Going to be having a conversation about the private sector in afghanistan. Hosted y posted this witht have done the partnership of the Senior Advisor here. Thank you, tony. Will have a very interesting and constructive conversation today. When i think about people who are qualified for their jobs, and two or the right people at the right time, i cant think of a better person than my friend greg from the afghanistan pakistan office. He has served in the toughest places in the world for the United States. Patriot, a really qualified individual. Thank god he agreed to do public service. Up. , come on [applause] it is very nice to see many of my old friends here, particularly my friend from cairo. He has done a lot of things that need to be done in afghanistan. Great to see all of you. I look forward to meeting all of those i have not met. I would like to see say a few words about the strategy, and a few points on how that relates role in afghanistan and pakistan, and talk about the specifics. I feel very fortunate to be returning to usaid at a time when we actually do have a strategy for what to do in the region, the south asia strategy. I have some marching orders. Within it, we have the components for afghanistan and pakistan. Dhe afghanistan role for usai is to help with sustaining the gains made in the social sector over the last 16 years health, education, and womens empowerment. The second is to build the bond between the government and citizens. That is through the Service Delivery i mentioned, through credible elections, and through significantly reduced corruption. Is private sectorled economic development, focused on Market Centers and importantly nonexclusively, but not exclusively, on exports. I will talk about that in more detail. This is a very president ial thing to do, by the way. [laughter] pakistan, where we have been engaged for a long time, we have three things we are trying to and we are on the same page with the government and the network of important stakeholders related to these things. Help pakistan to mainstream the Federally Administered Tribal Area in any way they feel appropriate with the adjacent province. To help make that area a place where people who have lived there all along can helpa normal life, and to there were 1. 6 Million People displaced by conflict, and to the rest of pakistan. Returned, making it possible for them to reintegrate. The second piece is to help communities in pakistan, particularly the areas gainrable to extremism, to resilience against that, and southernrly karachi, number two. Something that involves working with Civil Society. We are building on something that is happening. Pakistan, helping attract private investment to create jobs, particularly for younger people. Under all of that is to make the maximum effort to be accountable for the taxpayer funds that go into supporting our programs in pakistan and afghanistan, and in the broader context, to make the relationship with india as constructive as possible. Thingsthat, one of the that afghanistan has done over the last year is to create an air corridor between kabul and delhi. This has been a real support to businesses, private afghan businesses that are exporting the process products of the countryside. Particularly in markets in the region. Marble,uts, carpets, war wool. Es, this corridor has been quite understand and i they are contemplating extending that to the uae, kazakhstan, other Central Asian countries, and perhaps, turkey. As we collaborated with our business colleagues in egypt and the ability to invest in equipment to process the products of the countryside depend upon the regulatory policies and administrative environments conducive to that. Electricity,ity, land,nd clear access to and a transparent relationship between the business and do allent, so they can the things they need to do to do that kind of business. We think that is a real andrtunity for afghanistan, we are doing everything we can to support it, and we would like to see 10 years hence what one can see if one drives from cairo to alexandria, producing highvalue crops for the local export markets. Focusing on to be the market areas, in the larger cities, and the areas adjacent where the government control then in some of the other parts of the country. Given some of the policy environment and conditions, conl there are already existing gaps in the businesses, and there will be more who can set up the facilities to process the products and the countryside, and reach out. Someone mining for onyx in hel mond and processing near kabul, others growing fruit and vegetables and selling it in india. A trading event for three days at the end of september in india, between indian and afghan men and women, government officials, media there, Civil Society, were about 1700 people that participated in that event. Out of that came 27 million in products,igned sales 24040 million million in various types of agreements. Shows there are existing afghanistan thats know how to deal with the region , and our job is to make that grow. Be doing a number of things to support those many of including the businesses in india are run and owned by women. Another piece we are looking at are the electrical Power Requirements, the growth of the private sector in afghanistan. Our support to the electric power sector, and we are still working on that. There would be significant privatesector led Economic Growth relating to the exports to the region and other places, that what are the electric Power Requirements of that . We are trying to get a handle on january, andnd of see what we can do to support that as we move forward. And iortant part of it, was