contentsharakat.af/pdf/annual_reports/14409961801.pdfcontents-chairman’s letter ceo’s letter...

CONTENTS

-Chairman’s LetterCEO’s LetterHarakat By Numbers AcronymsAbout Harakat OVERVIEW 2014Activities Projects per Priority Outcome Area and Objectives Challenges and Opportunities PROJECTSProjects Completed in 2014 Projects Under Implementation in 2014 Snapshot of Past Harakat Projects Private Sector Reform PrioritiesAnnex 1Harakat’s Project Portfolio (Start-Now) ABOUT USManagement Structure Board Members Application and Approval Process Governance Charter Partners UNITS AND FINANCIAL OVERVIEW Communication ActivitiesMonitoring and Evaluation ActivitiesFinance and Procurement Activities Independent Auditor’s Report

-

- 12356

79

11

121939414345

4949515253

54555657

If there is one year in Harakat’s history that has defined the organization, it was this one. In 2014, Harakat went from being a modestly known facilitator of better business initiatives to the country’s champion for private sector reforms.

I applaud the Harakat team for continually striving to meet this country’s growing challenges head on. I see a visible shift in the perception of our stakeholders, including the private sector, the government and international partners, that investment climate reform is essential for investment and better business and that Harakat is strategically positioned to meet many of these needs.

Since arrival in office, President Ghani, CEO Abdullah Abdullah and other leaders of the Government of National Unity (GNU) have repeatedly and publicly underscored the urgent need for a better business climate and private sector investment to boost economic growth. We have a private sector that is adamant for credible reforms and it wants to proactively participate in the reform process.

It is no secret that Afghanistan faces mounting challenges in 2015, especially in building momentum for economic growth and attracting private sector investment to create sustainable jobs, business and business confidence and revenue for the state. As an organization established to remove barriers to investment and promote business, we have clearly communicated with the leaders of the new government and its international partners what reforms are needed to gain the confidence of the private sector and to kick start the economy.

This convergence of interests has put Harakat at the forefront of private sector and investment-related reform in this country. Harakat played a leading role in positioning private sector reforms and sustainability of the Afghan economy as top priorities for the new government and its international partners in 2014.

The success of Harakat’s “Private Sector Priorities for Reform Conference” in October was bolstered further by the opportunity in December 2014 to present private sector reform priorities at the London Conference Private Sector Roundtable attended by President Ghani and very senior international partners of Afghanistan.

The recommendations met with a positive response and, more importantly, put the spotlight on the key needs and concerns of the private sector from the new government in Kabul and its international partners. There is an opportunity for Harakat to help the government in translating its vision for an enabling environment into practical action. Harakat will pursue these priorities in the future and I look forward to working with our stakeholders to achieve results.

For everyone working towards a better business environment in this country, I have seven words: Harakat keeps reform alive and moving forward.

Karim Khoja Chairman, Harakat Board

CHAIRMAN’S LETTER

1 Harakat Annual Report | 2014

This past year was not without its struggles. We saw the drawdown of most international forces and the subsequent security concerns. More consequentially, we watched as the results of the presidential election were contested, delaying the formation of a new government and the operation of the state.

These developments created protracted political uncertainty, which adversely impacted advancing reform at two levels. First, it slowed down the pace of implementation of many Harakat projects due to the absence of key decision-makers in many government institutions. Second, private sector investment by domestic and international investors stayed stagnant or decreased.

The trajectory of advancing reform at Harakat, however, did not change. We completed three projects and three report studies in 2014 with strong, measurable impacts on Afghanistan’s business climate.

The Harakat-funded “Afghanistan Extractive Industries Transparency Initiative” (AEITI) implemented a transparent system of revenue collection and taxation within the mining sector. This transparency has attracted international investment to an industry that seems promising but was once deemed untouchable.

Similarly, the Harakat-funded “School of Accounting” (SoA), within the American University of Afghanistan, enrolled over 1,200 students. The SoA is now operating as part of the American University, Professional Development Institute (PDI). It is fully sustainable: 13,104,000 AFS ($225,931) have been generated in revenue so far.

The “Institutional Capacity Building for NSDP” project developed 40 demand-driven National Occupational Skills Standards for five emerging sectors. This will help train workers inside the country, which will decrease reliance on expensive workers from other countries. It will have a positive impact on youth employment and will provide the private sector with a higher quality, less expensive labor force.

These projects are good examples of how Harakat and its partners are continually identifying sustainable, long term solutions that will improve the country’s business climate – and three more new projects, as well as four research studies, were added to Harakat’s portfolio this year.

When I look at the work that is being done, the role of Harakat in building a new Afghanistan becomes increasingly clear. Harakat identifies strategic barriers to investment and doing business and seeks to implement solutions that are sustainable. We often take risk and that opens the door for other donors to come and build on our work. We lead the change we wish to see in our country.

Naseem Akbar Chief Executive Officer, Harakat

CEO’S LETTER

2Harakat Annual Report | 2014

HARAKAT BY NUMBERS

Since 2008, Harakat and its partners have contributed to investment climate reform and private sector development through the implementation of 36 projects. Below is a snapshot of results to date. The number of results will continue to grow as Harakat projects become operational and generate impacts.

4

21

748,650

290

4,300

18

Laws Developed

Research Projects Completed

Land Records Modernized

Standards for the Afghanistan National Standards Authority

Developed

People Trained

Manuals Produced

4 11 2

Projects by other Donors Harakat Funding has Catalyzed

Technical Booklets, Guides and Books Published

Call Centers Activated


5

5

40

5

18

14

New Institutions and Departments Opened

Procedures Developed

Standards for National Occupational Skills Validated and

Certified

Key Memberships Bestowed on Project Partners

Policies Developed

Regulations Developed

9 87 4

Websites and Portals Launched Trainers Trained Codes Developed


ACRONYMS

ABA Afghanistan Builders AssociationABC Afghanistan Building CodesACBRIP Afghanistan Center Business Registry and Intellectual PropertyACCA Association of Chartered Certified AccountantsACCI Afghanistan Chamber of Commerce and IndustriesACDR Afghanistan Center Dispute ResolutionAEITI Afghanistan Extractive Industries Transparency InitiativeAEP Afghan Education ProjectAFS Afghan Afghani (currency)AIBF Afghanistan Institute of Banking and FinanceAISA Afghanistan Investment Support AgencyAKFED Aga Khan Fund for Economic DevelopmentALA Afghanistan Land Authority (ARAZI)ALP Authorized Learning ProvidersALCO Afghan Land Consulting OrganizationAMCHAM American Chamber of CommerceANSA Afghan National Standard AuthorityAPI Application Programming InterfaceAPTO Afghanistan Patent and Trademark OfficeARAZI Afghanistan Land Management ReformsARD Afghanistan Revenue DepartmentAUAF American University of Afghanistan Foundation

BA Bachelor of ArtsBBC British Broadcasting CorporationBINA Business Integrity Network Afghanistan

CAT Certified Accounting TechnicianCBE Computer Based ExamCEO Chief Executive OfficerCPCPD Competition Promotion Consumer Protection DirectorateCR Collateral Registry

DAB Da Afghanistan BankDCDA Dehsabz – Barikab City Development AuthorityDFID UK Department for International DevelopmentDM-TVET Deputy Ministry Technical and Vocational Educational TrainingDRACS Deed Registry Archive Conversion System

EITI Extractive Industries Transparency InitiativeEPA Export Promotion Agency

FIA Foundation in AccountancyFPASC Finance, Procurement and Audit Sub- Committee

GNU Government of National UnityGSM Global System for Mobile CommunicationsGSMA Global System for Mobile Communications Association

IAS International Accounting SystemIFC International Finance CorporationIFRS International Financial Reporting StandardsIWA Integrity Watch Afghanistan

JD Juris Doctor

LLM Master of LawsLMI Labor Market IntelligenceLRMP Land Records Modernization Project

MEC Monitoring and Evaluation CommitteeMEW Ministry of Energy and WaterMoCI Ministry of Commerce and IndustriesMoF Ministry of FinanceMoHRA Ministry of Hajj and Religious AffairsMoLSAMD Ministry of Labor, Social Affairs, Martyrs and DisabledMOU Memorandum of UnderstandingMSG Multi Stakeholder GroupM&E Monitoring and Evaluation

NCB National Consumer BoardNOSS National Occupational Skills StandardsNSDP National Skills Development Program

PCR Public Credit RegistryPMU Project Management UnitPPP Public Private PartnershipPRSC Performance Review Sub-CommitteePSC Project Sub-Committee

SCS Supreme Council of StandardsSME Small Medium EnterpriseSoA School of AccountingSSB Sharia Supervisory Board

TOR Terms of ReferenceTVET Technical Vocation and Educational Training

USAID United States Agency for International DevelopmentUSD United States Dollar (currency)

WTO World Trade Organization


ABOUT HARAKAT

Harakat – Afghanistan Investment Climate Organization Facility (hereafter referred to as Harakat) is an independent, nonprofit, Afghan-managed organization that aims to improve Afghanistan’s business environment. It provides grant funds to government, civil society and the private sector to implement projects that will reduce or remove barriers that currently make it difficult to do business in Afghanistan.

Harakat expects measurable results from its partners and maintains a stringent monitoring and evaluation (M&E) process throughout the lifecycle of each project. The organization acts as a coordinating entity to bring government, civil society and the private sector together on a regular basis to tackle investment climate reform issues and facilitate actionable reforms.

Harakat started operating in May 2008 with a £30 million (approximately $50 million) fund investment from the UK Department for International Development (DFID).

Harakat’s 8 priority outcome areas:. 1 Financial markets that provide greater access to finance and affordable credit to all sizes of business, especially SMEs. 2 Streamlined and more effective regulations and creation of regulatory impact assessment systems. 3 Increased private sector investment in infrastructure, especially energy, water, agriculture and transportation. 4 More equitable and efficient taxation and customs systems. 5 Strengthened property rights and more effective contract enforcement. 6 Higher workforce productivity, mobility and improved labor market regulation. 7 Strengthened competition policy that reduces anti-competitive practices. 8 Improved capacity of government and institutions to tackle corruption

MissionRemove and reduce barriers to doing business by providing grant funds to government, civil society and the private sector, in order to increase or create opportunities for investment in Afghanistan.

VisionFacilitate a healthy and competitive investment climate in Afghanistan that leads the way towards sustainable economic development.

Values• Excellence• Innovation• Transparency• Accountability• Commitment• Afghan-managed• Equal opportunities


By the end of 2014, Harakat’s portfolio consisted of 36 projects. Of the 36 projects, 20 projects have been completed and 16 projects are now in the implementation stage.Here is a breakdown of how Harakat funding has been spent:

Government $22,373,569Private Sector $3,833,906Civil Society $3,549,102Total $29,756,577

Throughout 2014, Harakat continued to work in close partnership with the Government of Afghanistan, private sector and civil society organizations to identify, fund and implement projects to drive private sector development and growth in Afghanistan.

*Some projects fit into more than one priority outcome area. The table above indicates each project’s main priority outcome area.

The 36 projects had a total estimated value of $29,756,577 at the end of 2014. This amount includes $13,179,417 for projects completed and $16,577,160 for projects currently being implemented.

OVERVIEW OF HARAKAT ACTIVITIES

Priority Outcome Area Total Number of Projects Completed

Total Number of Projects

Completed in 2014

Total Number of Projects in

Progress in 2014

#1 Greater access to finance 1 0 3

#2 More effective regulations 6 0 3

#3 Increased private investment in infrastructure 0 0 1

#4 More efficient taxation 1 0 0

#5 Strengthened property rights 1 0 2

#6 Improved labor market 3 2 1

#7 Strengthened competition policy 2 0 3

#8 Improved capacity to tackle corruption 2 1 2

Fits into Harakat’s overall mandate 4 0 1

Total 20 3 16


Type of Partner Total Number of Projects Completed

Total Number of Projects Under Implementation in 2014

Government 14 11

Private Sector 3 2

Civil Society 3 3


PROJECTS PER PRIORITY OUTCOME AREA ANDOBJECTIVES IN 2014

Priority Outcome Area Harakat Objectives Contributions to Improved Investment Climate

Harakat-funded Projects*: C – Completed I – Under Implementation

1. Financial markets that provide greater access to finance and affordable credit to all sizes of business, especially SMEs

Improve Afghanistan’s legal and regulatory framework to increase access to finance for SMEs Improve information sharing in the financial market Contribute to increased knowledge on how to expand access to finance

Improve access to credit, particularly for SMEs Improve access to information on borrowers and reduces related credit risk Increase investment in the housing sector and reduce investment risks for banks and property developers Tackle barriers to Islamic Financing

Afghanistan Public Credit Registry (I) Shariah Compliant (I) Residential Mortgage Framework Development (I)

2. Streamlined and more effective regulations and creation of regulatory impact assessment systems

Simplify and streamline registration and licensing process and other business regulations to reduce costs and delays Increase private sector awareness of and compliance with regulations Increase government capacity to enact and implement effective regulations

Reduce costs and time for private sector and increases regulatory compliance Address balance of trade Formalize economy by increasing the number of businesses formally registered and licensed (with important benefits to government and civil society)

Business Licensing Reform Phase II (I) Development of National Trade Policy (I) Facilitating the Operation of the Afghanistan Patent and Trademark Office (I)

3. Increased private sector investment in infrastructure, especially in energy, water, agriculture and transportation

Facilitate private sector investment in infrastructure, energy, water, and agriculture via Public-Private Partnership (PPP) establishment

Increase investment in better infrastructure Improve PPPs in the infrastructure sector

Public Private Partnership (I)

4. More equitable and efficient taxation and customs systems

Simplify processes Reduce costs and delays Increase transparency

Formalize the economy Increase compliance Encourage international trade


Priority Outcome Area Harakat Objectives Contributions to Improved Investment Climate

Harakat-funded Projects*: C – Completed I – Under Implementation

5. Strengthened property rights and more effective contract enforcement

Streamline the property registration process Increase the proportion of formal property registration

Improve security of tenure for investors Increase access to finance for SMEs Reduce costs of property registration and contract enforcement

Modernization of Property Deeds and Land Records Project Phase II (I) Afghanistan Center for Dispute Resolution (I)

6. Higher workforce productivity and mobility and improved labor market regulation

Equip different sectors with qualified professionals to produce effective and efficient services Improve and enforce labor market regulations

Reduce cost and time of doing business by accessing locally available professionals Enable private sector to deliver better quality goods and services Improve working conditions

School of Accounting (C) Labor Market Intelligence Survey and National Occupational Skill Standards Development Program (NSDP) (C) Developing Curricula for TVET (DM-TVET) (I)

7. Strengthened competition policy that reduces anticompetitive practices

Encourage more companies to invest in different sectors Reduce anti-competitive practices Improve product standards

Establish equitable opportunities for doing business in Afghanistan Improve quality of goods and services, and reduce prices Increase market trust

Afghanistan Building Codes (I) Strengthening Consumer Protection Project (I) Afghan National Craft Standards Development Project (The Artisan Toolkit) (I)

8. Improved capacity of government and institutions to tackle corruption

Equip government with human and institutional capacities to tackle corruption

Reduce business costs Build trust between government and the public

Afghanistan Extractive Industries Transparency Initiative (C) Harakat Integrity Initiative: Corporate and Social Responsibility Project (I) Business Integrity Network (I)

Harakat’s Overall Mandate Harakat Research Project (I)

*Some projects fit into more than one priority outcome area. The table above indicates primary outcome area.


