Home » AFGHAN MARKET ESSENTIALS: THE UNTOLD 12
A short piece based on local conversations in the business community
One-Size-Fits-All Doesn’t Work
Be cautious! What works in the Western world may not necessarily be effective in the context of Afghanistan. Culture, traditions, beliefs, laws, and attitudes in Afghanistan are very unique to the country. You must adapt your leadership and management practices to fit the environment. A basic example: phone calls work much better and quicker than emails. Alternatively, frozen yogurt businesses haven’t done so well, while fast food is on the rise.
Hmm, let me think and get back to you!
Things take a lot of time here. There is limited data, thus you have to rely on anecdotal information and exercise judgement based on personal trust. Mobility is restricted. Technology is new. Infrastructure is weak. All in all, you can’t make a decision in a snap!
Opportunities Fly Around
Isn’t it the general belief that the more problems there are, the higher the number of business opportunities? This is even more real in Afghanistan. Every sector of the economy offers opportunities for investment. All it takes is a bit of entrepreneurial acumen, some cash, and the guts to get started.
Expensive is too expensive
Expensive goods and services don’t sell to the vast majority of the Afghan population, of which 39% live below the Poverty Line. Except for major government & donor contracts, trying to sell expensive goods, such as luxury cars, can prove to be too expensive for your business: it won’t grow.
Growth Has a Limit
In the Afghan market, businesses can grow very fast but only to a certain size. Compared to its neighbors such as Pakistan, China, and Iran, Afghanistan’s market is too small to house businesses that aim to grow into billions of dollars. That’s why the country has over 80% SMEs and only a handful of large companies. Start in Afghanistan, but see your growth in the region.
Managing Human Capital is a Constant Struggle
Training, training, training! Despite over 17 years of capacity building, Afghanistan is still in dire need of qualified human capital. It’s ironic that about 40% of the population is unemployed, but many sectors continue to import technical expertise from abroad. High staff turnover is another challenge. A company would constantly have to effectively source, recruit, train, and maintain staff.
Weeks Are Shorter Here
Rebellious Afghanistan! We are the only country in the world with our official weekend on Thursdays and Fridays. Rebellious enough, some organizations here have Saturdays off. If we add the time zone differences with the Western countries and their weekends on Saturdays and Sundays, Afghanistan has three days a week to work in conjunction with the rest of the world. This is bad for business.
Everything Depends on Security
Security incidents put businesses on hold. The shock from each attack or major security news, especially in the main cities, put the market into a temporary halt, incurring businesses millions of dollars in lost revenue.
Jack of all Trades, Master of None
In Afghanistan you will find yourself doing every bit of your business by yourself. From finding raw materials to production to packaging to distribution, you will often spend a lot of time and bear many failed attempts before you can find the right supplier.
Volatility at Its Peak
Given the turbulent situation of politics, security, and economy, the levels of volatility in markets is very high in Afghanistan. Things change very quickly and that must be incorporated in your business model.
High Risk High Margin
It’s risky to do business in Afghanistan. But it’s worth it. Margins are very high and opportunities very vast.
Thinking Long-Term Is Hard
If you can objectively plan beyond a year or two, you’re a genius. In business, it’s difficult to think long-term here. It’s usually short-term + short-term + short-term!
Murtaza Edries is the Founder and Chief Editor of Business DNA. He is an economist by training and an entrepreneur by practice. He writes on entrepreneurship, economic growth, private sector development, and business management.