Ministry of Commerce and Industry
Implementing the SME Strategy: An
Updated Action Plan for Developing
Afghanistan’s Carpet Sector
October 2013 – September 2016
1
TABLE OF CONTENTS
1.0 Executive Summary--------------------------------------------------------------------------------------- P 3
2.0 Situation analysis -- overview and current status of the carpet sector--------------------- -P 6
2.1 Nature, scope, and importance of the carpet sector----------------------------------- P 6
2.2 Principal Markets ------------------------------------------------------------------------------- P 6
2.3 Recent development and current status -------------------------------------------------- P 7
3.0 The carpet value chain ____________________________________________________P 9
3.1 Structure and performance _________________________________________ P 9
3.2 SWOT analysis ___________________________________________________ P10
3.3 Priority problems and constraints ____________________________________P11
3.4 Investment needs and opportunities _________________________________ P12
4.0 Strategy and priorities for improving carpet sector competitiveness ______________ P12
4.1 Specific development priorities ______________________________________ P12
4.2 Stakeholder roles in implementing the action plan and sources of assistance –P13
4.3 Requirements for action plan implementation__________________________ P14
5.0 Summary (Table) of priority actions and implementation plan___________________ P16
2
Acronyms
ACCI
Afghanistan Chamber of Commerce and Industry
ACE
Agricultural Credit Enhancement Program
AISA
Afghanistan Investment Support Agency
ANSA
Afghanistan National Standards Authority
ABADE
Assistance in Building Afghanistan by Developing Enterprises (USAID Program)
BDS
Business development services
CEG
Afghanistan Carpet Exporters Guild
CSO
Central Statistics Organization
EPAA
Export Promotion Agency of Afghanistan
FAIDA
Financial Access for Investing in Development of Afghanistan
FOB
Free On Board (shipping term for cost of shipment delivered to shipping company)
GIZ
Deutsche Gesellschaft für Internationale Zusammenarbeit
GIRoA
Government of the Islamic Republic of Afghanistan
MAIL
Ministry of Agriculture, Irrigation and Livestock
NGO
Non-governmental organization
NMDP
New Market Development Program
MOF
Ministry of Finance
MOCI
Ministry of Commerce and Industry
MOTCA
Ministry of Transport and Civil Aviation
MRRD
Ministry of Rural Rehabilitation and Development
NEPA
National Environment Protection Agency
PPAs
Public-Private Alliances
SME
Small and medium enterprise
TIR
International Convention on Transport
USAID
United States Agency for International Development
USDOC
United States Department of Commerce
3
1.0 Executive Summary
Action plan objectives
This action plan is intended to provide a roadmap to facilitate the implementation of a key set of
actions that can help remove the principal constraints that are inhibiting the growth of the carpet
sector. It aims to increase private sector participation in solving problems, on one hand, and mobilize
available sources of support from donor-funded projects, NGO initiatives, and GIRoA agencies, on the
other, to provide a systematic, coordinated approach to promoting the carpet sector.
The action plan lists the principal priorities and activities that stakeholders feel are needed to
stimulate the development of this sector. It also includes information on resources that can be
mobilized to address these problems, secure stakeholder support to undertake systematic efforts to
remove constraints, and provide the basis for developing detailed implementation plans and
procedures for achieving the objectives contained in this plan.
The action plan also provides a means of coordinating the efforts and resources of carpet sector
stakeholders – including GIRoA ministries, donor-funded programs, business associations, and
companies -- to implement projects and development initiatives to solve the principal problems that
are inhibiting the growth of the carpet sector
Recent developments and current status of the sector
 Reports from Afghanistan Central Statistics Organization indicate that over the past 6 years
exports sales of Afghan carpets have declined by more than 80 %. Evidence suggests that this
decline is due to poor economic conditions in western markets and competition from better
organized and more strongly supported exporters in neighboring countries.
 In spite of declining export sales over recent years, the carpet industry remains as Afghanistan’s
second largest employer, after agriculture. Around one million Afghans are involved in various
aspects of carpet production, and carpets vie with dried fruit as the country’s most important
legal export.
 Income from carpet-related production plays a critical role in sustaining the livelihoods of Afghan
households in a several parts of the country.
 Some progress has been achieved in repatriating parts of the value chain from production centers
in Pakistan, but serious problems that are inhibiting the ability of Afghan producers and exporters
to increase sales, provide employment opportunities, and compete effectively in the international
marketplace remain.
Priority problems and constraints
 High transportation costs limit the ability of exporters to ship goods directly to overseas
customers.
 Limited direct connections with buyers result in lower sales margins and difficulties in keeping up
with market requirements (carpet styles, designs, pricing, etc.).

