economic growth planning for kandahar...

V8* 4 Mar 2012 Draft - p1

Kandahar Provincial Reconstruction Team (KPRT)

Kandahar Province, Afghanistan

ECONOMIC GROWTH PLANNING FOR KANDAHAR CITY EXECUTIVE SUMMARY The priority focus of the KPRT EG Plan for the coming year will be the continuing development of the SD5 Shurandam Industrial Zone (SIZ), Kandahar City’s economic core, taking advantage of the reliable and affordable power generated at the newly-built 12mw Shurandam Industrial Power Plant (SIPP). According to the director of Industrial Parks, new power is responsible for over 2,000 new workers with 100 new factories requesting connections. The KPRT will shape the planning on the effective use of SIPP power, develop public-private working groups to address expansion issues, and encourage international donors to contribute to infrastructure construction. Industrial park development is a top NPP, PDP and USAID priority. Other KPRT EG Plan lines of effort more specifically defined herein include: GIRoA Enabling Environment; Private Sector Development; Agribusiness Value Chain Growth; and, USAID OEG Program Shaping and Monitoring. The KPRT EG Plan first outlines the KPRT EG Afghan-led guiding philosophy, then details a RSSA-formatted action plan to address these and RP-S EG priorities. STRATEGIC MISSION / GUIDING PHILOSOPHY The KPRT is pursuing an Afghan-led economic growth strategy focused primarily on Kandahar City yet inclusive of the regional and international inputs that drive the province’s economy and provide opportunity for future prosperity. Inputs to the KPRT EG Plan are hierarchal, beginning with the Afghan National Development Strategy (ANDS). The ANDS divides EG priorities into two categories: Hardware (Enabling Infrastructure) and Software (Capacity Building). The ANDS details EG directives in the National Priority Programs (NPP) for Private Sector Development which identifies both national and Kandahar-specific EG programs to be addressed in the next several years. Also included at the NPP level of the KPRT EG Plan are Ministry of Agriculture (MAIL) agribusiness objectives. Combined, these directives include industrial parks, cold-storage facilities, improved partnerships, export processing and one-stop GIRoA services.

v.9 * 20 Mar 2012 * [email protected]

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The provincial level of input to the KPRT EG Plan focuses on the Kandahar Provincial Development Plan which identifies top economic and agribusiness priorities for Kandahar City, primarily supporting industrial growth, agricultural processing and the economically-viable utilization of the Nesaji Textile Complex site. The final (although missing) level of input to the KPRT EG Plan will eventually include the KC Municipal – Private Sector EG Plan. No plan exists as the previous municipal administration focused primarily on security and governance. The present municipal administration lacks EG expertise and thus is primarily guided by business-association and power-broker interests. A priority near-term strategic objective is to connect Mayor Omer with the private sector by capitalizing on the Mayor’s primary objectives of planning, capacity building and revenue generation. The ‘Directives’ section of the following chart illustrates the Afghan-led EG strategic hierarchy as detailed above. The base of the hierarchy illustrates the USG resources and initiatives directed to ‘Support’ GIRoA’s strategic objectives.

THE KPRT ECONOMIC GROWTH GUIDING HIERARCHY


PLAN OF ACTION Using this hierarchal guiding philosophy, the KPRT EG Plan of Action detailed in the RSSA reveals 5 Lines of Effort: 1. INDUSTRIAL DEVELOPMENT

a) Shurandam Industrial Park Infrastructure & Growth b) Shurandam Industrial Power Plant Optimization & Transition

2. GIRoA ENABLING ENVIRONMENT

a) KC Municipal – Private Sector EG Plan b) KC Municipal EG Office c) KC Municipal Business Licensing & Tax Collection d) Provincial EG & AG Support e) NPP / PDP Directives

3. PRIVATE SECTOR DEVELOPMENT

a) Business Association Engagement b) Gender, Youth & NGO Business Capacity c) Bazaar Improvement d) Business / Vocational Training

4. AGRIBUSINESS GROWTH

a) KC Municipal & Wholesale Markets b) Cold Storage Facilities c) Processing & Packaging d) Regional Inputs Development