CHALLENGES AND OPPORTUNITIES IN 2014

Transition was a dominant theme in Afghanistan in 2014. The drawdown of international forces sharply decreased economic activities. Security also deteriorated. However, the biggest event that had a profound impact on investment and the business climate was the prolonged presidential elections and the subsequent uncertainty it generated. The implementation pace of several Harakat projects were slowed due to the absence of decision-makers within many of our government partner entities.

Harakat also faced the question about its future beyond 2015. While Harakat’s leadership team has a clear vision for where Harakat should be in the next five years, and what areas need reform, the task of setting the organization’s future mandate was made difficult by the slow formation of the new government, and the challenge this posed in better understanding what business reforms the government intended to tackle first.

The net outcome of these challenges translated into reduced private sector investment and a sharp reduction of economic growth. The principal reasons contributing to withdrawal of some existing investment or reluctance to make new investment, based on Harakat’s observation on the ground, have been political uncertainty, reduced foreign assistance and an interruption in government operations since the election.

An important opportunity impacting people and businesses alike was the peaceful transition of power. The arrival of a new government in Kabul generated a renewed interest in business reform among Harakat’s key stakeholders. As a technical and nonpolitical body, Harakat played a facilitating role, along with the ACCI, to link the private sector, government, international partners and civil society to find common ground for reform actions.

Harakat organized two national conferences in 2014 to provide private sector representatives with a nonpartisan platform to prioritize and put on the table a set of specific, achievable and measurable business reforms to the new government. The private sector representatives showed their willingness to work with the government to stimulate private sector investment and kick start economic growth.

The private sector has spoken on the matter very clearly. Harakat has played its role as a facilitator of reform and advocate for better business environment. The ball is clearly in the government’s court, and it is now the new government’s turn to act. Harakat is willing and ready to work with the new government and its international partners to facilitate converting as many of these reform priorities as possible from ink on the paper to pragmatic actions that solve real business problems.

While advocating for reform, Harakat did not forget its mandate to remove investment barriers in Afghanistan. The organization launched three new projects: Residential Mortgage Market Regulatory Framework Development, Sharia Compliant Access to Finance, and Establishment of Public Private Partnership Central Unit and Regulatory Framework, which, when completed, have the potential to increase access to finance and bring private investment to public service delivery.


PROJECTSCOMPLETED

IN 2014

PROJECTS COMPLETED IN 2014: OVERVIEW

# Project Name Priority Outcome Area Project Applicant

Implementing Partner

Budget (USD)

Timeline

1 AfghanistanExtractive IndustriesTransparencyInitiative (AEITI)

#8 Improved Capacity to Tackle Corruption

#4 More Efficient Taxation

#3 Increased Private Investment in Infrastructure

#7 Strengthened Competition Policy

Ministry of Finance (MoF)

AEITI Secretariat and Multi-Stakeholders Group

$596,716 Mar 2010 –Aug 2014

2 School of Accounting #6 Improved Labor Market

#8 ImprovedCapacity to TackleCorruption

American Universityof Afghanistan (AUAF)

AUAF $1,282,380 May 2010 –May 2014

3 Institutional capacity building for NSDP (Labor Market Intelligence Survey and National Occupational Skill Standards “NOSS” Development Program)

#6 Improved Labor Market National Skills Development Program, Ministry of Labor, Social Affairs, Martyr and Disabled (MoLSAMD)

MoLSAMD $1,048,167 Nov 2011 –May 2014

4 *Research projects completed:

Trends of Corruption and Anti-corruption Practices related to Private Sector Development in Afghanistan

Special Economic ZonePre-Feasibility Study

Mortgage Market Assessment in Five Major Cities in Afghanistan

These research projects fit into Harakat’s overall mandate

Harakat Various $490,000 Ongoing

*Harakat conducts research projects on relevant and important topics within its mandate on a continuous basis. In 2014, three research projects were completed.


“We have invested about $10 million in the mining sector. I think AEITI has been beneficial to our business since for us more transparency means less business cost. In the last AEITI reporting period, of the 254,442,066 AFS that we paid to the government, the reported difference was zero AFS. The government can help legal businesses like ours by increasing transparency and stopping illegal mining.”

Masoom AhmadyarKabul Mining Manager Khoshak Brothers

1. Afghanistan Extractive Industries Transparency Initiative (AEITI)

11 2012 200

Number of mining companies reporting in 2011, up from 4 in 2008

The year the Afghan Government committed

to EITI transparency standards.

Number of contracts published in 2014, including the Amu Darya

oil, the Qara Zaghan gold and the West Garmak coal contracts.

Important Activities:• In 14 ,2011 companies reported their revenues to the Government, up from 4 in 2008. The reported revenue by the government

(101,776,401 AFS) almost perfectly matched the reported payments by the companies (101,712,176 AFS). This difference of 64,225 AFS -- less than USD 1,000 – is not significant by industry standards. This is a positive change from prior years.

• Conducted extractive industry baseline study to show where Afghanistan is in terms of the sector and disseminated the outcome.• Developed and launched EITI country work plan and sustainability action plan.• Developed and disseminated three reconciliation reports (1387, 1988, 1389). Developed and advertised ToR for fourth Reconciliation

Report (1390).• Developed AEITI annual report format and published the report.• Established AEITI effective process implementation.• Developed AEITI communication strategy and conducted training workshops for relevant staff at different levels and geographical

locations on how to best implement the strategy. • AEITI secretariat staff and MSG members attended trainings in Afghanistan, France, Indonesia, Mongolia and Norway.• Launched a targeted awareness program about the extractive industry through the BBC AEP radio program “New Home, New Life”.• Transferred the funding support mechanism for AEITI (including staff payroll) from Harakat to the World Bank.

Key Achievements:• The Afghan government officially endorsed EITI implementation in 2009. This shows that Afghanistan is striving to improve its investment

climate by sending a signal to investors and international financial institutions that the government is committed to greater transparency in the extractive industry.

• Afghanistan became an EITI candidate country on 11 February 2012, after meeting requirements assessed by the EITI international secretariat. As a candidate country of EITI, Afghanistan has made a commitment to implement EITI Standards to ensure full disclosure of taxes and other payments made by oil, gas and mining companies to the Afghan government.

• Established AEITI Multi-Stakeholders Group (MSG) and developed relevant Terms of Reference.• Now Afghanistan is able to implement a widely accepted international standard to promote open and

accountable management of its natural resources, which will strengthen governance and financial reporting in the industry, inform public debate and increase trust.

• With the expected increase of revenues, it is significant that the government has committed to publish all mining, oil and gas contracts. Over 200 contracts have been published, including the Amu Darya oil, the Qara Zaghan gold and the West Garmak coal contracts.

Background:Afghanistan has extensive mineral deposits and potential for oil and gas production estimated to be worth more than USD 1 trillion. In recent years, investors have shown interest in copper, iron ore, rare earth metals, gold, gemstones and marble. However, the extractive industry remains under-developed in large part due to facilities that monitor the transparency of the entities involved in the sector.

Objective:Implement transparent systems of revenue collection and efficient taxation systems to attract investment and increase competition in the mining sector.

Harakat Priority Outcome Areas:# 8 Improved capacity to tackle corruption# 4 More efficient taxation# 3 Increased private sector investments in infrastructure

Project Applicant:Ministry of Finance

Implementing Partner:AEITI Secretariat and Multi-Stakeholders Group

Timeline: March 2010 – August 2014

www.aeiti.af www.facebook.com/AEITIwww.twitter.com/AfghanistanEITI


www.aeiti.af

www.facebook.com/AEITI

www.twitter.com/AfghanistanEITI

2. School of Accounting

13.1 1,220 27

Important Activities:• Developed academic curriculum for the SoA. • Hired qualified teachers and recruited 19 staff members.• Introduced an enrollment fee structure that will enable the program to be sustainable after Harakat funding finishes.• Conducted awareness programs about the accounting program at the Ministry of Commerce, Civil Service Commission, Ministry of

Rural Rehabilitations Development, Afghanistan International Bank, high schools and other relevant organizations in Kabul, Herat and Kandahar.

• Performed capacity building and knowledge transfer to the university on the International Financial Reporting System (IFRS) and International Accounting System (IAS).

• Conducted 25 CBE exams for 245 FIA and ACCA students.

Key Achievements:• Received the Authorize Learning Providers (ALP) golden membership from ACCA and authorization to conduct Computer Based Exams (CBE)

– UK.• Enrolled 510 students in the CAT and ACCA programs in 2012.• Enrolled 31 students in other academic programs within the BA accounting program.• Graduated 27 students with an Accounting Major so far.• Generated 13,104,000 AFS (USD 225,931) in revenue since Harakat funded this project.• ACCA and AUAF have developed curricula for 9 out of 14 papers. These have been approved by ACCA. • Enrolled 1,220 students (678 ACCA and 551 FIA) after conducting awareness sessions at high schools and universities. Thirty-five students are

currently studying Paper 7 of the ACCA.• Extended the SoA programs to three other provinces, including Herat and Mazar. • Established a Computer Lab with 19 computers for ACCA and FIA students to use.• Reduced the dropout rate from 30% in 2011-2011 to 25% in 2014.

Background:The lack of an internationally recognized accounting institution in Afghanistan brings about low-quality financial reporting and analysis. Lack of qualified and certified Afghan accountants is a major constraint to the growth and development of the private sector.

Objective:Establish a School of Accounting (SoA) to train and certify Afghan accountants who will contribute to improving financial reporting and decision-making in both the public and private sector. Through developing accounting and auditing skills, the school will improve the integrity and reliability of financial statements based on international accounting standards.

Amount of revenue generated as a

result of Harakat funding the SoA.

Number of students enrolled after

awareness-raising sessions at high schools

and universities.

Number of Accounting Major

graduates.

million AFS“Now we are able to take the ACCA courses and exams at the School of Accounting in Kabul and do not need to go to neighboring countries as in the past. With the ACCA Golden Membership, the School of Accounting has created an opportunity for Afghan students to obtain a professional education based on internationally accepted standards.”

Farhad Salihi ACCA Student, School of Accounting, American University in Kabul

Harakat Priority Outcome Areas:#6 Improved labor market#8 Improved capacity to tackle corruption

Implementing Partner:American University of Afghanistan

Timeline: May 2010 – May 2014

www.auaf.edu.af/ www.facebook.com/AUAfghanistan www.twitter.com/auafghanistan www.vimeo.com/auafghanistan


www.auaf.edu.af/

www.facebook.com/AUAfghanistan

www.twitter.com/auafghanistan

www.vimeo.com/auafghanistan

3. Institutional Capacity Building at NSDP and DM TVET for Demand-Driven Labor Market

40 3

Important Activities:• Partnered with Cambridge International Training and Education to review, validate

and certify the NOSS.• Handed over NOSS to DM-TVET to develop the relevant curriculum based on them. • Conducted public awareness activities for relevant stakeholders, including

representatives from the five sectors that the labor survey focused on, relevant ministries, government institutions and donor agencies.

Key Achievements:• Conducted Labor Market Intelligence (LMI) survey and identified demand for skills in the

following five sectors: mining, food processing, packaging and storage, tourism and hotel management, railway and carpet/woven products.

• Developed 40 National Occupational Skill Standards (NOSS) for the most in-demand occupations.

• Developed training materials for NOSS and translated NOSS materials from English into Dari and Pashto.

• Strengthened coordination mechanism between NSDP and the Deputy Ministry of Technical and Vocational Educational Training (DM-TVET).

Background:Decades of war, high levels of illiteracy and a lack of modern technical training programs and facilities have created a scarcity of skilled workers in Afghanistan. Data currently available on the labor market is not sufficient to provide educational planners proper guidance on training components required for specific skill building curricula.

Objective:Identify skills needed to meet demand and develop relevant national occupational standards as well as teaching materials to reduce labor cost and increase employment in Afghanistan.

Number of NOSS developed for the most in-demand

occupations.

Received certification and

validation for all NOSS from

the Cambridge International Training and

Education Center.

Number of languages the

NOSS are available in (English, Dari and

Pashto).

Priority Outcome Area:#6 Improved labor market regulations

Project Applicants:Ministry of Labor, National Skills Development Program (NSDP)

Timeline: November 2011 – May 2014

www.nsdp.gov.af

“The demand for a skilled workforce in Afghanistan is high and growing but the current curriculum does not give students the real skills the private sector needs. Companies like Roshan are spending a lot of money to train and retain their staff. A national standardized skill development program improves the labor market in the emerging sectors, reducing costs and increasing the relevance and reliability of skills of the labor force. It enables firms to invest its resources more effectively in technology and innovation that create new jobs and stimulate growth.”

Shireen RahmaniDirector of Human Resources, Roshan Telecom

“Over a decade ago, Afghanistan became a market economy with the private sector playing a vital role in investment and job creation. This task has been made costly and challenging due to the lack of a skilled and semi-skilled labor force. This project develops demand-driven occupational standards and teaching materials. We will be able to train workers in five emerging sectors domestically instead of importing expensive labor from other countries. I believe it will succeed.”

Javed AndishEntrepreneur and President, Kabul Group


www.nsdp.gov.af

The Harakat-funded Residential Mortgage Regulatory Framework has the potential to facilitate the development of major projects like this residential construction project, which will benefit the private sector and ordinary Afghans.