Input supply weaknesses (wool supply, dyes, yarn, washing chemicals) result in Afghan producers’
continued heavy reliance on Pakistani suppliers.
4
 Limited capacity of domestic cut and wash facilities to provide export-quality, cost-competitive
finishing services limits the ability of carpet dealers to ship directly to overseas customers and
results in carpets continuing to being shipped to Pakistan for finishing.
 Limited public support in critical areas, including market promotion, provision of land and facilities
for carpet production, technical assistance, and transport – particularly in comparison to what
governments in competitor markets are offering – affects the ability of Afghan exporters to
compete in international markets.
Growth prospects and investment opportunities
 Concerted efforts from public and private sources will be needed to reverse decline in export sales
and preserve jobs.
 Investments are needed in several key areas, including: improved transportation and logistics
facilities; more effective export marketing and promotion; increased supply of local inputs (wool
washing, scouring and combing, yarn spinning, and local production of carpet washing chemicals);
provision of land in industrial zones and other locations to permit clustering of production
facilities; and upgraded cut, wash, and finishing facilities.
Summary of principal development needs and priority actions
 Transportation and logistics – There is an urgent need to develop shipping services through
alternate transportation corridors to decrease reliance on routes through Pakistan; exporters
and government departments need to work out agreements with air freight companies that will
reduce costs of air freight shipments from Kabul.
 Marketing – Carpet sector stakeholders need to develop and implement an updated carpet sector
export marketing strategy, including improved use of online marketing channels and applications,
regular participation in industry trade shows and market promotions, training in modern
marketing strategies, and cost-sharing arrangements for marketing support. Maintaining close
relations with buyers is a critical requirement for keeping up with market trends, understanding
product design and other buyer requirements, generating orders, and working out efficient
logistical arrangements that meet buyer needs.
 Improving input supply – Investments are needed to increase wool and yarn supply using Afghan
wool; investments are also needed for local production of washing chemicals.
 Improving production –In order to develop more efficient, international competitive production
facilities, the GIRoA needs to make more land available in industrial parks and other locations to
support the development of carpet sector clusters (integrated facilities for yarn spinning, design,
carpet weaving, finishing, and logistics) similar to those established in competitor countries.
5
2.0 Situation Analysis -- Overview and current status of the carpet sector
2.1 Nature, scope, and importance of the carpet sector
The production of hand-made carpets is one of Afghanistan’s traditional industries, with a history that
goes back several centuries to the early years of the Mogul era (16th Century). After agriculture, the
carpet industry is Afghanistan’s second largest employer. Afghanistan Carpet Exporters Guild (CEG)
estimates that there are over one million Afghans working in the production of carpets (with further
millions involved in ‘support industries’ such as wool production, cutting / washing and design).
The majority of production takes place in the Northern provinces, but there is also significant
production in the western province of Herat and around the capital city, Kabul.
North
The carpet belt in the north is
estimated to account for almost
70% of Afghanistan’s output
Shebergan
Mazar
Andkhoy
Maimana
Herat
Kabul
Centre
Production in the Kabul area is
mainly the newer variety of
Chob Rung carpets, with a
generally higher portion of men
weaving than in other regions.
Estimated to account for 25% of
total production.
West
Having faced declining demand, falling
prices and higher costs (of both labour
and inputs), the carpet cluster in the
Herat area is under threat. Estimated to
account for 5% of total production
Carpet production provides a vital source of income to sustain the basic livelihoods of large numbers
of Afghan households and supplements income from agriculture. Returns to carpet weavers are
fairly low; nevertheless carpet weaving provides a vital source of income to sustain livelihoods in
carpet-producing regions.
2.2 Principal markets

Export sales account for over 95% of the total market for hand-made carpets.

Carpets are second only to dried fruit as the country’s most important official export.