5. USAID OEG / AGRIBUSINESS PROGRAM SHAPING & MONITORING

a) EXPORT: 1) TAFA: Trade Accession & Facilitation for Afghanistan 2) CHAMP: Commercial Horticulture & Agricultural Marketing

b) FINANCE 1) RUFCOD: Rural Finance & Cooperative Development 2) FAIDA: Financial Access in the Development of Afghanistan 3) AGF: Afghan Growth Finance 4) ADF / ACE: Afghan Development Fund / Afghan Credit Enhancement

c) WORKFORCE DEVELOPMENT 1) AWDP: Afghan Workforce Development Program

These Lines of Effort detailed in the KPRT EG RSSA support the RP-S EG Priorities as illustrated in the

following charts:


SHURANDAM INDUSTRIAL ZONE DEVELOPMENT

RP-S EG PRIORITY KPRT CURRENT KC EG ASSESSMENT KPRT 6-MONTH KC EG ENDSTATE KPRT KC EG ACTION

10) Work with provincial officials to prioritize and focus on critical public infrastructure that will provide the business community access to basic services such as power and water that will allow them to grow and expand their businesses.

SHURANDAM INDUSTRIAL POWER PLANT 8mw fully operational, 4mw USAID plant being tested. Power extended to all existing industry within Old SIZ. 1a. KIA adding power lines to New SIP but demand may exceed production. 1b. Fuel subsidies end 2013. 1c.No GIRoA plan for future budget & operations.

1a. Complete factory census of current and future power demand in SIZ leading to SIPP optimization. 1b. RC-S delivers to KC leadership updated power briefing & viable options for SIZ power. 1c. KC Power Shura, KC Power Management Committee begins transition planning.

1a. NGO-implemented census completed. 1b. RP-S Power Briefing. 1c. GIRoA Power Shura led by RC-S power group.

SHURANDAM INDUSTRIAL ZONE 2a. SIZ Development Committee of public/private leaders meet regularly, infrastructure projects planned. 2b. Illegal factories, squatters and power-brokers restricting future growth within critical areas of the SIZ. 2c. SIZ lacks a comprehensive master plan.

2a. Continued SIZDC engagement and projects. 2b. SD5M and Mayor evict illegal factories, begin negotiations for Kuchi relocation. 2c. Urban Dev Dept, Dept of Ind Parks, and KIA develop and implement a comprehensive SIZ master plan.

2a. Mayor & PG collectively address illegal factories. 2b. KPRT further facilitating options and resources to relocate SD5 Kuchi. 2c. KPRT facilitate SIZ master planning.

OLD SHURANDAM INDUSTRIAL PARK Existing factories in the city's main industrial park (Old SIP) are taking advantage of reliable and cheap power from the Shurandam Industrial Power Plant revealing a substantial improvement in output, employment and new investment. 3a. Old SIP dirt road & lack of drainage impacting farm to processing to market linkage.

3a. New roadway and drainage infrastructure in Old SIP completed facilitating goods to market, reduces factory flood damage and supports additional factory growth. 3b. City corruption (bribes for new business approvals) & illegal factories addressed. 3c. Engineering & package complete Old SIP Phase 2 to end of factories.

3a. Old SIP CERP package approval, bidding, award, construction. 3b. Mayor publically addresses corruption. Eviction of illegal factories. 3c. KPRT engineering SOW for Phase 2.

11) Strengthen capacity of the Southern Regional Chapter of AISA to efficiently and profitably promote and operate the Shorandam Industrial Park and support the business community. 7) Facilitate Raisin Process Plan construction.

NEW SHURANDAM INDUSTRIAL PARK 4a. Limited infrastructure exists in the New SIP to facilitate economic expansion. New SIP not a priority for DABS. 4b. AISA SIP not productive, applicants submitting unacceptable business plans.

4a. New SIP factories complete private sector funded power infrastructure; USACE connect to SIPP grid. Paved roads and drainage construction planned and funded. 4b. Business plan training.

4a. Technical support for the Kandahar Industrial Association power project. USG construction planning supported by India Consulate funding for new roads. 4b. Facilitate monthly SIZDC meetings.


GIRoA ENABLING ENVIRONMENT


9) Help facilitate dialogue and interaction that builds mutual respect, cooperation and collaboration between the Kandahar Provincial, District and Municipal government organizations and the regional business community.

