Prepared by: Mark T. McCord, IOM, CCE CEO The McCord Group May, 2007
Analysis of Business Opportunities Within Afghanistan’s Carpet Sector May, 2007
Overview of the Afghan Carpet Sector
Afghanistan’s thriving carpets and textiles trade is a legacy of the country’s rich commercial history and diverse culture. World-renowned for their intricate designs, Afghan carpets reflect the heritage of cottage-based craftsmanship passed through generations of families. Afghanistan produces several types of handmade carpets, including felted wool carpets (namads), flat non-pile fabric woven carpets (kilims), and pile and knotted carpets made from wool, silk, and cotton. Although carpet weaving by far dominates this sector, other textile items of cotton, wool, silk and cashmere are also made in Afghanistan. The manufacture of carpets is largely accomplished by a huge network of weavers working on individual carpets throughout Afghanistan’s countryside. As testament to the meticulous nature of the art, one large carpet typically takes six to nine months to weave. Numerous dealers or traders contract upfront with the weavers, or purchase the carpets prior to final finishing for eventual sale to retail and wholesale customers on a global basis. In their role, the traders perform a variety of functions related to production and sale. According to the Afghanistan Carpet Exporters Guild (ACEG), over one million Afghans work in the production of carpets, with millions more working in compatible industries such as wool production, cutting/washing and design. Because of this, the carpet sector has become a major focus for Afghanistan’s government and private sector support organizations. For example, Afghanistan’s Ministry of Commerce formed a carpet consortium in 2005 in order to utilize the combined strength of carpet producers to create visibility in the marketplace. The Afghanistan Investment Support Agency (AISA) and the Afghanistan Export Promotion Agency (AEPA) work to promote internal and external investment into the sector. On the private sector side, organizations such as the Afghan Women’s Business Federation (AWBF) and the Center for International Private Enterprise (CIPE) facilitated the launch of a socially conscious brand called AfghanMark as part of a growing carpet consortium of thirteen companies and more than 23,000 weavers. While one cannot argue that both the government and private sector are focused on the carpet sector as a potential growth industry in Afghanistan, one must also understand that no consistent strategy exists to coordinate investment within the sector or to consistently market Afghan carpets around the world. Many activities are ongoing, but most are done with little coordination or synergy, which creates activity but little long term progress. Even so, there are many opportunities for successful investment in Afghanistan’s carpet sector for those companies and/or individuals with the resources, technical expertise, and long-term commitment to remain in the market.
This document is an analysis that can be used by potential investors within Afghanistan’s carpet sector as a guide to achieving the best possible return on investment. It must be said that this is only a preliminary guide. Each investor will need significant assistance on the ground in Afghanistan to identify facilities, build support with the private sector and government, analyze the project’s cost versus benefit, and to coordinate the logistics necessary to mitigate risk. Section One: Organizational Plan Description of Venture A. Profile of Opportunities within the Carpet Sector: 1. Production: As stated above, the Afghan Carpet Exporters Guild reports that there are over one million Afghans currently involved in the production of carpets. Upwards of 95% of this production is done within the home on free-standing looms provided by carpet export...