afghanistandividends on profits, rather than charging interest on loans, since usury is
forbidden under Islamic law. The bank was essentially the Shirkat-i Ashami
under another name, for Zabuli was both president and its main share-
holder, though the government contributed just under half of the initial
capital. Zabuli then appointed senior members of the dynasty as directors.
The Musahiban brothers and other Muhammadzais, as well as wealthy
Afghans, reaped immense profits from their investment that were as high
as 500 per cent. Many senior officials stationed abroad spent more time
pursuing their personal commercial interests than performing state duties,
and the line between personal and national interest became so blurred that
for many officials they were two sides of the same coin.
Zabuli’s fiscal policies more than tripled state revenues and, since
ministers and other government officials benefited substantially from
the shirkats, he was given almost unlimited authority over Afghanistan’s
economic and fiscal affairs. The Bank-i Milli eventually controlled more
than fifty state monopolies including the lucrative karakul, or lambskin,
trade, sugar, raisins, dried fruit, rice, cotton, wool, petrol, motor vehicles
and cement. Before the creation of the Da Afghanistan Bank in 1938, the
Bank-i Milli also functioned as the Reserve Bank, controlling financial
markets, exchange rates, foreign currency and bullion trading, and the
issue of treasury drafts. Since Zabuli was also Minister of Commerce, he
Currency dealers, Herat. In Afghanistan such transactions have always been conducted
through the informal hawala system rather than banks. Zabuli’s monetary and fiscal reforms
were designed to undermine this system and to exert state control over exchange rates and
foreign currency dealings.