In failing states the normal models of wealth creation fall apart. Andrew Shirley asks former Afghan politician Seema Ghani why
Afghanistan, unsurprisingly, doesn’t feature in our study of global wealth populations. No reliable figures exist as to the number of HNWIs living in the country, but one thing is certain: although there is plenty of money circulating among an elite group of wealthy individuals and businesses, very little of it is trickling down to the rest of society, especially those living in the rural provinces away from the capital Kabul. Seema Ghani, a former deputy government minister, anti-corruption campaigner and NGO leader, says there are a number of reasons why the normal model of wealth creation, whereby the poor gradually become better off, even in countries with high levels of wealth inequality, is failing in Afghanistan.
“What is happening is that we are becoming a nation of importers. Those with money invest into importing things from other countries. Money is not being used to produce anything here that would generate employment. Even basic agricultural productivity is declining.” A culture of short-termism and corruption is to blame, says Ms Ghani, who has calculated that private businesses pay only one third of the tax that they owe.
“Despite the billions of dollars of aid that the government has received over the past 16 years, and which now accounts for about half of our national budget, it hasn’t managed to tackle security or create the infrastructure and pool of qualified labour needed to encourage private investors.It is cheaper and safer to import things, or invest elsewhere. Entrepreneurs exist, but many have moved to Dubai or are creating businesses in places like Malaysia.”
A lack of well-educated young people with new ideas to help take the country forward isn’t part of the problem, Ms Ghani points out. “Lots of aid money has been spent on education and almost six million children now attend school, a significant achievement. But when they graduate there simply aren’t enough jobs and so poverty levels remain high, especially outside Kabul.” Another problem is the fact that very little investment flows out of the capital to the rest of the country. “All the government contracts are awarded to businesses based in Kabul. And even when they are working on projects in the provinces they bring labour and sub-contractors from Kabul, too,” says Ms Ghani. Ms Ghani, who was deputy minister of finance in 2004 and deputy minister of labour affairs in 2011, resigned both positions because she couldn’t live with the system of patronage and short-termism.
Breaking this vicious circle, when politicians have such a short-term view and are unwilling to embrace the vision of the younger generation, seems a daunting prospect. But for all that, she remains hopeful that the right kinds of interventions can make a real difference. Working mainly in the northern provinces of the country, initiatives funded by NGOs such as Hand in Hand International and the Aga Khan Foundation are shifting some power back into the hands of people at the bottom of the wealth creation ladder by helping the rural poor to set up their own micro enterprises.
Not only do these programmes help offset the country’s entrepreneur drain, they provide Afghanistan’s educated and unemployed young people with a productive, often life-changing outlet. And because they target poor Afghans directly, the short-termism that mars Afghanistan’s politics is sidestepped completely. “It’s not easy because decades of aid dependency have made even the poorest people very demotivated,” says Ms Ghani. “But once we’ve convinced people to change their mindset and they realise that we have zero tolerance for corruption of any kind, the results are very rewarding and we find that other people start asking for help as well.” Not that Afghanistan’s micro entrepreneurs have it easy. Those who successfully set up small businesses – for example, poultry production – often have to compete with cheap imports, while poor infrastructure makes it difficult to access other marketplaces. “We are constantly having to adapt and think of new ideas and approaches – but the benefits of smaller NGOs is that they can be much more reactive,” says Ms Ghani. “It’s not easy, but this year we will have created employment for about 11,000 people, so it can be done.” It can be done and indeed must be done, she adds. The NGOs are also competing with terrorist organisations such as the Taliban that pays its recruits up to US$600 a month. “If we don’t succeed it’s not just this country that will suffer, the flow of refugees heading for the rest of the world will continue.
"It’s much more cost effective to tackle this problem on the ground than waiting for them to arrive in the Western world.” Seema Ghani is chairman of the NGO Hand in Hand Afghanistan and co-founder of the People's Movement against Corruption.
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