Governance Structures for Business Environment Reforms in Afghanistan: Knowledge Exchange with Morocco

Afghanistan faces significant development challenges, as poverty levels remain high. While fostering growth led by the private sector is essential to addressing these challenges, the formal private sector is extremely limited. Continuing conflict has caused a sharp contraction in private sector credit, firm registration and private investment.  

The Government of Afghanistan and the World Bank Group (WBG) have recognized that regulatory reforms are needed to establish a conducive business environment, restore private sector confidence and create jobs. To address its development and poverty challenges, the country must find new sources of private sector growth that could help to reduce its dependency on international aid, as well as the economy’s reliance on a volatile agriculture sector. Addressing private sector constraints will be key to achieving sustained growth in the long term. 

To support job creation and promote a more enabling regulatory environment for businesses, the Government must strengthen the institutional structures dedicated to the design, coordination, implementation and monitoring of its investment climate reform program. 

To help address the country’s development challenges, the Government of Afghanistan has undertaken several interventions to improve the business environment and support private sector-led growth. In April?2017, the Inter-Ministerial Committee on Private Sector Development (PRISEC) was established to lead business environment reforms. PRISEC is co-chaired by the Ministry of Commerce and Industry, the Office of the Chief Executive and the WBG. The Committee includes key public and private stakeholders. 

To strengthen the institutional capacity of PRISEC, a knowledge exchange was organized with Morocco, a country that has implemented a series of reforms and continued to improve its ranking in the World Bank’s Doing Business publication1. The exchange aimed to strengthen institutional capacity to design, coordinate, implement and monitor a successful business environment reform program that would foster private sector development in Afghanistan. 

During the exchange, which took place from July?2018 to May?2019, the Afghan delegation met with key representatives from Moroccan institutions that are leading the effort to improve the country’s business and investment climate. The Commission Nationale de l’Environnement des Affaires [National Committee for Business Environment] (CNEA) has been successful in implementing numerous business reforms since its creation in 2013. These reforms have improved the position of Morocco in the World Bank’s Doing Business publication. CNEA facilitated a learning session on designing, implementing and monitoring an investment climate reform program by developing action plans and effective reform strategies. They also discussed the role of academia, inclusive approaches to stakeholder and regional engagements, and techniques and approaches for establishing sector-specific frameworks for dialogue. 

Learning from the efficient and multilayer management approach employed by CNEA, PRISEC representatives discussed the possibility of simplifying the existing structure of the coordination and policy units to enhance efficiency and high-level political support. 

Following the approval of the Afghanistan Women Chamber of Commerce and Industry by the High Economic Council, the delegation has identified practical proposals to help increase women’s representation and participation on executive boards in Afghanistan. 

Due to limited data and baselines, it remains difficult to make decisions and measure investment-related targets in Afghanistan. The delegation therefore nominated two officials to lead the process of creating the business surveys needed to improve data quality and establish more reliable baselines. 

A presentation of the knowledge exchange, experiences, good practices and next steps for the PRISEC executive committee was scheduled to take place by the end of the fiscal year?2019. The team representative from the Ministry of Industry and Commerce committed to preparing updates on the proposed e-governance law and circulating them to the rest of the delegation and the WB team following the exchange visit.