Surveys & Studies

This study, which is conducted, with the technical and financial support of H – AICFO, focuses on the impact of COVID-19 on businesses, the current business climate, and the expectations of the business climate in Afghanistan for the next six months. In order to analyze the ongoing situation of the private sector and determining the impacts of COVID-19 on the business, the current situation is compared to the same period of last year, we conducted in-depth study of the impact of the COVID-19 on five sectors (Trade, services, agriculture, construction and Manufacturing) on Small-Medium and Large Enterprises in five zones (Kabul, Herat, Balkh, Nangarhar, and Kandahar). We analyze the extent of the impact of COVID-19 on private sector activities and their future expectations based on five indices (decrease in employment due to COVID-19, the expectation of an increased employment post-COVID-19, decrease in orders and sales due to COVID-19, the current business climate, and factors that affect private sector activities post COVID-19).

Since the prime objective of the ACCI and H – AICFO is to support the private sector to create a safe environment for attracting in-ward investment (domestic and foreign) into Afghanistan. The two organizations, therefore, studied the investment climate and the impact of COVID-19 on businesses and propose recommendations to the GIRoA and its international society in that regard.

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Major findings:

1. 82.56% of business say that the lack of access to electricity is their utmost limiting infrastructural problem, among all sectors, services (90.2%) is most affected by a shortage of electricity.
2. Business perception has slightly improved regarding the security condition in Balkh, Kandahar, Nangarhar and Kabul regions compared to last year.
3. Half of the surveyed businesses say they have problems in paying their taxes mainly because "taxes are too sophisticated and therefore not transparent”.
4. In total surveyed businesses' perceptions regarding the public tendering conditions have slightly improved compared to last year; but still the majority of surveyed companies say they have problems in access to public tenders mainly because of “unclear and arbitrary procedures” and "bribery". Business in Kandahar (80.95%) highly unhappy with public tendering procedures.
5. Custom conditions, especially in Kandahar, Balkh and Kabul are reported very poor and businesses say that tariffs are “too sophisticated and non-transparent”.
6. Despite the challenges faced by women in businesses, the Business Bottleneck Survey shows a considerable support for women operating in the private sector.

Major findings:

1. More than 58 percent of the respondents across the country regard getting access to land as a problem, and a large number of them have marked the unavailability of industrial land for real estate as a major problem for their businesses.
2. Like previous years, the majority of companies who face problems in obtaining finance have marked high interest rates as the main reason.
3. The perception of surveyed businesses regarding the tax system has improved since last year
4. In total surveyed businesses' perceptions regarding the public tendering conditions have deteriorated compared to last year.
5. Starting a business in Afghanistan is not a concern of the private sector.
6. The lack of electricity is the main infrastructural problem for businesses.
7. The lack of qualified labor force is a problem especially for manufacturing and services companies.
8. Insecurity is a chief concern throughout the Afghan business community. Transportation of goods and material is extremely difficult and risky in some regions of the country; and SMEs report more problems than large companies.
9. Women entrepreneurship is more encouraged in all sectors.

Major findings

• Companies say, their business conditions have deteriorated during last three months and their expectations regarding the coming six months have significantly decreased.
• Security remains the most important factor for business development. It is followed by market and demand, administrative reforms, better infrastructure and access to finance.
• Small and medium companies suffer more than large businesses.
• Businesses have reported that their order books keep shrinking.
• In general, surveyed companies have fired more people than those they have recruited during last three months. Meanwhile, agriculture and manufacturing companies expect to employ more people in the coming six months.

• The surveyed businesses' level of confidence regarding their current condition has deteriorated compared to the last survey; and their expectations regarding the coming six months has also decreased.
• Businesses have reported that their order books keep shrinking. Kabul has the worst indicator for order books.
• Like other recent surveys, the current condition for all three categories of businesses are negative, but small companies are much more affected compared to large companies.
• The number of respondents who say they have decreased their employees is about 20 percent more than those who say they have employed more people during last three months.
• In general, the security situation has deteriorated compared to the previous survey.
• Businesses call for better market & demand, and administrative reforms, but insecurity and poor infrastructure are the two most deterrent challenges.

Major findings

• The surveyed businesses' level of confidence regarding their current condition is very much negative as the last survey but their expectations regarding the coming six months has increased sharply.
• Calls for better market and demand, administrative reforms and suitable infrastructure have increased.
• The average indicator for security situation has improved compared to the previous survey, but in general the security condition seems very unstable.
• Companies are optimistic about their employment prospects, but the number of respondents who say they have decreased their employees is about 21.5 percent more than those who say they have employed more people during the last three months.
• Businesses have reported that their order books keep shrinking.
• The current condition for all three categories of businesses are negative, but small and medium companies are much more affected compared to large companies.

All sectors, but trade, are optimistic about their business plans and prospects for the coming six months.

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Major findings

• The overall business climate was slightly improving during recent surveys, but this survey shows a deterioration compared to the same periods of 2016.
• The surveyed businesses' level of confidence regarding their current condition and as well as their expectations regarding the coming six months have deteriorated compared to the previous survey.
• In contrast to three previous surveys of 2017, no region has reported a positive business climate indicator.
• Agriculture expects the highest rate of employment (3.1) and Construction the lowest (-25.7).
• Since the last season of 2016 manufacturing has gradually dropped in sectoral ranking.
• Large companies keep improving, while SMEs suffer from a worsening business condition.
• Businesses have reported that their order books keep shrinking.

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Major findings

• The overall business climate has slightly improved during recent surveys, but this survey shows no tangible change compared to the same periods of 2016.
• The surveyed businesses' level of confidence regarding their current condition has also improved compared to the previous survey but their expectations regarding the coming six months have decreased.
• Like two earlier quarters of 2017, only Nangarhar region maintains positive business climate indicator, but Kandahar and Balkh have also shown small signs of improvements.
• Agriculture expects the highest rate of employment (13.1) and manufacturing the lowest (-9.4).
• Since the last season of 2016 manufacturing has gradually dropped to the bottom of sectoral ranking.
• Large companies keep improving, while SMEs suffer from a worsening business condition.
• Businesses have reported that their order books keep shrinking.
• The most important factor for business development is security; and none of the regions have reported a positive security indicator.

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Major findings

• The overall business climate has slightly improved during last two surveys, but no tangible change is reported compared to the same periods of last year. Companies remain optimistic about the coming six months, but the level of their optimism has decreased compared to the previous survey.
• Regional differences are considerable. Business condition has sharply improved in Nangarhar and Herat region has also a positive indicator; while Kabul, Kandahar and Balkh reported no significant change in their deteriorating businesses conditions.
• Agriculture is the only sector with positive business climate indicator in this survey, while manufacturing and construction are the two most suffered sectors.
• Businesses have reported that their order books keep shrinking, but they are in a better position compared to the same season in 2016.
• Security, market and demand, and infrastructure are major desired improvements for business developments.
• Construction, Trade, Manufacturing and Service have fired more people than those that they have hired during last three months. Only Agriculture's employment indicator is positive.
• According to this survey, companies are optimistic about their employment prospects (9.5), but the level of their optimism has decreased compared to the previous survey. Agriculture expects the highest rate of employment (33.1) and manufacturing the lowest (-0.6).

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