Reconstructing a warzone in Afghanistan


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Two London Business School alumni are braving the frontline to contribute to rebuilding wartorn
Afghanistan in very different ways.

This was first published in AlumniNews, Issue 131, February 2014. Find out more about our alumni community at

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Reconstructing a warzone in Afghanistan

  1. 1. AlumniNews ISSUE 131 FEBRUARY 2014AlumniNews ISSUE 131 FEBRUARY 2014 Two London Business School alumni are braving the frontline to contribute to rebuilding war- torn Afghanistan in very different ways. DOMINIC MIDGLEY reports RECONSTRUCTING A WAR ZONE DIGGING DEEP Ian Hannam hopes to create jobs and wealth through gold and copper mining
  2. 2. ■TheBigIssue/Reconstructing Afghanistan IF EVER A COUNTRY presents a challenge to an incoming investor, it’s Afghanistan. After all, it has been in a state of almost constant civil war since the Soviet invasion of 1979. While the Soviet troops left a decade after they arrived, the puppet regime they left behind was soon toppled and the country descended into a proxy war between Saudi Arabia and Iran. By 1994 the Taliban – backed by Pakistan – was on the rise but it was opposed by more secular forces and ultimately driven out of Kabul when the US, supported by the UK and others, invaded in 2001. Naturally, this incessant conflict took a heavy toll on the country and its people. Millions were killed, millions more were displaced – a third of the population are estimated to have fled to Pakistan and elsewhere – and large parts of Kabul were razed to the ground. The international community has spent more than $30bn on reconstruction projects with varying degrees of success since 2002 but, with the last US troops departing next year, the future remains uncertain. In this context, it takes a big man to step forward with an ambitious development plan. And they don’t get much more formidable than Ian Hannam MSc17(1984). Until September 2012, he was Chairman of JP Morgan Capital Markets and since 1997 he has advised on the listing of 12 large companies in London, six of which entered the FTSE100. “Traditionally, for every dollar a mining company generates, after it’s paid a dollar in taxes, it creates six dollars through the wider economy. ” Ian Hannam MSc17(1984) has ambitious plans for mining in Afghanistan The miner
  3. 3. ■TheBigIssue/Reconstructing Afghanistan Perhaps equally significantly, given the nature of the terrain on which he is operating, he started out as an engineer working in challenging territories such as northern Nigeria and Oman before joining London Business School, and spent 20 years in the Territorial SAS. And it is the School that he credits with enabling him to make a career-defining change of direction almost 30 years ago: “I believe it completely rounded me off as a human being, and taught me things which I needed and I didn’t know, such as finance, operations and negotiation. As a result, I saw other opportunities which led me to move to New York and join the training programme at Salomon Brothers.” The seeds of his current venture date back to 2010 when he worked with the US Department of Defence to analyse data prepared by Russian mining experts on the scale of mineral deposits in Afghanistan. The resulting report estimates that Afghanistan’s copper and gold could be worth up to $1.4trn dollars. In 2010, Ian – who is also a member of the School’s Governing Body and the Campaign Committee – established a company called Centar to invest in the Afghan minerals sector, and it has been awarded preferred bidder status in an official auction for six copper and gold exploration licences via its subsidiary, Afghan Gold & Minerals. While Centar is designed to make a return for its shareholders, Ian also sees it as a vehicle for giving something back to society. “The people of Afghanistan want to improve themselves,” he says. “Forty per cent of its population is under the age of 26 and a signifcant number of them have spent time in Britain or America, and have gone back. They are very sophisticated. They’ve got a culture and a history. “They may look to Bollywood rather than Hollywood, but they are, in general, moderates. Cricket is very popular and they are also crazy about football. There are now eight teams in a league, and we are sponsoring one.” Centar currently has around 550 people working in Afghanistan, the vast majority of them – 525 – Afghans. While it has a drilling
  4. 4. ■TheBigIssue/Reconstructing Afghanistan operation and a mining service company, it cannot proceed at the pace it would like until the country passes a new Mining Law. “The real problem is that there is so much microscope scrutiny relating to the award of these licenses that every step is painfully slow,” he says. “If it was down to us, we would have liked to be in production and paying taxes by now. That said, tremendous progress is being made. Fifteen world-class deposits have been identifed and prioritised, and the first leg of Afghanistan’s first railway line was completed last year.” Ian reckons that if the Mining Law is passed, half the revenue of the Afghan government could be generated from the exploitation of natural resources revenue within ten years.The other half will come from growth in the services sector, with scope for extensive expansion of the mobile phone and retail markets, as a result of the multiplier effect. “Traditionally, for every dollar a mining company generates, after it’s paid a dollar in taxes, it creates six dollars through the wider economy,” he says. “Drillers and truckers have to be fed and that, in turn, creates demand for farmers and butchers and bakers, for example.” For a country that is still very much in transition, it is an inspirational vision. ■
