Saturday, September 27, 2008
USAID Deputy Mission Director Charles Drilling speaks on Afghanistan's new business registry.
Salaam Alaikum. Minister Farhang, Judge Baha, Mr. Zakhiwal, Mr. Haqju, distinguished guests, ladies and gentlemen, on behalf of the United States Government, I am honored to be a part of this important event that will help bring greater prosperity and economic independence to Afghanistan.
Afghanistan’s vision for the future, described in your National Development Strategy, is to become a society of hope and prosperity, based on a strong economy and social equity, and standing with full dignity in the international family. The US Government is committed to helping Afghanistan achieve this vision.
This is why we strongly support the development of the private sector and the growth of the market economy in Afghanistan. Encouraging private sector business development is the only way that Afghanistan can create jobs and improve the welfare of its people.
At the Paris Conference in June, the United States and the rest of the international community reaffirmed their commitment to Afghanistan and pledged more than $20 billion dollars for Afghanistan’s development.
But no international aid lasts forever, and no amount of aid alone builds a strong economy. The experience of countries worldwide shows that those that succeed take advantage of assistance to reform their economies, encourage the private sector, and welcome trade and investment.
One only needs to look to India to see this dynamic at work. For decades, India received massive amounts of international aid and yet remained mired in poverty. Since the 1980s, the government began deregulating, the state got out of the productive sector, and private business was allowed to take off. Today India is on the fast track in growth and innovation, quickly becoming one of the major economic powers in the world. China is another similar example. As a result, according to the World Bank, these two countries account for most of the poverty reduction in the world, having lifted more than one billion out of poverty.
Some would argue that due to Afghanistan’s special conditions, it can ignore the experience of other countries, and pursue a state-led path. We believe that’s wrong. Afghans have long been famous as traders and entrepreneurs. But the experience of the past thirty years has imparted to many the habits of state intervention in the economy. It is time to break these habits.
The private-sector led model works in Afghanistan just as well as it does in India. Look at the telecommunications sector. It has often been cited as a success story, and rightly so – it has powered growth in the service industry and the economy as a whole. That’s because the telecommunications sector is governed by a new modern legal framework that has decreased regulations and encouraged competition and investment, and we have all seen the incredible results. Just as this sector has thrived, so can the rest of the economy grow if you make the commitment to go down this path.
In the past six years, Afghanistan has achieved a lot. Economic growth since 2002 has been impressive, reflecting recovery from the deprivations of thirty years of war. But serious challenges remain. Far too many of Afghanistan’s people are unemployed, especially the young. Far too often, ordinary Afghans are faced with rising prices that leave them unable to afford basic necessities. Afghanistan remains highly dependent on foreign assistance.
But aid alone will not reduce unemployment. For that, you need a strong, vibrant, diverse national economy, where higher demand is met by higher productivity, not by higher prices. To achieve that will require putting in place the basic building blocks of the market economy, including the enactment of needed commercial laws and modernized business registration and licensing processes. This is essential to attract and enable new businesses, creating jobs and opportunity. Without this, there is great uncertainty for investors, foreign or domestic, and they are far less likely to take a chance on Afghanistan.
The Central Business Registry represents an important major reform that will help encourage the growth of the Afghan economy. Reduced fees and faster registration will make it easier for businesses to access the benefits of being registered, including qualification for bank loans, expedited customs clearance, legal protections, and the ability to obtain trader and investment licensing. Additionally, this registry reduces opportunities for corruption, as registration fees change hands only once. The improved data collection and reporting from the Central Business Registry to the Central Statistics Office will ultimately contribute to a stronger environment for doing business.
We commend the Ministries and governing bodies for supporting the establishment of a single one-stop shop for business registration. This agreement gives us a small taste of what the future of Afghanistan could be like when the Government and private sector work together to encourage business development. A next step will be to bring this reform to Afghanistan’s provincial centers to facilitate registration for all businesses everywhere. We also strongly encourage Afghanistan’s governing institutions to resolve outstanding issues on key commercial legislation, for example, the Contracts Law and Agency Law, and encourage their timely passage in Parliament.
The United States is proud to have provided financial support to establish the Central Business Registry, in keeping with our belief that the private sector must be the primary engine of economic growth in Afghanistan. I congratulate those of you who are here today to improve the environment for doing business in Afghanistan. That means creating more employment and well-being for the Afghan people. Thank you.
Last updated: February 12, 2014