A round up of some of the big stories in 2011.
The year started with large transit deals between Afghanistan and Iran. But within months Iranian authorities had detained some 2,000 fuel tankers at the border.
The year started with large transit deals between Afghanistan and Iran. But within months Iranian authorities had detained some 2,000 fuel tankers at the border. The transit agreement was not working as well as hoped. The tankers were carrying fuel from Iraq and some of Afghanistan’s other neighbours.
The impasse at the border sent fuel prices rocketing upwards. Prices of food and basic necessities spiralled.
According to the deputy head of the Chamber of Commerce and Industry, Khan Jan Alokozay, transit everywhere is a challenge for landlocked Afghanistan. There has been tension with Pakistan, Iran, Uzbekistan and Tajikistan. The worst was with Iran at the start of 2011. Anti-Iran demonstrations were reported from some provinces.
Some traders clandestinely operated between Uzbekistan and Afghanistan, according to the deputy minister. Oil tankers slipped in surreptitiously across the Uzbekistan border but others were not allowed in. The smuggling did not put money in the government’s coffers. Before the blockade, Nimroz customs was earning 150 million Afghanis per day ( 3.1 million USD).
Afghanistan-Pakistan trade
APTA or Afghanistan-Pakistan trade agreement was signed in August. But it was informally launched from March. The agreement allows Afghan traders rights to travel up to Wagha, the border between Pakistan and India. The agreement is a major breakthrough for Afghan traders searching for markets. India’s vast population is a major market for Afghan agricultural produce. The transit deal was based on a previous agreement between Afghanistan and Pakistan in 1965.
However, the implementation has run into snags. Pakistan banned 5,000 containers of imports at its port.
Kabul Bank crisis
The government-owned bank’s crisis became official in February. The IMF (International Monetary Fund) called the bank sick and advised the government to sell it to new shareholders to save it from complete collapse. The precarious state of the bank has affected foreign capital inflows into the country including development funds from foreign donors. Poor management and bad loans have led to the crisis.
This was not the only sick bank. Da Afghanistan Bank has been in crisis.
Taxing the rich
In November 2011, the Ministry of Finance announced tax collections from the rich have increased by 25 percent in the past seven months. The country’s aviation, hospitality and security industry are counted in the “rich” category.
The ministry thinks the rise in tax collections is because of an increase in investments in Afghanistan.
The Ministry of finance declared that Afghanistan taxes increased 25% from rich tax payers during last seven months of the year.
The Ministry added that they obtained 8,700,000,000 (186 million USD) Afghanis from Afghan rich tax payers since beginning of the current year. The ministry received more than 7,000,000,000 Afghanis (149 million USD) over the last year.
Mining
An Indian-conglomerate led by the state-owned SAIL won the bid to mine the A, B and C Hajigak iron deposits. A Canadian company has been awarded the rights to the D section, which has lower grade iron ore.
A survey of the Hajigak mines 50 years ago showed the deposits worth 1.8 million tonnes.
The primary works will be launched in 2012, but the mining will only begin from 2019. The Indian bid has promised to build roads, railway and provide employment to local people.
Industrial slowdown
Some 130 factories shut down in Herat province. This affected the livelihoods of some 20,000 people. Much of the blame has been put on the government for neglecting industry in the province. The deputy trade and industry minister, Ghulam Mohammad Yaylaqi, blamed the crisis on unnamed saboteurs. There are people who do not want to see investment in Afghanistan, he said.
Amo Darya mines
A 700 million USD oil and gas agreement was signed with China National Petroleum Company in November. It is the first large contract to explore and develop gas fields in the country.
Minister of mines and industry, Wahidullah Shahrani, said the oil fields were discovered 80 years ago. Afghanistan’s immense natural wealth has ensured 2011 was a good year for the country.
Mohammad Arif of the Ministry of Economic Affairs said despite the worldwide recession economic prospects were hopeful for Afghanistan.
Professor Sayf-ul-Din Sayhoon of the economics faculty in Kabul University urges government planners to focus on infrastructure growth. “Afghanistan’s growth has been restricted by poor infrastructure,” he told Killid. He warns the economic growth needs to be managed. “An economy that relies on trade and imports cannot expand. For instance, narcotic smuggling and the money flowing in from that have put negative pressures on the economy,” he said.
While 2011 was good, the best year was 2007, according to head of the Chamber of Commerce and Industry Khan Jan Alokozay. He hopes there will be an increase in exports which had fallen by 35 percent in four years.