  5. 5. ■TheBigIssue/Reconstructing Afghanistan WHEN SHOSHANA CLARK STEWART MBA2013 arrived in Kabul in 2006 as a volunteer for development charity Turquoise Mountain, she was a 26-year-old teacher who had never managed anything bigger than a class of school children in a US inner city school. What’s more, the organisation that she joined was less than six months old, had a handful of computers and 150 staff. Seven years on, with an MBA from London Business School under her belt, she is CEO of the organisation, with 500 full-time staff and students, which is engaged in a range of projects, including an estimated $1m in sales of Afghan crafts next year. In the process, Turquoise Mountain has transformed the The aid worker Change we can believe in: Turquoise Mountain has restored 110 traditional buildings from derelict shells to their former glory. Window screens lovingly restored (above); a courtyard rebuilt and planted (below)
  6. 6. ■TheBigIssue/Reconstructing Afghanistan fortunes of a particular community in Kabul’s historic old town. It consists of 70 extended families totalling 1,800 people and hosts a bazaar that attracts a further 10,000 people on a daily basis. When Shoshana first arrived, the streets were piled high with debris and many of the houses had been damaged during the extended Afghan conflict. Since then, Turquoise Mountain has established a clinic serving nearly 20,000 patients a year, her team of builders have rebuilt no fewer than 110 traditional buildings and an institute for traditional artisans has been set up. Projects backed by Turquoise Mountain today range from a small group of calligraphers and a women’s jewellery-making co- operative to a wood-working workshop which can deliver $200,000 commissions. The products of these outfits are now sold by a number of blue-chip retailers in the West. As Turquoise Mountain – named after a long forgotten Afghan dynasty – grew in size and complexity, Shoshana realised that she would benefit from some formal business training. As an American, you might have assumed she would opt for a US school but, apart from the fact she is married to a Brit, she was also greatly taken by the diversity of intake. “There is no place as genuinely international as London,” she says. “It’s true of the city and it’s true of the School. It doesn’t feel like a British school with a bunch of foreigners in it. “My study group was perfectly representative of the class. It consisted of me, the American teacher/NGO worker, Lydia, a Chinese woman who had worked in marketing, James from Australia who had done management consulting, Antonio from Portugal who had been an engineer, George from Greece who was in private equity, and Pranav from India who was in real estate private equity. Two women, four men, six sectors, six countries, 11 languages it was amazing.” She adds: “Before attending London Business School I had learned everything I knew about managing from managing. I had had no formal training at all, except in education. When I did the MBA, I found it offered me a new set of options. I felt that I was at the perfect stage in my career to get a lot out of it. “I had had so many different experiences that I could nail on to the structure I was being taught. I remember the management
  7. 7. ■TheBigIssue/Reconstructing Afghanistan accounting class in particular. I loved it because I had an example in my head for every single topic from charging costs across departments, to how to price the time of my staff. Basically, the MBA filled in holes in my skill-set.” The financial and business planning elements of the course have proved particularly useful in running an increasingly complex project. “We’re trying to grow 30 small independent Afghan businesses to stand on their own two feet,” she says. “I can build their accounts with them which I never would have been able to do before. “A lot of the organisational behaviour classes were really wonderful too. There are a lot of things that psychologists know about the way our brains work that I’ve found very helpful. “Whether it’s knowing how people will react to your posture or the ways you might identify what the bargaining zone is between two positions. They are things you might have known instinctively, but might not have been able to deploy or identify. As soon as you understand them, you don’t forget them. A lot of the organisational behaviour classes were great in that way.” In an unstable environment such as Afghanistan, a sensitivity to nuance is a valuable quality. Shoshana and her colleagues at Turquoise Mountain take great pains to keep the authorities up to speed with everything they do. She estimates that they have shown one or two people around the area every day for the past seven years to make sure that the people who matter at the ministries of urban development, education and culture, as well as the President’s office are aware of the progress they were making. After all, until Turquoise Mountain got involved, the plan was to bulldoze the area and erect concrete high-rises, and no one wants the powers that be to revert to that policy. With US troops due to leave the country this year, the national future is uncertain. The Afghan security forces are taking on more and more responsibility from their American counterparts as the transition process nears its end but it remains to be seen how they will cope with the Taliban once the Americans have departed. The presidential election due in April 2014 is another source of uncertainty. But Shoshana remains guardedly optimistic: “We are lucky to work closely with one community in an area of the city that we have grown to know very well.” ■
  8. 8. ■TheBigIssue/Reconstructing Afghanistan THE DISTRICT THAT TURQUOISE MOUNTAIN was created to restore is called Murad Khane and it was once the pride of Kabul. But, in 2006, when Shoshana Clark Stewart arrived, it had become a refuse heap for the expanding city. There was no running water, electricity or sewerage. One in five children died before the age of five and the adult life expectancy was 37. Its once-fine buildings, with their distinctive carved wood screens had virtually disappeared under mountains of garbage. In the summer of 2006, the 50 members of the community of Murad Khane under their headman, a famous former wrestler called Pahlawan Aziz, invited Turquoise Mountain to work alongside them in renovating the old town. In the years that followed 25,000 truck-loads of garbage were cleared by hand, and in the process a network of streets lined by townhouses with enclosed courtyards were revealed. MURAD KHANE: THE REBIRTH OF A COMMUNITY