the live stock. But some problems are also arrived at the live stock.

67

This sector contributes the most to national income and personal livelihoods,

increased investment in the agro-business and agriculture areas will have a direct

positive impact on the lives of thousands of Afghans. Intensive commercial farming

increases sustainable economic growth in rural areas, encourages competition,

contributes to regional development and helps sustain the growth of private

businesses.

.

Afghanistan benefits from low labour and irrigation costs by regional comparison

and high value cash crops provide vital food security and an alternative to poppy

cultivation in the country.

68

STEEL SECTOR OF

AFGHANISTAN

69

Introduction of The Steel Sector And it’s Role in The

Economy of Afghanistan

• Introduction of Steel

Steel is an alloy of iron, usually containing carbon. The common carbon content in steel is between

0.2% and 2.1% by weight, depending on the grade. Other alloying elements used are manganese,

chromium, nickel, vanadium and tungsten, usually in addition to carbon. Carbon and other

elements act as a hardening agent, preventing dislocations in the iron atom crystal lattice from

sliding past one another. Varying the amount of alloying elements and the form of their presence

in the steel (solute elements, precipitated phase) controls qualities such as the hardness, ductility,

and tensile strength of the resulting steel. Steel with increased carbon content can be made

harder and stronger than iron, but such steel is also less ductile than iron.

Alloys with a higher than 2.1% carbon content are known as cast iron because of their

lower melting point and good castability. Steel is also distinguishable from wrought iron,

which can contain a small amount of carbon, but it is included in the form of slag

inclusions.

• INTRODUCTION OF STEEL SECTOR

It is common today to talk about "the iron and steel industry" as if it were a single entity, but

historically they were separate products. The steel industry is often considered to be an indicator

of economic progress, because of the critical role played by steel in infrastructural and overall

economic development

In 1980, there were more than 500,000 U.S. steelworkers. By 2000, the number of steelworkers

fell to 224,000.

The economic boom in China and India has caused a massive increase in the demand for steel in

recent years. Between 2006 and 2011, world steel demand increased by 6%. Since 2000, several

70

Indian and Chinese steel firms have risen to prominence like Tata Steel (which bought Corus

Group in 2008), Shanghai Baosteel Group Corporation and Shagang Group. ArcelorMittal is

however the world's largest steel producer.

In 2009, the British Geological Survey stated China was the top steel producer with about one-

third of the world share; Japan, Russia, and the US followed respectively.

In 2011, steel began trading as a commodity on the London Metal Exchange. At the end of 2011,

the steel industry faced a sharp downturn that led to many cut-backs.

Comparative Position of Steel Sector Product With India

& Gujarat

Financial performance of major and other major producers 2011-12

Company Sales PAT Capital

Employed

PAT/CAP.

Employed%

Sales /CAP.

Employed%

Essar steel 9006.57 435.52 10449.02 4.17 4.84

Ispat industries 8423.44 -10.26 9338.85 -0.11 -0.12

JSW steel 9297.26 1291.89 9412.5 13.73 13.96

SAIL 39312.59 6202.29 19684.28 35.51 15.78

TATA steel 27437.29 4165.61 37680.64 11.06 15.18

(Source: www.Steel.govt.org)

Present Position and Trand of Bussines (Import /Export)

With India/Gujarat During Last 3 to 5 Year

India trade in finished steel


0

1

2

3

4

5

6

2007-08 2008-09

1.77 1.83

5.28

5.89

3.51

4.06

Years Import

2007-08 1.77

2008-09 1.83

2009-10 2.60

2010-11 4.81

2011-12 5.30

71

resent Position and Trand of Bussines (Import /Export)


India trade in finished steel

In millions tones


2009-10 2010-11 2011-12

2.6

4.81

5.34.97

5.19

5.91

4.06

2.36

0.380.61

Import Export Net

5.28 3.51

5.89 4.06

4.97 2.36

5.19 0.38

5.91 0.61

resent Position and Trand of Bussines (Import /Export)


