Starting Up in Afghanistan
Afghan tech entrepreneurs face a unique set of challenges, but seem to be in the right place at the right time.
“If a hospital is willing to spend a million dollars on infrastructure, they won’t say no to a software package that costs 5000 dollars,” says, Aimal Miakhel, as he flashes a smile. “If you utilize your skills and take risks, there is a lot of opportunity in the market. Even now.” In the face of a unique set of obstacles that litter the entrepreneurial path in Afghanistan today, this brand of optimism is what seems to drive the determined owners of tech start-ups in the capital city, Kabul.
Aimal is the CEO of HSoft Technologies, a new business being incubated at Ibtikaar Start Ups. Ibtikaar is a two-year program by the Ministry of Communications and IT (MCIT), which is led and managed by TechNation, a Kabul-based technology and incubator management company, and supported by the World Bank. Ibtikaar’s mission is to provide promising tech entrepreneurs and their teams with physical infrastructure, mentoring, business advisory services, market support and access to funding. The incubator can accommodate up to 12 start-ups at any time. Each office covers a surface area of 20 sq. meters, and is equipped with power sockets, network points, air conditioning, lighting, furniture and shared broadband internet access. Last month, there was an event at the Ibtikaar campus in the ICT Institute Compound on Jalalabad Road to celebrate the successful graduation of its first round of incubatees. In his opening speech, the Deputy Minister of IT, Mohammad Aimal Marjan, highlighted the importance of such endeavors which encourage young talent to follow their dreams, and provide them with the necessary mechanisms to grow their businesses. Ibtikaar’s mission is to create at least 20 successful businesses by mid-2016.
This is a timely enterprise. The technology landscape has been burgeoning in Afghanistan in recent years, with massive investments in infrastructure and service delivery, notably the fiber optic cable network which has turned the country into a regional pioneer. With the rapid penetration of mobile phones (83% in 2014, according to MCIT figures), potential for business in this area is unprecedented. An infoDev feasibility study conducted in 2014 made a comprehensive assessment of the ICT ecosystem, including the technical and regulatory environment, major players, level of human capital, and financial enablers. The report concluded that the appropriate ecosystem is in place for mobile innovation and entrepreneurship, especially to tackle the pressing social issues that exist in the country, and predicted that the mobile app market will grow from an estimated US$ 20-33 million to US$ 48-60 million, at least twice the current size in the next three years.
By the end of 2015, the government expects that 50% of the country’s population will have access to 3G Internet services. The potential for apps, to both facilitate and ease bureaucratic processes, as well as address socioeconomic issues such as access to finance, is huge. And it is a fact that mobile phones really do provide a way for marginalized groups and low income populations to access information and benefit from social and economic services.
Qaseem Qiam, the CEO of Bright-Bit technology company at Ibtikaar, is in the process of developing a mobile app that will make the process of passport applications streamlined and convenient by introducing an online ticketing system. The hardest part, so far, has been selling this idea to his primary client: the passport department. Governance needs to move at the same pace as technology, for the latter to be effectively absorbed. Muhammad Ajmal, yet another Ibtikaar incubatee and the CEO of AfghanID, envisions an iOS and Android app that combines the best of yellow page directories and mapping systems, and which provides key information on registered establishments – including businesses, restaurants, parks and religious sites. He states as his biggest challenge the authorities, who lack an understanding of the benefits of this kind of a domain for the citizenry.
For the young Afghan entrepreneurs at Ibtikaar, however, web portals seem to remain the jumping off point, especially for B2B models. From MIS and accounting software, to real estate buying and selling platforms, they are trying to navigate the still rather uncharted territory of completely digital businesses, while juggling the regular uncertainties faced by entrepreneurs globally – financial sustainability, hiring and retention of skilled human resources, and getting their products into the target market. Add to that, the additional setbacks of doing business in a volatile and conflict-ridden emerging economy, whose structures of governance remain fragile.
Naikpeen Naikpay, whose start-up Smart Maktab is in the process of digitizing and augmenting school curriculums, says his license is still pending after six months of initiating the application, because the government could not identify which ministry the business should be registered under. Was it a technology enterprise, or was it an educational one? “Now I have to take a product demo and my business plan, and start the whole process all over again,” he says, failing to keep the frustration off his face. Before any of his content can be sold to schools or individual students, he needs to get it approved and verified by the Ministry of Education. Access to adequate funding and venture capital is also difficult, explains Naikpay, because the culture of investing in a stranger’s company is still not entrenched in the business community.
