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Afghan Contractors Feel Pinch Of Drawdown

Dec 9, 2012
Originally published on December 9, 2012 3:27 pm

The Afghan construction industry has been one of the big winners since the fall of the Taliban. NATO and the international community have pumped billions of dollars into building roads, schools and bases.

With the drawdown of troops and NGOs, however, comes a drawdown in construction spending, and that has Afghan contractors scrambling to find new business.

The offices of Mustafa Omid Construction Co. in Kabul are silent, its jackhammers still and cement trucks parked. Company President Abdel Wakil Saadat says last year they did $500,000 in business, mostly smaller projects like schools funded by Japan. This year, they did zero; they have no projects coming up.

Saadat says they have let go all but a few administrative staff, and it's not what he had in mind when he started the company in 2004.

"At the beginning, we thought there is a need for a lot of construction work and there is a big opportunity," Saadat says. "We thought our business would continue to grow."

A couple of months ago, Associates in Development, a midsize construction firm based in Kandahar that's focused on U.S. government-funded projects, finished a $15 million project and had upward of 400 people on staff. It's currently bidding on jobs, but for now, there's no hammering or sawing going on.

"As of right now, we just got rid of two offices and in the works of potentially downsizing a third office, which we're going to be down to about 25 staff members," says CEO Amir Sediqi.

Nationally, thousands of jobs are on the line. It's not just unskilled laborers being laid off, either, it's engineers, accountants and project managers, some of whom are likely to take their skills to other countries.

Naeem Yassin, the head of the Afghan Builders Association, a trade organization that represents about 500 Afghan contractors, says that for years the country was swimming in money from NATO, USAID and other international donors.

In 2010, he says, the U.S. Army Corps of Engineers alone funded projects worth $6 billion to $7 billion. Last year that dropped to $5 billion, he says, and next year it will be around $2 billion; other donors are dialing back, too. But he remains optimistic that there will be future growth in housing and non-military building.

The Builders Association recently held a conference in Washington, D.C., in hopes of luring more business. Sediqi attended the conference, and said it was full of Afghan contractors in a mild state of panic.

"There was this depressed look in their eyes, and they were just really looking for a solution to the lack of work right now," Sediqi says.

The situation isn't helped by the fact that many private investors are holding off on spending in Afghanistan until they see what things look like after NATO troops withdraw in 2014.

Sediqi says it's the midsized firms like his that will be weeded out of the market, and he's looking to diversify into other business areas to survive.

"I think the larger companies are going to be around, and I think the smaller companies are going to have a place as subcontractors," he says. "They will find a niche in the housing market."

Aziz Mobarez is another contractor hoping to find a niche. Like other contractors in Afghanistan he got into the business in 2007, anticipating 20 percent annual growth.

"Honestly, I'm giving myself and the company another six months," Mobarez says. "I think that after six months, we cannot survive, or we change our activity."

So, for now, he and many other contractors are submitting bids, and waiting, and worrying about whether they will break any more ground.

NPR's Aimal Yaqubi contributed to this report.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

RACHEL MARTIN, HOST:

In Afghanistan, the construction industry has thrived since the fall of the Taliban. NATO and the international community have pumped billions of dollars into building roads, schools and military bases. But with the drawdown of troops and NGOs, construction spending is now drying up, leaving Afghan contractors scrambling to find new business. NPR's Sean Carberry spoke with a few of them.

SEAN CARBERRY, BYLINE: I'm standing in the hallway of the Mustafa Omid Construction Company here in Kabul. And if the people had their way, we'd be talking next to a construction site. But for now, the jackhammers are silent, the cement trucks are silent and these offices are very silent.

ABDEL WAKIL SAADAT: (foreign language spoken)

CARBERRY: Abdel Wakil Saadat is the president of the company. He says they do smaller projects, mostly schools funded by Japan. Last year, they did half a million dollars in business; this year, zero, and they have no projects coming up. They have let go all but a few administrative staff. It's not what Saadat had in mind when he started the company in 2004.

SAADAT: (Through Translator) At the beginning we thought there is a need for a lot of construction work and there is a big opportunity. We thought our business would continue to grow.

AMIR SEDIQI: There was so much construction work done over the past few years. Everyone and their brother in Afghanistan has a construction company.

CARBERRY: Amir Sediqi is CEO of Associates in Development, a construction firm based in Kandahar. They're a midsized company that's focused on U.S. government-funded projects. A couple of months ago, they finished a $15 million project and they had upwards of 400 people on staff. They're currently bidding on jobs, but for now, there's no hammering or sawing going on.

SEDIQI: As of right now we just got rid of two offices and in the works of potentially downsizing a third office, which we're going to be down to about 25 staff members.

CARBERRY: Nationally, there are thousands of jobs on the line. And it's not just unskilled laborers being laid off - it's engineers, accountants and project managers, some of whom are likely to take their skills to other countries. Naeem Yassin is the head of the Afghan Builders Association, a trade organization that represents about 500 Afghan contractors. He says that for years the country was swimming in money from NATO, USAID and other international donors.

NAEEM YASSIN: 2010, just for the U.S. Army Corps of Engineers, they had us around $6 billion to $7 billion project.

CARBERRY: He says last year it dropped to $5 billion, and next year he says it will be around $2 billion; and other donors are dialing back too. But, he remains optimistic that there will be future growth in housing and non-military building. The Builders Association recently held a conference in Washington, D.C., in hopes of luring more business. Amir Sediqi attended the conference, and said it was full of Afghan contractors in a mild state of panic.

SEDIQI: There was this depressed look in their eyes, and they were just really looking for a solution to the lack of work right now.

CARBERRY: The situation isn't helped by the fact that many private investors are holding off on spending in Afghanistan until they see what things look like after NATO troops withdraw in 2014. Aziz Mobarez is another contractor hoping to find a future niche. Like others I spoke with, he wishes we could have met at a job site rather than his new downsized office space. He got into the business in 2007, anticipating 20 percent annual growth. Now...

AZIZ MOBAREZ: Honestly, I'm giving myself and the company another six month. I think that after six month, we cannot survive or we change our activity.

CARBERRY: So, for now, he and many other contractors are submitting bids and waiting, and worrying about whether they will break any more ground. Sean Carberry, NPR News, Kabul. Transcript provided by NPR, Copyright NPR.