The Afghan Procurement Crisis – “buy local” issues on a world stage

(We're pleased to feature another guest post from Ross Mulkern, writer, procurement commentator and heavy metal guitarist...)

After over ten years of conflict, it seems there are few aspects of Afghan society which haven’t been affected by the war. Under NATO occupation, procurement guidelines were put in place which sought to focus sourcing locally in a bid to defibrillate the flatlining Afghan economy. As Barack Obama commits to a final and complete withdrawal, however, the vast industrial districts of outer Kabul show very few signs of life. So what went wrong?

Certainly for a time the western-led vision for the economy seemed to be going according to plan, with multi-million dollar contracts – especially for the military – being awarded to a good number of native suppliers. According to Reuters, in 2010, local contracts included 100 percent of Afghan uniforms and boots, textiles, furniture, tents, software and transformers.

Factory owner Farhad Saffi was one such supplier – courting contracts of up to $40 million back in 2009 for his military boot manufacturing business, Milli Boot Factory. Now, however, Saffi’s factory lies silent, still well stocked with high quality American leather which is unlikely to find its way into a pair of boots any time soon.

What, then, has happened to the plan for localised Afghan procurement? In a nutshell, when control of supply lines was relinquished to the Afghan government, those in charge quickly found themselves courted away from local suppliers by the lure of cheaper, lower quality products from the Far East. As anybody even vaguely familiar with good procurement practice knows, it’s a short term solution with bleak long term effects for an economy in desperate need of parental TLC.

Those responsible for this supply chain infidelity are quick to offer excuses; Lieutenant-General Abdul Basir Asafzari, who heads procurement at the Ministry of Defence, claims that Saffi’s company imported cheaper boots from China and tried to pass them off as genuine, going on to assert that the company “…did not fulfill its commitments. There were some complaints from soldiers about the quality."

This is refuted by a number of parties, however, including Mohammad Akbar Ahmadzai of NGO Building Markets, who confirms that Saffi’s boots were genuine and met U.S. based quality tests. Even if Asafzari is to be believed, and Saffi was illegally subcontracting abroad, where is the drive to support other local businesses? Milli Boot Factory is far from a lone spectre in Kabul’s industrial ghost town.

This lack of commitment to localised procurement is certainly a kick in the teeth to Afghan suppliers, but many fear that its consequences could have a far more dangerous impact on the post-NATO Afghan state. Says Ares Khan, one of Saffi’s last remaining employees, "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." It is a worrying sentiment and one echoed by his friend, a recent migrant to the Capital, who states that "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."

What this illustrates is not simply a war of ideology, as propagandists from both sides would like to present it, but a war of provision. In a country with unemployment rates around 35% and 10 million people below the poverty line, refusing the Taliban’s offer of $10 per day is simply not an option for vast swathes of the population.

What the Afghan government needs more than anything right now is the faith and dedication of its people, but if President Hamid Karzai can’t start creating jobs, it puts a faltering regime in an even more precarious situation. As Farhad Saffi puts it, "When my company is closing and also going down, the same way you can think of the country … I am managing my company, and now my workers are leaving. The same will be happening to the country.”

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