Sunday, October 18, 2009

Doing Business in Afghanistan

I keep an eye on the conferences and conventions here in Washington D.C. This one caught my eye: 5th Annual U.S.- Afghanistan Business Matchmaking Conference Who the hell is doing business in Afghanistan and why? I decided to find out.

The opening reception was tonight at the hot new W Hotel. It was a large group, more than I expected. 500 plus. 90% were Afghans. Many flew over from Afghanistan. The big news for the night was that the U. S. State Department just opened a visa office in Kabul. Those in attendance had to make a day long trek to Islamabad, Pakistan to get their U.S. visas.

The Americans walking around were all the stone faced types. Any I approached told me they were consultants. Who knows what they were really up to?

I had a long talk with American-educated Hamid Rahin of Afghanistan's Telephone Systems International. I asked him if it was safe to do business in Afghanistan. He told me, "You need balls, after that its like doing business anywhere else."

He told me TSI was a family business. Before 9-11, the family had a contract with the Taliban to provide telephone service in Afghanistan. Once the bombs started falling the family pulled up stakes and moved to America.

A couple of years later, they got a call from the U.S. military. After TSI pulled out, a Chinese company moved in to provide telephone service. The military told them that they had just bombed the Chinese phone facilities and asked TSI if they wanted back in Afghanistan. They dropped all their U.S. based projects and headed back. They expected to provide cell phone service to about 200,000. Instead, they have 2.5 million customers.

There are now four telephone companies in Afghanistan and the competition is fierce, Rahin tells me. He says rates are cheaper in Afghanistan then in the U.S.

He says some Afghans carry sim cards from more than one company. They watch rates (It's all pre-pay) and put in the sim card for the company that has the cheapest rates.

TSI is now working on launching a television network in Afghanistan. It will be satellite based, so it will be viewable around the world.

I asked him why he thinks the U.S. is really in Afghanistan. He shrugs a bit and says its probably strategic. Afghanistan borders Iran, Pakistan, Turkmenistan, Uzbekistan, Tajikistan, and, in the far northeast, China. Russia is also nearby. The U.S. can do a lot of intimidation from Afghanistan, he says.

He tells me that TSI workers are mostly happy with the U.S. presence. It means steady jobs and less lawlessness. "They all can afford to buy jeans and they have a steady wages," he says. He says the real problems are in and around the mountains. The Afghan government doesn't go there and the Taliban goes in and gives those living there food and money.

Closer to Kabul, he tells me, at points where the Taliban come in and harass local businesses, the U.S. attacks with fighter jets and drives them back.


  1. Mobile telephony is a technology and business that unexpectedly had major impact in 'Third World' countries.

    Another interesting example. Kenya has 10% of the world's m-payments by volume.

  2. interesting that all the new tech helps developing countries more.

    Globalization is a huge benifit for 3rd world countries and the rich wallstreet bankers. Middle class and Below middle class in developed countries get the short end.

  3. Anonymous,

    Globalization helps everyone. It is a further division of labor that makes firms more efficient and products cheaper. The problem with some globalization efforts is that they create "free" trade agreements which are not free trade at all, but managed trade, designed to favor only large firms with large amounts of capital and politically connected interests.

    Also, new tech is more likely to help an under-developed country because there was nothing there to begin with. Whereas, developed countries with large infrastructures are less likely to abandon them unless it is cost effective to do so. Consider also the level of regulation designed to hamper infrastructure improvements (the US has the FTC, FCC, FDA, OSHA, SEC, FINRA, FCTC, etc) and favor already established interests.

    We need more globalization, not less.