Import

Export

Net

Imports as a percentage of consumption of steel

Category 2007

Bars and Rods

0.76

Structural’s

1.54

Plates

18.73

HR Coils/Skelp/Strips/sheets

4.57

CR Coil/Sheets/TMBP

9.48

GP/GC Sheets

7.26

Others

27.54

Grand Total

5.42

0

10

20

30

40

50

60

2007-08 2008-09

72

Imports as a percentage of consumption of steel

2007-08 2008-09 2009-10 2010-11

0.51 0.84 2.25

0.51 1.66 2.21

18.73 18.50 14.90 22.19

4.83 8.69 15.58

8.04 9.12 12.26

6.04 5.49 6.54

27.54 29.88 38.86 51.62

5.27 6.70 11.05

2009-10 2010-11 2011-12

11 2011-12

1.54

1.76

2.87

13.11

13.41

8.13

50.40

10.64

12

bars and rods

structurals

plates

hr coils

cr coils

GP/GC

others

total

73

CONCLUSION AND SUGGESTIONS

The government of India organizes a large international trade exhibition for Afghan export

products in this country. Cherain Thomas, Head of the Indian Council in northern Balkh province of

Afghanistan following a press conference said, the motive of organizing a trade exhibition in India

is to boost trade ties between Afghanistan and India.

He also expressed optimisms for finding new ways of boosting trade ties between the two

countries by organizing such exhibitions. While pointing towards the close political ties after the

two countries signed a strategic cooperation agreement, Mr. Thomas said, we welcome the

Afghan merchants to take part in India’s largest commercial exhibition which is going to be held

from 7 November 2011 to 27November 2011.

He also emphasized for the participation of Afghan merchants to take part in India’s small and

medium technology and industrial exhibitions which will help Afghans to improve Afghanistan’s

small and medium industrial sector by bring the technologies in the country.

Meanwhile deputy provincial governor for Balkh province, Zahir Wahdat while India’s cooperation

to Afghanistan said, we expect closed commercial ties with India as we are already having India’s

cooperation in other fields.

Head of Afghan chamber of commerce and industries in northern Balkh province Mohammad

Mohsin Mostaqeem said, Afghanistan and India are having historical trade ties and Afghanistan

had 60% commercial ties with India before Pakistan was formed.

According to reports the first Afghanistan and India trade agreement was signed in 1949 and

Afghanistan for the first time participated in Agricultural exhibition which was held by India in

1958.

Currently Afghanistan exports around 27 different types of Afghan products to India.

74

TEXTILE SECTOR

OF AFGHANISTAN

INTRODUCTION OF THE TEXTILE INDUSTRY

Textiles are formed by weaving, knitting, crocheting, knotting, or pressing fibers together

(felt).A textile or cloth is a flexible woven material consisting of a network of natural or

75

artificial fibers often referred to as thread or yarn. Yarn is produced by spinning raw fibers

of wool, flax, cotton, or other material to produce long strands.

Textile refers to any material made of interlacing fibers. Fabric refers to any material made

through weaving, knitting, spreading, crocheting, or bonding that may be used in

production of further goods (garments, etc.). The words fabric and cloth are used in textile

assembly trades (such as tailoring and dressmaking) as synonyms for textile.

However, there are subtle differences in these terms in specialized usage. Cloth may be

used synonymously with fabric but often refers to a finished piece of fabric used for a

specific purpose (e.g., table cloth). The production of textiles is a craft whose speed and

scale of production has been altered almost beyond recognition by industrialization and

the introduction of modern manufacturing techniques.

However, for the main types of textiles, plain weave, twill, or satin weave, there is little

difference between the ancient and modern methods.

Incas have been crafting quips (or khipus) made of fibers either from a protein, such as

spun and plied thread like wool or hair from came lids such as alpacas, llamas, and

camels or from a cellulose like cotton for thousands of years. Khipus are a series of knots

along pieces of string. They have been believed to only have acted as a form of

accounting, although new evidence conducted by Harvard professor, Gary Urton, indicates

there may be more to the khipu than just numbers.

SOURCES AND TYPES

Textiles can be made from many materials. These materials come from four main sources:

animal (wool, silk), plant (cotton, flax, jute), mineral (asbestos, glass fiber), and synthetic

(nylon, polyester, acrylic).

76

In the past, all textiles were made from natural fibers, including plant, animal, and mineral

sources. In the 20th century, these were supplemented by artificial fibres made from

petroleum.

Textiles are made in various strengths and degrees of durability, from the finest gossamer

to the sturdiest canvas. The relative thickness of fibres in cloth is measured in deniers.

Micro fibre refers to fibres made of strands thinner than one denier.

