Safi Ahmad Jamshid

Undergraduate MBA

Eurasian National University  named after

L.N. Gumilev's  Astana ñ., Kazakhstan

NECESSITY TO IMPROVE STRATEGIC MANGEMENT

OF STANDARDIZATION IN AFGHANISTAN

 

     Following the 2001 intervention of the International Alliance and the subsequent fall of the Taliban  regime,  Afghanistan  faced  the  immense  challenge  of  building  a  functioning institutional  framework  with  the  support  of  the  international  community.  Beyond the important focus on the establishment of political institutions, a part of these efforts, largely supported by the World Bank, were placed on establishing a favorable environment for the development of a market economy in Afghanistan.

     Yet, in this area, the country faces many obstacles and, more than ten years after the end of the Taliban regime, Afghanistan's private sector remains extremely fragile and dependent on international assistance.  Three decades of conflict have significantly impacted  the  entire productive and business apparel, leaving Afghanistan with a very important trade deficit and a  private  sector  that  is  unable  to  compete  with  its  main  neighbors.  Economy will be a necessary basis for the future of the country, especially once the 2014 transition is achieved. A 2011 World Bank report raised the flag on the harsh difficulties that the Afghan economy is likely to face following the 2014 political and security transition [1].

     In  2012  the  conditions  for  doing  business  are  still  among  the  worst  in  the  world,  with Afghanistan  being  ranked  160  out  of  183  countries  in  the  Doing  Business  2012  ranking. Among  the  obstacles  faced  by  private  actors  in  the  development  of  their  business  come regularly the same three major challenges: security, corruption and lack of electricity [2].

     Yet, beyond  these  obvious  issues,  private-sector  actors  also  long  for  a  sound  business environment based on clear – and respected – regulatory frameworks and guidelines. Among them,  the  development  of  national  standards  and  of  an  adequate  National  Quality Infrastructure is crucial. In this respect, the establishment in 2004 of the Afghan National Standards Authority (ANSA) was a very promising step. Initially under the authority of the Afghan Ministry of Commerce and Industry (MoCI), ANSA was declared independent in 2007. This was followed by an important effort at capacity building within ANSA, supported by the World Bank Emergency Custom Modernization and Trade Facilitation Project. A  National Standard Law was drafted and enacted in 2010. It served as the basis of the progressive development of national standards in Afghanistan. As of 2012, ANSA has developed 125 standards officially approved by the Supreme Council of Standards, established in December 2010. These are encouraging achievements; but the task of building a complete and efficient quality infrastructure out of nothing is immense and requires time. ANSA therefore still has a series of  steps  to  undertake  to  reach  an  operational  level  in  country.   The 2011-2015 strategy exposes some of these main steps, but the implementation of national standards whilst on paper, is very slow at being functional in real time.

     In order to identify the priorities for the implementation of national standards in the country, it is necessary to have a look  awareness and usage of standards  in  the  country  so  far  for  each  kind  of  standards:  available,  national,  foreign  and international.

     According to conducted survey by UNDIO found that 47.8% of surveyed respondents declared being aware of the existence of national standards, while 52.2% of respondents were not. This figure is surprisingly high if compared with the very low level of awareness of businessmen about ANSA. Some disparities between  sectors  appeared  in  the  level  of  awareness  about  national  standards:  the  level  of awareness  of  the production  sector  is lower  than  in  the  rest  of  the  private  sector, with 'only'  39.6%  of respondents  declaring that  they  are  aware about  the  existence  of national  standards.  On the  other  hand,  the level  of  awareness  in the  trade,  service  and construction  sectors about  national standards  is  higher. These differences may be linked to the different socio-economic profiles of private actors in these different sectors. It appears that respondents  from  the  production  sector  showed  a  lower  access  to  literacy  and  school education than in other sectors with 14% of respondents illiterate or literate without having attended school as opposed to 6.1% in the trading sector and 3.6% in the construction sector. Managers in the production sector are also characterized by a reduced access to university as compared to other sectors, with 18.9% of respondents having attended university as against almost 30% for traders and service providers.  This lower awareness about standards in the production sector might also be linked to the fact that a lot of production units in Afghanistan are small-size and rely on traditional techniques while the service sectors is more recent and more capable of modernizing itself and staying aware of innovations and regulations. It is also a  direct  result  of  the  lack  of  provincial  outreach  of  ANSA,  which  action  is  concentrated  in Kabul. As this study showed that 58% of Afghan SMEs' market did not go beyond provincial borders, there is a discrepancy between the landscape of the private sector and ANSA's coverage, explaining the lack of awareness about standards. Between  various  sub-sectors,  the  level  of  awareness  of  private  actors  notably  follows  the path  of  standard  development  followed  by  ANSA. While four out of five managers of companies working in the petroleum sector were aware of the existence of standards, 56.5% of respondents working in the construction sector and 55.6% of respondents from the food and beverage sector declared being aware of the existence of standards, it was only the case for  23.8%  in  the  metallurgical  sector  and  only  for  1  out  of  4  pharmaceutical  companies. Among the sectors that appeared the least aware of the existence of national standards, we found mining & quarrying (33%) and chemicals (20%). There  is an  interesting correspondence between  ANSA's  priority sectors of development  of standards  and  the  level  of  awareness  of  actors  within  these  sectors.  This  can  have  two explanations: a) ANSA's outreach is progressively increasing and starts impacting the sectors where ANSA was the most efficient in terms of standardization b) these sectors were already sensitized  to  the  issues  of  standards  and  were  therefore  rightly  identified  by  ANSA  as  key sectors for standardization.

