Private sector development in Afghanistan is a crucial topic for U.S engagement in the region. Between 2002 and 2010, about 57 billion US dollars of official development assistance (ODA) was disbursed to Afghanistan for purposes of reconstruction and development. Less than five percent of the ODA has gone towards private sector development in Afghanistan, with most of the money allocated to infrastructure, agriculture and rural development, and governance. More recently, the Trump administration committed to extending the U.S. military presence in Afghanistan into the foreseeable future. Military resources alone cannot achieve U.S. foreign policy goals in Afghanistan: it is important to look at the role that the private sector plays in consolidating Afghanistan's future prosperity and growth.
Afghanistan is doing well in fiscal policy, inflation, access to credit, and some aspects of human capital investment (i.e., health expenditures and primary education expenditures). There have been attempts to support and incentivize private sector growth, for example, the Afghanistan New Market Development Project (ANMDP). However, to promote private sector growth, Afghanistan needs to tackle political rights, fight corruption, uphold the rule of law, build effective governance, and reform business regulations, to name a few.
Fostering a solid private sector in Afghanistan is important for long-term sustainable growth and improving the quality of life for its citizens. Leveraging the private sector to build a robust economic foundation in Afghanistan is a necessary and timely discussion.
