Afghan University Continues DOD Business-building Effort
By Cheryl Pellerin
American Forces Press Service
WASHINGTON, March 26, 2014 With support from the Defense Department’s Task Force for Business and Stability Operations, the American University of Afghanistan in Kabul is taking over a successful pilot effort to speed the growth of small- and medium-size companies and help to stabilize the Afghan economy.
Staff and clients settle into new space in February 2014 for the Business Innovation Hub at the American University of Afghanistan in Kabul. DOD photo
(Click photo for screen-resolution image);high-resolution image available.
DOD formed the task force, known as TFBSO, to leverage American international economic power as a strategic tool in Afghanistan for promoting economic stabilization and security. The Investments and Entrepreneurship Program, in particular, helps facilitate deals between responsible investors and Afghan firms and enhances the efficiency of Afghan companies by providing business consulting services.
TFBSO managers Brendan O'Donoghue and Griffin Huschke told American Forces Press Service in a recent interview that the task force’s mission ends with calendar year 2014 on Dec. 31, and they were looking for an organization capable of continuing to provide business services in Afghanistan into the future.
After visiting private and public universities in Kabul, Jalalabad and Herat, they chose the American University of Afghanistan, or AUAF, which O'Donoghue, program manager of TFBSO’s Investments and Entrepreneurship Program, said is “widely considered the best university in Afghanistan and is the best university to accurately implement our vision.”
The model for the new center is the TFBSO Herat Business Accelerator pilot, established in 2011 initially to work with technology start-up companies. Several of the first accelerator firms went on to develop and market software products for local business applications, O’Donoghue said, “but we found that many of them were too small and conceptually underdeveloped to fully benefit from the business management services the accelerator provided.”
The task force also discovered companies operating in nontechnical sectors that would benefit from business services, O’Donoghue said, so the accelerator began working with those that had proven business concepts but needed coaching to develop business models and management practices.
“We wanted to focus on the strength of the economy,” O'Donoghue said, adding that working with small- to mid-size companies affects more employees and more quickly moves money into the economy.
“If you have a 500-person firm that grows 25 percent, you've got another 100 people working, not to mention the multiplier effect in the economy like the downstream jobs it creates,” O’Donoghue explained.
The accelerator provided on-the-job training and helped companies with business plans, financing assistance, process improvements and strategic planning.
It has helped 35 companies and 810 employees and 130 female entrepreneurs and employees in Afghanistan, and its companies generate more than $30 million in revenue and more than $6 million in profit, O’Donoghue said.
One of their clients is a food processing company in Herat that works with 25,000 farmers in Afghanistan and distributes dairy products around the country.
“We started working with them,” O’Donoghue said. “There's a term in Afghanistan in Farsi called zerang, and these guys are very zerang, meaning very savvy in their business practices. But they're not very good, like a lot of firms, in making sure they have a proper business plan and financials.”
Accelerator staff helped the company with these essentials and helped it secure loans for equipment inventory. After much searching, accelerator staff also found a European equipment manufacturer who was willing to work with the food processing company in Afghanistan.
Now, O’Donoghue said, “the company can expand its business line, employ more people, and improve its revenues and profits, which is good for everyone, but you can see the challenges involved in trying to integrate [Afghan companies] into the international business community.”
Huschke, project manager for the Herat Business Accelerator, said another client was a women's food processing co-op doing business from a traditional mud structure in the hills outside Herat.
“The senior entrepreneur from this women’s co-op had studied for a summer at [the Thunderbird School of Global Management in Glendale, Ariz.], a top-ranked international business school,” he said.
“She is a smart woman,” he added, “and food processing is important in Afghanistan because there's very little access to cold storage or proper canning, so … it’s a good way to make money.”
Huschke said the accelerator helped the co-op straighten out its finances, pay down debt by restructuring loan payments, and most importantly helped it find money for a storefront in Herat City proper.
“They moved from the mud hut into downtown Herat, and their sales are going through the roof,” he said. “We help them with their strategic financing and strategic planning, and I think with the [new] terms of the loan, it will be paid off by this time next year, and the senior entrepreneur … definitely will be doing well for herself in the next couple of years.”
The AUAF Business Innovation Hub, which will take over the clients and work of the accelerator, officially opened Feb. 1. It is housed in the university's International Center for Afghan Women's Economic Development, though it works with both men and women to help mid-size companies, and its staff combines international and domestic private-sector experience.
To sustain its services, O’Donoghue said, the Business Innovation Hub provides consulting and coaching services for a small fee. It also offers creative long-term-relationship packages for growing businesses.
To lead the hub, he added, “we were lucky enough to get two senior managers from one of Afghanistan’s leading communications firms.” The telecommunications industry is arguably Afghanistan’s most successful, bringing cell phone usage in country from nearly zero to 18 million in the last decade. Both men have lived and worked in Kabul for more than a decade.
Huschke said developing strategic partners for the innovation hub is critical, and as part of that process the task force hosted the innovation hub’s new leaders in the United States for 10 days.
They met with officials from the Harvard Innovation Lab in Cambridge, Mass., and with officials at Dartmouth College’s Tuck School of Business in Hanover, N.H., at Babson College, a top-ranked school for business and entrepreneurship in Wellesley, Mass., and at the University of Maryland.
“I think those visits will yield fruitful partnerships if they haven't already,” Huschke said, “and then we'll continue to help foster and connect them to increasingly fruitful partnerships.”
Such institutions support one another in several ways, he added. Dartmouth, for example, has an exchange program that brings students to the United States from the American University of Kosovo for entrepreneurship training, and sends U.S. students to Kosovo to continue their education.
Huschke says a similar arrangement may be possible with the Business Innovation Hub, along with potential student exchanges with business schools in the United States.
The Business Innovation Hub also benefits from partnerships with international business organizations such as InfoDev, a multidonor trust fund within the World Bank that helps innovators test, shape, finance, make and distribute their products.
The successes of small- to medium-size enterprises like those that participate in TFBSO's Business Accelerator and the AUAF Business Innovation Hub, “present proof that Afghans can take advantage of real economic opportunities to improve their lives through education and determination,” O’Donoghue said. “This is a promise that is being fulfilled daily in Afghanistan, little by little.”
(Follow Cheryl Pellerin on Twitter: @PellerinAFPS)