The majority of export sales (over 80%) continue to be through Pakistan, where Afghan carpets
are relabeled and exported under a “Made in Pakistan” label.
6

Principal export markets or Afghan dealers (after Pakistan1) include –Turkey, India, UAE, Russia,
Germany, and the USA
Total Carpet Exports (2007-2011)2
Importing Countries
Value in USD
Pakistan
Turkey
India
UAE
Russia
Germany
USA
Canada
ITALY
Brazil
China
UK
Kazakhstan
Saudi Arabia
Tajikistan
Iran
Egypt
Australia
Spain
Others (Ukraine, France, Poland)
$455,108,917
$26,282,720
$24,321,385
$12,899,396
$10,243,683
$7,972,775
$3,288,561
$1,304,164
$1,260,369
$1,207,107
$592,812
$319,682
$275,916
$260,271
$114,741
$99,198
$61,380
$39,303
$25,500
$20,196
Total Value of Exports 2007-2011
$545,698,076
2.3 Recent development and current status

Sales and growth trends – Carpet exports have been declining steeply over the past several years.
o
Export sales have declined more than 80% during the period from 2007 to 2012, from
$262 million in 2007 to approximately $50 million in 2012 (CSO export statistics).
1
Afghan carpets sold to Pakistani dealers are usually re-labelled as “Made in Pakistan” products and sold mainly to
dealers in the USA, Germany, UK, Italy, and the UAE, with smaller amounts being sold to growing markets in China,
Russia, Korea, Australia, and Latin American countries.
2
Source: CSO statistics
7
o