PROJECTS UNDERIMPLEMENTATION IN 2014

PROJECTS UNDER IMPLEMENTATIONIN 2014: OVERVIEW

# Project Name Priority Outcome Area

Project Applicant

Budget (USD)

Timeline

1 Afghanistan PublicCredit Registry Program

#1 Greater Access toFinance

Da Afghanistan Bank (DAB)

Public Credit Registry Department, DAB

$194,242 Jan 2010 –Apr 2015

2 Afghanistan Building Codes #7 StrengthenedCompetitionPolicy

#3 Increased PrivateSector Investmentin Infrastructure

Afghanistan NationalStandards Authority (ANSA)

ANSA $2,390,477 July 2010 –Sept 2015

3 StrengtheningConsumer ProtectionProject

#7 StrengthenedCompetitionPolicy

Ministry of Commerceand Industries (MoCI)

MoCI $644,319 Apr 2011 –Mar 2015

4 Institutional CapacityDevelopment andDevelopment of Curriculums for Technical and Vocational Education Training (TVET)

#6 Improved LaborMarket

Deputy Ministry for Technical and Vocational Trainings, Ministry of Education (DM-TVET)

DM-TVET $1,214,140 Nov 2011 –Sept 2015

5 Modernization ofProperty Deeds andLand Records ProjectPhase II (Digitization)

#5 Strengthened Property Rights


Afghanistan SupremeCourt

AfghanistanLand ConsultingOrganization(Renovation Phase) andHawk Vision ConsultingServices(Digitization Phase)

$2,313,697 July 2012 –Mar 2015

6 Afghanistan Center for Dispute Resolution

#5 StrengthenedProperty Rights

Afghanistan Chamberof Commerce and Industries (ACCI)

ACCI $1,785,000 Oct 2010 –June 2015

7 Afghan National Craft Standards Development Project (The Artisan Toolkit)

#7 StrengthenedCompetitionPolicy

Far & Wide Collective(previously Jali Designs)

Far & Wide Collective and the ExportPromotion Agency ofAfghanistan

$579,297 Sep 2013 – Mar 2015


# Project Name Priority Outcome Area

Project Applicant

Budget (USD)

Timeline

8 Harakat Integrity Initiative #8 ImprovedCapacity to TackleCorruption#2 More EffectiveRegulations

Ministry of Hajj andReligious Affairs

Integrity WatchAfghanistan (IWA)

$925,213 Nov 2013 –Mar 2015

9 Business Integrity Network #8 ImprovedCapacity to TackleCorruption

Business IntegrityNetworkAfghanistan

$983,950 Nov 2013 –Mar 2015

10 Business LicensingReform in Afghanistan Phase II (Digitization)

#2 More EffectiveRegulations#5 StrengthenedProperty Rights#7 StrengthenedCompetitionPolicy#8 ImprovedCapacity to TackleCorruption

MoCI MoCI $865,700 Oct 2013 –Mar 2015

11 Facilitating the Operation of the Afghanistan Patent and Trademark Office

2# More EffectiveRegulations5# StrengthenedProperty Rights7# StrengthenedCompetitionPolicy8# ImprovedCapacity to TackleCorruption

MoCI MoCI $865,700 Oct 2013 –Mar 2015

12 Establishment of Public Private Partnership Central Unit and Regulatory Framework

#3 Increased Private Sector Investment in Infrastructure

Ministry of Finance (MoF)

MoF $1,061,665 Apr 2014 – Sep 2015

13 Development ofNational Trade Policy

#2 More EffectiveRegulations

MoCI MoCI $388,768 Apr 2011 –Jun 2014

14 Shariah Compliant Products for SME Access to Finance


DAB DAB $1,293,160 June 2014 – June 2015

15 Mortgage Market Regulatory Framework Development


DAB DAB $825,782 April 2014 – June 2015

16 Harakat ResearchProjects (Various)

Harakat’s OverallMandate

Harakat Various ResearchFirms

$490,000 Jan 2011 –Mar 2015


1. Afghanistan Public Credit Registry

Important Activities:• Conducted capacity building for Public Credit Registry Department staff within the Central Bank.• Established Credit Registry and Collateral Registry Systems.• Held a public launch for the Credit Registry in 2013 to raise awareness of the among key stakeholders.• To ensure that the two newly created systems are fully understood and utilized by banks, financial institutions and other relevant

parties, in addition to Harakat funding during the first phase of the project, Harakat also provided funding and technical assistance to the Central Bank to implement an awareness and capacity building program. The goal of this program was to increase awareness of the stakeholders about these two systems through educational and seminars, symposiums and meetings. The capacity building and public awareness component included:

Trainings: Conducted public awareness and capacity building training programs on the legal and functional framework for PCR and CR users to expand lending by collecting reliable information from a unified system in six major commercial hubs: Kabul, Mazar, Heart, Kandahar, Jalalabad, Konduz and Gardez. The programs taught more than 800 CR and PCR users on the benefits of the system, how it provides high-quality information and how it can help increase access to finance with borrowing rates that correspond to the risks, how their rights are protected when using the system and how the system provides security and confidentiality. These workshops were held for commercial banks, microfinance institutions and insurance companies, relevant government bodies, the Afghanistan Chamber of Commerce and Industries, the Tax Department of the Ministry of Finance, National Statistics Office, Kabul Municipality, Afghanistan National Standards Authority (ANSA), Ministry of Higher Education, Ministry of Education and the Afghanistan Investment Support Agency.

Media: Developed a documentary film, TV spots, TV commercials, radio spots and a visual guide to the PCR and CR in multiple languages (certain segment of which were broadcast on television and CDs were distributed to targeted audience). Published articles in English and local languages covering the topic of credit reporting in newspapers and magazines

Marketing Materials: Designed and printed marketing materials (notebooks, pens, banners, brochures, booklets and folders) and newspaper announcements.

Key Achievements (overall):• Now commercial banks, other financial institutions and borrowers can access more timely credit information as a result of these newly

established systems• Now access to finance is made easier to small and medium enterprises because of the facilities (i.e. using reputation as collateral) that the

new systems offer the users • Now Afghanistan has an effective legal framework for secured transactions • Now Afghanistan has operational advanced digital collateral and public credit registry systems • Initiated registration of credit contracts in the Public Credit Registry, with a total and combined value of the registered contracts of 40 billion

AFS (exceeding initial target of 5 billion AFS by 800%). Over 80% of this consisted of small business loans. • Now 16 banks and microfinance institutions are offering loans to the private sector using the Public Credit Registry system

Background:Limited access to finance for the vast majority of the private sector in Afghanistan limits growth opportunities for small and medium enterprises. A critical gap is lack of an institutional information sharing mechanism that enables the key stakeholders to exchange reliable information and make informed decisions in issuing new loans and other financial products.

Objective:Establish a Credit Registry to provide key lending stakeholders such as financial institutions and lenders with access to reliable and accurate credit information, exchange information for better managing risks, improve operational efficiency, diversify credit products and increase lending volume and outreach, two important factors in expanding access to finance in Afghanistan.

Harakat Priority Outcome Area:#1 Greater access to finance

Implementing Partner:International Finance Corporation (IFC) and the Central Bank (DAB)

Timeline: January 2010 – April 2015

www.pcr.gov.afwww.facebook.com/PublicCreditRegistry


www.pcr.gov.af

www.facebook.com/PublicCreditRegistry

40 16 800

Value of the registered contracts in the Public Credit

Registry.

Number of banks and microfinance

institutions offering loans to the private

sector using the Public Credit

Registry system.

Number of Collateral Registry

(CR) and Public Credit Registry (PCR)

personnel trained on the systems.

Afghanistan now has an effective

legal framework for secured financial

transactions.

Billion AFS

“Now with the push of a button we are able to access reliable information about a customer’s credit history by using the Public Credit and Collateral registries. Previously, we had to contact all other banks to collect credit information from them for each new customer, which required at least 15 days. Even then, the information obtained could still turn out to be fraudulent. With these two systems, that is no longer the case. Now we can better identify the qualified customers and issue new loans with more confidence.” Khalil SediqCEO, AIB

BANK


2. Afghanistan Building Codes

9 4

Important Activities:• Conducted targeted workshops for the public and private sector to increase

awareness regarding the four national building codes.• Conducted numerous technical workshops to increase the capacity of ANSA’s

technical team.• Provided trainings to the staff of Kabul Municipality, Dehsabz (DCDA) and the

Afghanistan Builders Association.• Printed and disseminated the ABC (Afghanistan National Building Codes) to

government and the private sector and made them available to the public.• Development of a training manual and an implementation/enforcement of codes

manual is in progress. • Development of a user feedback mechanism manual is in progress, to incorporate

the strengths and weaknesses of the four building codes developed as experienced or reported by the end users.

Key Achievements:• Established nine national technical committees at ANSA and improved their capacity.• Developed four national building codes (Urban Development Code, Architectural Code,

Structural Code and Highway and Bridge Codes) and facilitated their approval by the Supreme Council of Standards.

• Translated all four codes into Dari and Pashto (being technically edited).• ANSA signed a memorandum of understanding (MoU) with Breshna (the National

Power Company), Ministry of Energy and Water (MEW) and DCDA (New Kabul Dehsabz City Development Authority) to use these newly developed codes and standards.

Background:Lack of standardized national building codes is a major barrier in designing, bidding and implementing infrastructure projects in Afghanistan. This also impedes the ability of domestic firms to compete for large contracts and become the primary contractor.

Objective:Lay the ground for safe and sustainable building design and construction practices and improve competition in the construction sector through the development of the following national building codes: Urban Development Code, Architectural Code, Structural Code and Highway and Bridge Codes.

Number of national technical

committees established at

ANSA.

Number of national building codes

developed.

Conducted targeted workshops for the public and private sector to increase

awareness of the new national building codes.

Trainings provided to Kabul Municipality,

Dehsabz (DCDA) and Afghanistan Builders

Association (ABA) staff

AfghanistanBuilding Codes

“Now we have a building code that will serve as the foundation for technical standards in the construction sector in Afghanistan. It is based on the International Building Code (IBC), something that evolved over the last two hundred years. It is inconceivable for our construction sector to grow without good standards. The natural next step should be adding electricity and mechanical (HVAC/plumbing) codes and starting a licensing system for the designers. Proper enforcement and monitoring of these newly developed standards are the biggest tasks ahead of us.”

Jamil Khaled President, Society Afghan Architects and Engineers (2014-2008)

Harakat Priority Outcome Areas:#7 Strengthened competition policy#3 Increased private sector investments in infrastructure

Implementing Partner:Afghanistan National Standards Authority (ANSA)

Timeline: July 2010 – September 2015

www.ansa.gov.af


www.ansa.gov.af

3. Strengthening Consumer Protection Project

2013 9 3

Important Activities:• Conducted a targeted training program and prepared a training manual for CPCPD staff on developed regulations and procedures

for conducting investigations that clearly defines roles, responsibilities and limitations of each position.• Organized a final workshop and conference to present the Consumer Protection project results.• Organized an exposure visit to Turkey which included firsthand experience for norms and standards to the consumer complaints

handling cycle as well as a theoretical session on the entire consumer protection regulatory framework covering consumer protection law, regulations and market surveillance.

• Sustainability plan for securing continuity of the project, and raising public awareness about its work, is in progress.• Translation of all project materials into Dari and Pashto is in progress.

Key Achievements:• Developed the Consumer Protection Law and had it approved by the Ministry of Commerce and Industry. The law has been submitted for the

Ministry of Justice’s review and approval.• Developed the following regulations and bylaws for CPCPD: Regulation on the Investigative Powers of the CPCPD, Regulation on the Chair

of the National Consumer Board, Regulation on Pecuniary Penalties, Regulation on the Establishment and the Role of the NCB, Regulation on Registered Consumer Protection Associations, Regulation on Advertisement, Regulation on Awards (recognition of consumer protection champions in six categories), The Essential Goods Bylaw, The Prevention of Black Marketing and Preservation of Supplies of Essential Goods Bylaw.

• Developed standard operating procedures, investigation procedure manual and specific protocols for data collection.

Background:Consumers in Afghanistan are not protected from low-quality or counterfeit goods and unfair trade practices because there is no legal framework in place. The competitiveness of Afghan products also suffers because of this, reducing opportunities for economic growth.

Objective:Develop a legal framework for consumer protection in order to improve access to high-quality, safe, dependable and cost-efficient goods and services, which will result in economic growth. Help the Consumer Promotion and Consumer Protection Directorate (CPCPD) become fully functional in implementing the legal framework.

Developed Consumer

Protection Law.

Number of regulations and

bylaws developed for CPCPD.

Number of procedures

and protocols developed.

Harakat Priority Outcome Areas:#2 More effective regulations#7 Strengthened competition policy

Project Applicant:Consumer Protection and Competition Promotion Directorate (CPCPD), Ministry of Commerce and Industries (MoCI)

Timeline: April 2011 – March 2015

www.cpcpd.gov.af


www.cpcpd.gov.af

4. Institutional Capacity Building and Development and Curricula Development for TVET

40 6

Objective:Identify skills needed to meet demand and develop relevant national occupational standards and teaching materials to reduce labor cost and increase employment in Afghanistan.

Important Activities and Achievements:• Initiated the development of the following:

- 40 curricula, contents and learning material for these five sectors: mining, railway, carpet weaving, food processing and packaging, hotel management and tourism- Eight courses in Carpet Weaving (workshop manager/supervisor, junior/senior weaver, finishes, mender and junior/senior designer)- Eight courses in Hotel Management and Tourism (flight attendant/purser, hotel receptionist, laundry worker/supervisor, ticketing clerk, tour guide and tour guide director)- Eight courses in Food Processing (edible oil extraction technician/supervisor, dairy processing technician/supervisor, meat and poultry processing assistant/technician/supervisor and fruit and juice processing technician)- Eight courses in Mining (underground/surface mine safety technician/officer, surface mine driller, mine assistant electrician, drilling team leader, dump truck driver and underground/surface mine electrician/supervisor)- Eight courses for Railroads (forklift operator, mobile crane operator/assistant, junior/senior excavator operator, roller operator and junior/senior grader operator)

• Handed over all 40 National Occupational Skill Standards (NOSS) from the National Skill Development Program (NSDP) to DM TVET to develop curricula based on them.

• Hired a consultancy firm to provide on-the-job for training for the relevant DM TVET departments.• Conducted a joint workshop with the Ministry of Labor to review the findings of the Labor Market Survey and the exposure visit.• Conducted outreach and awareness events with key stakeholders such as the private sector and government to introduce the newly

developed curricula to them.• Trained 20 staff of DM TVET on data collection methodologies.• Held three on-the-job trainings for DM TVET departments.• Validation from private sector representative to collect their comments, inputs and

observation to improve the final version of the curricula has been initiated. • Hired an international organization to certify curricula based on international standards

Background:Decades of war, high levels of illiteracy and a lack of modern training programs and facilities have created a scarcity of skilled workers in Afghanistan. Data currently available on the labor market is not sufficient to provide educational planners proper guidance on training components required for specific skill building curricula.

Number of curricula being validated by a company

with international standards.

Number of sectors students can gain

internationally recognized

certification in.

Recruitment of an international

organization to certify curricula based on international

standards in progress.

