“The private sector can play a key role in delivery of humanitarian and development assistance which in turn will promote economic stabilization.”
Hojat Fazly, CEO of Harakat
1. Could you briefly describe Harakat and its operations in Afghanistan?
HARAKAT – Afghanistan Investment Climate Facility Organization was established as a Special Purpose Vehicle back in 2008 to facilitate investment, reform the private sector framework, and facilitate doing business in Afghanistan. Since its inception, Harakat has successfully delivered numerous private sector development projects and has been the pioneer in preparing and introducing private sector development priorities, promoting the rightful status of the private sector as the main driver for economic and social development in Afghanistan.
2. What are the current initiatives and programs of Harakat for private sector development in Afghanistan?
As the leading private sector development entity, our programs focus on assisting women businesses, safeguarding livelihoods, initiating and supporting economic policy, regulatory reforms, facilitating private investment climate, and creating jobs by supporting businesses. Our strategic vision is to streamline a private sector-led economic recovery and growth through engaging with our previous and new partners for supporting the private sector development in Afghanistan. Harakat continues to work with all its stakeholders in ensuring private sector development in Afghanistan.
Harakat has recently partnered with the International Finance Corporation (IFC) which was announced on September 5, 2022 during an event regarding assessment of the private sector of Afghanistan conducted by the World Bank (WB) in Istanbul, Turkey. The partnership is designed to support private sector advocacy, policy making, facilitating business platforms and opportunities in Afghanistan. Harakat will connect and facilitate dialogues between authorities of the interim government and private sector in Afghanistan. This will in turn preserve the important role of the private sector in economic growth of Afghanistan.
In addition, Harakat recently concluded the United National Development Program (UNDP) funded Women in Business Recovery Project for Afghanistan resulting in re-opening of 20 female enterprises. The mentioned success was achieved through the financial and technical support of the UNDP.
3. How do you assess the role of international organizations pertaining to the private sector development in Afghanistan?
For over 20 years, international donor organizations such as the WB, USAID, EU and others supported Afghanistan in achieving significant social and economic gains. These organizations have worked with the Afghan government, private sector, and international partners to implement laws and policies to support establishing a dynamic private sector. Today, as Afghanistan faces a humanitarian and economic crisis, all those international organizations have to continue supporting the private sector to preserve the gains made in the last 20 years. The private sector can play a key role in delivery of humanitarian and development assistance which in turn will promote economic stabilization. So we hope that international organizations will involve the private sector in their humanitarian and development assistance with Afghanistan. The key element of their strategies must be prioritizing efforts to sustain the significant achievements of the Afghan private sector focusing on agriculture-led economic growth and fiscal sustainability.
4. What are some of the major changes that have currently affected the private sector in Afghanistan?
Weak institutions, dysfunctional regulatory frameworks, and lack of a business-enabling environment are still the major challenges facing the private sector development in Afghanistan.
HARAKAT Group Picture 2022
5. Please describe briefly if there are any opportunities for the private sector in Afghanistan currently.
The Afghan private sector has huge potential to contribute enormously to the economic growth and to be an instrument of social inclusion. However, unequal access to economic resources, and insufficiency of public services undermine the creation of an effective and sustainable private sector that can be an engine of growth. There is a prospect of reversing this dynamic. The Afghan private sector could, in addition to leading economic growth, contribute to improving human and security conditions in the country. Immediate actions by key players are needed to catalyze this process. The government and international donors need to create a more facilitating environment for the private sector, particularly for the many disadvantaged smaller players such as Small and Medium-Sized Enterprises (SMEs) that form the bulk of the economy.
6. What are your recommendations for the overall development of the private sector in Afghanistan?
In comparison with more developed economies, the Afghan private sector faces considerable challenges. It is largely inequitable, informal and is shaped strongly by excessive market conditions. I recommend the following to the existing three main players i.e., the interim government, the international community/donors, and the private sector stakeholders.
- The Interim Government needs to:
- Provide direction by developing a realistic private sector growth strategy with clear measurable milestones, division of labour between international and national actors, and implementation, monitoring and follow-up mechanisms;
- Improve the business climate in close coordination with the organized business community through realistic growth promoting economic policy reforms and by prioritizing sustainable development of strategic industries. Instruments such as tax relief, state supply contracts and public-private partnerships (PPPs) should be considered; and
- Prioritize women’s full and equal participation in the economy, leveraging women-to-women economic networks, while promoting male endorsement. Support policies should be mainstreamed within all economic plans.
- The International Community/Donors need to:
- Set up a formal cooperation and coordination mechanism for the development of the private sector in conjunction with both the interim government and the private sector;
- Support full value-chain development projects in the agricultural sector, which have high labour intensity and job creation potential, including for women; and
- Incorporate consumer demand perspectives in private-sector development programs considering that demand is a critical component of commercial feasibility and sustainability for the mentioned programs.
- The Private sector stakeholders need to:
- Strengthen the capacity, transparency and member representation of organized business. The views of smaller scale business actors, including informal and rural-based businesses, should be given greater weight.
Biography of Hojat Fazly:Hojat Fazly serves as the CEO of Harakat-Afghanistan Investment Climate Facility Organization, focusing on public private partnerships, private sector legal and regulatory reforms, investment facilitation, women’s economic inclusion, and trade and transit. Prior to joining Harakat in 2021, Mr. Fazly was the CEO of International Chamber of Commerce in Afghanistan. He holds two MA degrees, one in International Development Studies from Erasmus University-Rotterdam, and the other in Global Political Economy from Leiden University in the Netherlands. Mr. Fazly is Fluent in English Dutch, Dari and Pashtu.