The local market for hand-made carpets has nearly dried up, due to competition from
low-cost machine made carpets imported from other countries, and currently accounts
for less than 5% of total carpet sales.
Significant developments since the last action plan
o
Progress has been achieved in establishing additional cut and wash facilities. The capacity
of cut and wash facilities currently is adequate to meet the demand of exporters who ship
directly to their international customers. However, due to better logistics facilities and
more favorable freight rates for shipping via Pakistan, the great majority of Afghan carpet
exports-- 80-90% -- continue to be sent to Pakistan for cutting, washing, and finishing and
onward for shipment to international customers. Typically these carpets are relabeled as
“Made in Pakistan” products and included in Pakistani export statistics.
o
Exporters have received support from a variety of donor-funded projects to participate in
a number of the principal carpet and home furnishing trade shows, resulting in good sales
results and recognition of Afghan production capabilities; however, with the close out of
some of the principal projects that were supporting these market promotion efforts,
levels of support have declined. Additional public resources (GIRoA and donor) will be
needed to augment private sector contributions to enable companies to maintain regular
participation in market promotion events.
o
Less favorable security conditions in Pakistan during the past five years have resulted in
fewer buyers visiting Pakistani carpet producers and exporters, which has adversely
affected the volume of orders and, subsequently, the size and number of contracts with
Afghan suppliers.3
o
The global recession has had an enormous negative impact on the carpet industry all over
the world – after 2007-08 there was a sharp decline in export sales from all the major
carpet exporting countries; in addition, heavy exports of Iranian carpets in 2010, in
anticipation of the subsequent trade embargo, have produced a heavy overhang of carpet
inventories in both the US and Europe, resulting in reduced new imports from other
countries.
o
In spite of the support provided by the GIRoA, donor organizations, NGOs, and others, the
overall situation in the carpet sector has continued to decline, due to adverse market
conditions, transportation constraints, and competition from other countries. Reversing
these trends will require increased coordination among stakeholders and commitments
to mobilize and focus resources to solve the priority problems that are currently
constraining the growth of the carpet sector. Planning needs to be followed by
coordinated, focused actions supported by effective project implementation procedures.
3
See “Carpet exports drop 50% as buyers refuse to visit Pakistan”. http://paktribune.com/business/news/Carpetexports-drop-50pc-as-buyers-refuse-to-visit-Pakistan-10344.html
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3.0 The carpet value chain
3.1 Structure and performance
The following table provides an overview of the carpet sector value chain, including main components
and value-added/ square meter in US dollars for each stage of the value chain4.
Step
Activities
Value-added $
Production and
processing of wool
Shearing, washing/scouring, sorting, blending, carding, 12-14
combing
Yarn production and
dyeing
spinning (hand spinning, spinning wheel, machine 6
spinning) and dyeing
Carpet design and
weaving
Designing and weaving carpets
Transport and logistics
Collection of carpets from producers, transport by truck 2
to Pakistan
Marketing/sales
Sales commission for Afghan dealers selling unfinished 10-20
carpets to Pakistani wholesalers/exporters
Total local value
added (US dollar
value)
4
60
90-100
Finishing carpets in
Pakistan
Cut, wash, trim, and blocking—final finishing and 5
inspection of carpets
Exporters’ sales
margins
Average profit margin for Pakistan exporters selling to 30
international buyers/dealers (includes packing,
warehousing, sales commissions, and miscellaneous
expenses
Total FOB price/M2
Invoice value for delivery to shipping company. Does not 125-135
include costs of insurance and freight for delivery to
international buyers,
Source ABADE research – company interviews
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SWOT analysis
Strengths
Carpet Production
- Large supply of skilled labor in parts of the country
where carpet weaving has been traditionally
important.
- Quantity and quality of traditional designs and
patterns—unique product
Input supply
- Availability of some of the inputs --(good quality
wool, natural dyes) needed for carpet production
Market demand
-- Perception/appreciation in the world market for
special characteristics of traditional handmade
Afghan carpet
--Duty free access for imports of Afghan carpets in
many overseas markets
Opportunities
Transportation and logistics
-- New transportation treaties, such as TIR
(Convention on International Transport), should
provide shipping options through a wider range of
transport corridors, alternatives to relying on
Pakistani routes and exporters, and potentially lower
shipping costs.
-- Opportunities exist for exporters to cooperate in
consolidating shipments and negotiating lower rates
as well as establishing logistics hubs and showrooms
in major market centers
Marketing and market demand
--Some opportunities exist for obtaining support from
international donors and GIRoA ministries to develop
systematic market development programs, including
regular participation in major trade shows and
promotional events
-- With economic recovery in the US and Europe,
demand for carpets and home furnishings should
rebound
-- Growing markets in Asia – particularly China –
should provide new markets for luxury products such
as hand-made carpets
Weaknesses
Market access
-- Limited contacts with international buyers
-- Limited participation in overseas trade fairs
-Poor understanding of modern marketing methods, including use of
online channels
-Limited domestic market demand for traditional handmade Afghan
carpets due to availability of low-cost machine made carpets from
Pakistan, China, India, and other markets
Transportation
--High transport costs, including high costs of air freight for export
shipments from Kabul; air and sea transport costs from Pakistan to
overseas buyers are significantly lower than transport alternatives from
Afghanistan
-- Alternative transport corridors are only beginning to be used by
carpet exporters
Input supply
- Facilities for wool washing, scouring, and (machine) yarn production
are limited, resulting in need to import yarn from suppliers in Pakistan
and elsewhere
-- Low technical expertise level for wool processing and yarn dyeing
Carpet Production
--Limited ability of producers to adapt to market demands (new color
and styles) due to weak direct connections with buyers
--Poor working conditions for home-based weavers
--Continued reliance on child labor to reduce production costs
--Home production makes monitoring and quality standards difficult.
Finishing carpets
--Quality of available cut and wash facilities is low
or varying—exporters continue to rely on facilities in Pakistan for final
finishing
-Costs of finishing carpets (cut and wash) are cheaper in Pakistan
- Chemicals used in cut and wash facilities have to be imported from
Pakistan and are expensive
--High quality cutting and washing facilities are not sufficient to meet
the needs of carpet dealers who export directly to international buyers
Threats
Marketing
-Growing competition in both the local market and export markets from
cheaper machine made carpets from other countries (Iran, China, India)
is affecting market opportunities
10
Input supply
--Potential to establish new wool processing and yarn
spinning operations to take advantage of improved
supply of high quality Afghan wool
--Potential to produce washing chemicals locally to
replace imports from Pakistan
Carpet weaving and finishing
--Investments to upgrade the quality of finishing
facilities could reduce reliance on Pakistani facilities
and enable more direct exports from Afghanistan
-- Creation of a “socially conscious” carpet brand
could change the business model within
Afghanistan’s carpet industry and increase foreign
support/desire for Afghan carpets
-- Increased support from the GIRoA to provide land
for carpet sector activities could facilitate the
development of carpet sector clusters that could
provide a full range of support services to lower costs
and improve quality of carpet production
-Weak economic growth in US and Europe is depressing demand for
luxury products such as hand-made carpets
-Deteriorating security conditions in Pakistan have resulted in reduced
visits by buyers and declining exports; this has affected demand for
Afghan carpets exported by Pakistani traders.
--Possible restrictions on purchases are likely to continue in some end
markets due to child labor concerns
-- Changing consumer tastes -- Growing tendency among customers to
buy lower quality carpets and change more often (instead of focusing
on durability)
Competition
- Governments in some of the principal competitor countries (Pakistan,
India, Iran, and China) are providing more support and subsidies to
carpet producers than the GIRoA – for example Government of
Pakistan provides subsidies for transportation, technical services, and
low-cost land for production facilities)
3.2 Priority problems and constraints
5