“Our current workforce in Afghanistan lacks the skills to meet our labor needs This forces us to import labor from the neighboring countries, which is expensive, unproductive and unsustainable in the long term. This project supported by Harakat can potentially solve many of the obstacles we face: labor cost, skills quality and labor productivity. It enables businesses like us to focus on competitiveness and growth.”

Mustafa SadeqPresident, Omaid Bahar Agribusiness

Harakat Priority Outcome Area:#6 Improved labor market regulation

Project Applicants:Deputy Ministry of Technical Vocation and Educational Training (DM-TVET)

Timeline: January 2012 – September 2015

www.dmtvet.gov.af


www.dmtvet.gov.af

5. Modernization of Property Deeds and Land Records Project Phase II (Digitization)

1 500,000 467,300

Important Activities:• Trained 16 staff members from 12 provincial courts to use DRACS, the new digitization

system.• Completed renovation of one office per province in the following 12 provinces: Kabul,

Parwan, Panjsher, Baghlan, Konduz, Mazar, Laghman, Jalalabad, Kunar, Paktia, Logar and Herat. The office spaces are located in the provincial courts and used for digitization of current and new deeds.

• Hired 180 staff members for cleaning and digitizing 1.4 million property records and deeds. Three provinces already completed.

Key Achievements:• Now property records and deeds can be retrieved more quickly. The registration processes are

faster and duplication is prevented.• Now the cost and space required for storing property records and deeds have decreased.• Now the time and resources required for administrative processes and printing alternate

copies are reduced.• Cleaned 500,000 deeds in the Supreme Court and Kabul Makhzan.• Digitized 467,300 new deeds in 12 provinces.• Now the digitization system provides efficient and reliable disaster recovery methods.• Now the system offers access to deed-related data, improves their distribution to authorized

parties and enhances consistencies of the deeds’ records.

Background:Until recently, property deed records in Afghanistan were not kept on a centralized registry. This put investors at risk of fraudulent transactions, competing claims and forced eviction.

Objective:Create a secure and efficient system for management of land records through a secured property registration system with reduced transaction costs to lower risk for investors and, therefore, increase investment.

All deeds and records are on one information

system that enables fast and timely retrieval

of information.

Number of clean deeds in the

Supreme Court and Kabul Makhzan.

Number of new deeds digitized in

12 provinces.

Harakat Priority Outcome Areas:#5 Strengthened property rights#1 Greater access to finance

Project Applicant: The Supreme Court (Afghanistan)

Implementing Partners:Afghanistan Land Consulting Organization (Renovation Phase) and Hawk Vision Consulting Services (Digitization Phase)

Timeline: July 2012 – September 2015

www.supremecourt.gov.af

Kaka Shaker Story:In Afghanistan, there are an estimated 4 million official property records. These records are extremely valuable, both in monetary and historical terms. Unfortunately, the vast majority of them are very old, in poor physical condition kept in substandard storage facilities.

When Harakat started the Land Records Modernization Project at the Supreme Court, the project technical staff, mostly made up of the young generation of Afghan men and women, faced difficulty reading these property records that are written in quill and hard to read. The project team realized that Baba Shaker’s ability to read these old written texts would help. So he was hired.

For 40 years, Baba Shaker worked on property deeds at the Supreme Court, Makhzan Division. His retirement in 2013 meant that the Supreme Court would lose one of a handful of its employees who could read property deeds written by hand decades or centuries ago. His experience and talents in reading these texts proved to be important to the success of digitizing the property deeds.

This Harakat-funded Land Records Modernization Project will clean up, digitize and make accessible about 1.4 million records around the country. This ensures that Afghanistan’s property records, which literally represent billions of dollars, are properly digitized and stored before Baba Shaker is no longer around.

Bottom Line• Prevented from more than ten fake title deeds so far in the mentioned provinces.• Due to benefits of the new system, several requests for expansion to other provinces

have been received to secure the deeds from deterioration and misuse.


www.supremecourt.gov.af

6. Afghanistan Center for Dispute Resolution

Important Activities• Formulated organization charts, roles and tasks and developed key operational materials including forms, manuals and procedures.• Developed domestic and international mediation rules and the relevant forms.• The selection and training of domestic and international mediators is ongoing.• Conducted advanced mediation workshops for ACDR staff.• Development of twinning agreements with International Mediation Centers in progress. • Developed a comprehensive Stakeholder Analysis and detailed stakeholder engagement plan.• Development of financial plans for ACDR Center is in progress.• Initiated the development of a case management software for ACDR and an internal manual for the case managers and the

mediators with relevant forms and letters.

Key Achievements:• Established a Steering Committee consisting of leading figures for the Afghanistan Center Dispute Resolution (ACDR).• Now ACDR has a Charter that is approved by the ACDR Steering Committee.• Now ACDR has a permanent place to operate from: a suitable office space in Kabul was allocated for ACDR and, with Harakat funding, the

building was renovated• Now ACDR has an Independent Monitoring Committee and a secretariat.• Now ACDR has a website (www.acdr.af ) to provide timely information to stakeholders and potential clients about its activities and services

Background:According to the World Bank Doing Business Report 2010, contract enforcement in Afghanistan involves 47 procedures and takes over 1642 days. An average of 25% of the claimed amount is spent on dispute settlement in the formal justice system. This demonstrates inefficiencies in the court system, which, among other factors, serves as disincentive for domestic and foreign investment.

Objective:Institutionalize commercial dispute resolution and mediation for the private sector so that disputes are resolved more quickly with less cost. To achieve this goal, establish an independent mediation center as a pilot and facilitate transferring skills and dispute resolution practices to judges, lawyers and stakeholders.

ACDR Charter is approved by the ACDR Steering

Committee

ACDR has a permanent place to

operate from

Twinning agreements with

International Mediation Centers

initiated

Initiated the development of

case management software for ACDR

Harakat Priority Outcome Area:#5 Strengthened property rights

Project Applicant:Afghanistan Chamber of Commerce and Industry (ACCI)

Timeline: October 2010 – June 2015

www.acdr.af/en/home/ www.facebook.com/acdr.afghanistanwww.twitter.com/acdr_af


www.acdr.af

www.acdr.af/en/home/

www.facebook.com/acdr.afghanistan

www.twitter.com/acdr_af

7. National Craft Standards Development (The Artisan Toolkit)

Important Activities:• Developed a detailed training workshop with an aim to train more than 200 artisans as trainers in early 2015.• A draft research project assessing the current situation and the regulatory barriers in the crafts industry is completed. The research

paper with a list of specific findings and recommendations will be presented to the Ministry of Commerce and Industries (MoCI).

Key Achievements:• Now two Artisan Toolkits (Level 1 and Level 2) are developed in Dari, Pashto and English and available to the artisans and other interested

parties. • Now animation videos (simulation) of 5-7 minutes for each chapter of the Artisan Toolkit Level 1 are available, which were designed to

enable semi and illiterate artisans take full advantage of the resources that the Toolkits offer to artisans.• Now the Artisan Toolkit has a website (www.artisantoolkit.af ) that provides users with access to all the Artisan Toolkit materials in video and

PDF formats (in Dari, Pashto, English).

Background:Afghanistan has a rich material culture, which has the potential to become once again a substantial source of economic growth, education and national pride. However, there is no deep understanding among artisans on how to build a business and there are few widely accepted standards for export.

Objective:Develop and disseminate an Artisan Toolkit to address major take-to-market obstacles and offer practical instruction to artisans on how to overcome existing barriers that will enable domestic and international artisan businesses to succeed.

Number of Artisan Toolkits (Level 1 and Level 2) developed.

Animation videos of the Artisan Toolkit Level

1 make it accessible for semi-literate and

illiterate artisans.

Website provides users with access

to all Artisan Toolkit materials.

Harakat Priority Outcome Areas:#7 Strengthened competition policy

Project Applicant:Far & Wide Collective (previously Jali Designs)

Implementing Partners:Far & Wide Collective and Export Promotion Agency (EPA) at Ministry of Commerce and Industries (MoCI)

Timeline: September 2013 – March 2015

www.artisantoolkit.af

“As a trainer, I regularly work with businesses owned by individuals who cannot read or write. The Artisan Toolkit enables me to communicate the training content to these business-owners effectively, especially by using the video and visual materials. The materials deal with very practical business issues and applying them would greatly benefit any business.”

Rahima PaimanMarketing Development Manager, Zardozi, Markets for Afghan Artisans


2





8. Harakat Integrity Initiative-Social Responsibility

Important Activities:• Established a steering committee consisting of religious scholars, Ministry of Haj (Religious Affairs) members, academia, Integrity

Watch Afghanistan (IWA) and the Joint Monitoring and Evaluation Committee (MEC) to oversee development and implementation of all relevant activities and deliverables under the project activities.

• Trained 690 religious scholars in nine regional hubs through 90 workshops to raise awareness about corruption and encourage action to counter it in their communities by viewing corruption from the prism of Islamic principles and practices during Friday sermons and other gatherings. A total of 2,700 will be trained over the course of this project.

• Held a competition on Islam and Anti-Corruption to promote integrity among 210 religious school students.• Developed an integrity promotion campaign on television, radio and billboards.

Key Achievements:• Now a call center is established and operational that receives, reviews and records reports of corruption by the public from across the country.

This is logged on www.efshagar.af to generate trends of reported corruption.• Now a dedicated website (www.efshagar.af ) is operational where confirmed cases of demand for bribes are logged. • Now a book on corruption from Islam’s perspective has been developed by a team of leading religious scholars. Five thousand copies of it in

Dari and Pashto have been distributed among stakeholders in in 34 provinces.• Now an Islam and anti-corruption booklet consisting of 200 questions and answers has been developed, published and shared with students

of religious institutions in nine regional hubs.• A total of 1,500 booklets were distributed to students and libraries.

Background:Despite a number of anti-corruption measures implemented in recent years, systemic corruption imposes serious costs to the private sector and the Afghan economy. In 2013, Harakat started a dialog with key stakeholders in the private sector and civil society to explore what actions can be taken to counter the growing scope of corruption.

Objective:Engage with religious leaders and other influential members of the public to raise awareness about corruption and encourage action at the grassroots level to counter it by using direct outreach and mass communication channels such as public forums, radio, television, social media, website and a religious leaders conference.

Number of copies of a book on

corruption from Islam’s perspective distributed in 34

provinces.

Number of religious scholars trained

to raise awareness about Islam’s view

of corruption, and encourage

community action against corruption.

Dedicated website logs cases where bribes have been demanded, and a call center records corruption reports

from the public.

Number of questions answered

about Islam and anti-corruption in a booklet distributed

in nine regional hubs.

www.efshagar.af

5,000 690 200Anti-Corruption

and Religion

Harakat priority Outcome Area:#8 Improved capacity to tackle corruption

Project Applicants:Integrity Watch Afghanistan and Ministry of Hajj and Religious Affairs

Implementing Partners:Integrity Watch Afghanistan and Ministry of Hajj and Religious Affairs

Timeline: November 2013 – May 2015

www.efshagar.af www.facebook.com/efshagar.afg


www.efshagar.af

www.efshagar.af

www.efshagar.af

www.efshagar.af

www.facebook.com/efshagar.afg

9. BINA (Business Integrity Network Afghanistan)Background:A high level of corruption is impacting the Afghan economy. In particular, it increases the cost of doing business for existing businesses and discourages new investment by reputable domestic and foreign investors. In addition, it adversely affects the performance of Harakat’s national projects.

Objective:Empower Afghans to self-improve, build norms, promote ethical standards and increase integrity in their business transactions by using a bottom up operational approach, partnering with interested private sector representatives, government entities and other stakeholders.

BINA has a dedicated website.

www.BINA.af

Harakat Priority Outcome Area:#8 Improved capacity to tackle corruption

Implementing Partner:Business Integrity Network (BINA)

Timeline: November 2013 – March 2015

www.bina.af

The year BINA was established as a nonprofit organization with a

secretariat and a board of directors.

2014

A code of conduct for businesses is now available.

Key Activities and Achievements:• This project is in its startup stage. So far, BINA has been registered as a nonprofit organization. A secretariat has been hired. A board

consisting of many members has been identified.• Developed bylaws and the legal structure of a membership compliance regime.• Developed a code of ethics for the board of directors.• Developed a Five-Year Business Plan for BINA.• Developed key operational documents for BINA as an institution, including: Organizational Chart, Human Resource Manual, Code of

Conduct and Integrity, Financial Policy and Procurement Manual.• Developed membership criteria and vetting process for new members.• Now BINA has a dedicated website.• Initiated the development of a strong monitoring, compliance and evaluation system for members.• Initiated a comprehensive Self-Assessment Tool for businesses.


www.bina.af

www.BINA.af

10. Business Licensing Reform (Phase 2)

Key Activities• Hired 35 staff in different categories through a transparent process to implement and manage cleaning, scanning and digitizing of

business licenses. • Procured required technical equipment for the business license digitizing and handed them over to MoCI to sustain its activities. • Conducted a needs assessment for required software such as Application Programming Interface (APIs) and database/server

connectivity for the Afghanistan Center Business Registry and Intellectual Property (ACBRIP). • Developed and made operational customized APIs which are based on the ACBRIP’s database requirements. • Integrated APIs with the ACBRIP database to capture scanned business licenses and data entry.• Trained ACBRIP on technical, maintenance and operational aspects of the digitizing process.• Developed a User Manual as a sustainability tool to enable MoCI to train and prepare its future workforce to use the new digital

system.

Key Achievements: • Now 90,000 business licenses are digitized at the Afghanistan Center Business Registry and Intellectual Property (ACBRIP) at MoCI.• Now the MoCI staff members are able to use a digital licensing system after receiving training before work and on-the-job training.• Now MoCI has a practical user manual as a sustainability tool that enables it to train and educate its future workforce in order to operate the

digitation system smoothly.• Now the MoCI has a modern digital archiving system that enables it to retrieve, validate or issue new copies of business licenses, eliminating

or reducing unnecessary steps arising from the manual archiving system.

Background:The current business licensing regime in Afghanistan is highly bureaucratic, lacks transparency and requires businesses to dedicate considerable time and financial resources to comply with many unnecessary requirements. This is a disincentive to domestic and foreign investment.

Objective:Following on the successes of the first phase of this project, further streamline processes for increased efficiency and sustainability at MoCI’s One-Stop-Shop and roll out Business Registration and Licensing reforms to MoCI offices at the provincial level.

Number of digitized business licenses in the Afghanistan

Center Business Registry and Intellectual Property at MoCI.

The digital archiving system can retrieve, validate or issue new copies of a

business license much more efficiently than the manual

archiving system.

MoCI now owns the technical

equipment required to digitize business

licenses.

