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The Enabling Environment: Effective Private Sector Contribution to Development in Afghanistan

“Our experience…is that sustainable development is only possible when the community is engaged at the grassroots level and is given the ways and the means to take responsibility for its own future. This means building the capacity of civil society institutions as well as tapping into the wellspring of individual initiative that has been part of the vigorous Afghan spirit for centuries. It is therefore critical that the Government of Afghanistan creates the appropriate legal and fiscal framework, the regulatory conditions and the stable democratic institutions - in other words, the enabling environment - that encourages and supports the confidence and growth of private initiative, and also facilitates the development of public-private partnerships.

It is my firm belief that if the enabling conditions are in place, private initiative and the organisations of civil society can work successfully, with governments, toward achievement of our common vision for Afghanistan.”

Excerpt from a speech of His Highness The Aga Khan on the occasion of the Conference on Afghanistan, London, United Kingdom, 31 January 2006

The Stakes in Afghanistan

“Afghanistan emerged in late 2001 as a state that had been devastated like no other in modern history. The extent of destruction of our physical, institutional, human and social capital left us and our international partners with a staggering task: to build a pluralist Islamic state governed by the rule of law, in which all Afghans have the opportunity to live in peace, fulfil their economic potential and participate politically as full citizens.

Five years later, we have yet to achieve this vision, and we have jointly underestimated the depth of our challenges and the length of time required. As a consequence, we have failed to invest adequately in our security, our economic recovery and our political stability. Since we agreed on the Afghanistan Compact in London a year ago, we are facing greater challenges in insecurity, narcotics, and corruption, while the persistent challenges of poverty and unemployment remain with us. This year, as the Afghan people suffer through another harsh winter, they are looking towards all of us for support. They are asking whether this new year will deliver real change in their lives, or return them to the despair of conflict and poverty that they know so well.”

Position Paper presented by the Government of Afghanistan at the Joint Coordination and Monitoring Board meeting, Berlin, Germany, 30-31 January 2007

The Challenge

An effective and functioning state apparatus is essential for Afghanistan to develop. But experience demonstrates that it is not sufficient to rely exclusively on any state to implement a complex development agenda. Afghanistan’s growth, and some would argue survival, requires private initiative (both for-profit business and non-profit civil society) to make full and effective use of the country’s human potential, generate material resources, and develop a vibrant and robust socio-economic base. Afghanistan can secure its destiny as a modern Islamic state by basing development and growth on a solid foundation of ethics and values, respecting the country’s rich pluralistic heritage, and promoting a diverse, sustainable, and engaged civil society.

In order for private initiative to play its role in development, it needs an enabling environment, characterised by political stability; confidence in the future; mutual trust, understanding, dialogue and collaboration amongst stakeholders; rule of law; protection of the rights of citizens; a diversity of stable democratic institutions; and a streamlined legal, fiscal, regulatory and administrative framework governing all spheres of private initiative, which is predictably, consistently and impartially applied.

The Dialogue

To dialogue on how best to enable private initiative to contribute to and accelerate Afghanistan’s social, economic, and cultural development, the Enabling Environment Conference will bring together leaders, decision-makers and creative thinkers from the Afghan Government and National Assembly, the international community, private for-profit businesses and non-profit civil society, development agencies and subject experts. The Conference will provide a forum for open discussion and creative problem-solving, drawing on Afghan and relevant regional and international experience.

The Conference sessions will take place in June 2007 in Kabul, Afghanistan. On the first day the Conference will be inaugurated and plenary discussions and smaller workshops will be held, covering the main themes of the Conference. On the second day, a plenary panel discussion will take place followed by the closing session, during which the Conference’s recommendations will be delivered.

The Issues

Through a year-long preparatory process involving a review of work undertaken by a wide range of actors, analyses of background papers and case studies commissioned for the Conference, extensive interviews conducted with subject experts, and a series of round-table discussions held across Afghanistan and with the diaspora abroad, the following questions have emerged as topics of discussion:

The Way Forward

The Conference outcomes will have little meaning without purposeful and energetic follow-through in the days and months after the Conference. The follow-up mechanisms must be pragmatic and action-oriented. Conditions for success include continued commitment and active engagement from senior Government and National Assembly officials, meaningful consultation of the private for-profit sector and non-profit civil society in identifying impediments and designing solutions, and support - technical, financial and other - from the international community. Specifically, the Conference will conclude with a declaration, including a post-conference road map and an oversight mechanism to ensure implementation of recommendations.

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