Afghanistan, Land of Opportunity (pt II)

There's a certain mythology built about around conflict, as if the laws of physics or economics somehow don't apply.

Our image Afghanistan is of a soldier standing in front of a mud hut. That's not what's going on...Businesses are functioning, even thriving, in a very difficult environment.

We came across a number of medium-sized businesses that are finding opportunities.

Our perception going in was that physical insecurity would be the number one concern of business... But we found that Afghans were generally more concerned about the uncertainty in the business environment than they were about security.

Business feel very threatened by the Afghan government...One entrepreneur had this to say: "Insecurity is caused by the government and the Taliban. They are the same."

Afghanistan is donor drunk. In Kabul, people were gaming the system...We frequently found international organizations nominally "trying to help" actually distorting the system.

War should not be an excuse to resurrect failed policies, such as that centrally planned growth is necessary in a chaotic environment…

These snipets are from a talk that Jake Cusack and Erik Malmstrom (two a MPP/MBA candidates at the Kennedy School and HBS) gave as CSIS last Thursday, previewing their fabulous report on entrepreneurship and the prospects for real development in Afghanistan. The report is based on interviews that Cusack and Malmstrom conducted over the summer in Kabul, Herat, Balkh, Nagarhar, and Kandahar Provinces. (Thanks to Dane Stangler for bringing me along to this event, and H/T to the Kauffman Foundation for funding the study.) The full audio is here and is a must-listen for anyone interested in entrepreneurship and development. (When you're done, read Carl Shramm's excellent essay in Foreign Affairs that provides the context for this study.)

Back in January I wrote a post titled "Afghanistan, Land of Opportunity." Drawing heavily upon the success of Roshan, the first and still the leading Afghan mobile phone company (more on Roshan here, here, and here), I made the following argument:

Roshan is an example of the sort of "positive insurgency" driven by entrepreneurship, technology, and innovation that is the real driver of development. Want to "help"? Provide local entrepreneurs with skills development, mentoring, and other essential support (yes, funding as necessary). 

The report by Cusack and Malmstrom takes this line of argument to another level, documenting that entrepreneurship is, indeed, alive and well in Afghanistan and clearly explaining why support for entrepreneurship must be the cornerstone of any coherent and potentially effective security strategy in that country.

But here's another question: Why did it take two Masters students to get these basic facts straight, and organize them in a manner that they could influence the design and implementation of policy, when the blue-ribbon task force recently assembled by the Council of Foreign Relations failed almost entirely to grasp or articulate them? Why is it that our security thought-leaders have such a difficult time getting past their fixation with the hardware of development to understand the software--entrepreneurship and business innovation in particular?

Granted, the (war) stories we hear about Afghanistan and the (entrepreneurship) stories we don't hear are linked. Entrepreneurs don't get very far under conditions of totalitarian repression, and the founding of Roshan was made possible by the ouster of the Taliban. But, there is a big difference between the systematic repression that existed under the Taliban (which is historically very rare) and the sort of everyday cronyism, neglect, or even anarchy that is far more typical of poor and poorly governed places around the world. Indeed, today's Afghan government ranks among the most corrupt in the world. However, it is precisely the failure of government to provide basic services, combined with a lack of formal regulatory constraints, that can create tremendous opportunities for entrepreneurs.

To claim, as many in development and security circles do, that an honest, stable government is a prerequisite for economic vitality is akin to claiming that a healthy, bountiful garden is a prerequisite for rainfall. 

Just ain't so.