ACCI notes worsening business environment

KABUL has deteriorated generally during last three months, but small and medium enterprises (SMEs) have suffered more due to the unstable condition, a survey revealed on Wednesday.

Conducted by the Afghanistan Chambers of Commerce and Industries, the survey said the companies in general had an optimistic outlook in March 2014, compared to their judgment on the real situation in July 2014 regarding the future order books.

Security was cited as the most important factor behind business development, followed by lack of market and demand, poor infrastructure, administrative burdens and lack of access to finance.

Several companies were closed or downsized. At least 9.9 percent of the employees of the companies surveyed lost their jobs in a most favourable season of the year

Supported by the German organisation GIZ, the Business Tendency Survey asked managing directors of businesses for their opinion on the current situation and their expectations for the next six months in Kabul, Balkh, Kandahar, Nangarhar and Herat.

The first survey was conducted in December 2012 in Kabul and Balkh regions and second in October 2013 covering Kabul, Balkh and Kandahar. The latest study time also covers Nangarhar.

The overall business climate indicator in March 2014 for Kabul, Balkh, Kandahar and Nangarhar regions altogether valued 27 points and in July 2014 it decreased to 0.02. Since Herat has shown a comparatively better climate, the overall business climate indicator for all five regions in July 2014 is 0.78 points.

The regional business assessment in July 2014 showed that Nangarhar (18.18) enjoys the best climate, followed by Kandahar (10, 34) and Herat (4.02). Balkh (-21.11) stands at the rock bottom, followed by Kabul (-7.5).

The construction sector was found in the worst condition while manufacturing tops the rankings, although in comparison to the last survey (March 2014) it has also experienced a severe deterioration.

The business climate for SMEs and large companies in Kabul, Balkh, Kandahar and Nangarhar is highly declined. Business Climate Indicator values for SMEs in Kabul, Balkh Kandahar and Nangarhar were (23) in March, and (-6.04) in July 2014.

In the last survey Kabul, Balkh, Kandahar and Nangarhar companies’ expectation for the increase of their order books valued 50 (percent balance of positive minus negative expectations), but this July they expressed a lower expectation (41.97) for the next three months.

A comparison of the current situation (-49.78) of the order books with what the companies expected (50) previously shows a big difference. Regional differences in analysing the situation of order books were considerable with Nangarhar (-29.87), Herat (-50.57), Kandahar (-55.17), Balkh (-55.56) and Kabul (-58.5).

Managers and owners have an optimistic outlook in terms of employment in the next three months. The balance of employment plans is 42.76 points in trade, 38.79 points in manufacturing, followed by construction with 19.8 point and service with 18.46 points.

Trade and Manufacturing are the most promising sectors in terms of employment planning. The situation was different from what businesses expected in the previous survey. In March the surveyed companies expected an increase (45.95 points) points in their employment, while this survey showed a negative trend.

At least 9.9 percent of the employees of the surveyed companies lost their jobs in the most favorable season of the year, which is unprecedented and indicates a dire situation of business, mainly caused by political confusions.

Business managers in Kabul, Balkh, Kandahar and Nangarhar regions reported decline in their security situation during last three months.

ACCI asks business managers about the gender of their owners, with 18.11 percent of respondents saying that their businesses were owned by female or there were female shareholders in their companies. 81.89 percent of the businesses are owned by males.

mud

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