Omar El Akkad

Kabul — From Tuesday's Globe and Mail
Last updated on Tuesday, Jul. 21, 2009 03:28AM EDT


There's a ramshackle compound in Kabul where tens of millions of dollars change hands every day. Within these walls, hidden from most foreigners, is the most important financial centre in Afghanistan.

This is the Shazada money market, the largest currency exchange in the country and one of the few Afghan institutions to have survived decades of war and poverty. For many local residents, this sprawling, three-storey mall, and its hundreds of money changers, are the only financial link to the outside world – the place to go if you're looking to send money to relatives in Iran or stock up on Pakistani rupees.

There's a lot to be learned about Afghanistan from watching the thousands of deals done here every day. In a country ravaged by violence and corruption, there are few examples of successful, independent, Afghan-run operations. The Shazada money market is one of them.

It's a Saturday morning and the blaring sounds of Kabul life – a maelstrom of vehicle traffic, Bollywood hits screaming out of car stereos, lines of vendors by their roadside carts offering every fruit and vegetable imaginable – are accompanied by the added din of electioneering. The presidential election is just a month away, and two candidates stand on kiosk roofs on either side of a large, sewage-laden riverbed, shouting campaign speeches at the passing crowd.

Some people stop and listen, but the only reason most come to this part of Kabul is the mess of sagging power lines and fractured concrete that is the Shazada market, hidden down a back alley just a few metres from the main road. The Shazada compound is guarded by Afghanistan's ubiquitous uniformed rent-a-cops, armed with submachine guns and expressions of overwhelming boredom.

Inside, the compound's roof-less main square is a frenzy of microtrades: Afghanis for dollars, dollars for euros, something for something. Dozens of tiny operations have set up offices inside the market's buildings. But many money changers simply sit cross-legged on the floor of the main square.

About 100,000 people walk through the Shazada gates every day, estimates Mohammad Amin Khosty, a board member of the Afghanistan Chamber of Commerce and Industries. He says the weekly tally of money exchanged is about $100-million, most of it the result of large deals involving the country's banks and corporations. But the vast majority of foot traffic involves individuals looking to exchange smaller amounts or send money overseas.

Within the Shazada, Afghans can send U.S. dollars to about 175 countries. Canada is one of the most popular destinations, but, more often than not, more money flows to Dubai than just about anywhere else, Mr. Khosty says. The emirate has strong ties with Afghanistan – it is, for example, one of the very few places in the world that offer direct flights to Kandahar. While many Afghans travel south to Pakistan to escape violence, wealthier residents tend to opt for the far more prosperous and stable Dubai.

But if it's an elusive connection to the rest of the world that draws Afghans to the money market, it's isolation that has allowed the Shazada to churn along, untouched by the global economic downturn. Simply put, Mr. Khosty says, the Shazada lives on trades between Afghans, and so is insulated from external calamities.

Besides, the Shazada has been through worse than the current strife in Afghanistan. There are 75 years of history in this place, the last 30 or so shrouded in all manner of violence. Some members of the Taliban looted the market shortly before the militant Islamic government was driven out of Kabul.

It was around the time of the Taliban's rise to power that a 17-year-old named Atiq decided to quit his job as a part-time dressmaker and line up on the curb outside the Shazada, where all the small-time, unlicensed money changers set up shop. Fifteen years later, he is one of the bigger individual dealers in the market. On a good day, he estimates he'll have a hand in about $1-million worth of transactions.

Money changers such as Mr. Atiq tend to set their rates based on information they glean from the Internet and the television sets littered all over the compound, tuned to myriad international business news stations. The rates set at the Shazada ripple out to the rest of Afghanistan, and can impact hundreds of millions of dollars in deals.

Given the sums of money he works with, it's somewhat surprising that Mr. Atiq's way of doing business essentially boils down to the honour system.

“Many people know me only by telephone. They call, they tell me how much they want to exchange, and I send them the money,” he says. “I can't count all the money [on the spot] – I give it to them and they count it later. If they say there's too little money, I give them more. If they say there's too much money, they give me.

“If I don't know someone very well, I don't work with them,” he adds quickly.