The Importance and Economic Benefits of Joint-Stock Companies
Introduction
By: Fazal Wali Sherani
Economic development and investment pave the way for the progress of every country. In this regard, joint-stock companies play an important role, among other mechanisms, by enabling the pooling of capital from a number of investors and thereby facilitating the financing and implementation of major and fundamental projects. Joint-stock companies are not established solely for conducting business; rather, overall, they provide profound and sustainable benefits for economic growth.
Joint-stock companies make it possible for several individuals to pool their capital instead of relying on a single investor. An individual investor cannot, on their own, launch major industrial and service projects with their available capital. However, when several investors pool their capital through a joint-stock company, this not only facilitates the concentration of capital and the implementation of large-scale projects, but also provides limited liability, whereby each shareholder is liable only to the extent of their investment. This, in turn, reduces the level of investment risk for investors and encourages other investors to invest as well.
Given the economic importance of joint-stock companies, the Islamic Emirate of Afghanistan has taken steps in this area. In the presence of the esteemed Deputy PM for Economic Affairs, Mullah Abdul Ghani Baradar Akhund, a memorandum of understanding was signed on August 18, 2026, between the Chambers of Commerce and Investment and the Chambers of Industry and Mines for the establishment of a joint-stock company. A brief overview of the importance and economic benefits of such companies is presented below.
Importance and Economic Benefits of Joint-Stock Companies
Joint-stock companies are commercial companies whose capital is divided into shares. Each shareholder holds an ownership interest in the company in proportion to their shareholding. Joint-stock companies are not merely a means of conducting business; they are also considered important instruments for mobilizing savings, concentrating capital, financing large-scale projects, creating employment, increasing production, developing technology, and promoting economic growth.
In particular, in countries where substantial capital is required for major economic and infrastructure projects, joint-stock companies can serve as an important mechanism for pooling the capital of both small and large investors. Recently, an agreement was reached in Afghanistan to establish a joint-stock company for mobilizing private-sector capital and financing major projects.
At a meeting convened for this purpose, the Deputy PM for Economic Affairs, Mullah Abdul Ghani Baradar Akhund, described the establishment of this joint-stock company as important for implementing major economic and infrastructure projects in the country and expanding investment. He stated that this initiative represents an effort to establish an organized and practical pathway for the country’s economic future.
The Deputy PM further noted that, through this company, the capital of numerous traders, industrialists, and investors would be pooled within an organized, legal, and transparent framework, and their collective capacity would be utilized to finance major projects. At present, there are very few individuals in Afghanistan who can independently invest in a particular sector on a large scale. However, many people possess capital, although not enough to make a major investment individually.
With the establishment of joint-stock companies, several investors can come together instead of relying on a single investor, pool their capital, and use it to cover the costs of implementing major projects such as factories, mines, banks, energy projects, transportation projects, or other large-scale ventures. This will, on the one hand, increase and expand investment and, on the other hand, facilitate the construction and financing of major economic projects, including industrial factories, energy projects, telecommunications, transportation, mining, and large commercial centers.
In addition, as joint-stock companies expand, they create a need for employees to support production and service activities. Such companies generate both direct and indirect employment opportunities, thereby increasing the sources of income available to citizens.
Joint-stock companies can increase domestic production and, consequently, reduce the country’s dependence on imported goods, moving the country toward greater economic self-sufficiency. As domestic production increases, joint-stock companies can also create opportunities for increasing the production of quality goods and products that meet required standards, thereby laying the groundwork for the expansion of exports.
Joint-stock companies that engage in lawful economic activities pay taxes in accordance with the relevant laws. As the number of companies and the volume of their economic activities increase, the government’s capacity to generate tax revenues may also increase. These revenues can then be used for public services, infrastructure, education, healthcare, and other economic and social sectors.
Many people in society save their money, but if suitable investment opportunities are unavailable, such savings may remain idle and unproductive. Joint-stock companies can provide people with opportunities to transform idle capital into productive capital and participate in economic activities.
The role of these companies in technological advancement, human-resource development, diversification of economic activities, and the expansion of financial markets are among the factors that contribute to economic growth. Most importantly, such companies can strengthen the role of the private sector. A strong private sector can, alongside the government, play an important role in expanding production, employment, trade, exports, and investment.
At the signing ceremony of the memorandum of understanding on the establishment of a joint-stock company between the Chambers of Commerce and Investment and the Chambers of Industry and Mines, the Deputy PM for Economic Affairs also highlighted this point, stating that the private sector, alongside the Islamic Emirate of Afghanistan, has an important role to play in the country’s economic growth and can make a fundamental contribution to increasing production, creating employment, expanding exports, and financing major projects.
This demonstrates that, overall, joint-stock companies can be regarded as a key driver of economic growth.
Conclusion
Joint-stock companies are among the important foundations of the modern economy, as they enable small and large amounts of capital to be pooled and transformed into productive investment for major economic activities. Their importance is not limited to benefiting company owners; they also contribute to the expansion of employment, production, exports, tax revenues, technology, human capital, financial markets, and economic growth.
Given the importance of joint-stock companies, the Islamic Emirate has moved toward establishing such companies. To this end, on August 23, 2026, in the presence of the Deputy PM for Economic Affairs, a memorandum of understanding was signed between the Chambers of Commerce and Investment and the Chambers of Industry and Mines for the establishment of a joint-stock company.
The establishment of such companies will, on the one hand, bring together small amounts of capital and enable the financing of major economic and infrastructure projects and, on the other hand, facilitate the development of sectors such as industry, agriculture, and trade through the mobilization of capital. The development of infrastructure and various economic sectors, in turn, paves the way for economic growth.