AFGHANISTAN; THE PRIVATE ENTERPRISE PROGRAM

THE REPORT COVERS (1)THE ACTUAL GOALS OF THE PROJECT, (2)A REVIEW OF ITS BROADER POLICY AND DEVELOPMENT IMPLICATIONS, AND (3)A TENTATIVE DETERMINATION OF THE PROGRAM'S RELATIONSHIP TO AND OVERALL PRIORITY WITHIN THE MISSION'S OTHER PROGRAMS. THE PROGRAM'S MACRO-ECONOMIC IMPACT HAS BEEN MODEST TO DATE. IT HAS CREATED AN INDUSTRIAL OUTPUT OF $7 MILLION A YEAR WITH A CORRESPONDING 30 PERCENT INCREASE IN INDUSTRIAL EMPLOYMENT. ABOUT 6,000 NEW JOBS HAVE BEEN CREATED. THE FAVORABLE IMPACT ON AFGHANISTAN'S BALANCE OF PAYMENTS, BOTH IN TERMS OF IMPORT SUBSITITUTION AND EXPORT PROMOTION, HAS BEEN CONSIDERABLE. BECAUSE OF THE PROJECT'S NOTICEABLE EFFECT ON URBAN EMPLOYMENT AND INCOME DISTRIBUTION, THE PROJECT IS SLOWLY BUT SURELY CHANGING CERTAIN VALUES IN THE TRADITIONAL SOCIETY. FURTHERMORE, BECAUSE OF ITS RELATIVELY HEAVY CONCENTRATION ON THE PROCESSING OF AGRICULTURAL RAW MATERIALS, IT IS INCREASING RURAL INCOME. THE MISSION FEELS THAT THE PROGRAM'S COST-BENEFIT RATIO HAS BEEN AND CONTINUES TO BE QUITE HIGH. BASED ON THE MERITS OF THE CASE, THE MISSION MAKES A STRONG RECOMMENDATION FOR A TWO-YEAR EXTENSION OF THE CONTRACT AND OUTLINES PROPOSED CHANGES AND ADDITIONAL SERVICES.