MUNICIPAL ECONOMIC GROWTH PLAN No KC EG plan exists. KC has no EG Officer. Mayor and SDMs have limited connection with the private sector. Military BSOs under pressure to spend CERP funds on EG projects, particularly microgrants and solar lights.

1a. NGO-implemented KC EG plan funded. 1b. Monthly Business Shuras per subdistrict connecting SDMs to business community; SD EG priorities established. 1c. Mayor's Business Awards Luncheon connecting Mayor to business leaders. 1d. BSO working through KCDST & SDMs.

1a. NGO KC EG QRF grant development. 1b. KCDST facilitating regular meetings btw SDM and SD biz community to develop a short-list of EG priorities. 1c. Mayor's Business Awards Luncheon planned for late January 2012. 1d. KPRT EG Deep Dive presentations.

MUNICIPAL BUSINESS TAX COLLECTION Some 11,000 KC shops (43%) are unlicensed and untaxed leading to dramatic shortfalls in KC municipal revenues. Many businesses uncertain how to become city compliant and/or lack business skills for compliance.

2. Citywide distribution of "How to Do Business in Kandahar City" booklets and media program detailing business taxation compliance and illustrating the basics of accounting needed for compliance.

2. Development and submission of QRF grant to fund NGO creation and distribution of booklet.

NPP & PDP SUPPORT KPRT addressing NPP & PDP priorities in industrial park development and ag value-chain facility support.

3. Continued progress in SIP infrastructure, India Cold Storage upgrade, raisin processing factory, ag markets and new processing/packaging investment.

3. See EG-Industry and EG-AG RSSAs.

PROVINCIAL EG SUPPORT KPRT meets regularly with Dep of Economy and Dep of Ind Parks. Both departments lack planning and budgeting expertise but are well-connected with top KC business leaders. Prov Depts do not receive development budgets from Kabul.

4a. KPRT-sponsored institutional training for provincial EG staff. 4b. Kabul Embassy pressure on national ministries to fulfill Kandahar provincial on-budget mandates.

4a. KPRT development and funding for provincial EG institutional training. 4b. Connection with appropriate mission leaders.

11) Strengthen capacity of the Southern Regional Chapter of AISA to efficiently and profitably promote and operate the Shorandam Industrial Park and support the business community.

AISA INDUSTRIAL PARK AISA regional manager Hedayatullah integrated with business & GIRoA leaders via the Shurandam Industrial Zone Development Committee. RP-S business development assistance.

Expansion of AISA Industrial Park marketing and favorable lease terms to Kandahar businesses. Greater leadership role for RM Hedayatullah.

Continued SIZDC meetings; individual mentoring.


PRIVATE SECTOR DEVELOPMENT


1) Initiate an engagement strategy with the Southern Afghanistan business community in order to identify those key obstacles and constraints that impact their ability to grow and expand their businesses and solutions on what can be done to expedite resolution.

BUSINESS ASSOCIATIONS Numerous KC business associations are active in addressing membership needs and lobbying GIRoA. KPRT has a close relationship with the Kandahar Industrial Association, jointly pursuing SIZ improvements. USAID ASMED closing in Dec jeopardizes programs with Chamber and other biz organizations.

KPRT effectiveness stalled by loss of ASMED so no rating improvement. 1a. Fully-funded KPRT-Chamber annual workplan to assist in private-sector development. 1b. Improved private-sector connection to the municipal and city government and int'l donors. 1c. Priority assistance provided to Ag-oriented business associations.

1a. Relationship-building meetings with ACCI leadership, project prioritization, funding secured. 1b. Regular business shuras with SDMs; SIZ development meetings; business shuras with Mayor. 1c. Establishment of a KPRT Agribusiness Development Committee

BAZAAR IMPROVEMENT PROGRAM No comprehensive EG plan to improve KC bazaar business environment and municipal revenue generation which includes over 26,000 shops, 43% unlicensed. BSO CERP projects in bazaars not tied to municipal governance.

2a. Complete atmospheric profile of all KC major bazaars. 2b. Municipality-approved priority list of requested improvements forwarded to each SD's BSO for CERP consideration. 2c. Improved management, infrastructure and revenue collection of municipal-owned bazaars.

2a. KCDST and BSOs addressing bazaar census RFI. 2b. Bazaar Improvement Shura with Mayor and SDMs presenting findings. 2c. Municipal EG officer or NGO assigned to public market management.

