MIDASMining Investment and Development for Afghan Sustainability

SMEs Assessment Results

Presenter: Mohammad Ajmal Ahmadzai and Abdul Hakeem Montazir

MIDAS

The objective of the MIDAS project is to support and facilitate the development of the mining sector in Afghanistan

Three components:

1. Component I: Legal and Policy Framework

2. Component II: Capacity Building of the MoMP Employees

3. Component III: Private Sector Development

Component III

Focuses on the private sector development requirements which include fostering a strong enabling environment for SMEs to support the extractives sector. Under Component III a SME survey/assessment was administered to identify the existence and capacity of SMEs that are typically necessary to support the mining sector.

SME Survey Key Focus AreasSMEs included:

– Business Consulting/ Support Services – Construction– Geo-sciences– Transportation– Mining operations and community support services

The interviewees were asked about their views on new opportunities and employment expansion related to the mining sector

SME Survey Additional Areas of Focus

Also included:

– Gender assessment which identified the role of women in various SME functions

– SME accessibility to financing evaluated – Inquired on SME supporting mechanisms such as the availability of

business institutions such as Chambers of Commerce and typical business regulatory processes (such as if the business is registered)

This information was gathered to provide a project baseline and to identify strategic interventions that Component III will design and implement to

support a strong and robust Afghan mining sector

Survey Structure

Locations:

•Bamiyan – Hajigak – Iron Ore

•Badakhshan – Ragh – Faizabad & Baharak - Gold

•Sar-i-Pul – Balkhab – Copper

•Parwan Valley - Silver

•Ghazni – Zarakhshan – Copper and Gold

•Baghlan – Qara-Zaghan – Gold

•Herat – Shaida – Copper

•Helmand – Chaigi Hills – Gold and Copper

•Takhar – Samti – Gold

•Panjshir Valley – Silver

Survey Administration Details

– 9 Teams of 4 people of which 1 was a women

– On average there were 30 surveys in each location

– 270 survey in total analyzed

– Teams trained in Kabul and in the field

Key Findings Are…. • Construction – The construction area is well

developed with people having experience in large scale construction initiatives, access to good equipment, and know-how. We saw that there were few applications to the mining area, however, with some training, companies could adjust to mining needs.

• Transportation - The transportation area is fairly well developed but there are many SMEs but the scale is smaller than that of the construction sub-sector.

Key Findings with respect to Business are…• The construction and transportation sub-sectors would

benefit from accounting and business training, training to adapt to the mining sector, occupational health and safety training, training for improving of skills (certifications for western investment) to ensure quality standards.

• The business consulting services skill set does exist but primarily in places like Kabul. They are willing to work in the regions and will do so on demand. These are more sophisticated skills and could develop over time in the regions when there is enough local demand. Support for large center or Kabul based companies to train regional employees or set up branch offices would be useful.

Key Findings Regarding Community Services Are…

• Mining operations and community support services do exist, but their level of service and quality is lacking. These SMEs will require equipment, perhaps through a grants under contract program (GuC), technical assistance, training, and linkages to markets or demand to really develop and prosper.

Recommendations

Increased stakeholder awareness and engagement by training the following:

• What is mining?• What are the stages of mining?• What are community needs? How to determine these?• Understanding the role of government• Understanding your rights• How to negotiate with mining companies? • How to promote your region?

Recommendations

Access to Finance:

• Building the capacity of banks to provide products to meet the needs of SMEs in mining

• Dedicate funds for SME development

 • Train SMEs to understand their business

and apply for local forms of financing through business planning and other training

Recommendations

Access to Technology:

• Introduce new technology such as machinery, equipment, and tools to increase the efficiency, profitability and safety of mining work and mining support services.

Recommendations

Training:

• Improve the capacity of training providers to sustainably develop SMEs now and into the future to support the growing mining sector of Afghanistan.

• Provide on the job training to SMEs to improve their use of technology and business know-how to increase their effectiveness, efficiencies, and profitability.

Recommendations

Business Support Services:

• MIDAS will help SMEs to create business plans to better understand their business and to be able to apply for local financing

• MIDAS will promoting an enabling mining environment through good policies that support the development of the private sector and SMEs to contribute to the mining sector

• MIDAS will support SME creation and expansion through the provision of improved business support services, access to finance and technology, and training

THANK YOU!

Questions?