1. KAINAAT GROUP OF COMPANIES (KGC)
INTRODUCTION
With what began as a $700 construction contract, KGC has grown into a multifaceted organization that
can handle multi-million dollar contracts in logistics and transportation, construction, management
services, trading, operations, and maintenance, and land cultivation. KGC’s success has largely been
dependent on diversification and adaptation to the changing business environment and innovative
means to stay ahead of competitors in the market.
OVERVIEW
Founder, Owner, & CEO Muhammad Gul Sahibzada
Sector Construction, logistics and transportation (L&T), agriculture
Services/Products Construction, L&T, management services, general trading, operations and
maintenance (O&M), land cultivation
Founded Late 2001
Website http://www.kainaatgroup.com/
Employees Total: permanent 235; 1000’s of project based staff at any given time
-135 skilled and highly skilled
-150 unskilled
- majority male
Salary Range undisclosed
Revenue undisclosed
Areas of Operation -Afghan offices: Kabul, Kandahar, Kunduz, Mazar-i-Sharif, Badakhshan, and
Baghlan
-International offices: Dubai
-Construction projects currently operating in 5 provinces; L&T nationwide
Registration Construction: license# 4042; logisitics: license# 0102(Code – 188);Trading:
Status/Associations license# 0101(Code – 4425; Dubai, UAE – 3482
Table 1 KGC Overview
BUSINESS STORY
FORMATION
“The first $700 was my freedom. In the beginning I was not in a place financially to take advantage
of the opportunities in Afghanistan, but the first contract gave me the courage that this $700 could
become $7,000, $70k, $700k, and even $7m.”
Prior to forming KGC, Mr. Muhammad Gul Sahibzada worked as the Head of the Resident Coordinator’s
Office for Kofi Annan’s Staff at UNOCHA in Afghanistan, oftentimes working with contractors. However,
he felt rewards and efforts were misaligned at the UN, and he wanted to receive both more recognition
for his activities and more reward for his accomplishments. Upon leaving the UN, he initially developed
business for large contractors and provided services for them such as business development
management, registration of the companies and launching their Afghan operations. Mr. Sahibzada

2. gained valuable experience of business start-ups and operations, but soon recognized an opportunity to
build his own business to capitalize on his newfound expertise. Mr. Sahibzada’s initial investment into
KGC in late 2001 was solely sweat equity. His first contract was a $700 painting contract for a one-room
UN Building.
KGC’s early success can be attributed to five defining success factors:
1. Ambition: Mr. Sahibzada wanted ‘more’ and was not content with settling for less control over
his earnings and professional direction.
2. First-Mover: KGC’s first contract was in late 2001, thus he was one of the first local construction
companies created after the fall of the Taliban. This factor gave him a competitive advantage
over others in the market.
3. English Proficiency: Mr. Sahibzada was able to secure the UNOCHA position as well as easily
communicate with clients because he could speak English at a proficient level. This certainly
influenced his ability to win initial contracts with western donors and implementers.
4. Work-Experience: His position at the UN provided him with an understanding of organizational
structure, strategy, planning and other intangibles seldom found in Afghan businesses.
5. Network: Through his work at the UN, Mr. Sahibzada built a network of contacts in the
international and local communities that assisted him in winning early contracts.
GROWTH
“I didn’t begin hiring permanent core staff until 2 years into my operations, opting to just use
contracted staff to execute projects as they came in. We were always worried that we would
have overhead that we could not sustain with our projects, and we didn’t want to hire anyone
and have to fire them because of a lack of work. However, we received our largest contract to
that point in 2003, and found a number of talented engineers at the Engineering Faculty at Kabul
University, and decided to set up an office for them. This patient and risk-averse model has
clearly defined who we are today”
KGC has grown and diversified considerably since the initial $700 contract. The company has
transformed itself from a one man operation to a highly structured organization with 235 permanent
staff and upwards of 1,000 contractual staff at any given time depending on projects. KGC can now
handle 8 figure contracts with ease and professionalism. Recognizing that the construction sector will
likely take a dip in the post-2014 environment, the company has diversified its business interests into
nationwide L&T services, trading, management services, O&M, and most recently entered the
agricultural sector via land cultivation in a number of provinces. Finally, KGC now has 6 offices across
Afghanistan and 1 international office in Dubai.
KGC’s growth and sustainability can largely be attributed to HR and corporate strategy success factors:
Corporate Strategy
1. Diversification and Flexibility of Business Interests: KGC has been able to succeed because it
has grown into complementary lines business selected through methodical market analysis.
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3. Typically, the strategy is to look at low-cost ways to enter new markets where KGC can learn
more about the business, as opposed to aggressively entering with lots of fixed costs. A good
example would be Logistics & Transportation. KGC first took on a small sub-contract to learn
more about executing projects, while making sure to not invest too much in hard assets, looking
at ways to grow capacity and capabilities through agreements with outside providers to provide
capacity when needed. KGC expects a downturn in 2014, and has designed its business to
minimise hard assets and excess capacity to ensure sustainability. L&T now composes a growing
share of KGC’s revenue base, while construction projects are starting to dwindle.
