Addressing the Complex Challenges of the Afghan Carpet Cluster
With exports of $140 M in 2005, carpets are Afghanistan’s largest official export. During the past 25 years of conflict, carpets provided a good livelihood for many Afghan families, many of which were woven in refugee camps in Pakistan.
However, since the ousting of the Taliban in 2001, the Afghan carpet sector has been undergoing considerable changes. First, as weavers began returning to Afghanistan from Pakistan, carpet producers were forced to shift their production along with them. Yet the business environment remained very unstable with high costs of doing business (for example, insecure land title, limited access to operating capital, slow but expensive transportation, no insurance). Second, traditional Afghan carpets were losing market share. Producers were facing falling orders, but were unable to understand why. This is because most carpet producers have little contact with the buyers in end-markets where their carpets are sold. The majority sell their carpets to traders in neighboring Pakistan, from whom they receive their orders. Having no contact with final consumers, and no knowledge of the end markets where their carpets are sold, they are unable to develop effective responses to market shifts.
Addressing these challenges was the main focus of OTF’s efforts with the carpet cluster. Aref worked with the cluster to develop a strategy to guide new market penetration and production investment in Afghanistan. The process included conducting markets surveys to understand current trends and gaps between buyer demand and Afghan supply, and conducting competitor research (primarily in India, an advanced and aggressive carpet producer) to understand how Afghan producers should position themselves relative to their competition.
As part of this process, Aref also created the Afghanistan Carpet Committee, a public-private partnership institution established to play a key leadership role for the carpet cluster. With OTF’s support, the Carpet Committee spearheaded a number of initiatives to deliver short-term benefits to members of the carpet cluster and also test some of the ideas that were being developed as part of the strategy agenda.
These initiatives included:
- Financial and business planning support to key processing businesses.
- Support for carpet producer participation at the largest international carpet fair in Germany.
- Stimulating the growth and innovation of a local design sector.
- Latest
- Aref Adamali works as a regional economist for the World Bank Group, working out of Nairobi and Istanbul. He spent 5 years before this designing and manufacturing furniture. Having previously advised governments and businesses in developing economies on competitiveness and innovation, he applied some of this same advice to his family’s business. He realized that it is harder to implement good advice than to give it. So he is now back to just giving it.