6) Development of Kandahar Small Business Development Center with a goal to establish first center by early, 2012 and two satellite centers by mid 2012. Establishment of USAID sponsored workforce development and business internship programs which are market driven and implemented with input from private sector business.

BUSINESS TRAINING USAID ASMED program completing a multi-year program providing extensive business startup training along with business-association requested workshops.

3a. Ending of ASMED program in Dec 2011 will lead to significant loss in USAID training capacity and funding. Limited impact until USAID Afgh Workforce Development Program takes effect in 2nd half of 2012. 3b. New relations established with KC business training entities. 3c. SBDC location identified, master plan developed.

3a. Identification and funding of ASMED master trainers to address Chamber training priorities, 3b. Meeting and 'quick win' small projects with business training institutes to gauge effectiveness. 3c. Exploration of abandoned Shurandam Customs Building as the SBDC home.

5) Help facilitate the implementation of a women focused home/community based food security program that will provide education and training on home preservation of fruits and vegetables through canning and preserving methods.

GENDER, YOUTH AND NGO No EG plan exists to address at-risk populations or to improve NGO business capacity.

4a. Create the KC Female Business Council and the KC Youth Business Council connected to business community, GIRoA and int'l donors. 4b. Business skills training workshops for NGOs.

4a. Engagements with DOWA, DYA & business institutes to determine the appropriate approach and funding needs. AIMS Youth Business Council luncheon. 4b. Coordination with KPRT NGO support group.


AGRICULTURE VALUE CHAIN


2) Identify key Kandahar businesses that can provide products or services that feed into the agribusiness value chain and examine what can be done to enhance their qualitative and quantitatively production capacity and profitability.

INDIAN COLD STORAGE ICS used only at 10% capacity. Facility assessed, Phase I plan drafted. ICS initial projects of compound graveling and basic sanitation completed.

1a. Comprehensive upgrade to sanitation, fan system and loading doc. 1b. Business operations and marketing programs initiated.

1a. Presentation, amendment, approval and implementation of ICS Phase 1 Plan. 1b. India Consulate funding requested. 1c. Demand for cold storage researched.

WESTERN MARKET COLD STORAGE Market under construction, cold storage facility considered but not designed.

Conceptual design, cost & business plan, if needed. Package ready to shop for funding.

Stakeholder meetings for need and design; cost / benefit analysis; business plan; conceptual design.

PACKAGING Mushkani Plastic Factory upgraded recycling machinery for plastic and paper packaging. Lacks connection to ISAF recyclable supply.

Recycling contract with an ISAF facility. RP-S assistance in identifying and negotiating a recycling contract.

8) Construction of two fruit and vegetable wholesale markets in the Western and Eastern portions of Kandahar City and assist in developing effective operational management structure for both sites.

AG WHOLESALE MARKETS Western: Phase 1 infrastructure under construction by municipality. Eastern: New SIP site identified in master plan.

Western: Phase 1 complete. Phase 2 structures under construction, temporary market considered. Phase 3 concepts discussed. Municipal management plan finalized. Eastern: Development concept accepted.

Western: Phase 2 stakeholder meeting to address minor design changes. Construction oversight by KPRT engineers. Phase 3 input. Eastern: Eastern Mkt Dev Committee formed.

FARM SERVICE CENTERS and AG DEPOTS Privately-owned Farm Service Center and Ag Depots were built through USAID around the city and districts that provide quality agricultural inputs and services.

Farm Service Centers and Ag Depots are reliable source for high-quality agricultural inputs, extension and training, output marketing, access to credit, and an array of other services.

Assess their viability, expand operations by further training, marketing, and increase access to credit.

ADF / ACE Currently, this $150M USAID funded program has only invested around $13, 000 in the province and have not provided extended any credit in the province

Program roll-out in the province with limited number of small commercial farmers, agribusinesses, producers of high value crops, processors, and exporters receiving agricultural value chain-related credit services

Engage DAI and support the roll-out of the ADF/ACE program in the South. Assist in developing or identifying viable groups for credit to agricultural value chains.


USAID OEG / AGRIBUSINESS PROGRAMS


3) Promote advantages and opportunities in developing wider domestic, regional and international trade networks through an ongoing series of education and training seminars and workshops on the APTTA/SAFTA trade agreements.

