Published daily by the Lowy Institute

Getting the juice to flow in Afghanistan's private sector

By showing it is possible to succeed in Afghanistan, Omaid Bahar is an important example for would-be entrepreneurs.

Pomengranate juice processing at the Omaid Bahar Fruit Processing Company in Kabul (Photo: Paula Bronstein/Getty)
Pomengranate juice processing at the Omaid Bahar Fruit Processing Company in Kabul (Photo: Paula Bronstein/Getty)
Published 23 Mar 2017 

It is widely acknowledged that private sector growth is essential to increasing the amount and variety of economic opportunities in any given society. In fragile economies such as Afghanistan, private sector development plays an essential role in recovery and progress, providing livelihoods and economic growth and government revenue streams in the form of taxes. Indeed, Article 10 of the Afghan Constitution promises to encourage and protect private capital investments and enterprises in accordance with the provisions of law and the market economy. In practice, however, the country’s private sector has received little practical support in overcoming many obstacles.

Countless businesses have failed to overcome the significant challenges posed by Afghanistan’s adverse security situation. Businesspeople are kidnapped – last year six were seized in just one week in Kabul - and corruption is rife. Macro-economic conditions are also difficult. Unemployment is high and many Afghans moving assets have added to the flight of capital. It is not surprising many Afghan entrepreneurs have looked elsewhere, to central Asia, the UAE and even European countries to do business.

A few ventures, however, have stayed the course. One of these is the Omaid Bahar Fruit Processing Company that opened a multimillion-dollar processing and juicing facility, the country’s first, in Kabul in 2009.

Three years later, a Taliban suicide attack caused major damage to Omaid Bahar’s operations. The company did not receive any compensation but recovered. It is now processing around 40,000 tons of fruits each year. All of this fruit is bought from Afghan farmers – more than 35,000 local farmers from different provinces.

By using different fruits, some of which have cultural significance in Afghan society, the company quickly established itself as a market leader. It is also exporting fruit juice to Asia, Europe and the UAE. In 2014, the UK's leading pomegranate Juice company Pomegreat signed a multimillion dollar deal with Omaid Bahar to buy 1000 tonnes of pomegranate concentrate.

As the quality of juice depends on the quality of the fruit used, the company conducts regular seminars and training courses to update and upgrade farmers’ knowledge and skills. By employing and improving local resources, Omaid Bahar is driving endogenous growth. Its investments in human capital, knowledge and innovation are contributing to economic growth in Afghanistan. The company reaps profits and also helps restore agriculture sector, generate employment and improves the livelihoods of farmers.

Company owner Mustafa Sadiq has said: 'I myself expect that these troubles, these uncertainties, (will last) for the next 50 years and for the next generation to come. But it is our country, we have to build it, we have to live here. And only then we can bring peace'.

By showing it is possible to succeed in the volatile political and economic situation of Afghanistan, the company has provided an important example for other would-be entrepreneurs. Hopefully it will also help to show how the Afghan government, with the help of international community, can do more to address the obstacles faced by the country’s nascent private sector. This would in turn encourage economic growth and help provide a platform for peace and stability in Afghanistan.

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