Legal and Regulatory Reform

Legal And Regulatory Reform

Doing business in Afghanistan continues to be challenging, with complicated processes to follow, and weak laws and regulations that are erratically implemented. These bureaucratic roadblocks divert time, energy and resources away from productive business activity, and encourage businesses to move across the border or remain small and informal to avoid detection by enforcement officers. Afghanistan's economy is largely driven by informal deals, which ignore or circumvent formal market rules.

What is Currently Being Done

The Government of Afghanistan has made reform of the business environment a priority. It recognizes that an improved legal and regulatory environment is a key contributor to many of its priority reform areas, including tackling corruption, restoring fiscal sustainability and rebuilding private sector confidence.

In 2014, the Government committed to improving the business environment by significantly reforming licensing and registration procedures, including streamlining and unifying the system for issuing and renewing trade and investment licenses. The Government has pledged to support the formation of a One Stop Shop for private businesses.

How Harakat-AICP Will Support This

Together with the Ministry of Commerce and Industries (MOCI), Harakat will support the Government's commitments to improving Afghanistan's legal and regulatory environment. The aim is to simplify processes for businesses, including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Harakat's Support Will Includes:

Modernizing the regulatory environment so that it becomes a level playing field for investors, with incentives for private investment

Simplifying government processes for business services such as inspection reform, digitizing business licenses, streamlining export procedures and further reforming laws related to land lease and ownership

Helping to equip those who will be rolling out the new processes with the skills they needs to do so


The World Bank Doing Business Report for 2016 ranked Afghanistan 182 out of 190 economies

Survey of 40,000 firms in over 100 countries found that almost half of the barriers to doing business were related to burdensome regulation

Halving the number of procedures required to start a business is associated with a 14 percent increase in the number of new business registrations.

Currently, it takes almost one year to obtain a construction permit for a simple warehouse in Afghanistan, and obtaining a permit costs almost as much as the value of the warehouse.

Registering property in Afghanistan is a very lengthy process, requiring nine procedures and 250 days, far longer than international and regional practice.

In Afghanistan, time spent by medium sized businesses to file taxes is very high - 275 hours - and the number of payments is also cumbersome - 20 payments.

Establish a program to upgrade Technical Vocational Educational Institutions.

It costs up to US$350 to prepare all 10 documents needed to export fruit from Afghanistan to India