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Abdul Majid Zabuli (August 14, 1896 – November 23, 1998) was the founder of Afghanistan's banking system. He founded the Ashami company in 1932, which eventually became the Afghan National Bank (Bank-i-Milli Afghanistan). Until the 1990s, the Bank had seven branches in the Afghan capital of Kabul, and 10 additional provincial branches. It also had offices in Pakistan, Germany, England, and the United States. Other banks Zabuli founded include the Da Afghanistan Bank, and the Industrial Bank.

Abdul Madjid Zabuli and Bank-i-Milli Afghanistan

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In modern times there are only a few people in Afghan history who had an economic vision for Afghanistan. There is no doubt that national leaders placed the name of Afghanistan with pride and glory in the history of Asia, but no one in the economic and financial field came with a grand design and projects for the prosperity of Afghanistan than Mr. Abdul Madjid Zabuli.

Abdul Madjid Zabuli was born in 1896 in the city of Herat, where he was first educated. Later, he continued his studies in the Islamic College in Tashkent. He inherited his father’s export-import business which had opened a business centre with Iran and Russia in Tashkent. By 1922 Zabuli moved his operations very successfully to Moscow. When business for foreigners became too difficult there under Stalin, he relocated to Berlin/Germany in 1929 with the help of the Afghan Embassy where he opened an international investment finance company in 1930. His business success became known in Afghanistan and the Afghan government invited Mr. Zabuli to Afghanistan to find a way to revive the economy in his home country. Through civil war and regime changes, all monetary reserves which were gold and silver coins at that time were looted. The economy was further devastated by the “Great Depression” which had started in the US and infiltrated Europe and the East. In the first two years of the Depression, trade und business exchanges came to a complete halt. The foreign trade in Afghanistan was a monopoly of foreigners and Afghan business men were completely excluded from business deals with India and Europe. This fact added to the unemployment in Afghanistan and was the reason that no income from foreign trade returned to Afghanistan. After declining twice to return to Afghanistan, Abdul Madjid Zabuli finally agreed in 1932. He arrived 30 June 1932 in Kabul together with HRH Sardar Mohammad Aziz Khan.

Plans for fiscal and economic reforms were soon submitted. Abdul Madjid Zabuli’s proposal among other things for reform was establishing a bank and changing the monetary system from coins to paper money which was granted by the government. In order to make the economic reforms succeed he was asked to stay in the country. The Ashami Co. was founded,a stock company that was charted as a commercial bank in 1933 when it began its work with 80% private and 20% government loans. The Ashami Co. later developed into Bank-i-Milli, the Afghan National Bank. The charter of Bank-i-Milli was adopted in 1932 and began its work in 1933. This charter was planned in such a way that on the one hand it encouraged private businessmen to individually undertake trade activities and on the other hand would establish more joint stock companies. Since the joint companies could receive cheaper credit than in the open market and could be better guided by the bank, the system developed fast. Bank-i-Milli played an outstanding role in this regard. Loan interests given by private businessmen to each other were 20% a year, while Bank-i-Milli lowered it to 8% for exports and 10 % for imports. Bank-i-Milli was no ordinary bank, but a mechanism to carry development through all its complicated steps: promoting, surveying, organizing of capital, labor and production - all the way from raw material to the finished product. Most important: -marketing and training of the work force. The mechanism was largely one man- Abdul Madjid Zabuli.

Bank-i-Milli in 1933 adopted a three-phased plan for direct trade relations with other countries. Four new branches were opened in India and later in the same year in London and Berlin. For the first time, business commenced with European Banks. With the Karakul Fur Monopoly Law the export quotas were fixed for each participating stock company according to their own request. Private businessmen were invited also. The Karakul Trade returned again1935 into Afghan hands. Trade started to develop with Europe. The Bank secured direct access to the London Fur Exchange. Experts for standardization of karakul skins were brought into the country and a school for this purpose was set up. 1934 the first graduates started their work. The fur trade developed well and brought much bigger profits: from 900,000 skins sold at the London fur exchange in 1934 to 3.2 million in 1943. The economic upswing in Afghanistan was soon noticed abroad and the first Trade Agreements followed. The value of the Afghani was fixed against the Dollar and Pound Sterling, stabilizing prices and thus preventing inflation.

1936 Zabuli went with a Delegation to Europe to secure loans and credits. The businessmen could now open letters of credit abroad. The loans resulted in imports of whole factories. For example the Pul-i-Khumri textile factory came from England. At the same time agreements were made to recruit engineers and technicians from Poland, Italy and Germany.

