Ariana Afghan Rugs Note: This project has been cancelled, because of the security situation in Afghanistan.Afghanistan has a long tradition of carpet making. Among the connoisseurs the carpets are highly valued. On the market, they are often sold as "Persian Rugs" (high-end) or "made in Pakistan" (low-end). During the Taliban regime carpet production for export grinded to a halt. Production was limited to low quality rugs to be sold on the local or regional market. The local partner continued carpet production in Pakistan, employing and contracting 4,000 persons. After the fall of the Taliban he returned his business to Afghanistan. He designs and produces tailor made carpets for the European and the American market, that are sold by the applicant, his brother. The carpets are woven by some 3,500 local carpet weavers in the Kabul region and finished in his factory. Although business goes well and the unique carpets are sold for high prices, there is always the danger of market saturation, as the carpets themselves last for centuries. The applicant contacted major home decoration companies like IKEA who are interested in expensive (300 euro per m2) but confectionary rugs to be sold to their "mid-end" customers. This requires a completely different way of production. Sizes and colours must be standardised and meeting deadlines is important. The partners will set up a production facility in the north west of Afghanistan, in Herat, the tribal area of the brothers. The suppliers of the raw materials will be from other areas, mainly central and eastern Afghanistan. Carpet makers will be employed instead of contracted and work in a factory. In this way, the production can be quality controlled and CSR certified, especially to exclude child labour. To meet the required production for their first customers, an initial thousand persons will be employed and produce 8,000 m2 a year at the end of the pilot. Although the project is based on a sound business case, the partners are not able to raise a bank loan. American and European banks rate Afghanistan a triple Z, while Afghan banks demand crippling interest rates, effectively blocking long term investments. PSI financing enables the joint venture to proof that they can convert traditional skills into a competitive modern production method for a new market. After this investors will be prepared to finance the necessary expansion of the production facility.Corporate Social Responsibility (CSR)The critical points are child labour and environmental pollution. The carpets will be certified by an independent American NGO called "GoodWeave", who will monitor on seven principles, the two above included. GoodWeave certification is mainly used by companies like the applicant who produce unique carpets for niche markets.Impact•	Employment and working conditionsSalaries from 50 to 900% over minimum wage, meals, transport, paid leave, health benefits. The local partners treats his present personnel well, resulting in a relaxed but hard working atmosphere in his processing plant in Kabul. For Afghan standards, safety standards are high.•	Innovation / Transfer of knowledgeThere is no production facility for standardised rugs or carpets in Afghanistan. Most individual weavers sell their rugs to Pakistan labelled "made in Pakistan".•	Chain effectsAll supplies are Afghan. This will be a major source of income for goat and sheep owners, as well as cotton farmers and tradesmen.•	EnvironmentNeutral, if proper care is taken.•	Position of women40% of the employees will be female. They will have separate facilities and working areas, allowing to work outside their homes. To set up a weaving and finishing plant that will produce 8,000 m2 per year of standardised carpets for major home decoration retailers.