Development News from Afghanistan

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Private investment in Afghanistan drops by half in 2007, business group says

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Associated Press / January 28, 2008

KABUL, Afghanistan – Private investment in Afghanistan dropped last year to US$500 million (€340 million) _ about half the amount invested in 2006 _ due to the worsening security situation in the country, a business group said Monday.

The Afghanistan Investment Support Agency said investment last year compared unfavorably to the US$1 billion invested in 2006 and the US$570 million invested in 2005.

Security concerns, the targeting of businessman by criminal gangs and “burdensome bureaucracy” were among the key factors that caused the sharp drop, AISA said.

“The targeting of businesses and businesspeople by criminal gangs for ransom has had the most profound impact on the morale of private entrepreneurs and, therefore, on private business and investment,” the statement said.

Despite the sharp drop last year, AISA believes investments will rise in 2008 to more than US$1 billion (�680 million).

Last year was Afghanistan’s most violent since the ouster of the Taliban in the U.S.-led invasion in 2001. More than 6,500 people _ mostly militants _ died as a result, according to an Associated Press count of figures provided by local and international officials.

The country is also affected by record-breaking opium production, which has a corrupting influence on local officials and provides funds for the Taliban insurgency.

Kidnappings for ransom _ mostly of Afghans _ are on the rise in the country. An American aid worker was kidnapped in the southern city of Kandahar on Saturday; no group has claimed responsibility.

The Afghanistan Investment Support Agency was established by the Afghan government in 2003 as an independent outlet for local and international investors. Since its creation, AISA has registered and supported over 11,300 private companies, including more than 1,200 foreign investments.


Written by afghandevnews

January 29, 2008 at 3:55 am

Posted in Economy

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