“Today I personally witnessed that business licensing has become simple and easy. Today I came here and it took me two or three hours to renew my business license. In the past, it was a difficult process and took many days to register or renew a license.”

Mohamad Yosof President, Abobakr Shoaib Company

“I am from Faryab Province and have come to Kabul to get a trade license from the MoCI. I noticed the reform in licensing procedures in Kabul. I request that this new system should be expanded to other provinces. That will reduce costs and save businessmen like me from the risks of traveling all the way to Kabul.”

Esmael Nazari Vice President, Jahangir Toran Limited (Faryab Province)

90,000

Harakat Priority Outcome Areas:#2 More effective regulations#8 Improved capacity to tackle corruption

Project Applicant:Ministry of Commerce and Industries (MoCI)

Implementing Partner:Ministry of Commerce and Industries

Timeline: December 2013 – March 2015

www.moci.gov.af/en/page/7550/7555


www.moci.gov.af/en/page/7550/7555

11. Facilitating the Operation of the Afghanistan Patent and Trademark Office

Key Activities and Achievements:• Completed hardware assessment report and submitted it to MoCI for review. • The current law on trademark registration and patent registration was reviewed by the consulting firm hired by Harakat, which has

provided recommendations for action.• Collected 17,000 intellectual property-related files from the relevant entities for digitization.• Intellectual property automation process is ongoing.• Initiated electronization of Patent and Trademark registration office.• Initiated online subscription to get a trade license.• Digitization of 17,000 intellectual-property related files is ongoing.

Background:Afghanistan lacks clear guidelines on what trademarks can and cannot be registered. This has resulted in many currently registered trademarks very closely resembling international or domestic trademarks. MoCI started taking over the patent and trademark process from the commercial court in 2013.

Objective:Simplify the patent and trademark registration process by updating the rules and procedures and automate the registration process to increase efficiency. This will result in higher quality products, fair competition and will help Afghanistan to meet its WTO intellectual property obligations.

Consulting firm has provided recommended changes to the current trademark and patent

registration law.

Number of intellectual property-related files

being digitized.

Electronization of Patent and

Trademark registration office

underway.

“In Afghanistan, there is a misperception about the value of intellectual property and trademarks. Without implementing international standards, the country will continue to delay the development of its own brand, especially for premium agriculture products for export markets. The design and implementation of a practical patent and trademark system can be an important foundation in the country’s strategy in attracting more strategic FDI, supporting forward thinking momentum.”

Rachel ZedeckDirector of Sustainability, Control Union Agriculture Services Afghanistan

17,000

Harakat Priority Outcome Areas:#2 More effective regulations#5 Strengthened property rights#7 Strengthened competition policy

Project Applicant:Ministry of Commerce and Industries (MoCI)

Implementing Partner:Ministry of Commerce and Industries

Timeline: October 2013 – June 2015

www.acbr.gov.af


www.acbr.gov.af

12. Public Private Partnership (PPP)Background:Poor infrastructure is a significant barrier for investment and doing business in Afghanistan. In addition, it limits the government’s ability to deliver essential public services. With declining levels of international assistance, the government does not have resources to invest in infrastructure. One solution to this is to attract private sector investment through Public Private Partnership (PPP) mechanisms. However, the enabling environment for PPP, including the policy, legal, regulatory and institutional frameworks, is either weak or non-existent.

Objectives:Improve the Public Private Partnerships (PPP) enabling environment in Afghanistan to leverage private investment funds to combine with public sources of support.

Important Activities and Achievements:• Established PPP Central Unit in the Ministry of Finance.• Initiated the recruitment of three local PPP specialists to contribute to the development

and implementation of the regulatory framework after its approval from the council of ministers.

• Initiated the development of the necessary PPP guidelines.• Initiated recruitment of a PPP legal expert to review and amend the existing public

procurement law, develop PPP regulations and draft PPP contract templates.• National PPP policy is being developed.• Initiated research to prioritize five major fields for PPP.• Initiated review of PPP national regulatory framework to provide recommendations.

The year the PPP Central Unit was

established in the Ministry of Finance.

Initiated review of PPP national

regulatory framework to provide

recommendations.

National PPP policy is being developed.

Research to prioritize five

major fields for PPP planned.

2014

“The private sector currently has no role in generation, transmission and distribution of power in Afghanistan. The government has no resources to meet the growing demand for electricity. Attracting private investment in the energy sector is the most viable option. Establishing PPP legal and regulatory structures can facilitate investment in generation and distribution of electricity and maintenance of power grids and delivery of other public services.”

Mirwais AlamiChief Commercial Officer, Breshna (National Power Company)

Harakat Priority Outcome Areas:#3 Increased investment in the infrastructure #2 More effective regulations

Implementing Partner:Ministry of Finance

Timeline: June 2014 – September 2015


13. Development of National Trade Policy

Key Activities and Achievements:• Completed a review of existing trade data and literature.• Identified knowledge gaps through targeted in-depth interviews and focus groups across Afghanistan.• Identified principal trade markets and trends, key competitors and competitiveness issues.• Developed a database for the Ministry of Commerce and conducted training for MoCI staff to use it.• Translated the policy into local languages. The translations have been approved by MoCI and are now with the Council of Ministers for

review and approval.

Background:Domestic producers face multiple challenges in their efforts to increase efficiency, reduce costs of trade transactions, access adequate market information and deepen their market penetration. This requires establishing an enabling environment for trade.

Objective:Develop an evidence-based, targeted national trade policy that establishes an enabling environment for trade, increases competiveness of domestic producers, defines a clear vision for trade in Afghanistan, provides guidance to the government and private sector actors in relation to exports and imports and facilitates better coordination among key trade stakeholders.

Developed a national trade

policy, which is awaiting cabinet

approval.

The policy is translated in

multiple languages(Dari and Pashto)

Trained MoCI staff to use the new

database.

Harakat Priority Outcome Area:#2 More effective regulations Project Applicant:Ministry of Commerce and Industries (MoCI)

Timeline: April 2011 – September 2015


14. Development of Sharia-compliant Products for SME Access to Finance

Key Activities and Achievements:• Formed a Sharia Supervisory Board (SSB) at the central bank. It is now operational and has reviewed all project deliverables.• Developed ToR, Self Assessment manual, bylaws and Sharia governance framework for the operational matters of a functioning SSB.• Initiated the development of the Islamic Banking regulatory framework (the activity is being carried out with close consultation of the

Afghanistan Banking Association, Da Afghanistan Bank, Sharia Supervisory Board, and commercial banks). The Islamic Banking regulatory framework consist of 47 deliverables, which includes regulations, manuals, demand driven products, procedures and guidelines developed to regulate the Islamic banking industry in Afghanistan.

• Planned an extensive 15-day training of 70 stakeholders from commercial banks and micro-finance institutions by world-class Malaysian Islamic Banking experts.

Background:Access to finance is a critical barrier to investment and doing business in Afghanistan. At the same time, there is a huge amount of cash saved by the Afghan people. The savers have been reluctant to invest or deposit their savings in the conventional banking system due largely to religious reasons. Adding Islamic banking can respond to current market needs and offer Islamic financing services and products.

Objective:Develop the legal framework for Sharia-compliant financing for small and medium size businesses, the relevant central banking mechanism for it and strengthen sharia-compliant financial institutions.

The year the Shariah Supervisory Board (SSB) started

operating at the central bank.

The number of finance

representatives that will be trained at an

extensive, 15-day course by Malaysian

Islamic Banking experts.

The number of deliverables the Islamic Banking

regulatory framework consists of.

“In spite of progress since 2004 96% of the Afghan population remains unbanked. Customers’ cultural and religious preferences have not been met by the new banking system but the recent arrival of Islamic banking has been received positively. This Harakat project creates the regulatory foundation for responsive Islamic banking. This will eliminate one key reason people keep their money in their pillows instead of their bank accounts. That means more economic growth and employment.”

Omer OmeryHead of Retail Banking, AIB

2014 47 70

Harakat Priority Outcome Area:#1 Greater access to finance Project Applicant:The Central Bank of Afghanistan (DAB)

Timeline: June 2014 – June 2015

www.dab.gov.af


www.dab.gov.af

15. Development of Mortgage Market Regulatory Framework

Conventional and Islamic mortgage

regulations, manuals

guidelines are being developed.

Number of TV and radio spots that will be part of a public awareness campaign, in addition

to 5,000 brochures and 10 provincial

workshops.

A mortgage policy and a

dispute resolution and foreclosure

mechanism are being developed.

“The demand for owning property in big cities like Kabul is strong and growing. Mortgage is a good way to meet this demand but now it is not practiced widely here. This residential mortgage project will help create the foundation for the system to fill in the existing gap. If properly implemented, it will protect investors and consumers and will increase investment in commercial construction and generate employment opportunities.”

Ali SaberiPresident & CEO, Ikmal Engineering & Construction Company

700

Key Activities and Achievements:• Conducted five provincial awareness and stakeholder engagement sessions, in which more than 300 stakeholders participated.• Began developing conventional and Islamic mortgage regulations, manuals and supervision guidelines.• Initiated the design of a mortgage policy and dispute resolution and foreclosure mechanism.• Started preparations of a customized training of trainers (ToT) toolkit.• Planned a month-long capacity building training to mortgage directorate, supervision department and the Afghanistan Institute of Banking

and Finance regarding the developed regulations, manuals, procedures and supervision guidelines.• Planned an exposure visit to Malaysia in order to learn about the regulatory framework for Islamic finance industry in general and the best

practices applied in the country for regulating the Islamic banking industry.• Initiated an awareness campaign that will include 700 television and radio spots, 5000 brochures and 10 provincial workshops in order to

raise awareness about this new industry.

Background:High economic growth and rapid urbanization in Afghanistan have increased demand for housing in commercial hubs such as Kabul. A recent survey by Harakat in five major cities found that 92% of consumers sought long-term loans and 93% preferred Sharia-compliant financing. It is estimated that $16 billion in financing is needed for residential construction alone. The needs of this industry with significant growth potential are not being met by the financial sector.

Objective:Remove the regulatory and institutional barriers that will trigger investment in the housing industry by the private sector. Establish an enabling environment for housing financing by reforming the policy, legal and regulatory environment. Improve the capacity of the Central Bank to regulate and manage the sector. Develop required policies, regulations and platforms to ensure that the rights and responsibilities of both lenders and consumers are protected.


16. Harakat Research Projects

Research Completed:Harakat has funded the following research projects and shared the key findings of these studies with the relevant stakeholders:• Mortgage Market Assessment in Five Commercial Hubs • Pre-Feasibility for a Special Economic Zone • Trends in Corruption and Anti-corruption Practices related to the Private Sector• Informality and Small Business Development in Kabul • Corruption and Private Sector Development: Transaction Costs to Conduct Business• Critical Assessment of the Customs System• Understanding Gender in Enterprise Development: Barriers and Solutions• Women’s Access to Property in Afghanistan: Law Enforcement and Barriers

Background:Lack of reliable information makes it extremely challenging to develop effective reform actions that address the consequential barriers to investment and doing business. Without detailed and actionable information on the Harakat 8 Priority Outcome Areas, it is difficult to develop or select projects that will deliver significant measurable impacts on the business environment and, without evidence-based research, Harakat is unable to meaningfully and proactively engage with its core stakeholders.

Objective:Fund research projects that: (1) study key barriers to investment and doing business in Afghanistan and produce insights that will generate proactive projects for Harakat pipeline; (2) establish baseline information for reviewing and assessing Harakat-funded projects; and, (3) enables more effective and focused stakeholder engagement.

Factors preventing banks from providing

mortgage loans include non-

supportive laws, land titling problems, corruption in the court system, lack of capital for long-

term financing and difficulty in repossession of

property in case of default.

Finding from research project: Mortgage Market

Assessment in 5 Major Cities of Afghanistan

Not engaging in corruption would

be more costly and would lead to the

loss of business opportunities.

Finding from research project: Trends in Corruption and

anti-corruption Practices related to Private Sector

Creating SEZs through a Public

Private Partnership is Afghanistan’s

most secure and sustainable option.

Finding from research project: Pre-Feasibility for Special Economic Zone in

Afghanistan

“Harakat is among a handful of organizations that conducts research on the areas that improve the business climate the most, such as Residential Mortgage. I believe that Harakat research has catalyzed actions (like financial sector reforms). Harakat’s project portfolio demonstrates Harakat’s innovative approach to reforms, namely stimulating investment and improving the business climate. Therefore, Harakat research should be continued in the future.”

Ostad MasoodProfessor of Economics, Kabul University

Priority Outcome Area:Fits into Harakat’s overall mandate

Project Applicant: Harakat

Implementing Partners:Multiple research firms and individuals

Timeline: January 2011 – December 2015

www.harakat.af/research.html


www.harakat.af/research.html

Lack of credit and low demand for products

are the biggest constraints on small business activities in

Kabul.

Finding from research project: Informality and Small Business

Development in the City of Kabul

Duty charges need to be enticing enough

to keep the importers coming through legal

channels.

Finding from research project: Overview and

Critical Assessment of the Customs System

Lowering property taxes for female

owners will create an incentive for families

to recognize women’s justified rights

to property, and stimulate a process of property registration

for females.

Finding from research project: Women’s Access

to Property in Afghanistan: Law, Enforcement and

Barriers

Corruption in Afghanistan

became practically institutionalized

between 2001 and 2011, making it very

difficult to fight.

Finding from research project: Corruption and Private Sector

Development: Higher or Lower Transaction Costs to

Conduct Business?

Women’s small businesses suffer

from limited incentives, over-

complicated tax forms and

obligations, lack of tax guidance and an intimidating

environment at the tax office.

Finding from research project: Understanding

Gender in Local Enterprise Development in the

Context of Afghanistan: Barriers and Solutions


Land Lease One Stop Window (Arazi)Implementing Partner: MAILTimeline: September 2009 – August 2010

• Became a one-stop shop for all land administration, management and services in Afghanistan following Cabinet Resolution #5 chaired by President Ashraf Ghani.

• Reduced the number of steps in the land lease procedure from 52 to 9 and the amount of time from over six months to two months.

• Developed a land clearance procedure with required forms and formats.• Increased government revenue collection from 25 million AFS a year to 209 million AFS. • Leased 111,419 jeribs of land to the private sector and farmers across the country.• Proposed required amendments to Land Management Law which is included Parliament

Legislative Year 2015.

Collateral Registry Implementing Partner: DABTimeline: January 2010 – April 2015

• Received additional funding (USD 103,850) from the World Bank to improve the registry system and increase the capacity of its staff.

• Further improved the technical and information technology aspects of the registry system with a data recovery center established within the Ministry of Information Technology. An international firm was contracted to provide two years of support and maintenance between May 2014 and April 2016, which includes nine hours of Help Desk Services and 12 hours of Developer Support per month.