High transportation costs that limit the ability of exporters to ship goods directly to overseas
customers – shipping costs by air freight from Kabul are estimated to be as high as 22% of the CIF5
export sales price. Shipping costs via Pakistan by air are considerably lower (approximately 1/3 rd
the rate from Kabul) and considerably less by sea.

Limited direct connections with buyers result in lower sales margins and difficulties in keeping up
with market requirements (carpet styles, designs, pricing, etc.).

Input supply weaknesses (wool supply, dyes, yarn, washing chemicals) that result in heavy reliance
on imports from Pakistani suppliers.

Limited capacity of domestic cut and wash facilities to provide export-quality finishing services for
firms exporting directly to international customers.

Limited public support in critical areas, including market promotion, provision of land and facilities
for carpet production, technical assistance, and transport – particularly in comparison to what
governments in competitor markets are offering.

Limited access to finance – particularly working capital finance for wholesalers to provide cash
advances to weavers for production and household expenses and for investments in new
production facilities.
CIF shipping rates include the cost of the product plus insurance and freight costs delivered to the final buyer
11
3.3 investment needs and opportunities
Along the supply chain, principal investment opportunities include: wool processing and yarn spinning
facilities, dye manufacture, local production of chemicals used for washing carpets, investments in new
production facilities (development of carpet sector clusters), international marketing services, and
transport and logistics.
4.0 Strategy and Priorities for Improving Carpet Sector Competitiveness
4.1 Specific development priorities and actions needed to address constraints and take advantage
of opportunities
Information provided by carpet sector stakeholders obtained during the course of developing this
updated action plan, together with a review of available reports and analyses of the carpet sector in
Afghanistan and neighboring competitor countries, provides a clear and consistent picture of the
principal problems that need to be addressed to support the growth of Afghanistan’s carpet sector
and its competitive position in the global marketplace. These needs, in order of priority, are as
follows:
1. Improving transportation and logistics -- Carpet sector firms and associations need to
collaborate with shipping and logistics companies and GIRoA ministries (particularly MOTCA) to
develop reliable, lower cost global transportation links and logistic services through an
expanded array of trade corridors; exporters need to work together to consolidate shipments
and negotiate with shipping companies for more favorable air freight rates; the GIRoA should
speed up efforts to remove remaining barriers caused by inefficient and improper customs
operations and work to fully implement new trade agreements such as the TIR.
2. Building market linkages – Exporters, with public sector support, need to Increase direct
contacts with end-market buyers through regular participation in trade shows, market
promotion events, and online communication channels in order to improve the flow of market
information, stay abreast of design trends, improve ability to respond to market demands, and
generate increased sales.
3. Improving supply of inputs – Development support is needed to facilitate investments in local
production of chemicals used for washing carpets, wool washing and yarn spinning facilities, and
production of dyes from natural materials.
4. Provision of land and infrastructure – Private sector firms and associations should lobby AISA
and other GIRoA ministries to speed up the process of making land available in industrial parks
and other locations to facilitate new investment in carpet sector activities and encourage the
development of carpet sector clusters that offer better working conditions for workers and
enable more efficient carpet production.
5. Upgrading cut and wash facilities –As the volume of direct exports to international buyers
increases, some additional support will be needed to upgrade the quality of services and
capacity of Afghan cut and was facilities to meet this increased level of demand.
6. Improving access to finance— Afghan traders and producers need to be able to access working
capital and favorable rates in order to decrease reliance on working capital advances from
Pakistani wholesalers.
12
4.2 Stakeholder roles in implementing the action plan and sources of assistance
The following table provides an illustrative summary6 of the roles that different groups of carpet sector
stakeholders could play in implementing the carpet sector action plan in order to promote the growth of
the carpet sector. It also includes current sources of assistance for various types of business development
activities. During the course of implementing the action plan, other sources of assistance will be identified
and additional organizations and individuals will be invited to participate in the Carpet Sector Working