SYNTHETIC TEXTILES

A variety of contemporary fabrics. From the left: even weave cotton, velvet, printed cotton,

calico, felt, satin, silk, polycotton. Woven tartan of Clan Campbell, Scotland. Embroidered

skirts by the Alfaro-Nunez family of Cocas, Peru, using traditional Peruvian embroidery

methods.

All synthetic textiles are used primarily in the production of clothing.

• Polyester fibre is used in all types of clothing, either alone or blended with fibres

such as cotton.

• Aramid fibre (e.g. Twaron) is used for flame-retardant clothing, cut-protection, and

armor.

.

• Nylon is a fibre used to imitate silk; it is used in the production of pantyhose.

Thicker nylon fibres are used in rope and outdoor clothing.

• Spandex (trade name Lycra) is a polyurethane product that can be made tight-fitting

without impeding movement. It is used to make active wear, bras, and swimsuits.

• Olefin fibre is a fibre used in active wear, linings, and warm clothing. Olefins are

hydrophobic, allowing them to dry quickly. A sintered felt of olefin fibres is sold

under the trade name Tyke.

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• In geo is a poly lactide fibre blended with other fibres such as cotton and used in

clothing. It is more hydrophilic than most other synthetics, allowing it to wick away

perspiration.

• Lurex is a metallic fibre used in clothing embellishment.

• Milk proteins have also been used to create synthetic fabric. Milk or casein fibre

cloth was developed during World War I in Germany, and further developed in Italy

and America during the 1930s. Milk fibre fabric is not very durable and wrinkles

easily, but has a pH similar to human skin and possesses anti-bacterial properties.

It is marketed as a biodegradable, renewable synthetic fibre.

• Carbon fibre is mostly used in composite materials, together with resin, such as

carbon fibre reinforced plastic. The fibres are made from polymer fibres through

carbonization.

ANIMAL TEXTILES

Animal textiles are commonly made from hair, fur or skin.

Woolen refers to the hair of the domestic goat or sheep, which is distinguished from other

types of animal hair in that the individual strands are coated with scales and tightly

crimped, and the wool as a whole is coated with a wax mixture known as lanolin (aka wool

grease), which is waterproof and dirt proof [citation needed].

Silk is an animal textile made from the fibres of the cocoon of the Chinese silkworm which

is spun into a smooth fabric prized for its softness. There are two main types of the silk:

‘mulberry silk’ produced by the Bomb ox Mori, and ‘wild silk’ such as Tussah silk.

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Silkworm larvae produce the first type if cultivated in habitats with fresh mulberry leaves for

consumption, while Tussah silk is produced by silkworms feeding purely fed on oak

leaves. Around four fifths of the world’s silk production consists of cultivated silk.

Woolen refers to a bulkier yarn produced from carded, non-parallel fibre, while worsted

refers to a finer yarn which is spun from longer fibres which have been combed to be

parallel. Wool is commonly used for warm clothing. Cashmere, the hair of the Indian

Cashmere goat, and mohair, the hair of the North African angora goat, are types of wool

known for their softness.

Other animal textiles which are made from hair or fur are alpaca wool, vicuna wool, llama

wool, and camel hair, generally used in the production of coats, jackets, ponchos,

blankets, and other warm coverings. Angora refers to the long, thick, soft hair of the

Angora rabbit. Qiviut is the fine inner wool of the musk ox. Wadmal is a coarse cloth made

of wool, produced in Scandinavia, mostly 1000~1500CE.

PLANT TEXTILES

Grass, rush, hemp, and sisal are all used in making rope. In the first two, the entire plant is

used for this purpose, while in the last two, only fibres from the plant are utilized. Coir

(coconut fibre) is used in making twine, and also in floor mats, doormats, brushes,

mattresses, floor tiles, and sacking.

Straw and bamboo are both used to make hats. Straw, a dried form of grass, is also used

for stuffing, as is kapok. Fibres from pulpwood trees, cotton, rice, hemp, and nettle are

used in making paper.

Lyocell is a man-made fabric derived from wood pulp. It is often described as a man-made

silk equivalent and is a tough fabric which is often blended with other fabrics – cotton for

example Fibres from the stalks of plants, such as hemp, flax, and nettles, are also known

as 'bast' fibres.