• Added new technical features to the system, including a Credit Limit Report, Collateral Type Report, Sector Report, Report Segregation and Extracts, Charger Size and Statistics Information Tab.

• Conducted trainings and other activities to improve staff capacity on the newly added technical features to the system.

National Standard Development and Capacity Development of Technical CommitteesImplementing Partner: ANSATimeline: May 2010 – March 2013

• Developed 500 national standards in 11 sectors; thus far the Supreme Council of standards have approved 411 standards.

• Established two new technical committees for Chemical and Plastic Products. • Established a new technical subcommittee for enriching foodstuff.• Obtained memberships at both the International Standard Organization (ISO) and the Islamic

States Institute of Standards and Metrology.• Signed MOUs with Breshna (National Power Company), National Environment Protection

Agency (NEPA), Ministry of Energy and Water (MEW) and New Kabul City (DCDA) to facilitate application of the newly developed standards and codes by these institutions.

Afghanistan Institute of Banking and Finance (AIBF)Implementing Partner: DABProject Period: December 2009 – February 2013

• Held internship programs for 300 women.• Organized workshops and lecture programs for bank and microfinance institution executives.• Participated in an exchange program at the Indian Institute of Banking and Finance (IIBF).• Provided a two-module distance-learning program for over 65 students.• Trained a further 1,940 people, for a total of 4,376 trained during and post-project.

SNAPSHOTS FROM PAST HARAKAT PROJECTS

“This new system enables private companies to use their moveable assets as collateral and secure loans that are essential for expanding their businesses. In reality, this system facilitates better access to loans for borrowers and helps banks to better know their customers before giving them loans. It is good for both sides.”

Sakhi Paiman Businessman and President, Afghan Industrialist Association

“We have leased a total of 110 jereb land in Aqina and Hairatan from Arazi. We have invested around $22.5 million to build fuel processing facilities and have 175 staff in this project. After submitting our application, Arazi delivered the land to us in a month or so. In the past, we could only lease land for a short term, which meant that we had to lease it annually and go through a lengthy procedure every single time. Now, Arazi leased this land to us for 40 years, which allows us to invest with peace of mind. From all the interaction we have had with the government, we found the Arazi process to be the best.”

Gharshin Omar CEO, Ahmadyar Group


Harakat-funded Arazi (Land Lease Authority) makes it easier for individual investors and firms to lease government-owned land for long term commercial and industrial use.

The presidential election in 2014 presented the private sector with a unique opportunity to engage the new government’s leadership to implement urgently needed business climate reforms. Harakat and the Afghanistan Chamber of Commerce and Industry (ACCI) hosted two events in this regard: the National Business Forum in February 2014 and the “Private Sector Priorities for Reform Conference” in October 2014. The first attempted to identify barriers to investment and doing business.

The purpose of the second event was to provide an opportunity for over 250 private sector representatives to identify and recommend key policy reforms to the Unity Government, in order to help remove constraints to private sector development and stimulate inclusive economic growth, greater tax revenues and job creation. The following eleven reform priorities developed during the conference are specific, realistic, measurable and implementable in three to five years by the new government in Kabul and its key international partners:

. 1 Improve traditional irrigation systems and promote sustainable modern systems.

. 2 Advance the development of a national railway system for Afghanistan (review and address the key decisions and recommendations of the Afghanistan National Railway Plan and seek international support for its implementation).

. 3 Develop ancillary infrastructure (road and electricity) around resource corridors to facilitate development and reliable transport of extracted minerals.

. 4 Establish ‘one stop shops’ for public services with integrated electronic systems providing streamlined business administration services (registration, licensing, licensing renewal, tax, custom duty payments and other essential business administration requirements in Kabul and seven commercial hubs).

. 5 Lower the cost and increase the availability of financing by expanding existing credit guaranty and microfinance schemes and by making the contract enforcement and debt collection environment more attractive to lenders.

. 6 Develop a strategy for industrial parks that reflects comments and ideas from the private sector (including establishment of an independent office for industrial parks with special authority).

. 7 Urgently approve an electricity law, relevant sub-laws and guidelines that facilitate the immediate establishment of an independent electricity regulatory authority to implement policies that support private sector investment in the electricity sector.

. 8 Establish a program to upgrade the infrastructure and equipment of TVET institutions for 200,000 students based on market needs.

. 9 Protect investors and promote investment (improve contract enforcement, dispute resolution, insolvency).. 10 Develop a national policy and a legal and regulatory framework for public private partnerships.. 11 Establish an alternative transit route through Central Asia that would be implemented along with the proposed Central Asian Gas

Pipeline project. Note: To view the full conference report, which includes detail on each reform item listed above, please visit http://www.harakat.af/PSReformPriorities.html

PRIVATE SECTOR REFORM PRIORITIES IN 2014


http://www.harakat.af/PSReformPriorities.html

The Conference underscored the fact that there is a strong appetite for reform within the private sector. It also took note of signs of political will within the Government of National Unity (GNU) to address the key business climate reforms to increase private sector investment that is essential for sustaining economic growth, creating jobs and generating income for the government.

The success of the “Private Sector Priorities for Reform Conference” in October was bolstered further by the opportunity for Harakat and ACCI to present these private sector reform priorities at the London Conference Private Sector Roundtable in December 2014. President Ashraf Ghani, three UK cabinet ministers, senior international partners of Afghanistan and more than thirty private sector representatives (both Afghan and international) attended this event.

Below is a summary of goals of this roundtable and reaction from key stakeholders, including the private sector and President of Afghanistan.

Objectives of London Conference on Afghanistan: Private Sector Roundtable• Recognition that mobilizing private capital is critical for

economic sustainability particularly as aid and military spending de-escalates

• Provide a platform for government/private sector dialogue on reforms

• Discuss 11 key private sector reforms prioritized by 250 private sector representations in 16 focus groups with Harakat and ACCI playing a facilitating role in the process

• Identify reform priorities that are specific, realistic, measurable and implementable in 3-5 years

• Engage international business and investors in Afghanistan by identifying key opportunities

These are the key points that came out of the roundtable discussion.

Financial sector reform and access to finance:• Limited private credit in the system• Weak regulatory frameworks • Lack of medium to long term financing instruments• Loss of international correspondent banking relationships• Limited capacity in financial institutions• Crowding out of private capital by donor funding• Requirement for business development services, especially

accountancy

Business environment:• Actual versus perceived risk• Bureaucratic and time consuming to establish businesses• Increased private sector voice in policy development• Chronic skills gaps

Infrastructure for value chains:• Project preparation essential• Role of public private partnerships (PPPs) in mobilizing

investment• International consultancies vital for developing infrastructure

plans

• Integrated approach required for infrastructure development incorporating key economic sectors

• Afghanistan’s international airspace as a valuable asset

Extractives Sector:• Clear interest from international minerals companies• Investor confidence dependent on approval of key contracts• Need to boost exploration• Rationalize procurement process• Clarify minerals law

Reactions from key stakeholders (Private Sector):• Domestic investors: focused on detailed, procedural reforms,

investment climate, infrastructure, access to finance• International investors: interest in key opportunities including

finance, construction, strategic infrastructure and skills training but chronic uncertainty key issue

Presidential Palace (President Ashraf Ghani):• Welcomed reforms but challenged to raise level of ambition• 100 Firm Challenge: focus on firm level competitiveness• Develop a risk management framework• Financial sector reform• Comprehensive human capital strategy required• Develop industry clusters• National infrastructure plan• One stop shop for investors• Raise level of ‘out of the box’ thinking to create a functioning

market • Focus on transport and construction as key sectors for

growth (for example, convert secondary traders to producers, investors) – rather than mining and agriculture – as key sectors for growth

Initial Results and Next Steps: The government of Afghanistan and its international partners made a strong commitment to undertake serious investment climate and enabling business environment reforms. Below is the text of the London Conference 2014 on Afghanistan Communiqué, Clause #18, concerning an enabling business climate. Harakat is working with its core stakeholders to ensure that these key private sector reform priorities are taken seriously and translated into specific and measurable action.

The London Conference 2014 Communiqué: The Participants acknowledged the critical role that the private sector will play in Afghanistan’s path to sustainability, and noted the Afghan Government’s commitment to improving the Doing Business Indicators, and its commitment to prioritise a stronger, more consistent regulatory framework enabling a stronger and more competitive business environment, as well as investment in infrastructure, agriculture and the extractive industries to help encourage private sector investment and more sustainable economic growth. This commitment includes putting in place the strongest possible available measures, based on international best practice, to counter the threat of conflict and corruption around the extractive industries. The Government of Afghanistan also committed to take specific action to increase levels of domestic and foreign private sector investment in Afghanistan to help create and sustain decent jobs, including for women and youth, and improve access to services and markets. Making progress on an inclusive peace and reconciliation process is critical to pave the way for a conducive environment for future investments in Afghanistan.

Source: London Conference 2014 on Afghanistan Communiqué, Clause #18


ANNEX 1The matrix below contains all Private Sector Reform Priorities both for the London Conference on Afghanistan (1-16) and the Government of National Unity (17-50).

No Private Sector Reform Priorities - October 19, 2014

Private Sector Reform Priorities for the London Conference (2014)

1 (Focus Group 1-1) Promote and modify modern and traditional irrigation systems.

2 (Focus Group 2-1) Facilitate access to credit through establishing credit facilities.

3(Focus Group 3-1) Develop ancillary infrastructure (roads, electricity…) around resource corridors (develop the roads in order to facilitate convenient transport of extracted minerals to factories and cities and removal of transit problems)

4 (Focus Group 4-1) Establish industrial bank and/or other credit facilities

5 (Focus Group 5-1) Develop a policy and a legal framework for Public Private Partnerships

6(Focus Group 6-1) Enable Mobile Network Operators to install national and metropolitan fiber optic networks pursuant to the terms of their Licenses. ATRA (sector regulator) to confirm and uphold terms of Licenses wrt fiber to ensure accelerated roll out of privately held fiber transmission networks

7(Focus Group 7-1) Advancing the development of a national railway system for Afghanistan (review and address the key decisions and recommendations of the Afghanistan National Railway Plan and seek international support for its implementation)

8 (Focus Group 8-1) Provide financial resources and strengthen infrastructures for and enhance private sector capacity

9(Focus Group 9-1) Enhance observation, implementation, and enforcement of present laws, particularly money judgment enforcement, bankruptcy, and the creation of a market-friendly, reform-minded Sharia Board.

10(Focus Group 10-1) Urgent approval of electricity law and establishing electricity regulatory agency, develop policy for participation of private sector in production and distribution of electricity

11(Focus Group 11-1) Develop a strategy for industrial park which reflects comments and ideas of the private sector (including establishment of an independent office for industrial park with special authority).

12(Focus Group 12-1) Establish ‘one-stop’ Public Service Centers with integrated electronic systems providing stream-lined business administration services (registration, licensing, tax and duty payments and other government documents in each province).

13(Focus Group 13-1) Investment Promotion/Protection Council and (2) Establish Public Services Hubs (one stop shop for licenses /registration etc.)

14(Focus Group 14-1) A program to upgrade the infrastructure and equipment of TVET institutions for 200,000 students based on market needs.

15(Focus Group 15-1) Establish an alternative transit road through Central Asia that should be implemented with the proposed central Asian Gas Pipeline project

16(Focus Group 16-1) Increase the proportional role of women in Land Management Law to access to land and use it as guarantee against credit (collateral)

Private Sector Reform Priorities for the Government of National Unity (GNU)

17(Focus Group 1-2) Promote production of agriculture inputs (animal/plan species, chemical fertilizer, vet. Medicine, pesticides) by private sector

18(Focus Group 1-3) Provide public land to private business in order to use for modernizing agriculture and developing agricultural industries – addressing the problems related to land seizure and providing land to investors.

19(Focus Group 2-2) Establish one independent national standards agency for testing and certifying productions in Afghanistan according to international standards

20 (Focus Group 2-3) Enhance Work force capacity in agriculture development markets

21

(Focus Group 3-2) Capacity building around extractive industries value chain and developing investor friendly policies, regulations and laws (Increasing the government monitoring capacity in implementing the terms of mining bids and contracts; Increasing the government capacity in managing the legalities of contracts; Developing and introducing supportive and encouraging policies in mining industry)

22(Focus Group 3-3) Provide necessary facilities and conditions to invest in mineral resources both by private and public sector (proper conditions and necessary facilities for investment in processing minerals).


No Private Sector Reform Priorities - October 19, 2014

23 (Focus Group 4-2) Attract foreign investments

24 (Focus Group 4-3) Capacity building and training

25 (Focus Group 5-2) Amendment the procurement law

26 (Focus Group 5-3) Provide licensing/ certification for engineers

27 (Focus Group 5-4) Facilitate access to (mortgage) finance for construction material production in Afghanistan

28(Focus Group 6-2) Educate Judiciary (Strengthen the power of the Supreme Court to actually invalidate “traditional” laws and practices of local government officials)

29 (Focus Group 6-3) Build the capacity of the Parliament to understand the IFS

30 (Focus Group 6-4) Comply with the Financial Action Task Force (FATF) recommendations

31 (Focus Group 7-2) Renegotiate the terms and implementation of the APPTA, WTO and the TIR

32 (Focus Group 7-3) Allocate budget for improved technical and professional education and training of skilled workers

33 (Focus Group 8-2) Increase investments in domestic production of goods

34 (Focus Group 8-3) Seek international support for domestic production and provide facilitation to access global markets

35(Focus Group 9-2) Increase “credit support” options available to banks. These include cross-collateralization, use of movable property collateral in place of immovable property collateral, use of credit guaranty schemes in place of (or in augmentation of ) present immovable property collateral requirements.

36 (Focus Group 9-3) Develop strategies for micro finance institutions in rural areas.

37(Focus Group 10-2) Special attention of donors on managing balances of imported and domestic resources and investment on important dams according to the master plan and create clean energy resources

38 (Focus Group10-3) Provide facilities by donors for funding important dams (Kunar, Baghdara, Second Surobi)

39(Focus Group 11-2) Implement this strategy to provide infrastructures and required services for factory owners in IP in order to successfully operate and produce.

40(Focus Group 11-3) Improve the process of establishing handicraft complexes in big cities in order to facilitate market operation for handcraft productions.

41(Focus Group 12-2) Streamline taxation procedures for traders and companies and fully implement ongoing reforms in the taxation and customs systems so that the electronic data management systems SIGTAS and ASYCUDA are used by trained staff in all provinces and delink Tax Clearance Certificates from the tax audit process

42 (Focus Group 12-3) Review and abolish unnecessary procedures of licensing.

