Afghanistan Peace CampaignYou can preview the report online and download it by clicking here or the download button below.
We spoke to seven men and two women, all with employees and all but one with a business pre-dating the fall of the Islamic Republic. Our nine interviewees, based in Nangrahar, Mazar-e Sharif, Paktia, Bamyan, Kandahar and Kabul, include the owner of a factory that processes pulses; an importer of crockery and glassware for domestic retail, a trader in potatoes and onions; the deputy manager of a factory making pressure cookers; a children’s clothes manufacturer; the owner of a rug-making factory; the owner of an embroidery business; and a herbalist. We also conducted a number of less in-depth interviews in Kandahar.
Three of the interviewees said their businesses were flourishing, one after a significant decline because of Covid-19, followed by the change of government and collapse in the economy. Most, though, were struggling and most had downsized. The businesspeople spoke of plummeting sales and having to lay employees off or dip into savings to retain staff when profits could not cover wages. They described problems ranging from shrinking consumer demand to delays and bureaucracy at customs, high taxes, cheap imports, lack of capital, problems with banking and a patchy electricity supply.
Their day-to-day problems provide the context for the second section of the report which scrutinises the national economy. It considers the main takeaways of the World Bank’s most recent ‘Afghanistan Development Update’, published in April 2024, which was packed with information and was gloomy in its outlook, and the Emirate’s responses, which were far more positive. This report considers the reasons behind the shrinking of the economy when the Republic fell and the resulting sharp contraction in consumer demand. It looks at dynamics about which Emirate officials are proud, but the Bank is worried about, such as deflation and the strong currency. It looks at Emirate revenue collection and spending, including its focus on the security services, and the economic impact of the opium ban and changing Pakistani policy on trade and exports/imports.
The paper ends by looking at what our nine businesspeople, the Bank and the Islamic Emirate say would help the Afghan private sector, as well as the wider economy, to flourish. All the policy options, the report concludes, are highly political and would involve the Emirate or donors backing down on principled positions, or difficult domestic considerations, or measures by neighbours and countries further afield that would go against their perceived interests. Yet until at least some of these changes happen, it is difficult to see Afghanistan finding its way to an upward path of real sustained growth.
You can preview the report online and download it by clicking here or the download button below.
