(Removes superfluous word in paragraph two)
By Rob Taylor
KABUL, May 2 (Reuters) – Gazing glumly over millions of
dollars worth of machinery which used to churn out thousands of
police and army boots each day but now sits wreathed in plastic
sheeting, Farhad Saffi fears he is seeing the death of an Afghan
dream.
Saffi’s Milli Boot Factory, in Kabul’s sprawling industrial
hinterland, was a model for Afghanistan, showcasing local
manufacturing while giving jobs to hundreds of people who may
otherwise have picked up insurgent guns.
But a U.S. decision to hand procurement to the Afghan
government has left Saffi with something of a developed world
problem – local officials opted for cheaper boots made in China
and Pakistan, killing off Milli’s contracts after a year.
“The U.S. government told me when I started I would have
contracts for five years, until at least 2014,” he told Reuters.
“The Afghan government gave me only three months notice of
cancellation and now I have $30 million worth of raw material I
can’t use.”
When it opened, inside huge white sheds that once held PVC
piping machinery but is now home to high-tech German injection
moulding and boot-making equipment, Afghan and U.S. generals
were keen to be photographed alongside a local success story.
U.S. Navy Rear Admiral Kathleen Dussault toured in 2010 to
present Saffi, just 23, with a quality certificate for the plant
to supply fledgling Afghan National Security Forces with
top-quality boots under contracts worth up to $40 million a
year.
Saffi sold his leather boots, which underwent a rigorous
quality testing process in the United States, for $62 a pair,
while Chinese-made boots with imitation leather cost the Afghan
government $22 in a contract for up to 700,000 pairs a year.
“The Afghan government is just looking for the lowest
price,” he said, surveying a room piled high with rolls of
leather and raw material bought from Taiwan.
“They asked me to sell for $15 a pair, but the leather alone
cost me $40. The Chinese boots use fake leather and quickly fall
apart, but they are cheap.”
From 2002 until the end of 2011, $85.5 billion was spent on
reconstruction in Afghanistan, according to U.S. government
figures, while international aid worth $57 billion has flooded
into the country.
NATO-led forces, who have mostly handled purchasing for the
Afghan security forces in the decade-long war, have since 2010
operated under “Afghan First” rules requiring them to buy where
possible from local companies, boosting the economy and
employment while underpinning anti-insurgent strategies.
Contracts for Afghan businesses included 100 percent of
Afghan uniforms and boots, textiles, furniture, tents, software
and transformers, according to NATO data.
Those contracts spawned 15,000 jobs, while making savings on
imports for combat-related spending worth $650 million – still a
fraction of the estimated $200 million spent on the war a day.
THE $10-A-DAY TALIB
The Afghan First Policy backs anti-insurgency efforts by
ensuring that people employed locally with better jobs and
incomes aren’t tempted to join the estimated 25,000 Afghan
Taliban fighters in the country, often called the ‘$10-a-day
Talib’, referring to the payment offered to would-be fighters.
Some of the 700 workers laid off from Saffi’s factory are
now thinking of doing just that, seeing no other future as
Western nations and NGOs look to leave the country with the
withdrawal of most NATO combat troops in 2014.
“The factory must be reopened. If it doesn’t we will have to
join the Taliban for a job. What else can we do? We have
families to feed,” said Ares Khan, 23, as he packed some of the
last boots Milli will produce without a government change of
heart.
Workers at the factory earned between $400 and $900 a month,
well over the average wage in a country where up to a third of
the 30 million population live under the poverty line.
But many businessmen and workers fear security will
evaporate with the Western exodus, taking job opportunities and
investment dollars with them to safer havens elsewhere, as
Afghanistan’s moneyed elite have done for decades.
Khan’s friend, Khair Mohammad, who came to Kabul from Ghazni
province where NATO forces are engaged now in one of the last
large offensives of the war, also sees no future outside the
insurgency if the Afghan government closes off jobs.
“There are sixteen people in my family and there is no bread
winner except me. When I go back to Ghazni I will have to join
the Taliban,” Mohammad said.