43 (Focus Group 13-2) Enforcement of [internal and international] arbitration awards by the judiciary system

44 (Focus Group 13-3) Abolish annual AISA license

45 (Focus Group 13-4) Competition Law (to combat price fixing) [pass and enforce]

46 (Fo us Group 14-2) Short term (business, vocational, and technical) training programs based on labor market demand

47

(Focus Group 15-2) It is a fact that a new company in Afghanistan can be achieved within four days. However, renewable on the same can take as long as four months. This is due to the complication faced by the business community in having the tax office accepting their profit and loss statements. We recommend that in lieu of the P&L statement, effects tax on imported items.

48

(Focus Group 15-3) Since container transport companies allow the use of their containers by importers for a limited time, this time can lapse very quickly due to the long and complicated distance from the company of origin to Afghanistan. So, Afghan traders have to reload their cargo to another container somewhere on the way. This container being not up to standard cannot be exported to most overseas destinations, and if it is shipped an additional expense is required to demolish. A workable solution to this problem is requested from the international community.

49(Focus Group 16-2) Amend procurement law and increase 30 percent role of women entrepreneurs in government contracts

50(Focus Group 16-3) Highlight role of women entrepreneurs in laws and policies through establish trade centers and joint group in governmental and nongovernmental agencies like ministries, AISA, ACCI.


HARAKAT’S PROJECT PORTFOLIO (START-NOW)

The projects below are in order of most recent start date.

# Project Name Objectives Applicant Duration

1 Sharia-compliant Products for SME Access to Finance

Strengthen Sharia-compliant financial institutions, central banking mechanism and legal framework. Develop Sharia-compliant financing products for SME access to finance.

DAB June 2014 – June 2015

2 Mortgage Market Regulatory Framework Development

Address the lack of a supportive regulatory environment for housing financing. Increase capacity of DAB to establish the necessary regulation, policies, procedures, mechanisms and platforms to ensure that both the consumers’ and the lenders’ responsibilities and rights are protected.

DAB April 2014 –June 2015

3 Public Private Partnership Improve the Public Private Partnerships (PPP) enabling environment in Afghanistan to leverage private investment funds to combine with public sources of support.

MoF April 2014 – September 2015

4 Business Licensing Reform in Afghanistan Phase II (Digitization)

Following on the successes of the first phase of this project, further streamline processes for increased efficiency and sustainability at MoCI’s One-Stop-Shop and roll out Business Registration and Licensing reforms to MoCI offices at the provincial level.

MoCI December 2013 –January 2015

5 Harakat Integrity Initiative – Social Responsibility

Engage with religious leaders and other influential members of the public to raise awareness about corruption and encourage action at the grassroots level to counter it by using direct outreach and mass communication channels.

MoHRA November 2013 –June 2015

6 Business Integrity Network Afghanistan

Empower Afghans to self-improve, build norms and promote ethical standards and increase integrity in their business transactions by using a bottom-up operational approach, partnering with private sector representatives, government entities and other stakeholders.

BINA November 2013 –March 2015

7 Facilitating the Operation of the Afghanistan Patent and Trademark Office

Simplify the patent and trademark registration process by updating the rules and procedures and automating the registration process. This will result in higher-quality products and fair competition and will help Afghanistan meet its WTO intellectual property obligations.

MoCI October 2013 –March 2015

8 Afghan National Craft Standards Development Project (The Artisan Toolkit)

Develop and disseminate an Artisan Toolkit to address major take-to-market obstacles and offer practical instruction to artisans on how to overcome existing barriers that will enable domestic and international artisan businesses to succeed.

Far & Wide Collective

September 2013 –March 2015

9 AEITI Raising Awareness Amongst the Afghan Public of the Impact of Natural Resource Extraction

Implement transparent systems of revenue collection and efficient taxation systems to attract investment and increase competition in the mining sector.

MoF September 2012 –August 2013

10 Modernization of Property Deeds and Land Records Project Phase II (Digitization)

Create a secure and efficient system for management of land records through a secured property registration system with reduced transaction costs to lower risk for investors and increase investment.

Supreme Court

July 2012 –March 2015



11 Institutional Capacity Development and Development of Curriculums for Technical and Vocational Education Training (TVET)

Identify skills needed to meet demand and develop relevant national occupational standards and teaching materials to reduce labor cost and increase employment in Afghanistan.

DM-TVET November 2011 –September 2015

12 Institutional capacity building for NSDP (Labor Market Intelligence Survey and National Occupational Skill Standards Development Program)

Develop institutional platforms for the public and private sector to train a labor force that is demand driven and equipped with competency-based standards to ensure quality labor.

NSDP-MoLSAMD

November 2011 –May 2014

13 Strengthening Fair Competition Project

Strengthen capacity of the government to introduce consumer protection and reduce anti-competitive practices by: 1) developing Consumer Protection and Competition Laws, policies and investigation practices; 2) increasing functional and administrative capacity of the CPCPD; and 3) establishing dialogue with businesses, civil society and government organizations.

MoCI July 2011 – January 2013

14 Institutionalizing Business Advocacy and Business Journalism in Afghanistan

Increase skills of the Economic Journalist Association of Afghanistan (EJAA) and Business Membership Organizations to enable them to engage in dialogue and advocate for business climate reforms.

EJAA July 2011 – January 2013

15 Strengthening Consumer Protection Project

Develop a legal framework for consumer protection in order to improve access to high-quality, safe, dependable and cost-efficient goods and services. Help the Consumer Promotion and Consumer Protection Directorate become fully functional in implementing the legal framework.

MoCI April 2011 –March 2015

16 Development ofNational Trade Policy

Develop a trade policy that provides guidance to government and private sector actors in relation to exports and imports, and facilitates greater co-ordination between stakeholders in support of trade-related activities.

MoCI April 2011 – April 2014

17 Harakat Research Projects Identify barriers and produce insights that will generate proactive projects for Harakat and generate baseline information for reviewing and assessing Harakat projects. Enable more effective and focused stakeholder engagement.

Harakat January 2011 – March 2015



18 Strengthening the Association of Afghanistan Freight Forwarders Companies

Increase access to, and awareness of, international transit manuals, agreements and customs procedures among local transporters and drivers.

AAFFCO January 2011–October 2012

19 Small Taxpayer Office Reform (Kabul Province)

Create a more efficient taxation system for small taxpayers and strengthen the capacity of the Afghanistan Revenue Department to tackle corruption and help streamline taxation regulation.

ARD-MoF December 2010 –December 2013

20 Business LicensingReform in Afghanistan Phase I

Following on the successes of the first phase of this project, further streamline processes for increased efficiency and sustainability at MoCI’s One-Stop-Shop and roll out Business Registration and Licensing reforms to MoCI offices at the provincial level.

MoCI October 2010 –June 2014

21 Afghanistan Center for Dispute Resolution

Institutionalize commercial dispute resolution and mediation for the private sector so that disputes are resolved more quickly with less cost. Establish an independent mediation center and facilitate transferring dispute resolution practices to judges, lawyers and stakeholders.

MoCI October 2010 –June 2014

22 Land Lease Authority (Arazi, Phase 2)

Improve access to government-owned lands for commercial purposes by addressing the lack of standardized, efficient and transparent land offer and lease procedures.

MAIL September 2010 –November 2012

23 Afghanistan Building Codes Lay the ground for safe and sustainable building design and construction practices and improve competition in the construction sector through development of urban, architectural, structural and highway and bridge national building codes.

ANSA July 2010 –September 2015

24 Leadership and Vision for PSCSEC

Enable the PSCSEC to lead coordination and advocacy for private sector development by supporting the Enabling Environment Roadmap. The PSCSEC will guide the Government on what legislation is most appropriate for the private sector.

PSCSEC June 2010 – May 2011

25 School of Accounting Establish a School of Accounting to certify Afghan accountants. Through developing accounting and auditing skills, the school will improve the integrity and reliability of financial statements in Afghanistan based on international accounting standards.

AUAF May 2010 – May 2014

26 National StandardDevelopment and CapacityDevelopment of TechnicalCommittees

Enable ANSA to develop and enforce mandatory national standards through relevant government entities in petroleum products, construction, food, pharmaceuticals, cosmetics, metrology, textiles and electronic goods.

ANSA May 2010 – March 2013

27 Afghanistan Extractive Industries Transparency Initiative

Implement transparent systems of revenue collection and efficient taxation systems to attract investment and increase competition in the mining sector.

MoF March 2010 – August 2014

28 Afghanistan Public Credit Registry

Establish a Credit Registry to provide stakeholders, such as financial institutions and lenders, access to reliable and accurate credit information, exchange information for better managing risks, improve operational efficiency, diversify credit products and increase lending volume.

DAB January 2010 – April 2015



29 Reforming the issuance of Construction Permits in Kabul Municipality - Phase 1

Eliminate unnecessary delays, reduce/remove corruption in the process of issuing permits, and encourage investment in the construction sector through the reform and simplification of construction permit processes within Kabul Municipality.

HOO January 2010 – November 2010

30 Capacity Building within the Afghanistan Institute of Banking and Finance

Establish the AIBF to conduct training courses that will build capacity within financial institutions and commercial banks, and enable them to deliver better financial services.

DAB December 2009 –February 2013

31 Land Lease One Stop Window (Arazi)

Establish the ARAZI Land Lease One Stop Window as the executive body to manage lease of government land for commercial purposes and to equip ARAZI with the required capacities, policies, procedures and executive board.

MAIL September 2009 – August 2010

32 Afghanistan SecuredLending (Collateral Registry)

Increase efficiency of collateral laws and registries for a positive impact on levels of domestic investment and access to private credit for Micro, Small and Medium-Sized Enterprises in Afghanistan.

DAB July 2009 – June 2012

33 ACCI Outreach Increase understanding of how taxation, customs, tariffs regulation, arbitration, anti-monopoly, anti-hoarding and contract laws impact the private sector, in order to increase transactions, drive effective implementation of laws and reduce the investment risk.

ACCI July 2009 – February 2010

34 PSD IMC Secretariat Support

Support the effective implementation of the Afghanistan National Development Strategy for the private sector by providing technical support to the MoCI Private Sector Development Inter Ministerial Committee.

MoCI June 2009 – June 2010

35 Export Information Call Center

Reduce or remove import/export-related barriers on highways by increasing the capacity of government to enforce business-friendly policies and procedures, and therefore reduce import/export transportation costs.

EPAA March 2009 – February 2011

36 Modernization of Property Deeds and Land Records Project Phase I

Create a secure and efficient system for management of land records through a secured property registration system with reduced transaction costs to lower risk for investors and increase investment.

Supreme Court

November 2009–January 2012


MANAGEMENT STRUCTURE

Harakat was established by the UK Department of International Development (DFID) to be funded by multiple donors and private sector investors, governed by a Board of Directors and managed directly by operational management units. The Harakat Board meets quarterly and has two standing subcommittees, composed of selected members who support the Board in its ongoing responsibilities. The Board exercises oversight over, and has ultimate fiduciary control and responsibility for, all aspects of the operation of Harakat.

Harakat Board has two subcommittees: . 1 Project Subcommittee (PSC): Responsible for reviewing and approving all grant proposals and

projects to be funded by Harakat.. 2 Finance, Procurement and Audit Subcommittee (FPAS): Responsible for reviewing the

procurement and financial activities of Harakat to ensure that all fiduciary controls are effective. Responsible for overseeing investments into Harakat.

Led by the CEO and directed by Heads of Units, Harakat’s staff is responsible for the organization’s daily operations. Harakat has four units: Project Development and Management Unit, Monitoring and Evaluation, Strategic Communications and Finance and Procurement. The Board, through the Chairperson, provides support and supervision to the CEO. The Chairperson is the direct line manager of the CEO. The Director of Strategic Communications serves as Harakat’s main spokesperson.

BOARD MEMBERS

Karim KhojaBoard Chairman and Founding Board Member, 2009 to presentKarim, Chief Executive Officer of Roshan, has over 25 years of experience in the telecommunications industry, including starting and managing extremely successful GSM companies in Pakistan, Poland, Croatia, Tajikistan and Afghanistan. Under his leadership, Roshan has grown to be Afghanistan’s market leader, with six million customers. Karim started his GSM career as CEO for Mobilink in Pakistan, and then launched Era GSM in Poland. He went on to form the company, HTMobile, from Croatia Telecom. Over the last ten years, Karim has dedicated his time to the Aga Khan Fund for Economic Development (AKFED) to bring competition and best practices to the telecommunication industry in Afghanistan and Tajikistan. He has focused not only on financial results, but also on how technology can be used to change lives. Karim serves on the Board of several international companies, and is as an advisor to the GSMA Development Fund.

Malalai WassilFounding Board Member, 2009 to presentMalalai Wassil is a US-trained attorney with a BA in Political Science from Trinity College and a JD from New York Law School. She has worked extensively in Afghanistan serving as an attorney and legal advisor on private sector reform in the energy and commercial sectors. The projects Malalai has contributed to in Afghanistan include the commercialization of the power operator, successful promulgation of the financial leasing law and the establishment of an interim power regulator.

Malalai has managed a successful law practice in Kabul, taught at the American University of Afghanistan and was founding member of AMCHAM and the New York City-based Rebuilding Afghanistan Foundation. In addition, she served as the Chief Legal Officer of Roshan. She continues to serve as an advisor to Roshan and intends to remain committed to serving and promoting private sector development in Afghanistan. Malalai is enrolled at Georgetown Law School and obtaining her LLM in International Business and Economics Law.


Tamim SameeFounding Board Member, 2009 to presentTamim returned to Afghanistan from the United States in late 2002 to participate in the rebuilding process. His interests include information technologies and telecommunications, agro-business and print media companies in Afghanistan. His international experience includes management and executive roles in a number of leading telecommunication companies in the US, Canada, the UK, Brazil and Mexico. He has applied his experience to pressing and complex national projects and personally invested in the private sector to create economic independence – prosperity through meaningful jobs, new opportunities and peace through economic development.

David CrichtonBoard Member, 2010 to presentDavid is a development specialist with over 30 years of experience in the public and private sectors. In Afghanistan, he has advised on economic strategy, infrastructure and on the design, management and review of development programs. He has also worked recently in the Caribbean, East Africa and the Balkans. David was previously Global Director of Country and Economic Research with the Economist Intelligence Unit in London. He spent five years as CEO of Scottish Enterprise Edinburgh and Lothian, the economic development agency for the city of Edinburgh and its surrounding region, as well as two years as CEO of the Confederation of Forest Industries Ltd (UK). He has served as a non-executive Director in the health, property and tourism sectors.

