Improving the Business Climate in Afghanistan the Investor Roadmap

The Investor Roadmap is a tool that helps government identify the regulatory and administrative constraints (red tape) that hinder commercial activity. The Investor Roadmap in Afghanistan details the licenses and procedures that an investor must fulfill to invest and operate; the step by step procedures required to obtain the license; documents required, time frame; and costs. It also makes recommendations on how best to streamline bottlenecks and inefficiencies in this process. This is a valuable source of information for potential investors.

Development of the Investor Roadmap reflects the MoCI's commitment to improve the business climate and regulatory environment in Afghanistan. This is consistent with the Government's commitments within the Afghanistan Compact, which requires that all legislation, regulations and procedures related to investment be simplified and harmonised by end-2006 and implemented by end-2007.

The current process for starting a business in Afghanistan is costly and time-consuming - it consists of an excessive number of licenses and required approvals, too many steps in the process, and inadequate information provided which would make it easier to comply. This negatively affects the ability and willingness to invest, hurts our competitiveness, denies opportunities for wealth creation, and invites corruption. Specific problems are as follows:

Information

There are significant information gaps between government regulators and investors: only very few government agencies post any information about the licensing process. This makes it more difficult for business to comply, and increases the power of officials.

The process

  • The steps in the process of obtaining a license are all external, i.e., the investor must carry the paperwork from office to office - and often wait outside each office for days and days while the application is being processed.
  • In most organizations, the entry point of the process is at the top of the organization, and can continue down for several more levels until something is actually done to assess the application. This procedure wastes both the time of investors and these high-level ministry personnel, and gives too much power to the latter.
  • Licenses are often cross referenced, such that to obtain one license requires having another or being in good standing with another organization. This system increases the power of each organization whose permit is required to extract payments since, without their license, another vital license cannot be obtained.

Number of licenses required

Investors in 22 sectors not only have to be registered with the Commercial Court to be a legal entity and obtain an AISA license, but they also have to obtain sectoral licenses. In many of these sectors, the economic rationale for having to obtain these licenses is nonexistent.

For more information about the Roadmap please contact:

ASI Technical Assistance and Capacity Building Project

Ministry of Commerce and Industries

Kabul, Afghanistan

yousuf.jabarkhil@asi.org.af

Website: moci.gov.af