When he was in London he learned how to further increase profits from the Fur Trade and he convinced US buyers to purchase their furs directly from Kabul. Trade with the US started for the first time for Afghanistan. The first order was 400.000.00 pelts and this led to the opening of the Afghan- American Trading Co. in New York, which was not a bank, but assisted the Afghan economy. It was supported by Bank-i-Milli whose good reputation was already known and appreciated.

Soon after his return to Afghanistan in 1938 he was promoted Minister of Economy by HRH Mohammad Hashim Khan.

Zabuli was always in favor of the idea that the first priority must be allocated to the production of basic consumer goods and services and of course, improvement of standard of living should encompass the agro- industrial workers who would be offered a fair wage structure, health, housing and educational support. This one could clearly see soon.

An economic council with 32 experts was created in order to study the best way how to expand the economy in Northern Afghanistan. The valley along the Kunduz River was chosen to be the place for vast industrial and agricultural changes. First step was eradicating the malaria, which was rampant in this part of the country. Two Hospitals were built. Cotton production was expanded. Canals were built for electricity and irrigation. Coal was to be mined and consequently infrastructure became important. One project led to another. Textile mills were built, eight new ginning facilities.

Manufactory plants developed around Pul-i-Khumri and other towns like Baghlan with the sugar factory and its new sugar beet production close by became thriving company towns. Millions of people found work and made a decent living.

Trucks and cars were now directly imported from GM for almost two thirds less than previously when the cars were imported through Indian dealers. Ford Co. soon followed.

Da Afghanistan Bank was built, mainly to finance and oversee the industrial developments and follow a sound and wise monetary policy in order to keep the Afghani stable against other currencies.

Bank-i-Milli diversified. In connection with the Cotton industry, it set up plants to extract vegetable oil and produce soap. It taught farmers how to grow with profit sugar beets for the plant in Baghlan, 20 Miles North of Pul-i-Khumri. From the plants waste products, the livestock of the experimental dairy farm could be fed (500 cattle, 700 sheep, horses, camels and donkeys) and the Karakul farms could be supplied with feed also. The sugar industry sponsored another subsidiary industry, sericulture. Mulberry trees grow plenty in Turkestan. Silkworm breeding by the farmers and weaving materials by the women provided a second income for the families. The sugar factory promoted this experiment and gave it technical guidance.

When America joined World War II, the Pacific route was closed and the Afghan Karakul breeders experienced hardship. 1943 Zabuli was very ill in Switzerland, when the Afghan government informed him that it had decided the breeders should refrain from breeding karakul lambs until the end of the war and instead concentrate on breeding sheep for meat. Zabuli disapproved and proposed Karakul pelts should be purchased at the price of the mid-1942. The needed money should be paid 40% from Da Afghanistan Bank and 60% by Bank-i-Milli. Similarly purchase of cotton should continue as before and cotton farming development projects executed according to plan. Cotton buyers should also be given credit by the two banks. Purchased Karakul pelts and cotton should be stored until the end of the war. The government approved and Afghanistan reaped huge profits with its reserves on furs and cotton by the end of World War II. By 1957 the cotton mills provided for half of the population of Afghanistan all the cotton cloth needed.

By 1950 the bank was promoting projects south of the Hindukush, among them a hydroelectric project at Sarobi and an ultramodern cotton mill at Gulbahar, both German engineered. Over 30 industry projects were built and finally the first systematic training program was launched for young Afghans in economics, finance, and industry. All the young men had to travel west since this kind of education was not available in Afghanistan.

In 1951 Abdul Madjid Zabuli resigned, but continued to work for Afghanistan from abroad. President Daud nationalized Bank-i-Milli at the beginning 1973 and the Bank lost its drive. Abdul Madjid Zabuli helped the poor through establishment of the assistance fund of Bank-i-Milli and a number of other charitable instruments. He had worked and worried for the cause of progress until his death in 1998. His wife was his messenger to convey his last wish to the new Afghan generation, demanding they bring prosperity and peace back to Afghanistan. By working hard and by forgetting their ethnic, political and religious differences they can reunite and rebuild their Afghanistan.

References

1. Abdul Majid Zabuli short bio at Afghanistan Online

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• 1896 births
• 1998 deaths
• Afghan bankers
• Afghan centenarians