talking with the leadership of the chamber of commerce a few job ingo, 70 of the pushawar depends on trade with afghanistan. A lot of the opportunity relates to exporting, and it would be nice if there were Free Movement of goods across the afghanpakistan border area border. We will be doing everything we can to get to yes on that. For two weeks is not a good way to build your business. Theher important piece is extractive sector for several afghanistanrk with to help develop that, and the efforts werent very successful. Again open to doing that and we are looking to support it in ways afghanistan wants to. Were not going to get ahead of the Afghan Government of supporting the extraction, which could be a huge diversion. We have engaged the u. S. To take theervice huge amount of raw data developed years ago on the Mineral Resources of afghanistan, and put that into some form that is useful to potential investors in extractive industries. We have already contracted. That way, a Mining Company can ifif they are can know they are interested in a particular resource, what it is and what about it. The independent Anticorruption Agency monitoring and Evaluation Committee has done it corruption and vulnerability assessments, they started with even with the ministry of health and went to the ministry of education. Were supporting them to do that, and supporting their quarterly followup on action taken against the recommendations made. Has been ay of mines very good roadmap for development of the extractive industries. As the effort with the anticorruption push that the as theyecided push forward with that, there is a roadmap to develop the extractive sectors. We will do what we can to support that, including a new to help theave government ministries addressed sources of corruption within Society Monitor the extent to which that is being done. Make,nal point i would there is a u. S. Afghanistan initiatived afghan ghan initiative including over 200 Performance Measures related to the whole gamut of the country, including private Sector Development issues. Han initiative, and the president has emphasized they are moving forward with that. We are helping them to move on those things, and that we have some capability to do it. We have thethat, new development partnership, which is taking key reform measures, Performance Measures, and relating u. S. Financial support to them. 800 millionyear, to specificted Performance Measures agreed between the United States in afghanistan and afghanistan. Those are elements that can support more specific private Sector Developments that we know are absolutely essential to afghanistan of achieving the president has laid out that the afghan president has laid out at the senior officials meeting, how to get private investment so that afghanistan can pay its bills and move ahead. To the overall objective of the south asia strategy, which is to help afghanistan be stable enough to manage extremism within its borders, to help pakistan the secure enough to play be secure enough to play a constructive role in the region. I look forward to having the chance to say hello to my old friends. Thank you. [applause] thank you very much. Csis. Welcome to i am a senior fellow here. I will be moderating this excellent panel. Introduce to briefly our distinguished panelists, and then i have a dozen questions to ask. Lady, is a member of the Afghanistan Women Chamber of commerce and industry. Wayne, a former ambassador to Economic Affairs bul. He u. S. Embassy in kaubl and ceo of president the Afghan Chamber of commerce. And we have a member of the federation of afghanistans craftsman and traders. I would like to talk about the u. S. Perspective and jump into more of the local voices. We will start with a feelgood story, i would like to ask some questions about the achievements of afghanistan in the private sector in particular. Anthony, what are the three main achievements the private sector in afghanistan has to accomplish . I will start with the private sector. Afghanistan looking at it in context, it is weird cspan is here today. We have a larger audience than just the audience here, watching. It is important the American Public know the success afghanistan has had with a lot of support from the United States and other donors have not just been in health and education and womens empowerment. There is a of success going on in afghanistan. In light of that success cannot thatblicly talked about success cannot be publicly you canbout because bring others into it would like to take down that successful project. I am going to whip through a few successes in a broadway that identifies in a brod way that a broad identifies how far they have come. Cellularthere was no in afghanistan. Subscribersobile now exist, with a penetration rate for women of 86 92 . The private sector got there was with a lot of support of the donor community. The early donor investments started as early as 2002, and came from the department of helping usaid, implement over 2 billion inside used antan and additional 2 billion of outside donors to bring the infrastructure in afghanistan to where it was a few years ago. We will talk about what needs to be done now in a few minutes, and this is one of the sectors in which they have followed the kind. Followed behind. Afghanistan is primarily an agrarian economy. The illicit economy in afghanistan is agdriven, a pretty sizable percentage. Afghanistans agriculture is still the main driver for employment, subsistence living. Wheat is the main component. Afghanistan is the largest her capita wheat consumer in the capita we to consumer in the world. Agricultureducts in include