Scents & Sensibility

Monday, December 31st, 2007

In Scents & Sensibility, Sarah Chayes explains the difficulties she faced getting any kind of aid to start her exotic fragrance business in Afghanistan:

Andres suggested I turn instead to the Alternative Livelihoods Program (ALP). Funded by USAID, the project is, according to the agency’s Web site, a “major component of the U.S. and Government of Afghanistan’s comprehensive Counter-Narcotics Strategy.” The idea behind ALP is to compete with the ubiquitous opium poppy by promoting other ways for rural folk to make a living. The match seemed perfect. Our cooperative’s main objective was to find new, profitable uses for more of southern Afghanistan’s traditional agricultural and botanical products. The more reliably farmers could earn money from legal crops—especially ones with a higher market value than wheat or watermelons—the less likely they were to have recourse to risky and religiously taboo opium. Full of hope, I approached ALP.

As I was to learn over the next two bewildering years, the Alternative Livelihoods Program exemplifies the disturbing evolution of the international development industry. With neither the staff nor the mobility to carry out or even fully monitor the projects it supports, USAID acts strictly as a moneybag. Though it does fund nonprofit, nongovernmental organizations dedicated to humanitarian action, many American development dollars go to huge for-profit companies that have adapted over recent decades to capture the manna. Chemonics, which landed the contract for ALP in the southern region of Afghanistan—known, inevitably, by the clumsy ALP/S— is one of these.

Chemonics’ initial contract provided for $119 million, for use in three Afghan provinces over a four-year period. Roughly one year after the contract became official in early 2005, Chemonics had spent only a tiny percentage of its authorization, and a large part of that on its own start-up costs. Earlier this year, at its well-equipped building in Kandahar, guarded around the clock by a private security detail, I counted 10 brand-new SUVs. And yet, until this year, ALP/S was hardly visible in Kandahar, and only rarely had an international presence here. According to a former worker on the project, international employees can earn up to about $180,000 a year—plus 35 percent hazard pay, 35 percent “post differential,” and 20 percent for working Saturdays. But USAID, the former worker said, pays the company some $500,000 to $600,000 for each of them. Little surprise that Afghans wonder where the development dollars are going.

My initial contacts with ALP/S in May 2005 were warm, if a trifle confusing. The members of the agribusiness team were enthusiastic but unsure of how they could help. They kept inviting me to lunch at the German restaurant around the corner from their office, as though such charity could replace substantive help. What I needed was money—something they had plenty of. A year’s start-up funding would have been perfect, $50,000 or $70,000, until sales kicked in. The ALP/S workers said they couldn’t give grants and told me to write up a business plan.

Estimate is the word, a euphemism for “shot in the dark.” I was, like many business-plan authors, making it up. But by the end of June, I had submitted my 15-page document, and it included soap formulas, a list of raw materials and products, a description of likely markets and marketing strategies, and a schedule of production activities, both daily and seasonal. Its projections have proved quite accurate, at least in terms of raw-materials costs and margins. Even the monthly operating costs have checked out.

However, at my next meeting with the ALP/S team in Kabul, applause did not break out. “It needs more numbers,” commented one team member. I asked what kind of numbers; he could not specify. A Chemonics bigwig, in Afghanistan on a different project, volunteered to build me a spreadsheet. “It would be good if you could show yourself breaking even within six months,” he advised. A few days later, he e-mailed me an opus. Fourteen screens long on my laptop, in a rainbow of colors, it began with “Production Coefficients,” then scrolled through equipment procurement, loan-repayment summaries, sales figures, labor costs, packaging and shipping costs, and cash-flow statements. It took me two weeks, full-time, just to fill in the cells with real numbers. And I have a master’s degree from a U.S. university. I began to wonder how Afghan entrepreneurs would ever be able to negotiate such requirements.

Sometimes my numbers puzzled Chemonics personnel. Why had I altered the working hours per person for October? Answer: October that year was when Ramadan fell. No one is going to make an Afghan work more than four hours a day during Ramadan. Similar questions arose when purchases of pomegranates were entered only for October and November. Pomegranates are fruit, I explained. They have a growing season. It’s not like supermarkets in the West, stocked all year long.

The expectation that a start-up business, located in one of the most volatile and dangerous cities on Earth, should break even within six months seemed excessive. In any case, the ALP/S agribusiness team greeted the spreadsheet with a snort. “We don’t need anything like that. He just loves to cook up these spreadsheets,” they remarked of their colleague. I was stunned, but not ungrateful for the thought process this task had imposed. And I started over on a different type of business plan.

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