2. Reinvestment through earned revenue, not borrowed capital: Since KGC’s formation, Mr.
Sahibzada has fostered a slow growth, long-term strategy of re-investment of revenue earned,
not rapid expansion via risky loans through banks or private partners. The company reinvested
90% of its profits to ensure the company could bid for and launch ever larger projects, as
opposed to the short-term viewpoint of using profits for personal benefit that many Afghan
companies are prone to.
3. Corporate Social Responsibility: KGC believes it is vital to understand the local context in which
the business is operating and gain a social license to operate from the community at large. The
company builds strong relationships in each operating area, through building infrastructure such
as mosques, roads, and bridge or providing healthcare or services to residents. KGC never puts
their ethical status at risk by business decisions, as they have invested considerably in their
institutional structure. KGC aligns its activities such that social benefit and profitability come
hand in hand.
Mr. Sahibzada states: “In one project, we needed 500 laborers in a security constrained
environment. We were able to hire away Taliban fighters, train them in useful vocations, and
rehabilitate them, all because they realized that it was better to work for us for $10/day than
$5/day to fight for the Taliban. While the Taliban leaders did not appreciate this and sent me
death threats, they could not target the reintegrated fighters because they were all from the
same village. I believe if you follow social and ethical good, money will always come.”
4. Perseverance through Culture: KGC hit a major roadblock in 2007 and 2008 with $7 million in
losses through two contentious projects with unscrupulous prime contractors and was nearly
bankrupted. However, the company proved resilient as it was able to retain much of its staff and
capabilities, and it focused on maintaining its relationships and firm reputation with its donors,
completing projects at loss. KGC was able to rebuild itself with small contracts and is now
beyond 2007 revenue levels. KGC was able to win contracts despite its financial problems due to
a strong history of trust with the donor community.
Human Resources
1. Talent Retention: Mr. Sahibzada believes retaining and building the capacity of staff is more
cost effective in the long-term despite higher salaries than high turnover and lower salaries of
new staff members. This decision is driven on the time it takes to train new skilled employees
not only on the technical components of the job, but also the business culture of KGC. Much of
KGC’s staff has been with the organization for 6-7 years. He believes he has been able to
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4. accomplish this by two higher-level principles. First, integrity has been key, as it allows Mr.
Sahibzada to motivate staff in good times and bad. He reminds this staff in the face of year with
losses that their company is sustainable because it operates on integrity and its reputation with
donors and client businesses is intact. One of KGC’s core principles is: “We can lose our money,
but never our integrity”. Second, engendering loyalty in employees has been possible because
he pays staff half-salary even when there are no contracts at the time. He wants to remind them
that they are valued, and that he would appreciate their loyalty in difficult times.
2. Empowerment of Staff: Mr. Sahibzada places great importance of the success of KGC in his
ability to “step back” and place trust in his staff to make important decisions. He regularly
includes staff members in senior level discussions, shares results with them, and empowered
them to help prioritize activities in ways that reflected the realities on the ground. He believes
empowering staff members makes them more productive and loyal employees.
3. Building a Quality and Trusted Management Layer: KGC’s growth and sustainability has been
possible largely on Mr. Sahibzada’s ability to build a quality management team based on shared
characteristics of loyalty, trust, and professionalism. The core management team never
demoralizes employees, but rather engages them to ensure loyalty. In addition, they all value
trust, and appreciate being trusted by the CEO. That value trickles down to how they treat their
staff, and how they expect to be treated. Finally, the work environment is always professional.
4. Respect for Staff: Respect for the staff, especially in the Afghan context, is vital for sustainability
for the enterprise. Even when firing people, KGC ensures that the decision is made respectfully,
and that even employees that leave the company can speak highly of it. Mr. Sahibzada believes
treating employees poorly is the greatest threat to the company’s long term sustainability.
5. Afghan Owned and Operated: Although KGC has a few international senior staff, Mr. Sahibzada
believes it is the most Afghan operated firm in its revenue range. The firm has a high-level of
sophistication, western systems, and organization structure and capacity, and stands to benefit
as “international-heavy” firms depart the country.
FUTURE SUCCESS
“The next few years look bright. We are looking to further diversify into agriculture, and have
recently planted 30,000 almond trees and 30,000 fruit trees in my native Kunduz. In addition, our
L&T business continues to flourish and will help cope with diminishing revenue in the Afghan
construction sector. Yet, the situation in Afghanistan is so volatile that the long-term is difficult
to predict.”
1. Local Governance and Corruption: Lack of trustworthy and efficient government is suffocating
business in Afghanistan. A lot of time is wasted without the right people, the right institutions,
and the right policies in place to protect one’s business from government interference. Mr.
Sahibzada believes that if these major issues are not solved, no business will survive in the long-
term that has actually earned its money.
2. Skilled Afghan Workforce: Companies such as KGC rely on highly skilled engineers and as such,
need the education in Afghanistan to improve to a level on par with neighboring countries.
However, nowadays Mr. Sahibzada states bidding and retaining Afghan talent has become so
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5. competitive that it is impossible to continue adding skilled Afghans to the company’s staff. All of
the comparatively talented Afghans are snapped up almost immediately by foreign companies,
leaving only under-qualified and under-experienced staff members that have been quite bad
hires in recent years. Foreign entities are able to offer higher salaries and local companies such
as KGC cannot compete. Thus, a few senior staff members are internationals.
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