By Victoria Burnett
Amin Khosti spreads a wad of banknotes like playing cards between his chubby fingers: Swiss francs, euros, sterling, dollars, Saudi riyals and rupees. He handles about $200,000 a day in transactions with any of 120 countries at his shop in Shahzada, Kabul's teeming money market.
It's an efficient system, but those seeking a more formal way of handling funds in Afghanistan will soon have an alternative to hawala, the transfer network used in many Muslim countries. Standard Chartered, the UK-based bank, hopes to open the country's first ATM machine by late September, pending approval of its application to set up shop there.
Standard Chartered is one of a handful of financial institutions - including banks from India and Pakistan, investors from the US and Afghanistan and the Aga Khan Fund for Economic Development (Akfed) - that awaits passage of new laws and a licence so it can step on to the empty playing field of Afghan banking.
"We would like a few credible banks [in the market] and we need different banks to fulfil different roles ...a Pakistani bank for trade with Pakistan, a trade finance-oriented bank, a bank that's lending-oriented," says Torek Faradi, economic adviser to President Hamid Karzai.
The banking revolution passed Afghanistan by as the country drowned in a quarter-century of war. The skeletal system consists of six, dilapidated state-controlled banks, of which only two function in any capacity.
"Our objective is to establish a system of privately owned banks . . . driven by competition," says Anwar ul Haq Ahadi, governor of the central bank, which recently hooked itself up to the outside world with Swift and established an electronic connection for the first time with its own regional branches.
The majority of businessmen, diplomats and aid workers who need to bring money into the country currently do so in suitcases or through moneychangers like Mr Khosti.
"We bank those people all over the world, so we're following them [to Afghanistan]," says David Edwards, manager of Standard Chartered's Middle East and
South Asia operations, of the potential expatriate clientele. The bank, which has operations in 50 countries, also hopes to build on the Afghan clientele it has drawn in Pakistan.
Standard Chartered plans initially to open a single branch in Kabul with about six core staff. It would take deposits in US dollars and afghanis, do international money transfers and offer trade services on some secured transactions.
Mr Edwards says the bank is unfazed by the challenging economic and security environment in Afghanistan.
Afghan and foreign officials see the advent of a banking sector as a vital step towards tempting private investors to bring much-needed capital to Afghanistan.
"It's the first problem people have here: the banking issue, the difficulty transferring funds," says Mustafa Kazimi, minister for commerce and private investment. Since the Taliban collapsed in late 2001, Afghanistan has drawn about $100m in investment - mainly in hotels and telecommunications - but Ashraf Ghani, the finance minister, says $15bn is needed over the next few years to ensure strong growth.
In an effort to help kick-start the small-business sector, Akfed has applied for a licence to open First MicroFinance Bank of Afghanistan, which will make loans of up to about $5,000 to small enterprises. Akfed hopes to start operating in the first quarter of 2004. The development agency will hold a majority stake, and the International Finance Corporation and KfW, the German Development Bank, minority holdings.
But before any bank can enter the market, it awaits the banking laws, which will replace those drafted under the Taliban. Once the laws are passed, expected in early to mid-September, licences may be issued.
The new central bank law will enshrine the autonomy of the bank and its power to dictate monetary policy, says Mr Ahadi. The commercial banking law will establish parameters for banking licences, including a $5m capital requirement and 15 per cent deposit reserve, and rules for bankruptcy.
Afghanistan's existing banks have six months to conform to the new standards or face closure.
While the old banks may not survive the new era, Mr Khosti expects to. Even if NGOs and businesses flock to banks, he says he will still be supplying money to the Afghan provinces. The banks will create confidence, which will in turn create business for him, he says.
"If you open up the Afghan market to the investors of the world, it can only be good for me."