Group and the task force groups in order support efforts to implement the priority activities outlined in
this action plan. Additional details of stakeholder roles and responsibilities are included in the table in
Section 5.0 below.
Problem area
Stakeholder roles
Possible sources
of support
Improving
transportation and
logistics services
Carpet sector associations and companies– coordinating
efforts to consolidate shipments to obtain more favorable
rates; negotiating with freight forwarders and air freight
companies to obtain more favorable rates; cooperating to
establish showrooms and logistics facilities in key
international market centers.
Current:
MOTCA
CEG
MOTCA—facilitate negotiations with shipping companies
and offering incentives (such as reduced landing charges) to
help exporters obtain more favorable rates.
Building market
linkages
Improving supply
of inputs
Future: possible
support from
new USAID trade
project
Carpet associations and companies – arrange regular
participation in international trade shows and marketing
events; invest in training to learn how to use online
marketing tools; develop better marketing materials,
including online brochures, websites, etc.
Current:
US Dept. of
Commerce –
Sheep to Shop
program
EPAA and MOCI – provide cost-sharing support to develop
Afghan pavilions at international trade shows; help
organize trade missions.
Donor programs: provide technical and financial support to
help organize and conduct market promotion events.
NGOs -Future:
possible support
from new USAID
trade project
Carpet sector associations and companies – identify needs Current:
for new investments and develop business plans for ABADE PPAs, BDS
developing new facilities or upgrading existing ones.
support
6
This list includes projects and organizations that have current activities related to the carpet sector or potentially
could contribute resources to help improve performance in these areas. Additional details are included in the
table in Part 5.0 below. Listing these organizations and projects does not imply a commitment to undertake the
specific carpet-sector development initiatives. These arrangements will be worked out over the course of
implementing this action plan.
13
AISA—provide land in industrial parks or other locations for
new investments in key areas such as wool processing, yarn
spinning, production of dyes, and production of chemicals
used for washing carpets.
MOCI- NMDP-Cost sharing
support for
feasibility studies
and business
Donor programs – help firms acquire equipment (through
plans
PPAs or loans) needed to produce inputs requirement for
carpet production and finishing using local resources.
Future: TBD
Provision of land
and infrastructure
to develop carpet
clusters and
upgraded
production
facilities
AISA and other GIRoA ministries – Speed up the process of Current:
making land and supporting infrastructure available in
AISA, MAIL
industrial parks and other locations to carpet sector firms to
support the development of carpet sector clusters and Future: TBD
upgraded production facilities.
Upgrading cut and
wash facilities
Carpet sector associations and companies – identify needs Current:
for new investments or upgrades as direct exports to ABADE PPAs
international customers grow; and invest in local production
Future:
of chemicals for washing carpets.
TBD
Improving access
to finance
Donor programs – provide funds to financial institutions to Current:
provide working capital to traders to finance marketing FAIDA, ACE
activities and on-lend to producers to support carpet
Future:
weaving.
MOCI & MOF –
MOF, MOCI, and Carpet Associations – approve and help (support to
establish the Afghan Carpet Facility following the plan establish Carpet
developed previously by FAIDA.
Sector Facility)
4.3 Requirements for action plan implementation
Implementing the activities included in this action plan will require active participation and support from
the full range of stakeholders involved in the carpet sector, including companies, business associations,
NGOs, international donors and project implementers, and government ministries and departments.
Different groups of stakeholders will need to work out methods for undertaking cooperative initiatives to
attack and solve the priority problems highlighted in this action plan. This will entail:

Organizing task force groups that will operate under the direction of the Carpet Sector Working
Group and will include participants willing to take an active role in dealing with specific priority
problems outlined in this action plan.
14

Sharing information – developing systems and procedures to share information about the status
of implementation efforts, sources of support, new developments, and other types of
intelligences needed to support different development activities.

Actively collaborating to develop specific implementation plans, systems, and schedules to deal
with the constraints and problems outlined in this action plan.

Assigning specific responsibilities to different groups and group members and establishing
schedules and deadlines for carrying out various tasks.

Monitoring progress in achieving performance targets and meeting deadlines.