More than $12 billion a year spent on the war has driven up
prices in Afghanistan, and wages for an internationalised few.
Mohammad said his living costs were already high.
AFGHAN ABILITY
U.S. military officials say the decision to hand a large
slice of procurement to the Afghans was made in March, with
responsibility handed over to the Defence and Interior
Ministries.
“The decision was part of the transition process to Afghan
security and control,” said U.S. Navy Lieutenant Aaron Kakiel, a
logistics officer for the 130,000-strong NATO-led coalition in
the country.
Afghan companies, Kakiel said, had supplied everything from
boots to uniforms and sleeping bags, construction and even IT
services for the country’s security forces, which will
eventually number around 352,000.
Milli is not the only company to fall foul of the switch to
local procurement, with several uniform and equipment suppliers
either nervously eyeing soon-to-expire contracts, or having
already lost orders to cross-border competitors.
A rival company executive, who asked not to be named because
his firm fears retribution from Afghan military buyers, said,
like Milli, he had invested millions of dollars into his
business, but his supply contracts were now in limbo.
“The term of our contracts in some fields has ended. It’s
not clear if the government will contract with us again, or with
some other companies in other countries,” the executive said.
“My company has imported material from the U.S. for products
which get manufactured in Kabul and that will be useless if we
don’t get contracts back. We will have to sack people.”
Lieutenant-General Abdul Basir Asafzari, who heads logistics
and procurement in the Ministry of Defence, said only 30 percent
of supply currently was coming from Afghan companies, and
President Hamid Karzai had also ordered the military to choose
local firms where possible.
The reason Milli had contracts cancelled was because it was
importing low-quality boots from China and other countries and
relabelling them, he said.
“Milli boot company did not fulfil its commitments. There
were some complaints from soldiers about the quality,” Asafzari
said.
But Mohammad Akbar Ahmadzai, from the NGO Building Markets,
which helps build jobs and investment in developing countries by
supporting entrepreneurs, said Milli’s boots had been genuine
and met U.S.-based quality tests.
Other business experts, who would only comment anonymously,
said Milli and others may have fallen foul of Afghanistan’s
labyrinth of bribe and patronage payments, with better-connected
competitors manoeuvring to kill them off.
NATO’s Kakiel said Milli and others may also have
misunderstood complex contract provisions which stipulated only
one year of guaranteed sales.
In 2011, the NATO-led International Security Assistance
Force in Afghanistan saw U.S. agencies contract out over $4
billion, out of a total of $17.3 billion, with Afghan companies.
More than 90 percent of that was spent on products bought
from Afghan sellers (49 percent), construction (28 percent),
support services (11 percent) and transportation (6 percent).
But an audit by the U.S. government’s Special Inspector
General for Afghanistan Reconstruction, or SIGAR, released in
January, said the Afghan First Initiative (AFI) had been marred
by inadequate contract solicitation and vetting, while data on
claimed employment benefits had been limited.
BUSINESS CONFIDENCE
Saffi, whose family fled under Taliban rule and returned in
2002 to find everything destroyed, said his experience had
shaken his faith in both the U.S. government and the future
promised by Karzai.
“We tried to do a good job here in this factory, but right
now this has happened,” he said. “The only judgment we can make
is that my company and the country are going the same way.”
Most people in Kabul’s business world, he said, were nervous
about the unpredictable investment climate and deteriorating
security, a sentiment reinforced by an audacious Taliban attack
on the city centre and nearby provinces in mid-April.
Saffi said he now had to employ 30 personal bodyguards just
to ensure his children can attend school, without insurgent harm
or kidnap, while police snipers were based on the roof above his
home.
“When my company is closing and also going down, the same
way you can think of the country. I am president of my company
and Karzai is president of the country,” he said.
“I am managing my company, and now my workers are leaving.
The same will be happening to the country. The president must
manage his country.”
(Reporting by Rob Taylor; Editing by Nick Macfie)