Khalil SediqBoard Member, 2009 to presentKhalil has 30 years experience as a central banker and a commercial banker in Afghanistan and America. He joined Afghanistan Bank, the central bank of Afghanistan, in 1971 and held senior management position in most departments, serving as governor from 1990 to 1991. Khalil was with Sun Trust Bank in the US before returning to Afghanistan in 2006 to become Chief Executive Officer of Afghanistan International Bank (AIB), turning a loss-making bank into the most profitable, most respected and largest private bank in Afghanistan. He is also chairman of the Afghanistan Banks Association and a director of the Afghanistan Institute of Banking and Finance.

Simon White, PhDBoard Member, 2011 to presentSimon is a development specialist with expertise in business environment reform, private sector development, entrepreneurship, and regional and local economic development. He has worked at local, national and international levels in policy design and evaluation, program development and management, as well as in strategic planning and organizational development. Simon has worked as a self-employed consultant since 1990 in over 25 countries and has worked with a wide range of donor and development agencies, governments and business membership organizations in the design and


PROJECT APPLICATION TO IMPLEMENTATION PROCESS

HOW DO WE CHOOSE WHICH PROJECTS TO FUND?

Grant applications are accepted from government, civil society, and private sector organizations. The application-to implementation process is as follows:

1. Project identification Applicant discusses initial project ideas with Harakat to determine whether they fit its mandate.

2. Concept note submission3. Project application reviewed against primary criteria4. Project approved or rejected

Applicant submits a four-page Concept Note. Guidance notes are provided by Harakat to help the applicant answer each question fully. Additional support is given by the Harakat Project Management Unit (PMU), which presents the Concept Note to the Project Sub-Committee (PSC) of the Board for approval. If the concept is a good fit with Harakat’s strategic priorities and its set of standard project selection criteria, the applicant is invited to submit a Full Application.

5. Full Application submission6. Project finally approved or rejected

Applicant submits a Full Application, which is more rigorous in nature. Harakat’s PMU assists the applicant in developing this. The proposal is presented to the PSC for approval or rejection.

7. Due diligence and final project design8. Grant agreement award

If the Full Application is approved, then a Grant Agreement is drawn up, a signing ceremony is held, and project implementation and financial disbursement begin.

9. Project implementation The project partner implements the project.

10. Monitoring and evaluation A comprehensive monitoring and evaluation plan supports each project. Projects are continually assessed and learning is incorporated throughout their lifecycles.

Interested applicant submits a Concept Note outlining proposed project.

Harakat Board determines if proposed project fits with one of our eight strategic priorities.

If successful in Step 2, applicant is invited to submit a more detailed proposal. Harakat’s Proposal Development Unit is available to assist applicant.

Detailed proposal is presented to Harakat Board by the project team.

Board decides to approve or reject a grant for the proposed project.

CreditRegulationsInfrastructureTaxation Property Labor market Competition Corruption

Step 1 Step 2 Step 3 Step 4 Step 5


HOW DO WE ENSURE GRANT IS BEING USED APPROPRIATELY?

HARAKAT GOVERNANCE CHARTER

We require specific, measurable and timely deliverables from our project partners.

Our Project and Monitoring & Evaluation team conduct regular assessments of each project’s outputs for the duration of the project life cycle.

Though not a frequent occurrence, we freeze or terminate funding if a project is off track or not meeting its objectives.

Harakat’s Governance Charter sets out a code of conduct for its employees and partners as well as its relationships with investors, the Board, and the management team. The Governance Charter was developed in the context of the following core principles:

Human rightsHarakat is committed to upholding the principles of the United Nations Universal Declaration of Human Rights in its policies, procedures and practices.

Gender and social exclusionHarakat ensures that all of its activities are applied as consistently and broadly as possible to benefit all Afghans regardless of social or ethnic background or gender. It commits to integrating and tracking the dimensions of gender and socially excluded groups in the design and impact of its activities where possible.

The environmentHarakat upholds sound environmental principles and commits to mitigating potential negative environmental impacts of its activities. It complies with applicable environmental legislation and regulations where necessary to implement its commitments to the environment.

Bribery and corruptionHarakat maintains the highest standards of integrity in fulfilling its role as an effective change agent and credible advocate for business reform. Harakat does not support any activities or projects involving money laundering, bribery, or corruption in any form. Any suspected or actual acts of bribery or corruption by any party in connection with the activities of Harakat, including third parties receiving funding from Harakat or seeking such funding, are immediately actionable.

Compliance with the lawHarakat complies fully with all relevant Afghan and international laws and will act in accordance with all applicable national and international guidelines and regulations.

Transparency and objectivity of reportingHarakat reports on its activities transparently and takes all steps necessary to ensure that statements and reports are honest, accurate, and timely. An external auditor reviews financial and performance information on an annual basis to ensure the sustained accuracy and objectivity of reporting. The CEO and Board Chairman are made aware of any sensitive disclosure before it is made. Harakat, through its website and through its published annual report, accounts other statements, at all times endeavors to provide appropriate information to enable investors to accurately assess its performance.


HARAKAT’S PARTNERS IN 2014

Harakat works with partners across all sectors to identify, fund and implement investment climate reform projects.

Government:Harakat works with government partners to implement a number of investment climate reform projects in Afghanistan. As a nonpolitical body, Harakat connects government with the private sector, to find common reform interests. While the prolonged election in 2014 slowed the pace of implementation of some projects, the organization built close working ties with the Government of National Unity in Kabul in the latter part of the year.

In 2014, Harakat partnered with these government entities: • Ministry of Finance• Da Afghanistan Bank• Ministry of Commerce and Industry• Afghanistan National Standards Authority• Ministry of Labor, Social Affairs, Martyr and Disabled • Afghanistan Supreme Court• Deputy Ministry Technical and Vocational Educational Training, Ministry of Education• Ministry of Hajj and Religious Affairs• The Multi-Stakeholders Group of the Afghanistan Extractive Industries Transparency Initiative • The Supreme Council of Standards and Technical Committees for the Development of National Standards

for Afghanistan

Private Sector:Harakat worked closely with the private sector in 2014, both as a facilitator to identify key areas for reform, and as a project partner. In October, Harakat co-hosted the “Private Sector Priorities for Reform Conference” with ACCI in Kabul. This brought together more than 250 private sector representatives who prioritized reform recommendations for the new government and its international partners.

Civil Society:Civil society partners are essential for building transparency, and broad-based demand for reform in Afghanistan. Harakat continued to engage its civil society partners in 2014, on a number of reform projects.

In 2014, Harakat worked with the following civil society partners:• American University of Afghanistan • Afghanistan Integrity Watch• Business Integrity Network

Development PartnersHarakat was established with the intent that donors and the private sector fund it. To date, the UK Department of International Development (DFID) – the founder of Harakat – is its only investor. Other development agencies, including the World Bank, International Finance Corporation (IFC), United States Agency for International Development (USAID), either co-finance or collaborate with Harakat on projects or support Harakat as implementing partners.


STRATEGIC COMMUNICATIONS IN 2014

Core Responsibilities: Harakat’s Strategic Communications Unit works closely with Harakat’s Management Team, Project Management Unit, Monitoring and Evaluation (M&E) Unit and the Harakat Board to ensure Harakat’s mission, achievements and activities are communicated to stakeholders in a timely manner. The Strategic Communications Unit directly engages with core Harakat stakeholders and acts as a platform to facilitate the exchange of information and ideas.

The major responsibilities of Harakat’s Communications Unit include: • Lead all external communications and engagement (Communications Strategy, Stakeholder Engagement

Strategy)• Strategic communications at three levels: project-level, results-level and mandate-level• Provide advice to the Harakat Board, CEO and professional staff on all communication and public relation

matters • Manage Harakat’s relationship with media outlets • Manage Harakat’s branding and online presence• Represent Harakat at key national events • Conduct advocacy and research• Develop communication activities to increase levels of interest and support for reform and converting this

support into tangible reform action• Develop awareness-raising communications that increase understanding that reform in the investment

climate improves people’s lives, creates jobs, generates revenue and contributes to stability• Support awareness-raising activity components within individual Harakat projects and conduct quality

control and messaging coordination for these projects

Key Achievements in 2014:The key achievements and activities of Harakat’s Stategic Communications Unit, from January to December 2014, are highlighted below: • Organized “Private Sector Priorities for Reform Conference” in October and, subsequently, led preparations

for the London Conference on Afghanistan Private Sector Roundtable in December• Held 13 public stakeholder engagement events• Conducted targeted stakeholder engagement to increase awareness about Harakat’s mandate and

activities• Held 10 meetings with development agencies and ambassador-level representatives• Held 10 meetings with representatives of key industries to identify potential areas of collaboration• Engaged civil society to explore areas of collaboration with Harakat• Developed and published the Harakat Annual Report 2013 and disseminated 300 copies of the Annual

Report 2013 in multiple languages• Disseminated two issues of REFORM newsletter (in 3 languages; printed 300 copies of each version;

uploaded electronic version to website) • Revised Harakat brochure design and content (in three languages; printed 500 prints of each version)• Conducted quality control and developed materials for awareness and communication-related

components of Harakat projects, including the Artisan Toolkit, Afghanistan Building Codes and Consumer Protection

• Generated 17,979 unique visitors to website and 40,163 total page visits• Wrote and published 11 articles on digital platforms about Harakat-funded projects• Increased Facebook fans from 3,000 in 2013 to more than 15,000 in 2014• Reached over 21,000 Facebook users through 78 posts to the Harakat Facebook page• Harakat-posted content on Facebook generated 644 likes, 64 comments and 53 shares• Posted over 90 updates to the Harakat Twitter feed• Distributed seven press releases about Harakat-funded projects• Received 60 mentions of Harakat-funded projects in domestic media (including leading outlets)• Completed Harakat Stakeholder Perception Survey 2014• Finalized Harakat Prospectus


MONITORING AND EVALUATION

Core Responsibilities: Monitoring and Evaluation (M&E) plays an important role in monitoring actual performance versus planned activities and benchmarks for each Harakat project. Harakat has an internal M&E unit. It works closely with the Harakat Board, Project Management Unit and Strategic Communications Unit during project design, implementation and closing. To ensure it achieves its mandate effectively, the M&E Unit is operationally independent of Harakat Project Management Unit.

The major responsibilities of Harakat’s M&E Unit include: . 1 Monitor and measure project performance . 2 Develop Key Performance Indicators (KPI) for all Harakat projects. 3 Define performance targets and milestones based on the KPIs. 4 Track progress of key indicators. 5 Manage outsourced contracts for monitoring and verifying performance of Harakat projects . 6 Address reporting and monitoring requirements of strategic partners and donors

M&E helps Harakat ensure that interventions are designed in ways that would deliver expected results at output, outcome and impact levels in a measurable way. The Harakat M&E Unit works closely with the Project Management Unit and all implementing partners to verify results produced. The M&E Unit’s operations are based on standard documents, which include: • Theory of Change – the articulation of inputs to impacts• Program Level Logframe• Harakat Program Level Results Chain• Monitoring and Evaluation Results Measurement (MERM) Manual and Handbook• Reporting and Feedback Mechanism• Project Level Results Framework• Mini Logframes (Project-level Logical Frameworks) at output levels

Key Achievements in 2014:The key achievements and activities of Harakat’s M&E Unit, from January to December 2014, are highlighted below: • Completed independent monitoring and verification of 14 projects • Conducted more than 30 monitoring visits to Harakat projects and prepared reports• Developed “mini logframes” (project-level logical framework) for 18 projects (for the Harakat annual review

purposes)• Modified “Program-level Logical Framework” which received approval from the Harakat Board and DFID• Began preparating the terms of reference for the Harakat Process Evaluation and Arazi (Land Authority) Review

of Post-implementation Results • Developed action plans for implementing recommendations of the Organizational Development Review

(midterm review of Harakat commissioned by DFID) and Harakat Annual Review (DFID’s review of Harakat at the end of year)

• International Consultant developed M&E system documents


FINANCE AND PROCUREMENT UNIT

Core Responsibilities: Harakat’s Finance and Procurement Unit (FPU) is responsible for executing all of Harakat’s financial transactions. It plays an important role in ensuring that Harakat meets its financial obligations in a timely and responsive manner. It helps Harakat meet its fiduciary responsibility that its funds are used properly and only for the intended purposes.

The key responsibilities of the Finance and Procurement Unit include:• Perform treasury management• Manage Harakat grant funding to implementing partners (government and civil society entities)• Manage Harakat’s budget, procurement, audit, taxation and human resource operations • Manage Harakat’s financial relationship with banks and the financial community• Maintain Harakat’s financial records and prepare financial reports • Monitor compliance to procedures and contractual obligations • Provide advice to the Harakat Board, CEO and staff on all financial matters relating to the entity• Serve as the custodian of Harakat’s policies, procedures and contractual obligations• Coordinate financial reporting and execution with Harakat’s Finance & Audit Subcommittee

Key Achievements in 2014:Below are the key activities and achievements of the FPU, from January to December 2014: • Harakat received a clean audit report for financial statements in 2014. The audit was conducted by KPMG.

Harakat has received clean audit reports since inception in 2009• Processed the highest number of contracts with service providers, including grant agreements, that

resulted in spending the full amount of annual funding committed by DFID to Harakat• Harakat recorded its lowest staff turnover in 2014, in part due to adopting a staff retention strategy in June

2014• • • Supported the auditing of grant funding by external service providers, including: School of Accounting

at the American University of Kabul; National Skill Development Program with the Ministry of Labor; Afghanistan Extractive Industries Transparency Initiatives with the Ministry of Finance; Development National Trade Policy with the Ministry of Commerce and Industries; Public Credit Registry Awareness Program with the Central Bank (DAB); Strengthening Consumer Protection Project with the Ministry of Commerce and Industries and the Artisan Toolkit with the Ministry of Commerce and Industries.


INDEPENDENTAUDITORS’REPORT 2014

Harakat Annual Report | 201475

Prepared by: Harakat Strategic Communications

Year of publication: 2014

Editor-in-chief: Jawad Joya

Content Developers: Jawad Joya and Baktash Musawer

Project Coordinator: Baktash Musawer

Editors: Jawad Joya and Mia Barrett (Consultant)

Photography: Harakat and Nasim Seyamak

Infographics: Jawad Joya, Jawed Maqsoodi and Mia Barrett

Graphic Designer: S. Jawed Maqsoodi (MAA)

© Harakat Investment Climate Organization 2014

Designed by: [email protected]

700191418(0)93+

www.maa.af

In partnership with:

www.harakat.affacebook.com/harakat.investmenttwitter.com/harakat_invest

www.harakat.af

contentsharakat.af/pdf/annual_reports/14409961801.pdfcontents-chairman’s letter ceo’s letter...

Documents