Some of the entrepreneurs are Computer Science students at Kabul University, in their final year. They balance day jobs with their academic schedules, and focus on their start-ups in the limited spare time available. One of these is Mohammad Hadi Ulfat, who started 4MTech with six other students, a few months ago. Their key project is a real estate site, featuring customer accounts, for property owners to advertise their homes for sale and rent. 20% of the site development is complete, and they have a business plan all laid out. Marketing and promotion strategies involve physical visits to potential clients, and this personalized service is their unique selling point. Their competitors have a strong presence in the market. When asked how they will manage this, Ulfat says, “Our competitors are mainly businessmen, managers. We are engineers, with technical expertise. So we do things differently, better.’
Personal visits are also mandatory, because the community is still unfamiliar with the nuances of the digital world. Miakhel elaborates, “People are afraid of technology. They don’t understand it. If something goes wrong with their PC after they’ve installed our software, they blame us and make angry phone calls. Many are not educated, and sometimes they are illiterate. So it takes us double the time to train them how to use the software. We need to make physical demonstrations.” As an afterthought, he adds: “And many times – we need to explain to them the need before they can identify it.”
This distrust of technology was reiterated by other entrepreneurs. Faisal Abubaker, the CEO of Elitech, shared that some of his clients believed that the accounting software they had bought would leak precious information about the organization’s financials back to the creators, or would corrupt their systems. Extra time and effort was needed to sensitize the management, and train them from scratch. “Most of our competitors are selling Indian and Pakistani software. So we need to build trust regarding the quality of locally made products.” With a splash of good humor, he added, “and sometimes there are road blocks because of explosions, and we can’t get to our meetings on time.”
Needless to say, the economy is slowing down and security is a perennial issue to be factored in. Amid an escalating war with the Taliban and rising unemployment, coinciding with the withdrawal of foreign troops and international aid, there is a distinct fear that the business environment will suffer. The 2015 Survey of the Afghan People, released a few days ago by the Asia Foundation and which surveyed over 9,500 Afghans, claims that more than half of all Afghans say the country is moving in the wrong direction, and only the same proportion agree that the government is doing a good job, a drop from 75.3% in 2014 . Despite government initiatives to curb corruption, almost 90% of Afghans express that corruption is a major problem in their daily lives, the highest percentage reported since 2004.
At the institutional level, there are agencies that have incorporated the creation of an enabling environment for entrepreneurship into their core mission and operations. The Afghanistan Investment Support Agency is one of these, and they aim to promote a robust culture of foreign and domestic investment in core sectors of the economy, through assisting with the investment process, drafting conducive policy frameworks, conducting research and analysis, organizing networking events, and constructing Industrial Parks. The other notable player is the DEWAE Innovation Grants Program, a project of the MCIT, which aims to strengthen the ICT sector and government services by encouraging innovation through a series of prize awards and provision of seed funding for the best software and start-up ideas.
On a personal level however, despite pitfalls and setbacks, the journey of entrepreneurship appears to be enriching and rewarding for these tech start-up proprietors. “I have learned a lot about business, and how to do business, especially in Afghanistan,” says Abubaker. “I’ve learned how to deal with people; I wasn’t such a social person before. Now I am good at this, I can talk to people without any problems.”
Yet another young Afghan entrepreneur, Mohammed Zaher Akbar, who currently works the night shift at a local television station, is pursuing a degree in Business Administration and runs his own start-up, says his biggest dream is to industrialize Afghanistan, make the country self-sustainable, and provide thousands of youth with jobs. To this end, he wants to establish several companies producing everything from textiles to toothbrushes. His sentiments and dreams resonate with all the other talented and hardworking young men (women are still not in abundance in the tech sector) at Ibtikaar, who firmly believe that their businesses are a breeding ground for economic transformation, political stability and modernity. Afghanistan is on the cusp of a tech revolution, and it is the prerogative of institutions and individuals to push it over the edge.