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Cotton, flax, jute, hemp, modal and even bamboo fibre are all used in clothing. Piña

(pineapple fibre) and ramie are also fibres used in clothing, generally with a blend of other

fibres such as cotton. The use of milkweed stalk fibre has also been reported, but it tends

to be somewhat weaker than other fibres like hemp or flax. Acetate is used to increase the

shininess of certain fabrics such as silks, velvets, and taffetas.

Seaweed is used in the production of textiles. A water-soluble fibre known as alginate is

produced and is used as a holding fibre; when the cloth is finished, the alginate is

dissolved, leaving an open area.

MINERAL TEXTILES

Metal fibre, metal foil, and metal wire have a variety of uses, including the production of

cloth-of-gold and jewelry. Hardware cloth (US term only) is a coarse weave of steel wire,

used in construction.

Asbestos and basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels

and siding, acoustical ceilings, stage curtains, and fire blankets. Glass fibre is used in the

production of spacesuits, ironing board and mattress covers, ropes and cables,

reinforcement fibre for composite materials, insect netting, flame

fabric, soundproof, fireproof, and insulating fibre.

STRUCTURE OF TEXTILE INDUSTRY

The industry is made up of two sectors namely well organized (i.e. textile

and unorganized or decentralized sector.

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basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels



reinforcement fibre for composite materials, insect netting, flame-retardant and protective

fabric, soundproof, fireproof, and insulating fibre.

STRUCTURE OF TEXTILE INDUSTRY

The industry is made up of two sectors namely well organized (i.e. textile mills)

and unorganized or decentralized sector.

basalt fibre are used for vinyl tiles, sheeting, and adhesives, "transit" panels



retardant and protective

mills)

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The textile industry consists of two categories in the organized sector.

Spinning mills : Producing yarn only

Composite mills : Engaged in the both spinning & weaving Activities

These mills can be again classified as

i) Course and Medium Composite mills and

ii) Fine and superfine composite mills

The Textile Manufacturing Process

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COMPARATIVE POSITION OF TEXTILE INDUSTRY AFGHANISTAN WITH

INDIA/GUJARAT

In the past one year, there has been a massive upsurge in the textile industry of India. The

industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07.

During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23

billion to USD 30 billion. The export market increased from USD 14 billion to USD 19

billion in the same period.

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The textile industry is one of the leading sectors in the Indian economy as it contributes

nearly 14 percent to the total industrial production. The textile industry in India is claimed

to be the biggest revenue earners in terms of foreign exchange among all other industrial

sectors in India. This industry provides direct employment to around 35 million people,

which has made it one of the most advantageous industrial sectors in the country.

TABLE-2.1:INDIA’S IMPORT FROM AFGHANISTAN

Some of the important benefits offered by the Indian textile industry are as follows:

• India covers 61 percent of the international textile market

• India covers 22 percent of the global market

• India is known to be the third largest manufacturer of cotton across the globe

• India claims to be the second largest manufacturer as well as provider of cotton

yarn and textiles in the world

• India holds around 25 percent share in the cotton yarn industry across the globe

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• India contributes to around 12 percent of the world's production of cotton yarn and

textiles

The Role of Textile Industry in India GDP had been undergoing a moderate increase till

the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been

witnessing a robust growth and reached almost USD 17 billion during the same period

from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent

share in the total textile production across the globe and 3 percent share in the export

production of clothing. The growth in textile production is predicted to touch USD 19.62

billion during 2006-07. USA is known to be the largest purchaser of Indian textiles.

TABLE 2.2: INDIA’S EXPORT TO AFGHANISTAN

Following are the statistics calculated as per the contribution of the sectors in

Textile industry in India GDP:

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• India holds 22 percent share in the textile market in Europe and 43 percent share in

the apparel market of the country. USA holds 10 percent and 32.6 percent shares in

Indian textiles and apparel.

• Few other global countries apart from USA and Europe, where India has a marked

presence include UAE, Saudi Arabia, Canada, Afghanistan, China, Turkey and

Japan

• Readymade garments accounts for 45 percent share holding in the total textile

exports and 8.2 percent in export production of India

• Export production of carpets has witnessed a major growth of 42.23 percent, which

apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in

the year 2006-07. India holds 36 percent share in the global textile market as has

been estimated during April-October 2007

• The technical textiles market in India is assumed to touch USD 10.63 billion by

2007-08 from USD 5.09 billion during 2005-06, which is approximately double. It is

also assumed to touch USD 19.76 billion by the year 2014-15

• By 2010, India is expected to double its share in the international technical textile

market

• The entire sector of technical textiles is estimated to reach USD 29 billion during

2005-2010

The Role of Textile Industry in India GDP also includes a hike in the investment flow both

in the domestic market and the export production of textiles. The investment range in the

Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion within three

years, from 2004 to 2007. It has been assumed that by the year 2012, the investment ratio

in textile industry is most likely to touch USD 38.14 billion.

