Despite all the challenges, the National Unity Government has prioritized economic reforms. The government has taken measures to institutionalize reforms and focus its efforts on the promising sectors. It has provided a prominent role to the private sector to participate in all key public policy debates impacting businesses and investment. Concrete steps have been taken to improve the business enabling environment. For example, the government acted on the private sector’s recommendations to develop and approve an Electricity Law, an Open Access Fiber Optics Policy, a Public Private Partnership Law, secure membership at the WTO, develop a National Trade Policy, approve a National Export Strategy and pursue an alternative transit route through Central Asia.
Furthermore, the government has also taken systematic efforts to improve Afghanistan’s performance in the World Bank Doing Business Indicators. In 2018, the government successfully submitted reforms to five of the ten Doing Business Indicators, the most reforms in a single year by any Afghan administration since 2002. Responding to the private sector priority for reform, the government established one-stop-shops for business licensing, construction permits and export to reduce time and cost to businesses. To improve access to serviced industrial land, the government passed an Industrial Parks Policy. The government took steps to reform the regulatory framework for mining. To improve access to regional markets, the government in partnership with the private sector launched a network of air cargo corridors to key current and potential markets for Afghan products.
However, many challenges remain. The rate of economic growth is now below the rate of population growth leading to declining per capita income and increased poverty. Unemployment is high with this trend having the potential to continue in the near future as 400,000+ new workers are joining the labor force each year. Moreover, deficient infrastructure continues to remain a key barrier for the private sector and dependence on foreign assistant to finance development is high.
Afghanistan needs job-rich growth and higher domestic revenue to provide employment opportunities for Afghan youth, reduce poverty and decrease dependence on foreign assistance. Meeting these goals will ultimately depend on the Afghan government’s ability to attract investment and develop a vibrant private sector. The Afghanistan National Peace and Development Framework (ANPDF), the key economic development policy of the government, explicitly recognizes the critical role that the private sector plays in Afghanistan’s development and growth.
The National Priority Program for Private Sector Development 2018-2023 (NPP PSD) is the key mechanism through which the Afghan government coordinates the desired reform actions in support of the private sector development, investment climate reform and economic growth. It formulates the key elements of the National Unity Government’s (NUG) commitment to respond to private sector concerns and constraints.