Ambassador Christopher Alexander, Deputy Special representative of the Secretary General of the United Nations to Afghanistan, Dr. Tom Kessinger, General Manager of the Aga Khan Development Network and Afghan Ambassador Omar Samad spoke to a group composed of members of parliament, Canadian government officials, the diplomatic community, Canadian and Afghan-Canadian business leaders, and civil society and NGO representatives.

The Enabling Environment Conference is scheduled to be held in Kabul in Spring 2007 in partnership with the Government of Afghanistan, the United Nations Development Programme, the World Bank, Aga Khan Developement Network and the Asian Development Bank to discuss the role of private initiatives in development, highlighting important opportunities to invest in Afghanistan's reconstruction. Mr. Crawley of The Globe and Mail is a member of the Conference Steering Committee.

The Afghan Ambassador delivered the following remarks in Toronto:

Thank you Mr. Crawley,

I think that Ambassador Alexander gave a very comprehensive account of the achievements and opportunities that exists in Afghanistan today… he and I last saw each other in Ottawa last month when The Right Honourable Prime Minister Harper made the announcement for an additional $200 million aid for this year. I want to thank Dr. Kessinger of the AKDN for his insightful remarks, Mr. Crawley and The Globe and Mail, and everyone associated with the upcoming Enabling Environment Conference in Kabul to highlight the important contribution of the private sector to development in Afghanistan.

Let me also thank the AKFC whose staff remains focused and dedicated to help us get the message out in Canada. I don’t have to tell you how appreciative the people of Afghanistan are for the brotherly care and thoughtful engagement shown by His Highness the Aga Khan toward our cause. He and his colleagues continue to inspire many and play a role model in term of private-public partnerships in Afghanistan.

I am also happy to see active members of the Afghan-Canadian community here and a representation from the newly-formed Canada-Afghanistan Business Council and others.

Let me start with good news… which presupposes that there may be bad news… well maybe just news that can provoke us to fix things that need fixing. As those of you who have spent time in Afghanistan in recent years would agree with me, there is plenty of good news out of Afghanistan if we were not continuously distracted by the bad and grim accounts of continued violence instigated by diehard extremist militants that sporadically overshadow positive developments in some parts of the country.

Following the signing of the Afghanistan Compact last year in London, the Afghan government and our international partners, mainly the donors, are coming to the realization that with five years behind us and the windows of opportunity not likely to remain open for ever, there are lessons to be learnt, and learnt fast if we do not wish to lose the political momentum as well as the Afghan people’s faith in the changes that have been promised.

Since then, in addition to the all-important security mission in Southern Afghanistan, we now see that countries like Canada have almost doubled their development aid pledges to Afghanistan in the past year. We are grateful for this timely and strategically important increase. I am happy to see that we are experiencing increased Afghan-Canadian coordination and cooperation to make sure that our common objectives in terms of economic development and reconstruction are met in accordance with the Compact benchmarks.

We also see other donors like the US realize that time is of the essence. With more than $10 billion dollars of aid for Afghanistan being requested by the US administration, we remain optimistic of continued bipartisanship that will help us achieve real growth and fulfill the Compact benchmarks.

Recently, the European Union and Commission on the eve of its 50 th anniversary pledged a package worth €600 million for Afghanistan for 2007-2010, with a focus on reform of the justice sector; rural development including alternatives to poppy production; and health. And there are many others nations in Asia, Europe and other parts of the world, including the IFIs and NGOs, who continue to assist. We are appreciative of their continued contributions toward the emergence of a stable, law-abiding, democratic and prosperous Afghanistan.

It is the private sector, however, that has a special place in the rebuilding of the country. It is seen by many in Afghanistan as dynamic, responsive and result-oriented. Undoubtedly, like everything else in a destroyed nation like Afghanistan, it is not without its own challenges.

Some of these challenges facing the private sector are systemic and I want to spend some time highlighting the work that needs to be considered and implemented in order to fix the system as I mentioned earlier. I believe that in order for us to create this enabling environment, it is not only sufficient to list our achievements or criticize without offering solutions. We need to identify and define the problems, then offer pragmatic solutions. We also need to identify the elements and agents of change.