TEXTILES IN GUJARAT

The textile Industry is one of the oldest and the most important sectors of the Indian

economy. Gujarat’s textile industry contributes in a big way to the industrialization of the

State. About 33 percent of cotton production in the country is from Gujarat and the State

86

contributes to about 35 percent of the woven fabrics from the organized sector in India.

The city of Surat alone contributes to 40 percent of art silk fabric produced in India and is

the largest production base for man-made fabrics. Further, 23 percent of the State GDP

comes from textiles. Gujarat contributes around 20 percent of textile exports from India

and 6 percent of garments export in India. In the early 1990s, Gujarat saw a dramatic

change in the textile industry scenario with the entry of denim manufacturing. Arvind Mills,

Soma Textiles, Modern Denim started manufacturing denim in Gujarat, and soon the State

was known as ‘India’s land of denim’.

3.2 IMPORT AND EXPORT TREND BETWEEN INDIA &

AFGHANISTAN

TABLE 2.3: EXPORT OF INDIAN & AFGHANISTAN

EXPORT DURING 2000-2006

Country Year

2000 2001 2002 2003 2004 2005 2006

Afghanistan 60.3 49 44.4 64.1 87.4 102.1 125.3

India 1822 2082 2601 3918 4416 5273 6789

Sources: Direction of trade statistics year book,2007.IMF

TABLE: 2.4 IMPORT OF INDIA & AFGHANISTAN

IMPORT DURING 2000-2006

Country Year

2000 2001 2002 2003 2004 2005 2006

Afghanistan 169.5 196.9 307.9 590.9 684.8 1333.0 1648.6

India 473.0 533.0 544.00 664.0 891.0 1297.0 1763.0

Sources: Direction of trade statistics year book,2007.IMF

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TABLE 2.5: INDIA’S EXPORT TO AFGHANISTAN

TRENDS IN INDIA’S EXPORT TO AFGHANISTAN 2002-03 TO 2007-08

Country Year

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Afghanistan 60.89 145.37 16537 142.65 181.57 175.70

TABLE 2.6 INDIA’S IMPORT FROM AGHANISTAN

TRENDS IN INDIA’S IMPORT FROM TO AFGHANISTAN 2002-03 TO 2007-08

Country Year

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Afghanistan 18.49 40.54 46.99 58.41 34.48 74.10’

Sources: Ministry of commerce& industry, government of india-april,2007

TABLE 2.7: FOREIGN TRADE STATISTICS,1389

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SUMMARY AND CONCLUSIONS

After analyzing Afghanistan’s carpet or textile industry, it is clear that investment

opportunities exist. Certainly, these opportunities come complete with the risk associated

with doing business in a post-conflict country, but for the size of the potential investment,

the possible returns are high. There are three reasons for this:

The Afghan government and international donors perceive carpet production as one area

where Afghanistan can make a relatively quick impact on the global market. All parties

involved are very interested in assisting investors with the 20 development of production

and finishing facilities that will increase the quality, marketability and sale of Afghan

carpets.

Unlike in many other sectors of its economy, Afghanistan has a massive skilled labor force

in the area of carpet production. With the integration of new designs, weaving techniques

and market access, this labor force can greatly increase the volume of production.

Currently there is virtually no production capacity (in a factory setting) in Afghanistan’s

carpet industry. With this being the case, the establishment of a production facility can fill a

niche that is needed in order for the sector to increase its market access. There are also

few finishing facilities currently operational in Afghanistan, which provides an opportunity

for investors.

Even in light of these natural advantages, investors in the carpet or textile sector should

consider the following as they consider their strategy in Afghanistan:

� Investors may want to consider partnering with an Afghan individual or company as

a minority stakeholder. Any investor considering a site in an industrial park is

required to have an Afghan partner. This is especially important for investors that

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do not have a background in the carpet sector, as it will provide them the technical

expertise necessary to increase the likelihood of success.

