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Security clouds Afghan economy

Delawari talks about his vision for a self-sufficient Afghanistan where bureaucracy does not stand in the way of production.

india Updated: Apr 01, 2006 18:13 IST

Natural resources, agri-business and power generation are the bricks with which to rebuild Afghanistan's broken economy but security risks in the country are a major obstacle to investment outside of aid plans, Central Bank Governor Noorullah Delawari said on Saturday.

Speaking in his Kabul office, the urbane ex-California commercial banker outlined his vision for a self-sufficient Afghanistan where bureaucracy did not stand in the way of building production capacity and import-substitution became the norm.

"My problem is with lack of capacity ... President Karzai is struggling with government agencies, some of the ministries are not doing the kind of work, the practical things, to remove obstacles and provide opportunities," he said.

Delawari returned to Afghanistan in 2002 after 35 years abroad which included over 25 years experience in commercial banking with 16 at Lloyds Bank California.

He has seen good times for his country, and bad, when the world was not interested, but says he is determined to use the aid now coming in to good effect.

"Take advantage of the good times while you are in the spotlight," he said.

"I believe we can do it. We could take advantage of this window of opportunity in the next three to five years. "We have the resources to become at least 75-80 percent self-supporting, self-reliant."

War, poverty

After 25 years of war, poverty is still a major problem in the Afghanistan with only 13 percent of the population having access to safe water and 12 percent to adequate sanitation, according to the World Bank.

Foreign aid has amounted to $11.9 billion since 2002 and the government has drawn up a five-year-plan targeting annual growth of 10 percent.

"The fact is we are a recipient of a very large amount of foreign aid, it brings a lot of foreign exchange, that's our current account, that's our revenue," Delawari said noting that Afghanistan's exports stand at about $500 million while imports are officially close to $3 billion. He thinks the figure probably exceeds $4 billion.

"In the short-term we need to improve our exports ... agri-business and hand-made products will create a lot of jobs and fairly good income for the country," he said.

"Second, I believe Afghanistan could be a major player in exploring and exploiting our natural resources."

"We have potential to develop 25,000 MW of electricity ... We may use 10,000 MW, the rest could be exported to energy-hungry countries like Pakistan and India."

Self-sustained economy

While Afghanistan's infrastructure needs significant attention, Delawari does not see it as a mission in itself.

"Infrastructure is a subjective matter. Building roads, bridges and telecommunications and so on, those are fine ... but I want to spend more serious time on practical aspects of our growth, to remove obstacles, improve efficiency, to produce, to create jobs, move towards a more self-sustained economy."

"You have to create production opportunities. That's equally important to building roads and bridges."

Gross domestic product (GDP) in Afghanistan has averaged 17 percent over the past four years, Delawari said. The IMF is forecasting 11.7 percent growth this year.

"I'm convinced we could be a big player in the region. We have quite a bit of natural gas ... We have iron ore and copper," he said, adding that transport links were being developed from ports in Iran and Pakistan to Central Asia.

But the impact of the Taliban insurgency in the south and east was having a severe economic impact, he said.

"If we didn't have this security concern I could see really good investment opportunities, and investment coming."

He is also fighting with the Afghanistan's administrative ghosts as the government lays to rest old bureaucracies.

"We have had layers of very diverse types of government ... each one of these governments have left their residue in the system. To deal with it, to remove it, takes a little time."

"This is an opportunity to me that I couldn't buy with any amount in America," he said of his job. "To do what you really want to do ... you're helping humanity, helping a country which was so beaten down."