The latest surveys show that Afghanistan is ranked 162 out of 175 globally for ease of doing business (the top ranked country in case you are wondering is Singapore and Canada is 17 th). There are other criteria that are used to determine this.

Interestingly, Afghanistan ranks 17 th in the world for starting a business. This involves registration of a new business which now takes 8 days and only 3 procedures. It used to take 90 days with 28 procedures prior to 2003. In this area though, investors still face problems with industry-specific start-up barriers, because of the additional licensing demands. We will be doing away with this redundant step.

Afghanistan ranks 74 th on the ease of employing workers, since the cost is zero as there are no payroll taxes involved. We are currently working on this area.

Afghanistan ranks 169 th on the ease of registering property. It takes 252 days and 11 costly procedures to register. The land ownership issue caused by years of war has also given rise to corruption. We are currently working to rebuild the administration of property deeds and design a transparent dispute resolution mechanism.

We score low on the ease of getting credit because there are no credit registries to provide information to lenders and about borrowers’ history. This can simply be remedied by creating a credit registry and introducing collateral laws and secure transaction laws.

We also lack an active equity market. This means that there are requirements for insiders to disclose transactions involving conflicts of interest, no penalties for fraud or claims. While equity markets are for much advanced economies, we can avoid some level of white collar fraud by implementing rules to protect minority investors and allow for visibility into corporate operations.

We rank 30 th on the ease of tax payments. Only two payments are required yearly and it takes less than many other South Asian countries to fulfill tax laws. The tax burden is relatively low at 36% of profit compared to say 43% in Pakistan. However, we are working on tax reforms in order to clarify the tax policy.

Trade and transit are important economic lifelines for Afghanistan. Even though we passed a customs reform in 2004, which makes Afghanistan one of the most open economies on the region, we need to do more on ease of trading across borders. We have reduced tariffs from a max of 150% to a range of 3-16%. Still it takes too much time to process import and export goods, and the system allows for corruption. Additionally, trade related standards and procedures should be harmonized - another task that is being reformed.

Afghanistan ranks 165 th on the ease of enforcing contracts. It takes almost 5 years to enforce a commercial contract at high cost. Commercial courts and arbitration are weak and need reform.

And it should be noted also that it is too easy to close a business, since there is no history of legal bankruptcy or bankruptcy laws. This requires focus on improving foreclosure and introducing such laws.

Ladies and Gentlemen,

As you can see there exist a host of opportunities, reforms and remaining challenges. The picture is filled with hope as we identify and fix the problems. While we concentrate our efforts on improving the legal, regulatory and fiscal frameworks governing the private sector, including civil society initiatives, and the development of private-public-partnerships, the country has not stood still. Afghanistan is open for business and with its double-digit annual growth rate the country is experiencing a boom.

The previous speakers provided good insights into ways in which Canadian business and other entities can contribute to this win-win promotion of a dynamic and healthy private sector economy. This is also the stated goal of the sponsors of the upcoming Conference in Kabul. All participants, including the Afghan Government, aim to turn the Conference into a catalyst for the growth and revitalization of the private sector.

I am confident that we will overcome the remaining systemic hurdles very soon. The investment record over the past five years has proven to be better than anticipated in all sectors. Afghanistan’s potential in trade, transit, agri-business, light-to-medium size industries, transport, IT, telecom, banking, natural resources (including mining) and other start-ups are great.

It is literally virgin territory with high potential and I urge Canadian businesses to join others in enhancing this win-win proposition. Granted, there are risks involved, especially in unsafe areas, but as business people you know better that the opportunities can also be great with high return potential.

Finally, let us not forget the social and economic conditions of the average Afghan in one of the world’s poorest nations. As profit-driven entities, you should not lose sight of the realities by making sure that the benefits trickle down by uplifting the most disadvantaged through the creation of jobs and new opportunities.

Thank you.

March 29, 2007_ Toronto-Canada