Afghan banker picks up pieces of a ruined system

FEATURE - Abdul Qadir Fitrat, possibly the world's youngest central bank governor at 38, has just taken up perhaps the world's most hair-raising central bank challenge - restoring Afghanistan's ruined financial system.
FEATURE - Abdul Qadir Fitrat, possibly the world's youngest central bank governor at 38, has just taken up perhaps the world's most hair-raising central bank challenge - restoring Afghanistan's ruined financial system.

From the London Financial Times, 23 January by Mark Nicholson in Kabul

Mr Fitrat also undertakes this unenviable task at the helm of a resourceless central bank. Before they fled Kabul in November, Taliban leaders ransacked its last pitiful reserves, running off with $5m (GBP3.5m) in cash, Rs22m ($336,000, GBP255,000) in Pakistani rupees and 16bn Afghanis ($3.4m, GBP2.3m).

The billion-dollar promises from donors in Tokyo this week are aimed at pumping life into Afghanistan's moribund economy. But it is an economy without a financial system. Along with the penniless central bank, Afghanistan's two state-owned commercial banks and four sectoral lending institutions are shrapnel-scarred husks.

"There is nothing. The banks can only support their employees," says Mr Fitrat, "There are buildings, staff and files, and that's it - that and tens of millions of dollars they are owed in un-repaid loans."

Mr Fitrat is an economics graduate of Wright University in Daytona and former president of Millie Bank, one of Afghanistan's commercial banks.

Mr Fitrat, one of the new Afghan administration's few homespun technocrats, was the central bank's deputy governor when Kabul fell to the Taliban in the autumn of 1996. Mr Fitrat was in Washington for the annual IMF/World Bank meeting at the time. He chose exile, and took on some consultancy work with the IMF. His return to Kabul this month came at the invitation of Afghanistan's new interim government. "The most important thing is to serve this unfortunate nation in whatever capacity," he says.

First, this means attracting back the staff, most of whom fled Taliban rule.

"My first priority will be to appoint experienced and knowledgeable people in key positions, because without qualified people we can't achieve anything," he says.

"Most of our 800 staff have returned. The women have returned - more than half our staff were women.

"I always used to appoint people on a merit basis, and I actually established an equal opportunities employment programme at the bank before I left," he continues.

"Some of the girls who returned came back wearing the burqa [the blue, head-to-toe covering all women had to wear on pain of a beating under the Taliban]. I just insisted they take it off - I hate the burqa."

Mr Fitra is clearly determined to drag his institution back towards the 21st century - or into the 1960s at least. "Our banking system is that of the 1940s. It hasn't developed since."

On his desk, sits one of the few PCs visible anywhere within the Afghan administration.

Part of his modernising project will be to re-establish Afghanistan's Institute of Banking, which he insists will teach in English and include at least basic computing skills. He set up a computer skills centre before the Taliban interrupted his tenure.

But thereafter, as Mr Fitra easily admits, restoration of both the central bank and Afghanistan's wider financial system will rest entirely on outside help. A preliminary IMF mission is due shortly in Kabul. Mr Fitra says he will seek as much technical assistance and as many fund secondees as the institution can spare.

He will also then begin negotiating the direct fund financial assistance which will be another precondition of the financial system's recuperation.

Far harder, though, will be restoring the faith which virtually all Afghans have lost in the country's banking system. That, and helping create a tax system that will actually earn the government some revenues. Both, he says, depend upon the success of the Bonn peace process translating into a stable and secure central government, and the Tokyo pledges turning into visible benefits for Afghanis.

The Bonn process includes the goal of re-establishing Afghanistan's central bank. It gives the interim administration the right to print money and restores Afghanistan's entitlement to IMF special drawing rights.

But these will remain paper provisions without durable security and increased credibility for Afghanistan's month-old interim government.

Most of Afghanistan's scanty taxes are currently trickling into pockets of warlords and militia commanders.

Without belief in the government, Afghanis will continue to avoid its banks.

"People are not ready to deposit their money, which is the sense in which our banks are zero per cent operational. Afghanis have withdrawn all their savings from the system. It will take time for us to persuade people to come back."

But Mr Fitrat remains cheeringly sanguine. "The institutions are there, the buildings, the desks, the files. We just need effective people and capital. Give us those and hopefully, within six months to a year, the bank will be back."

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