� Investors should strongly consider having a representative on the ground in

Afghanistan in order to address the many issues that will arise with government and

private sector stakeholders.

� While investment in the carpet sector is less resource-intensive than many others,

investors should consider it to be a long-term commitment.

� Because of significant cultural differences, doing business in Afghanistan is

different than in most other areas of the world. Many investors find out too late that

culture and religion play primary roles in every facet of society. Investors should not

anticipate managing a production operation in Afghanistan the way they would in

most other areas of the world, which is why it is important to have a local partner

that understands the best way to conduct business operations within Afghan

society.

90

ENERGY SECTOR IN

AFGHANISTAN

91

Energy in Afghanistan is primarily provided by hydropower. Two decades of warfare have left the

country's power grid badly damaged. As of 2012, approximately 36% of the total Afghan population

has access to 24-hour electricity but in the capital Kabul the number is 70%. Afghanistan

generates around 600 megawatts (MW) of electricity mainly from hydropower followed by fossil

fuel and solar. Officials from Da Afghanistan Breshna Sherkat (DABS) estimate that the country

will need around 3,000 MW to meet its needs by 2020. The Afghan National Development Strategy

has identified alternative energy, such as wind and solar energy, as a high value power source to

develop. Alternative energy projects are already being tested across the country, from wind

turbines in Panjshir Province to micro hydro dams in Badakhshan, to family-size biogas digesters

throughut the country.

SOURCES AND TYPES OF ENERGY SECTOR OF AFGHANISTAN

Hydroelectricity

Hydroelectric plants were built between the 1950s and the mid 1970s, which included the Sarbobi

hydroelectric power plant in Kabul Province, the Naghlu in the eastern Nangarhar Province, the

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Kajaki in Helmand Province and a number of others. Other hydroelectric facilities that were

operational as of 2002 included plants at Puli Khumri, Darunta in Nangarhar Province, Dahla in

Kandahar Province, and one in Mazar-i-Sharif. Also in operation was the Breshna-Kot Dam in

Nangarhar, which had a generating capacity of 11.5 MW. Construction of two more power stations,

with a combined capacity of 600 kW, was planned in Charikar City.

Micro Hydro Power

Due to absence of electricity in the area, the populations have to utilize kerosene as their main source

of lighting and wood as their main source of energy for cooking, heating and baking. This involves

health hazards, is enormously time consumption, and lead to environmental degradation. Electricity

will contribute towards decreasing each of these disadvantages

The essence of this program has been initiating a number of micro hydropower units, which are paid

for and owned by the community. Attached to these power units are small scale agro processing

factories, which enable the processing of agricultural products and help to upgrade the living

conditions of the people. In addition to this, they help in generating employment opportunities for the

landless people in the area.

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Natural gas and oil

Natural gas was Afghanistan's only economically significant export in 1995, going mainly to Uzbekistan via pipeline de marde. Natural gas reserves were once estimated at 140 billion cubic metres. Production started in 1967 with 342 million cu m but had risen to 2.6 billion cubic metres by 1995. In 1991, a new gas field was discovered in Chekhcha, Jowzjan Province. Natural gas was also produced at Sheberghan and Sar-e Pol. As of 2002, other operational gas fields were located at 38 Djarquduk, Khowaja Gogerdak, and Yatimtaq, all in Jowzjan Province. In 2002, natural gas production was 1.77 billion cubic feet.

94

Solar energy

WIND

At least one wind farm was successfully completed in Panjshir Province in 2008, which

has the potential to produce 100 kW of energy. United States Agency for International

95

Development has teamed up with the United States National Renewable Energy

Laboratory to develop a wind map of Herat province. They have identified approximately

158,000 megawatts of untapped potential wind energy. Installing wind turbine farms in

Herat could provide electricity to much of western Afghanistan. Smaller projects are wind

pumps that already have been attached to water wells in several Herat villages, along with

reservoirs for storing up to 15 cubic meters of water.

