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Cablegate: Opic-Funded American Investors Create Jobs and Build

VZCZCXRO1102
RR RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #3962/01 3430612
ZNR UUUUU ZZH
R 090612Z DEC 09 ZDK
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 3878
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0949
RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 003962

SIPDIS
SENSITIVE

DEPT FOR S/SRAP, S/GWI, SCA/FO, SCA/A, AND EEB/CBA
DEPT PASS USAID FOR AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELIS
DEPT PASS OPIC FOR CONSTANTZ AND BEQUAI
DEPT PASS TDA FOR STEIN AND GREENIP
TREASURY FOR JCASAL, ABAUKOL, AWELLER, AND MNUGENT
COMMERCE FOR HAMROCK-MANN, DEES, AND FONOVICH

E.O. 12958; N/A
TAGS: BEXP EINV EAGR KWMN AF
SUBJECT: OPIC-Funded American Investors Create Jobs and Build
Capacity

KABUL 00003962 001.2 OF 002


1. (U) Summary: Capitalizing on "Afghan First" opportunities that
promote local employment, U.S. investors in Afghanistan are training
and employing thousands of Afghans, including women, while building
capacity in numerous sectors. OPIC-funded U.S. companies have
registered successes in the apparel industry, beverage production
and cold storage-frozen chicken imports. Investors have overcome
human resource challenges in these enterprises by offering extensive
training, transportation, meals and other benefits that, in turn,
have paid off with low turnover rates. Moreover, risk-savvy
investors find that by providing their own security and power, they
are able to keep production constant and costs down. End Summary.


2. (U) Overseas Private Investment Corporation (OPIC) Director of
Portfolio Management Mary Ryan Bequai and Senior Investment Officer
Jeffrey Constantz visited Kabul December 1-3 to monitor the progress
of ongoing OPIC projects. The following vignettes provide a
snapshot of private investment successes in Afghanistan across
various sectors.

SAFI APPAREL - TRAINING AND EMPLOYING WOMEN IN KABUL
- - - - - - - - - - - - - - - - - - - - - - - - - -

3. (U) Established in 2005, Safi Apparel has developed a growing
manufacturing business known for high quality products. The company
has a long-term contract, through the U.S. Department of Defense
(DOD), to provide the Afghan National Army (ANA) and the Afghan
National Police (ANP) with 14,000 uniforms per month. Currently,
the Safi factory is producing only 2,000 uniforms per month, with
the remainder subcontracted to a local manufacturer. Safi hopes to
build enough capacity to fill the orders independently within two
years. The factory was established with the intention of exporting
manufactured goods to Europe, however, the ANA and ANP contracts
proved to be much more profitable. (Note: Safi Apparel is not
related to Safi Airlines.)

4. (U) Creating a safe training and working environment for Afghan
women was one of Safi Apparel's primary goals. Currently
approximately 130 women and ten men work in the plant. The company
sent ten of the women to India for training two years ago and all
ten are now working as supervisors for the company. According to
the plant's managing director, the company's goal is to hire and
train 25 to 30 new women every two months until it reaches a full
capacity of 300 female employees. He also claimed there has been
less than one percent attrition since 2005.

5. (U) During a recent visit, factory standards appeared to be high
- the new facility was well lit and heated, clean and sufficiently
equipped. The women told Econoff their families were comfortable
with their working situation and said some had even visited the
facility to check on the security situation. Safi provides
transportation to the factory and a hot lunch for employees in a
well-maintained cafeteria. The company is looking for assistance to
open an on-site day care facility for approximately 100 of the
employees' children.

EVIAN OF THE EAST
- - - - - - - - -

6. (U) In 2004, OPIC invested almost $10 million in Afghanistan
Beverage Industry (ABI) originally a juice/water/soft drink
production facility in Kabul. Since that time OPIC's investment has
nearly doubled and the expanded plant now focuses solely on water
bottling. According to the South African plant manager, the company
now employs ten ex-pats and nearly 250 Afghans, many in managerial
positions. He stated that 95 percent of its product is purchased by
DOD through its contractor Supreme Food Services. ABI has been so
successful that it has purchased a second, faster production line
and is considering a third based on projected DOD demand increase.


7. (SBU) An Afghan line supervisor who has been with the company
since 2004 told Econoff that people approach him regularly about
jobs at the plant because of its good reputation. Employees are
well paid and proud of the product they produce in this high-tech
facility, he stated. The company provides perks such as free
transportation and food for all employees as well as a Mosque on the
compound. ABI's Afghan mechanic workforce are trained both
domestically and abroad to maintain and repair the German machinery
on-site. This investment in training is paying off with near
self-sufficiency in equipment maintenance and reduced repair costs,

KABUL 00003962 002.2 OF 002


the supervisor noted. According to OPIC representatives, the
project has been so successful that ABI is ahead on its loan
payments.

OPIC FUNDS LARGEST COLD AND DRY STORAGE FACILITY IN COUNTRY
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

8. (U) Afghanistan has a severe shortage of cold storage facilities
for foodstuffs. OPIC recently funded the construction of a
multi-million dollar cold and dry storage unit in Kabul to address
this issue. The project is the brainchild of the owner of Summit
Associates, a frozen Halal chicken importer and distributor with
prior OPIC funding. The company's owner discovered that lack of
cold storage was stifling the growth potential of his and many other
food-processing businesses. To remove that obstacle, he is building
cold storage facilities in Kabul and Herat, where he has established
multiple chicken retail outlets. While the majority of the cold
storage will be used to support the owner's frozen chicken import
business, dry storage space could be rented to support local demand
or converted into cool or cold storage areas. The state-of-the-art
facility, located near Kabul International Airport, will be a
self-contained secure establishment powered completely by diesel
generators. The facility is approximately 20 percent completed and
will serve as a prototype throughout Afghanistan once completed.


COMMENT
- - - -

9. (SBU) These OPIC investments highlight the human resource
challenges faced in starting a company in Afghanistan, as well as
the patience and hard work necessary to overcome them.
Nevertheless, these companies are doing well, despite the
difficulties. Although they are partially or fully American owned,
they fit the spirit of "Afghan First," because they train and employ
thousands of Afghan men and women, build capacity, and demonstrate
how modern production technology can be applied in the country's
emerging private sector. OPIC funds numerous ventures in the
country, has committed more than $200 million since 2004, and
remains on track to commit nearly another $100 million in 2010. Of
course, Afghanistan remains a risky investment venue. We will
continue to monitor these and other investments to distill best
practices on how to do business in Afghanistan.

RICCIARDONE

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