Jobs vs. efficiency as Afghan Ma Bell goes private

Businessman Jamil Noorzaie doesn't know how many employees he has. The first estimate said 750 people. A month ago, the figure had moved up to 1,025 people. Mr. Noorzaie estimates that he only needs about 350 of them.

Such are the pitfalls involved in Afghanistan's first attempt at privatizing a government entity. Noorzaie, who is inheriting the staff of Afghan Telecom from the Ministry of Communication, hopes to turn the company into a profitable business and a model for other joint ventures here.

"I want people to pay attention to Afghanistan not just as a war zone, but as a marketplace with opportunities," says Noorzaie, an Afghan American who used to run his own telecom business in the Dallas area. "They should feel comfortable bringing their families here. Only then will there be the security in this part of the world."

Afghanistan has become a nation of state-owned industries that don't make anything, bureaucrats who don't do anything, and citizens who don't get anything from their government. The solution seems simple on paper: Tear it all down and start from scratch. Yet laying off thousands of well-educated bureaucrats would only add to the angry unemployed.

For now, the state is easing citizens into the free market and quietly making Afghanistan a decent place to make a buck.

While Afghan Telecom has not earned a profit for years, it expects to attract corporate partners into a country where the telecom industry has grown at more than 35 percent a year over the past four years.

At the end of the Taliban era, there were only two telephones for every 1,000 Afghans. Today, landline phones managed by Afghan Telecom reach just 36,000 subscribers, but mobile phone service has skyrocketed to 500,000 subscribers. By 2015, the government hopes there will be 3.5 million subscribers in Afghanistan, equivalent to 120 phones for every 1,000 citizens.

The Afghan government has awarded mobile-phone licenses to three private companies, but Afghan Telecom hopes to enter the market using a different technology. Afghan Telecom also has the right to develop a nationwide fiber optic network.

Noorzaie's first taste of running a state-run company came early, when job seekers arrived for interviews. "They used to say, "The businesses make me work a lot, so I want to come to Afghan Telecom,' " laughs Noorzaie. "I told them, 'I have news for you. We're making people work hard, too.' "

Layoffs are currently out of the question, he adds, so he must show that there is a reward for hard work. "If they see the results, they won't see us as an evil foreign company taking away jobs," he says.

Mohammad Sharif, a 22-year veteran at the Ministry of Communication, is one of those few who, Noorzaie says, "gets it."

"A private company is better," says Mr. Sharif, head of general projects. "When they start to do something, they do it quickly and they finish the job."

Yet there are some here who think it is too early to privatize. Mohammad Hakim Marifat, a legal adviser at the Chamber of Commerce's reform commission, says that current laws allow foreign companies to dump products and force most Afghan businesses out of the market. Even in agriculture, where 80 percent of Afghans make a living, foreign buyers control prices and terms of trade. Afghan trucks cannot travel to Pakistan, for instance, but Pakistani trucks bring daily loads of goods.

"Every country in the world is dumping their trash, and ... trying to kill the country's ability to produce," says Mr. Marifat. "All traders want privatization, but can we protect it" from foreign competition?

David Garner, an American adviser to the Ministry of Mines and Industries says that there are dangers in moving too quickly. He advocates a three-step process. First, the ministry must commercialize, finding out what a particular state-owned business does well and what staffing it needs. Second, the business must figure out how to make a profit. Then, once the state knows the value of what it has, it can privatize.

"Let's say you have a coal mine that digs up 10,000 tons of coal a month," he says. "That operation may be sitting on a huge deposit, but the low output may make you say, 'Heck, we'll sell that for $1,000.' You may have given away mineral rights for a song."

Noorzaie says that Afghanistan has to start somewhere, and telecom just happens to be the business that offers the best opportunities for big change. "I want us to be a model for others to follow," he says.