A Comprehensive Analysis of State-Owned Companies in Afghanistan
By Amanullah Hanifi
The State-Owned Companies in Afghanistan operate under government support and aim to provide essential services and employment opportunities. These enterprises have diverse shareholders, with the Ministry of Finance holding a significant 50 percent of the investment. When a country hosts numerous government companies, it undoubtedly enhances its capacity to deliver quality services to the public while also playing a pivotal role in the country's economic recovery. This article delves into the crucial role that government companies can play in the reconstruction of Afghanistan's national economy. We will assess the current situation and explore the measures taken or planned by the Islamic Emirate to reactivate these enterprises.
Introduction to the State-Owned Companies
State-owned companies and enterprises play a pivotal role in a country's administrative structure as specialized organizations established by law to operate within the ambit of the General Directorate of State-Owned Companies. More than fifty percent of their shares and capital are owned by the state, with the Ministry of Finance serving as the primary government shareholder. In certain circumstances, other government ministries and agencies may also become shareholders, subject to the cabinet and Ministry of Finance's approval. The establishment of state-owned companies is strictly governed by legal provisions.
Functioning akin to private enterprises, state-owned companies are entrusted with managing and overseeing a significant portion of economic affairs, in collaboration with government ministries and various public and private entities. The primary objective of these companies is to generate profits while operating as government entities, adhering to their own laws and statutes. However, in situations where specific matters are not addressed in their internal regulations, they are bound to adhere to the commercial laws of the country.
Moreover, state-owned companies possess the authority to exercise control over private companies operating in sectors relevant to their activities. An illustrative example is Afghanistan's state-owned oil and gas company, which assumes the responsibility of directing and guiding private oil and gas companies throughout the country, as and when required.
History of State-Owned Companies in Afghanistan
The origins of state-owned companies in Afghanistan can be traced back to 1290 solar year, during the reign of Amir Shir Ali Khan, with the establishment of the Azadi Printing Company. This company commenced its operations by printing the newspaper "Siraj-Ul-Akhbar." Over time, various enterprises emerged in different sectors, gradually advancing and expanding.
A significant milestone in the history of state-owned companies occurred during the reign of Sardar Muhammad Dawood Khan in 1354. It was during this period that the State-owned Companies Law was enacted, leading to the conversion of numerous for-profit institutions into state-owned companies. Subsequently, the state-owned companies witnessed a phase of growth and development, reportedly contributing around 40 percent to the national income before the onset of civil wars.
However, the ensuing civil wars took a heavy toll on Afghanistan's production and economic infrastructure, causing extensive damage to the state-owned companies and other enterprises. Amid the conflict, the operations of most enterprises and government companies came to a halt, leading to a rise in unemployment among citizens. Unfortunately, the lack of attention and a clear policy from the ruling authorities during this time further diminished the role of state-owned companies, and their activities and revenues were severely impacted.
The turbulent period of civil wars left a lasting impact on Afghanistan's state-owned companies, with the nation facing significant challenges in rebuilding and revitalizing these crucial economic entities.
Current Status of State-Owned Companies in Afghanistan
The performance of state-owned Companies in Afghanistan has historically been influenced by government policies and political stability. Unfortunately, the past four decades of war have had a detrimental impact on these entities, leading to many government enterprises and companies becoming inactive. However, with the establishment of a fully independent and Islamic system under the rule of the Islamic Emirate of Afghanistan, there is a renewed focus on revitalizing state-owned companies and resuming their operations.
The Islamic Emirate is committed to amending the laws governing state enterprises and companies to facilitate their revival, creating employment opportunities for the people, and generating revenue for the state treasury. Cooperation between the central management, the Ministry of Finance, and support from the government and private sector has been crucial in taking initial steps toward strengthening the national economy, promoting self-reliance, and offering work opportunities.
Efforts are being made to use existing laws and regulations pertaining to enterprises and state companies, and additional state companies will be established according to the societal needs and economic growth of the nation.
The General Directorate of State-Owned Enterprises, operating under the Ministry of Finance, manages 44 state-owned companies. Sadly, many of these companies were closed, and their assets were looted during the time of the former Kabul administration due to corruption. However, after the re-establishment of the Islamic Emirate, 12 of these state-owned companies resumed operations in the year 1401 of the solar calendar.
Some of the reactivated government companies include Kunduz Spin Zar, Herat Silo, Helmand Bost, Central Silo, Afghan Handicrafts, Afghan Kart, Balkh Silo, National Bus, Kandahar Textile, Arzaaq State-Owned Company, Afghanistan Oil and Gas, and Balkh Cotton and Vegetable Oil. Efforts are also underway to revive Afghan Textile, Pul-e-Khumri Silo, Kandahar Woolen Textile, and Baghlan Sugar Factory.
Moreover, the Islamic Emirate has reclaimed nearly 19,000 acres of land that belonged to state-owned companies. The properties of 15 state-owned enterprises were assessed, amounting to a total value of approximately 85 billion Afghanis. This has resulted in the creation of job opportunities for thousands of individuals who are currently engaged in government company operations.
The Significance of State-Owned Companies in the National Economy
Undoubtedly, the revival of state-owned companies and the initiation of their operations can become a significant source of revenue for the government and offer numerous employment opportunities for thousands of citizens. To rejuvenate these state-owned enterprises, the Islamic Emirate must seek the support of both domestic and foreign investors, encouraging them to invest in collaboration with the public and private sectors.
By encouraging investments from the public-private sector into state-owned enterprises, the government can establish a substantial and sustainable source of revenue. Not only will this boost government income, but it will also create job opportunities for skilled and professional individuals within the country, ultimately leading to the provision of better services to the public under government oversight.
It is essential to recognize that increased investments in the country lead to a proportional increase in job opportunities. Consequently, state-owned enterprises stand as a prime investment target for the public-private sector, holding immense potential for the country's economic growth and prosperity.
Since the rise of the Islamic Emirate to power, a significant effort has been made to revive previously inactive state-owned companies. This commitment to development, supported by both domestic and foreign investors, aims to overcome any obstacles hindering their operations.
The reactivation of these state-owned Companies is poised to yield substantial benefits. Annually, millions of Afghanis will flow into the state treasury, bolstering the nation's finances. Furthermore, these companies will play a pivotal role in providing commendable services to the public, thereby enhancing the overall well-being of the people. Moreover, the revival of state-owned Companies will also generate numerous employment opportunities, benefiting thousands of citizens across the nation.