Providing incentives and rewards for effective performance.
15
5.0 Summary of priority problems and actions
Main problems
Main priorities
Possible tasks/activities
Possible
Sources of
support7
Priority (high,
medium, low)
Year (1,2,3)
Provide up to date cost information for shipping carpets via
existing trade corridors
Engage major exporters and GIRoA officials in discussions with
airline companies to negotiate more favorable/competitive air
cargo shipping rates and expand air freight facilities to Dubai at
Kabul airport
Undertake a feasibility study for air freight facilities to Dubai direct
from Mazar-i-Sharif
Develop and implement trade agreements with neighboring
countries to open up alternate trade corridors to reduce reliance
on Pakistani routes
Investigate the feasibility of contracting with one or more 3rd Party
Logistic Providers (3PLs) to provide groups of carpet exporters with
transportation, consolidation, forwarding and customs brokerage,
warehousing, fulfillment, distribution and other logistics and
trade-related services needed to deliver products in an efficient
manner to international customers
Ministry of
Transportation
High – start in year
one, continue tasks
in year two as
project resources
become available
Identify target markets
Develop strategies and tactics for expanding sales in target
markets
EPAA, ACCI,
Carpet Guild
Transportation and Logistics
Transportation
costs to ship
directly to
international
customers are
high
Developing solutions to
reduce transportation
costs and improve
logistics systems–
international shipping,
freight forwarding,
warehousing, order
fulfillment





Carpet Guild
Possible support
in future from
new USAID
trade project
Market Access
Lack of an
industry
marketing
strategy
Developing a marketing 
strategy for the carpet 
sector
Future support:
TBD
7
High—all years -need to increase
support
immediately,
continue support as
As noted in footnote 6 above, this list includes some of the projects and organizations that are currently supporting activities related to the carpet sector or
potentially could contribute resources in the future to help improve performance in these areas. Listing these organizations and projects does not imply a
commitment to undertake specific carpet sector development initiatives. Specific roles for different organizations, projects, and other stakeholder groups will
be worked out over the course of implementing this action plan.
16
Weak brand
recognition
Conducting effective
advertising and
promotional strategy

Support efforts by EPAA, AISA, and carpet associations to develop
new media strategy and promotional materials, particularly for
web-based promotions
Lack of direct
contacts with
international
buyers
Using online channels
more effectively to
promote sales



Develop new web portal for Afghan carpets
Conduct training programs on e-marketing for carpet exporters
Provide technical support to help exporters develop web content
for listings on other e-commerce portals (Alibaba and others)
Provide BDS services to help exporters develop websites
Develop schedule of trade shows for carpets and home products
for the next 12 months in target markets
Develop cost-sharing arrangements to ensure regular participation
by Afghan exporters at key trade fairs such as Domotex in
Germany, the world’s premier flooring trade show, and trade fair
in other target markets (Dubai, Istanbul, U.S., South Africa,
others?)



Low level of
participation by
exporters in
international
trade shows and
marketing events
Increasing regular
participation in
international trade
shows, product
exhibitions, and
business missions to
establish contacts with
buyers

International
buyers are
reluctant to visit
Afghanistan due
Organizing visits by
international importers
and buyers to
Afghanistan or other
off-shore locations





EPAA, AISA,
Carpet Guild,
other carpet
associations,
ABADE/C2,
EPAA, AISA,
Carpet Guild,
other carpet
associations,
MOCI NMD
project,
ABADE/C2, US
Department of
Commerce,
others (TBD)
more resources
become available
High – all years -need to provide
support
immediately
High – all years -need to provide
support
immediately
Develop plan outlining government and private sector roles and
cost-shared contributions to increase trade show attendance by
Afg. Exporters and support other market development activities
Schedule participation in trade shows, agree on cost-sharing
arrangements, sign up exhibitors
Provide TA on effective trade show marketing techniques
Ensure ready access to visas for Afghan carpet producers to travel
abroad to participate in marketing events and visit buyers
MOCI NMD
project
US Department
of Commerce
Others TBD
High – all years -need to provide
support
immediately
Identify major buyers in target markets – arrange in-bound buyers’
missions and events
Arrange business meetings between exporters and international
buyers in Dubai and Istanbul
US Department
of Commerce,
GIZ
High – all years -need to provide
support
immediately
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to security
concerns
Lack of
relationships with
overseas sales
agents
Developing agreements 
with overseas agents
and manufacture

representatives to
maintain show rooms

and generate sales in
various target markets
Develop data base of carpet importers and manufacturer reps in
target markets
Develop directory of overseas showrooms showing Afghan
products
Organize training programs on finding and developing agreements
with manufacturer representatives
Exporters not
familiar with
modern
international
logistics services
and not
cooperating to
use such services
effectively
Develop collective sales 
and logistical facilities
in major market
centers

