International coalition’s ‘Afghan First’ program works to award contracts locally

By Christopher Bodeen, AP
Friday, October 1, 2010

NATO coalition works to hand business to Afghans

KABUL, Afghanistan — Contracting with the U.S. military to make boots for Afghan soldiers and police doubled the work force at Farhad Saffi’s factory and guaranteed steady business for months — and possibly years — to come.

In the eyes of the U.S. military, the boot deal was another step toward building up Afghanistan’s economy and business culture and giving Afghans a stake in their government to help counter support for the Taliban insurgency.

For the country’s hard-pressed security forces, it means they aren’t going to war in plastic sandals or ill-fitting sneakers.

“We are proud that these boots are Afghan-made. They, the soldiers, are proud as well,” said Saffi, dressed in a natty suit and tie as he showed visitors around his assembly line in a nondescript factory on the east side of Kabul.

Saffi’s company, Kabul Milli Trading Ltd., won the boot contract as part of a year-old program known as “Afghan First,” run by the coalition and administered mainly by officers from the U.S. Air Force. It aims to source needed products locally to build up the Afghan construction industry and manufacturing base battered by three decades of near continuous warfare.

“Part of our counterinsurgency strategy is to employ people,” said Air Force Col. Lawrence G. Avery, who heads the program from his office inside a fortified U.S. military base in Kabul.

While Avery chalks up some of the program’s successes, it still faces a host of challenges. Afghan-made products must compete with cheap imports, construction delays and substandard quality — plus a business culture saturated by kickbacks and corruption and the ever-present insurgency, which makes business travel and the transportation of goods a perilous undertaking.

Crime and insurgent attacks against companies working with foreign forces are also major concerns.

“They feel like there’s always the possibility of retaliation,” Avery says of the local companies he deals with.

By almost any measure, Afghanistan’s economy is primitive and mired in inefficiencies. The gross national product stands at $14 billion. Per capita income is estimated at $1,000 a year. Unemployment is loosely estimated at 35 percent. And just 5.7 percent of the work force is employed in industry, as opposed to 78.6 percent engaged in agriculture.

Low spending power and problems financing and jump-starting a domestic manufacturing base have pushed the economy toward cheap, low-quality imported goods, much of it from neighboring China. Even for basic commodities such as cement, some Afghan businessmen say clients prefer imports from Turkey or elsewhere, convinced that domestic quality isn’t up to snuff.

Afghan First hopes to change some of those attitudes by offering lucrative contracts. This year, the program plans to award more than $500 million in contracts for equipment and another $2 billion for construction projects, mainly stackable buildings made from converted shipping containers and bases for the Afghan police and army.

Afghanistan’s garment industry was picked as the easiest place to start. Within a few months, all uniforms for the Afghan army and police were being produced locally from imported materials. Those contracts now employ 2,600 Afghans and have saved the U.S. military $41 million over the cost of imports.

Soon boots were on the agenda.

The military turned to the 30-year-old family owned Kabul Milli as a prospective supplier. Boots the company was importing weren’t good enough, so through trial and error, a model was eventually developed that passed muster after testing among recruits at army and police training bases.

Along with additional contracts now up for tender, local boot production will employ 1,500 Afghans and generate savings of $160 million over the next five years, the military says.

Kabul Milli’s factory lies on the road heading east out of Kabul, a potholed four-lane strip lined with parking lots crowded with secondhand cranes, backhoes and other equipment awaiting a construction boom that has yet to emerge. Guards armed with automatic rifles throw open its blue painted iron gate, revealing a cluster of workshops surrounding a dusty rose garden.

Inside, workers in pale green coveralls staff an assembly line that begins with the hand-cutting of leather uppers and culminating with a $3.5 million German designed machine that attaches the soles. Along the way, workers — almost all of them men — glue and stitch pieces together, pound them into shape, punch eyelets, and insert insoles.

A storeroom in the rear holds cow hides, fabric, cloth tape, laces and glue imported from India, Taiwan, and South Korea and trucked to Kabul along the perilous land route from Pakistan.

As many as 700 workers — twice the original number — will fill the cluttered but well-ventilated space once production ramps up to the 2,400 pair-per-day needed to fill orders for 100,000 pairs by the end of the year, said Saffi, the son of the company’s founder.

They are relatively well paid too, taking home anywhere from $450-$2,000 per month, with those in the sales office making the best salaries.

“There are many ways to make money, but this also contributes to the nation,” Saffi says.

For worker Mohammad Nasin, the job offers steady work that doesn’t require illicit connections or put him in daily peril.

“I’m feeding my family, educating my kids and contributing to the country,” said Nasin, whose father worked for the Saffi family in previous ventures.

While the program has taken time to get off the ground, the U.S. forces are eager to showcase successes such as the boot factory as a sign that development is proceeding. Women-owned businesses are also given special consideration with contracts to make goods such as T-shirts and sleeping bags that will employ 3,500 Afghans and save the military $1.4 billion.

The program also seeks to upgrade Afghan business culture through exposure to the standardized military bidding process, formal contracts, and adherence to strict specifications. Qualifying companies submit bids online and receive payment through electronic deposits — a far cry from the traditional haggling over cups of tea and suitcases full of cash.

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