TAFA TAFA opened a Trade Service Center at the ACCI but has yet to hire a full-time director or develop a KC work plan.

1. KC trade facilitation work plan finalized and implemented leading to export-oriented workshops, training and trade fairs.

Work plan review and input.

4) Help facilitate innovative loan instruments that can effectively and efficiently expand access to credit and financial services for the Kandahar business community and particularly rural areas that are not being served.

RUFCOD / FAIDA / ACE 2a. RUFCOD: 4 Islamic Finance Centers opened supporting 4,100 members offering credit and financing services mostly to micro enterprises. Loan amounts and terms limited and need to be restructured for SME applicability. 2b. FAIDA: credit facilitation program developing work plan.

2a. RUFCOD: Loss of RUFCOD KC office will limit growth in near term. Loan restructuring not anticipated. 2b: FAIDA: Focus on developing the Mobile Money program may limit implementation of KC financial capacity building.

Work plan revision, lobby for expansion of business program, connect to KC business community.

AWDP $70m nationwide program to partner with private institutions to improve technical and vocational education. Will roll out in early 2012.

KC work plan finalized; KC office established and personnel hired. KC business institute relationships established. Kandahar City Youth Business Council created.

Work plan review and input. AIMS Youth Business Council luncheon with KC leaders.


APPENDICES

I. KANDAHAR CITY ECONOMIC OFFICIALS AND INFLUENCERS

II. SHURANDAM INDUSTRIAL ZONE

III. DOING BUSINESS IN KANDAHAR CITY PROGRAM

IV. WESTERN MARKET PHASE 2 DESIGN

V. USAID OEG / AGRIBUSINESS PROGRAMS

VI. PUSHING FOR POWER TO 2017

VII. KANDAHAR PROVINCIAL DEVELOPMENT PLAN

VIII. KC MUNICIPAL PRIVATE SECTOR ECONOMIC GROWTH PLANNING

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APPENDIX I – KANDAHAR CITY ECONOMIC OFFICIALS AND INFLUENCERS

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APPENDIX II – SHURANDAM INDUSTRIAL ZONE

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APPENDIX III – DOING BUSINESS IN KANDAHAR CITY PROGRAM

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APPENDIX IV – WESTERN AGRICULTURAL MARKET – PHASE 2

Phase 2 scheduled completion Sept 2012. Needs management plan and revision of Phase 3 to parcel-leasing orientation.

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APPENDIX V – USAID OEG / AGRIBUSINESS PROGRAMS

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APPENDIX VI – KANDAHAR CITY POWER

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APPENDIX VII – PROVINCIAL DEVELOPMENT PLAN

5 Nesaji Fabrics Project Ag Rural Dev Ag Gov’t Fund MoAIL $2m 22 Refurb Cold Storage Ag Rural Dev Livestock RMLSP MoAIL $150k 23 Biz Rsrch Kohkaran Farms Ag Rural Deve Ag MoAIL $90k

Agribusiness

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APPENDIX VIII - KC MUNICIPAL PRIVATE SECTOR ECONOMIC GROWTH PLANNING

KPRT EG MEETING WITH MAYOR OMER 1. Agree on EG plan parameters

and high-publicity quick wins 2. Assign a municipal EG Officer

CONNECT MAYOR TO PRIVATE SECTOR

1. SIZ Busines Shura

2. AIMS Youth Council Luncheon

3. ACCI Mayor's Business Excellence Business Excellence Awards Luncheon

FORM KC EG PLANNING COMMITTEE

1. NGO hired to work with stakeholders to develop plan

2. Resources identified

3. USAID program / int'l donor participation

FINALIZATION

1. Draft plan citywide shuras

2. Reconciliation

3. Presentation

IMPLEMENTATION

1. Municipal EG Office

2. NGO implementation support

3. KPRT Shaping & Resources

KC Economic Study by Subdistrict

Doing Business in Kandahar City Booklet

CONCURRENT EG PROJECTS

S. Afghanistan Agribusiness Council

SIZ Infrastructure Construction

Western Market Construction

CONCURRENT EG PROJECTS

Municipal Markets Reorganized

Business Licensing & Tax Campaign

Youth & Women Business Councils

Mid December

End January

End February End April

May

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NOTES

economic growth planning for kandahar...

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