Investigate feasibility of establishing international sales and
logistical facilities in Dubai and Istanbul (or other international
locations)
Develop agreements with reputable third party logistics providers
(3PLs) to handle freight forwarding, warehousing, and order
fulfillment
Local demand for
hand-made
carpets has been
decreasing
Developing more
effective sales channels
to sell to high income
buyers in local market

Explore ways of reaching expat buyers – through special trade
fairs, e-marketing channels, or special sales events

Develop close contacts and maintain communications with buyers
to stay up to date on designs and color trends and other buyer
requirements
ACCI
Caravan project
(future)
EPAA, AISA,
Carpet Guild,
other carpet
associations,
MOCI NMD
project,
ABADE/C2, US
Department of
Commerce,
Others TBD
MOTCA, EPAA,
AISA, Carpet
Guild, other
carpet
associations,
MOCI NMD
project,
ABADE/C2, US
Department of
Commerce,
Others TBD
NGOs
High – all years -need to provide
support
immediately
High – all years -need to provide
support
immediately
medium
Producing competitive products
Difficulties
keeping up with
market trends and
Increasing capacity of
Afghan carpet
producers to meet
buyer requirements for
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EPAA, AISA,
Carpet Guild,
other carpet
associations,
High—all years
buyer
requirements
designs, colors, quality,
quantity, and delivery
times


Household
production makes
it difficult to
control product
quality
Use of child labor,
poor facilities for
carpet weavers
Arrange meetings with buyers and their design staff at trade
shows and other outbound business missions to gather
information on buyer requirements for designs, colors, etc.
Arrange for buyers and their product development staff to visit
Afghanistan to assess products and help develop new designs
--Improving production
facilities
--Controlling quality


Support investments in new production facilities in industrial parks
Collaborate with AISA to get land in industrial parks to establish
carpet production clusters with carpet weaving, cut and wash
facilities, input suppliers, and other support services
Improving working
conditions for carpet
weavers

Cooperate with programs that are helping carpet weavers improve
their working conditions and income

Support creation of automated wool washing facilities that will
allow for a greater percentage of production from local, Afghan
wool.
Support existing wool spinning factories and the opening of new
facilities in the Northern and Western Regions.
Support expansion of existing wool dyeing factories and the
opening of new facilities
Provide financial and technical assistance to yarn manufacturers
by providing training in:
o Modern spinning techniques, provision of equipment
o Quality control through the improved sorting and grading
of spun yarns so that these firms can yield specifications
desirable to carpet-weavers
o Natural dye application techniques
MOCI NMD
project,
ABADE/C2, US
Department of
Commerce,
Others TBD
AISA, ABADE
Medium, years 2-3
NGOs –
Goodweave and
others
Medium – all years
FAIDA, ABADE
Medium – years 1-2
for development of
Carpet Support
Facility, years 1-3
Improving input supply
Heavy reliance on
imported inputs,
failure to fully
take advantage of
current supply of
high quality
Afghan wool
Improving local supply
of quality yarns and
dyes at reasonable
prices



Finance
Few sources of
finance are
available for
Improving access to
finance for working
capital and equipment

Improve access to working capital to avoid reliance on preproduction payments from Pakistani traders
19
carpet producers
and dealers
for expansion of
production facilities

for PPAs to support
development of
production facilities
Cost shared financial support for expansion of production facilities
(for wool washing, dyeing, and spinning, production of chemicals
for cut and wash facilities )
Developing a more favorable business environment
Some
governmentimposed
constraints
remain
Lack of
government
support compared
to competitor
countries
Removing legal,
regulatory, and
administrative barriers

Continue efforts to develop more efficient customs operations
Others: TBD
Medium – yrs. 2-3
Providing incentives to
promote exports and
growth


Cost-sharing by government ministries for market promotion
Reduced landing fees for air freight companies in exchange for
concessionary air freight rates for exporters
Providing land in industrial estates to promote development of
carpet clusters (AISA)
MOCI NMD
program, EPAA,
AISA
High—Year 1 for
transportation
issues, yrs. 2-3 for
access to land

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