opium, fruits, nuts, and lambheepskins, skins. There are already a lot of withts going on, pomegranates and fruits and nuts. There has been a major amount of Infrastructure Development done by the United States, the world bank, and others. A series of private Sector Investments that will hopefully includes the, this dam, and aor a contract was awarded to General Electric for a second largest generator there. A 500 fulton line is almost finished. Kabulect that took the main public utility and it took it into a soon to be privatized fully and available to a foreign investor. They also spent a lot of time on regionalization. Power gridsne successfully. We hope you will have a diversified we will have a diversified electrical system that will be owned by private companies under the new independent Power Production law that passed. The afghan president really deserves credit for this they have attempted to region lies a lot of the economic regionalized a lot of infinite economic infrastructure with india and iran, actual ports they can ship products to. They started connections with salmah dam was inaugurated by india and afghanistan recently. Afghani ways to get private grown products abroad is the way to do that. That was the coverage of some of the highlights. I will put a little bit in context. Up inpita gdp has gone 2002 from where it was in 2002. The economy has grown. But it has been hard to foment growth in the private sector in afghanistan. The remains of the sector probably employees 70 probably employees 7 70 of the population. Afghanistan has a long tradition of small traders. You have a businessindustrial and theround 25 , Development Bank in their last said it is 10 12 . There is a lot to do out here, even with the very ambitious and determined entrepreneurs that exist. Growth came initial because of the International Funds going into afghanistan, a lot of it from the military spending, support spending which was tied to the Development Systems coming in from many sources. Thesaw the shock that hit economy when all of those withdrew, and a real drop in gdp growth. And we now reversing, have seen an upswing in gdp. Year about 2. 6 this growth, and expects to be over 3 next year. There is a lot that has to be done. The private sector condoms as an important component in a number of areas comes as an important component in a number of areas that need to be worked on simultaneously. As you are supporting the you need to get better at collecting revenue in a way that doesnt harm the private sector. You need to get better at collectingthis is bein the government and private sector how can you expand time,e and at the same not overburdened private sector , buth with bureaucracy look for ways to expand the tax base. You have to get a lot better in expanding your government funds, you have to provide Daily Services in a way that people appreciate. That is to the general population, as well as the private sector. Infrastructure was a very important part of making this possible, which now has to be maintained, because a lot of it has not been maintained sufficiently. Side tough top side, there are a lot of reasons that Business Confidence hasnt been high, due to the lack of security, the slow pace of reforms, and the week regulatory system weak regulatory system. Hope, thattant to the government seems committed to working on all of these areas. Is aimed aticy addressing the situation. All, but through them there are a number of steps the government has taken to improve dialogue with the private sector. In dealing with tax problems, audits, very practical things that make it hard for businesses to work together. There are a number of things they will have to keep working on in the longterm, which both jeff and greg mentioned. We will come back to them. There is a lot of work to do, but we all recognize the vital importance of getting this private sector engine moving, and one of the most important facts about that is 400,000 people coming into the job market every year. People without jobs are usually not good for societies. The private sector is the place you can generate those jobs. Thank you. What do you think are the main sectors that have the highest potential for growth and why . I will start with mining and extractives, because that has gotten a lot of focus from the Afghan Government and the United States government in the last few months. In afghanistan, there is a huge amount of illicit mining already happening around the country. Some of the deals are struck with shipments to the middle east and lebanon, but a lot of it is heading to china, prospective deals between chinese Extraction Companies and afghan governors or regional players or militia leaders. The Afghan Government is trying to bring the Mining Sector into the formal economy in a way that is structured and planned and ethical. It is a big lift to get there. The areas being looked at right there arerble, wonderful marble exports already occurring regionally. The Cargo Network we talked about will help do that. The world bank made the only in theon for clean coal world for afghanistan this past year, which is a big deal if you know the bank has been pushing for solar and wind the past few years. Coal, it has the ability to bring portable generation capacity to villages in areas that never wouldve had Energy Development there for years or decades. Lithium, the United States government has had a number of meetings internally and with the afghans about a possible joint venture between the United States and afghanistan to explore lithium. Service tookogical an analysis they did from 2006 so that extractive assessments could be made on the best lo