Biogas

Besides wind and sun, potential alternative energy sources for Afghanistan include biogas

and geothermal energy. Biogas plants are fuelled by animal dung, and produce a clean,

odourless and smokeless fuel. The digestion process also creates a high-quality fertilizer

which can benefit the family farm. Family-sized biogas plants require 50 kilograms of

manure per day to support the average family. Four to six cows are required to produce

this amount of manure, or eight to nine camels, or 50 sheep/goats. Theoretically,

Afghanistan has the potential to produce about 1,400 million cubic meters of biogas

annually. A quarter of this amount could meet half of Afghanistan‟s energy needs,

according to a January 2011 report from the United States National Renewable Energy

Laboratory

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Geothermal

An area of vast untapped potential lies in the heat energy locked inside the earth in the

form of magma or dry, hot rocks. Geothermal energy for electricity generation has been

used worldwide for nearly 100 years. The technology currently exists to provide low-cost

electricity from Afghanistan‟s geothermal resources, which are located in the main axis

areas of the Hindu Kush. These run along the Herat fault system, all the way from Herat to

the Wakhan corridor in the North. With efficient use of the natural resources already

abundantly available in Afghanistan, alternative energy sources could be directed into

industrial use, supply the energy needs of the nation and build economic self-sufficiency

Investment Opportunities in Energy Sector Energy is a critical input to economic growth. Energy projects support agricultural growth and improve management of water resources. The energy infrastructure projects included here will increase power supplies and contribute to expanded irrigation and rural development. Energy provides essential power supplies needed for private sector development, job creation and poverty reduction. Investment in the sector will create direct employment opportunities in the development of power plants, oil, gas and coal fields, the construction of grid systems and the commercial operations of the sector. The development of small energy installations will also contribute to local economic development, particularly in rural areas. Investment opportunities exist in the energy/electricity industry in: • Generation

• Transmission

• Distribution Including:

• Hydroelectric

• Gas Fired

• Coal Fired

• Solar

• Wind

• Geothermal

• Bio-butanol/ethanol

97

Scale of operations: Micro, small, medium and large scale production Potential. Market:

Mass and niche energy markets, primarily domestically but with limited regional market

potential. Generating capacity is mainly hydro-based with total hydro potential estimated to

be about 23,000 megawatts (MW). Thus, hydro potential is large, with opportunities for

export over the long-term, which would lessen both Afghanistan's reliance on imported fuel

and electricity, as well as more expensive gas-based generation in neighboring countries.

Domestic Market: Afghanistans per capita power consumption (as measured from grid

supply) is among the lowest in the world at about 27 kWh per year. Less than 10% of the

population currently has access to electricity. Over 85% of the country fuel needs are met

by burning wood. International Market: The Pakistani domestic market offers huge

potential as a market for Afghan energy exports. Monetary Returns: Monetary returns,

and risks, vary according to the type of activity and location. There are opportunities

offering rates of return that would warrant private sector investment. Social Returns: The

investment program will bring direct and indirect positive social impacts. The reject will

directly contribute to economic growth and will reduce poverty, by lowering household

energy costs and by removing energy constraints to enterprises that offer employment

opportunities for the poor.

Type of Assistance Requested There is need to established private sector firms familiar with the international energy market in terms of generation, transmission and distribution. Technical assistance and advice is required. Technical advice required relates to, advice on selecting and establishing specific investments and the operation and maintenance of facilities that will be established. There are opportunities for private sector operations to build and operate facilities. This area of activity requires substantial funds and technical skills. Local Advantage Northern Afghanistan has proven and probable natural gas reserves of about 5 Tcf. With perhaps up to 100 million barrels of medium-gravity recoverable crude oil reserves. More than 15 oil and gas fields in northern Afghanistan have been identified, but only three gas fields -- Khwaja Gogerdak, jarquduk, and Yatimtaq have been developed. Afghan natural gas production at its peak had reached 385 million cubic feet per day (Mmcf/d) in the mid-1970s. At the regional level, India and Afghanistan are participating in an important energy

98

CONCLUSION & SUGGESTIONS

Today, Afghanistan stands at the crossroads. The country has not yet stabilized, security

transition is in the process, and political transition is also due next year. International

support for the democratization process in the country has been gradually increasing;

however, political and social fragility remains a major concern. India‟s approach seems to

be cautiously optimistic towards Afghanistan. However, Kabul will remain high on the

priorities of Indian foreign policy agenda not only for security but also for natural resources

and regional trade as well as connectivity with Central Asia, which is considered as India‟s

„extended neighbourhood‟.

