Afghanistan: mobile phones an “affordable luxury”

Man in Bazaar looking at phone while others walk by: Photo by IMTFI ( creative commons)

Afghanistan’s Ministry of Communication & Information Technology is currently implementing the second wave of its World Bank supported Information and Communication Technologies (ICT) Sector Development Project. The project, approved last year, builds on the success of a series of programs and policies that have dramatically changed the telecommunication environment of Afghanistan over the past decade.

ICT development has increased exponentially in Afghanistan since the 2001 US invasion.  Due to government policies and extensive foreign investment, the telecommunication network now penetrates an unprecedented percent of the population as well as offering them mobile financial services.

“To say that in a country like Afghanistan we are able to bring world-class products and services, including BlackBerry, mobile money (M-Paisa) and social networking services, is something that we are extremely proud of,” says Karim Khoja, CEO of Roshan, the largest commercial wireless operator in Afghanistan.

There are currently over 17 million mobile phone subscribers and 15,000 Internet users in Afghanistan. By 2016, the ICT Sector Development Project, using the approved $50 million fund, plans to quadruple Internet users, lengthen the fiber optic network to connect most of Afghanistan’s provinces, increasing telephone penetration to 80 percent of the population. Kabul will even soon be launching its first telecommunication satellite and providing 3G Internet capabilities.

“Mobile phones have become the affordable luxury,” Khoja tells MediaGlobal.

This is in stark contrast to the Afghanistan of 2002, where 50 percent of landlines were located in Kabul causing less then 1 percent of Afghans to have access to telecommunication services. A phone could cost up to $500, a local call over $4 per minute, and an international phone call meant traveling 700 kilometers to a neighboring country.

“In Afghanistan, what we have seen is that the Ministry of Communications has been very supportive, which is why the telecommunications industry is the country’s biggest success story for the private sector,” Khoja tells MediaGlobal.

There is good reason for this. Beyond the government’s need to connect with rural Afghans, studies have shown that a 10 percent increase in mobile phone penetration in the public can have a 0.6 percent impact on GDP. While the Afghan Government is attempting to significantly invest in telecommunication infrastructure to reach out to penetrate into the rural areas, their efforts are dwarfed by the over $1.4 billion that private companies have invested in Afghanistan’s telecommunications network since 2002.

Roshan, a subsidiary of Aga Khan for Economic Development, has invested over $500 million into Afghanistan, contributes up to 5 percent of Afghanistan’s GDP, and employs over 30,000 Afghans.
 “Most importantly, these 30,000 jobs, in the second most corrupt country in the world, are all legitimate jobs,” says Khoja. “I cannot emphasize the word legitimate enough. These individuals are now the breadwinners for their families, feeding a typical household of 13 people.”

The mobile access has also created new economic opportunities. Lacking confidence in the country’s banking institutions, Afghans have taken advantage of the mobile money service provider “M-Paisa.” While its primary purpose is to assist microfinance clients by providing loan disbursements and repayments, the service also provides the 97 percent of Afghans without a bank with a range of fast and secure financial services through their phones. Consequently, entrepreneurs and business owners are benefiting from the new access.

“It has been very important for us to spur and build on the Afghan entrepreneurial spirit,” Khoja tells MediaGlobal. “Since bringing service to Bamyan in 2004…we have seen the bazaar flourish, the hospital reopen, and a vibrant tourism industry emerge.”

While a decade of market-liberal policies has corresponded with the rise of the telecommunication sector, Afghanistan is still struggling with corruption and an insurgency that ultimately threatens any progress. Ensuring proper lines of communication between provinces will continue to be of paramount concern for the Afghan government as it works toward developing its other sectors while extending its influence over the country.