Editor in Chief: Moh. Reza Huwaida Wednesday, July 8th, 2020

Privatization of Govt. Companies Adding to Poverty

Rebuilding and development of the economy of Afghanistan is a pressing need of the time in view of the grave setbacks it has suffered over the years. The Constitution of Afghanistan has allowed for a free market model of economic organization and in light of that, the government of Afghanistan, from the outset, has pursued a policy of rolling back its share in the economy and making way for participation by the private sector. As a result, the government, according to the Ministry of Finance, has sold or is on course to sell off and privatize around 50 large-scale government-owned companies which, before the breakout of the civil war, provided direct employment to tens of thousands of people and indirectly supported many more.

This privatization drive by the government of Afghanistan puts several question marks over whether selling off these valuable government-owned enterprises is the right thing to do. The government insists that privatizing these large government-owned companies helps the growth of the private sector and is in line with rules of a free market economy.

Further, the government maintains that the money it raises by selling these assets is invested in other sectors which need attention. There are a number of fundamental problems with this privatization drive being pursued by the government. It is true that helping to developing a healthy and strong private sector by extending assistance to Afghan investors and facilitating investment by foreign companies is a necessity in today's Afghanistan. It is widely agreed that the economic development in Afghanistan should be private-sector led. On the other hand, everyone is aware of the shortcomings and obstacles in the way of emergence of a strong and healthy private sector in Afghanistan.

War and insecurity, lack of electricity and other infrastructural constraints, lack of proper government support and regulation, burdensome bureaucracy and corruption, runaway import from outside which has made Afghan manufacturers unable to compete with cheap, low-quality foreign goods have all contributed to the sluggish and extremely slow growth of private sector economy in Afghanistan. As a result, unemployment and poverty have steadily increased across the country in recent years.

In such a situation, selling off of large government-owned companies has actually inflicted more damage, added to unemployment and has denied hundreds of thousands opportunities to have jobs. The fact is that the government has to restore these public enterprises and through their functioning, provide employment to the unemployed and hungry. By privatizing and selling off these sources of employment, the government is in fact avoiding its social responsibility and destroying the very pillars of support that it is supposed to provide to the people and economy at a time when there is no strong private sector that can offer an alternative.

Statistics and reports clearly show that as a result of privatizing these government-owned companies, many people have lost jobs and poverty and unemployment has increased. The other problem is that the process of selling off of these national companies and assets is vague and has resulted in massive corruption. The companies and national assets that were created with much sweat and blood of the people of this country are being sold at very cheap prices to politically-connected groups. It is high time the government review its privatization policies.