     The level of awareness of companies differed between cities, following a similar    although less  striking    geographical  pattern  than  the  one  analyzed  above  regarding  the  level  of awareness about  ANSA.  Kandahar’s  private  sector  also  appeared  to  be  less  aware  of  the existence  of  national  standards  than  the  rest  of  the  cities  with  only  40%  of  respondents responding  affirmatively,  as  against  50%  in  Kabul  or  Mazar-e-Sharif.  Once  again,  any implementation  plan  for  the  national  standards  will  have  to  take  into  account  the geographical  nuances  in  the  country,  and  the  lower  level  of  awareness  of  the  Kandahari private sector.

     Graph 1.1 - Are you aware of the existence of national standards?

    PRODUCTION

  RETAIL-WHOLSALES

      SERVI CES

     CONSTRACTION

                                    00%             20%            40%       60%       80%

     According to survey their  awareness  of  the  existence  of  international  standards,  41.1%  of respondents  answered positively (cf. graph 3.2).  Given the relatively low internationalization of Afghan companies, and their difficult access to the export market, it is understandable to find a lower proportion of company managers having some knowledge about international standards. As  shown  by  graph  1.2,  the  use  of  international  standards  is  less  common  within  Afghan companies than the use of foreign standards, as only 25% of companies (i.e. 87 companies) in total declared that some of their products conformed to international standards. Once again, the trading sector is more advanced in terms of use of international standards, as 34.8% of respondents  from  this  sector,  declared  selling  products  and  services  that  conform  to international  standards.  For the same reasons than with foreign standards, international trade – and imports in particular – introduces international standards in the Afghan market.

     Graph 1.2

      “Our food products – our salt – were not standardized. We wanted to sell our production to the WFP but they did not trust that our products were standardized. Now one of our ten factories respects international standards (30-59 PPM iodine)” [3].

      Priorities  in  the  development  and  the  implementation  of  standards  are  distinct  for  import and export products, as they respond to different logics. The development of standards is not expected to have the same outcomes for these two different fields. Implementing national standards for imported goods and national consumption is related to issues of public safety and import-substitution while the development of national standards for exports will aim at boosting Afghanistan's exports by focusing on its main competitive products on international markets. This is why these two sets of standards have been analyzed in separate sections in this report. The implementation of standards is crucial for the support of Afghan exporting companies. Presently,  only  the  private  actors  who  have  been  able  to  develop  bilateral  relations  with foreign  traders,  especially  in  the  US  or  in  Europe,  have  been  able  to  enter  these  markets, thanks to compliance with foreigner standards.

     The priorities in terms of implementation of standards for exports followed quite logically the previously  identified    and  well  documented    most  dynamic  and  promising  sectors  of production  of  the  Afghan  economy.  The five priority subjects for the implementation of national standards should therefore include the following products:

     1.  Dried and Fresh Fruits

     2.  Carpet sector

     3.  Marble

     4.  Gemstones

     Companies,  private  and  public  stakeholders  and  many  Afghan  consumers  were  asked  to determine  the  priority  subjects  for  the  implementation  of  standards  in  country.  As  it appeared, in the  country, there is a broad consensus among these various  actors on where the  priorities  should  be  set  first  for  the  implementation  of  standards.  The survey and qualitative interviews confirm that the implementation of standards should be prioritized for:

     1.  Food, beverages and oil products

     2.  Pharmaceutical products

     3.  Petroleum Products (already started)

     Literatures:

     1. World Bank, 2011, Transition in Afghanistan, Looking beyond 2014.

     2. Kauffman Foundation Research Series, 2011, Bactrian Gold: Challenges and Hopes for the Private-sector Development in Afghanistan.

     3. The salt refinery plant was opened in September 2011 and belongs to the Mullah Azad Group.

     4.'http://www.goodafghannews.com/2011/09/25/salt-refinery-plant-inaugurated-in-balkh-province/