New Delhi‟s economic engagement with Kabul will depend on security scenario in

Afghanistan in the aftermath of ISAF drawdown in 2014. The current political and

economic conditions in Afghanistan appear favourable for Indian businessmen. President

Karzai has promised a „red-carpet‟ welcome for Indian business community in

Afghanistan. The promise needs to be translated into action on the ground. Afghanistan

needs to undertake measures to improve governance and enhance security in order to

boost investment prospects in the country. The Afghan government should promote

transparency in all business deals it enters into with foreign and domestic companies

The government of India organizes a large international trade exhibition for Afghan

export products in this country. Cherain Thomas, Head of the Indian Council in northern

Balkh province of Afghanistan following a press conference said, the motive of organizing

a trade exhibition in India is to boost trade ties between Afghanistan and India.

He also expressed optimisms for finding new ways of boosting trade ties between the two

countries by organizing such exhibitions. While pointing towards the close political ties

after the two countries signed a strategic cooperation agreement, Mr. Thomas said, we

welcome the Afghan merchants to take part in India’s largest commercial exhibition which

is going to be held from 7 November 2011 to 27November 2011.

99

He also emphasized for the participation of Afghan merchants to take part in India’s

small and medium technology and industrial exhibitions which will help Afghans to improve

Afghanistan’s small and medium industrial sector by bring the technologies in the country.

Meanwhile deputy provincial governor for Balkh province, Zahir Wahdat while

India’s cooperation to Afghanistan said, we expect closed commercial ties with India as we

are already having India’s cooperation in other fields.

Head of Afghan chamber of commerce and industries in northern Balkh province

Mohammad Mohsin Mostaqeem said, Afghanistan and India are having historical trade

ties and Afghanistan had 60% commercial ties with India before Pakistan was formed.

According to reports the first Afghanistan and India trade agreement was signed in

1949 and Afghanistan for the first time participated in Agricultural exhibition which was

held by India in 1958.

Currently Afghanistan exports around 27 different types of Afghan products to India.

100

BIBLIOGRAPHY

News Paper & ARTICALES

• Economic times • Global times • The Hindu,

1: The Hindu, “TAPI pipeline gas sale agreement signed”, published on May 23, 2012, retrieved on 17 December 2012, http://www.thehindu.com/business/Economy/article3449588.ece 2 : Department of Commerce, Government of India, “Import-Export Data between India and Afghanistan”, retrieved on 17 December 2012, http://commerce.nic.in/eidb/iecnt.asp 3: The World Bank, Worldwide Governance Indicator, Afghanistan, http://info.worldbank org/governance 4: Indian Embassy to Afghanistan, “Indo-Afghan Commercial Relations”, retrieved on 13 December 2012, http://meakabul.nic.in/pdfs/commercialrelations 5: 2008 energy sector Yearbook AFGHANISTAN U.S. Department of the Interior U.S. Geological Survey-Article

Books

• CIA World Fact Book • Title: Dictionary of Afghan Wars, Revolutions, and Insurgencies

(Historical Dictionaries of Wars, Revolution, and Civil Unrest, No. 1) Author: Ludwig W. Adamec Publisher: Scarecrow Press

• Title: Afghanistan of the Afghans Author: Shah Sirdar Ikbal Ali Publisher: Shah Sirdar Ikbal Ali

• Title: The Politics of Social Transformation in Afghanistan, Iran, and Pakistan (Contemporary Issues in the Middle East) Author: Ali Banuazizi (Editor), Myron Weiner Publisher: Syracuse Univ Press

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Websites

• www.wesharestats.com

• www.Mangalamalloys.org

• www.Pulitzercenter.org

• www.Steel.govt.org

• www.indiamundi.com

• www.mining.com

• www.globaltimes.com

• www.kabulfelez.com

• www.encylopedia.com

• www.eximbankindia.in

• www.afghan-web.com

• www.iqrasearch.com

• www.cultuecrossing.net

• www.customs.mof.gov.afghan

• www.communicaid.com

• http://www.acci.org.af/

• http://www.commerce.gov.af/

• http://www.moec.gov.af/index_eng.aspx

• http://www.epaa.org.af/

• http://www.mof.gov.af/ http://doingbusiness.org/data/exploreeconomies/afghanistan

• http://mom.gov.af/Content/files

• http://articles.timesofindia.indiatimes.com/2012-11-15/india

• http://info.worldbank.org/governance

• http://www.theodora.com/wfbcurrent/afghanistan/afghanistan_economy.html

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