Private investment is expected to rise in 2008 despite a fall last year. This was announced by Dr. Zakhilwal, the President of Afghanistan Investment Support Agency (AISA) in a press conference on January 28, 2008 at AISA Headquarter. The conference, which was attended by a large group of Kabul-based media members, highlighted AISA’s achievements, activities, challenges and Afghanistan’s business environment in the past year. Security concerns were cited to be the main reason for the investment drop in 2007; however, Dr. Zakhilwal predicted that the investment figure in 2008 will be significantly boosted by investment in the Aynak Copper mine and a few other expected prominent projects in different parts of the country. “Despite security concerns some prominent investors are confident of reaping substantial rewards from investing in Afghanistan”, said Dr. Zakhilwal.

The total private investment in 2007 has been estimated to be about US$ 500 million compared to about US$ 1 billion and US$ 570 million in 2006 and 2005 respectively. AISA had predicted in the beginning of 2007 a figure higher than $1 billion for private investment in 2007. The drop, according to Dr. Zakhilwal, was due to a number of factors primarily security concerns. Other factors included slow progress in civil service reform relevant to private business and investment, inadequate power supply and burdensome bureaucracy. The targeting of businesses and businesspeople by criminal gangs for ransom has had the most profound impact on the morale of private entrepreneurs and, therefore, on private business and investment. Dr Zakhilwal said that President Hamid Karzai has responded to this by chairing a joint meeting of the private sector representative and heads of security institutions on regular basis. As a result, good progress has been made by the government security institutions in confronting threats specific to the business community in Kabul and elsewhere lately.

Investment accrued in 2007 was both due to increase in production capacity of existing investors as well as new investors. Prominent investors included the Etisalat GSM Company with an investment of over a $100 million which commenced its operation in 2007. By the end of this year, Etisalat’s total cumulated investment is expected to reach $300 million. In addition 2008 will witness a sizable investment by China Metallurgical Group in the Aynak copper mine. Other areas that are expected to receive significant investment include cement and other construction material, construction, manufacturing, transport and logistics, financial services and agroprocessing. AISA projects that the total private investment in 2008 will exceed $1 billion.