Economic peril and the Afghan election

Afghan businesses and workers struggle to survive security concerns and foreign investment pullouts ahead of elections.

Kabul, Afghanistan The shop’s furnace roared like a jet engine and blasted out a shower of sparks, illuminating the gloom in the corrugated tin shed. Workers, intent on their tasks, squatted over the fine sand on the casting floor and laid templates for oven lids.

Sweat streamed down the face of a labourer as he hurried to pour molten metal into a cast just centimetres from the shoes of an assistant. Past rows of rusty 55-gallon drums filled with slick black oil, another shed was filled with men and machines mass-producing sheet metal parts for assembly into the small gas ovens sold all over Afghanistan.

But with historic presidential elections just around the corner on April 5, the Taliban promising to disrupt the vote – there have been four attacks in Kabul alone in the past week – and uncertainty over whether US troops will stay in Afghanistan past 2014, this glimpse of industry, rudimentary as it is, may become an even rarer sight as businessmen hedge their bets on the political, economic and security future of the country.

“At the time that we established the factory in 2008, we did not expect such a situation as we have right now. We didn’t know the foreigners were going to leave,” says Wali Mohammad, 29, one of six brothers who set up and run the oven factory that sits in the shadow of the crumbling, war-battered hulk of Darulaman Palace, the former home of Afghanistan’s royal family.

Three months ago, we were still earning a lot of money, but for the past two months people have really stopped buying things for their houses...

- Wali Mohammad, factory owner

More importantly, he says: “Back then, the US had not started to say that they would leave in 2014. We only had this information in 2011. In 2008, the situation was better compared to now,” says Mohammad. “If we had known that this would happen, we would have set up a really small business to make some money for the family. We wouldn’t have made a big business like this.”

Saving up for uncertainty

Sitting on a modest couch in a small office with one computer, Mohammad’s voice can just be heard above the vibrating roar of the smelter blasting away just across a small garden dominated by one of his company’s plastic-wrapped ovens – sitting like a trophy on a fancy, polished-steel stand.

“Our work has been affected for the past two months. Three months ago, we were still earning a lot of money, but for the past two months people have really stopped buying things for their houses. That’s why we are producing less now,” says Mohammad, referring to the $44 ovens his factory produces. “But, after the elections, we hope that work will be going well again.”

The ripples of this ambiguity are being felt across Afghanistan as people stop spending money to save up for uncertain times ahead. This is as true for Mohammad as it is for the workers in the factory. “Day by day our problems grow,” says Mukhtar Ahmad, 26, a labourer in the stove fabrication shop, who supports a family of 12. “It is unclear what will happen after the elections.”

This feeling is widespread. Akhlaq Azimi, 33, builds private homes in Kabul to supplement his meagre salary at the Ministry of Transportation. He said two years ago, he was making $1,324 a month in construction, but that fell to $530 a month last year. This year, he only has one construction job, but he has not signed the contract yet. Although these monthly figures put Azimi well above what the average Afghan will hope to make in a year, they are an indication of the lack of confidence in urban investment – property and buildings – since many Afghans do not trust local banks enough to put their money in them.

“If there is no security, there will be no one around to invest money. Because of this, businessmen like me are afraid to invest. Nowadays all businessmen are holding back their money,” says Azimi.

Shaking things up

Unease over the presidential elections is multifaceted, but two big fears pervade. First, an informal system of corruption and patronage has become deeply ingrained in Afghanistan’s bureaucracy and a new leader would shake things up – especially in a system where so much is based on personal loyalties rather than on institutions.

Afghan security personnel arrive at an election commission office during an attack by gunmen in Kabul [Reuters]

Second, although leading candidates Ashraf Ghani Ahmadzai , Zalmai Rassoul and Abdullah Abdullah have all said they would sign the Bilateral Security Agreement with the US – a deal that would allow some American troops to remain in Afghanistan past 2014 – a poll conducted by Al Jazeera shows that slightly less than half of Afghans feel confident that Afghan forces could provide security, 38 percent were somewhat confident of that statement, and 14 percent were not confident that Afghan security forces were up to the job.

Many fear a civil war or Taliban takeover if there is a complete withdrawal of foreign money and troops. Afghanistan’s businessmen are aware of these factors and they are feeling the pinch. “If one link in the chain is broken, the whole thing will collapse,” says Azimi.

The candidates are also aware of these issues and, to some extent, the presidential campaign has focused not only on personalities – as is the norm in such a system – but also on issues.

Indeed, back at the oven factory, the workers are talking about the elections, says Mohammad with a smile.

“We talk normally at the factory about the elections. There is no arguing,” he says. “We will vote for someone who supports industry. And only Ashraf Ghani Ahmadzai and Zalmai Rassoul talk about supporting industry. They are always talking about factories and industry. The workers here will probably support one of these candidates.”

Highlighting the importance of personality here, Mohammad says even though a member of Abdullah’s campaign team visited the factory three weeks ago, he, his brothers and his workers would still not vote for the candidate.

“Ghani and Rassoul talk about supporting industries, but this guy was only a member of Abdullah’s team. If Abdullah himself had come here and told us that he would support us specifically, after he became president, then we would give him our votes.”

Broken economy

Regardless of what the candidates and foreign boosters say, Afghanistan’s economy is broken. The International Monetary Fund, the World Bank and the Asian Development Bank all agree that Afghanistan’s GDP growth slowed considerably – from about 14 percent in 2012 to an estimated 3-4 percent for 2013, according to a January 30 report to the US Congress by the Special Inspector General for Afghanistan Reconstruction.

“The decline in GDP is attributed to increasing uncertainty about the volatile political and security environment and to lower agricultural production and private investment. With an expected reduction in international aid and spending after 2014, World Bank projections show average real GDP growth declining to 4-6 percent annually through 2018,” reads the report.

Yet with nearly half-a-million dollars of infrastructure in place – and 45 labourers from every major ethnic group relying on salaries of between $88-$318 a month – it has become hard for Mohammad and his brothers to leave, especially since he believes the company would only sell for about $250m in the current market – half the value of the machinery, buildings and property.

“We will wait and see what will happen next. We can’t do anything but wait. This is our only option. If we don’t have enough security and we don’t have good government, we cannot improve our business,” says Mohammad.

“Now we trust the government, but they don’t really help us. Only because the international community is here, we are not really afraid. If they leave, there will be a civil war here and we will lose everything.”

Follow John Wendle on Twitter: @johnwendle

Source: Al Jazeera