Afghanistan Economy

While the world media is focussed on the shambles at Kabul International Airport, I am far more concerned about the Afghanistan economy and the effect that the twenty-year war and the sudden US withdrawal will have on the economic well-being of the people.

• Two-thirds of the population of Afghanistan live below the poverty-line of $1.90 per day. They don’t have the capacity to cope with the serious economic shock that is inevitable.

• The Afghanistan government, which has collapsed, had 300,000 people in its armed forces. Those 300,000 people no longer have a job and have lost their source of income. That is a huge increase in unemployment in one hit. Some will be able to go back to the countryside from where they come and live on their family farm, but most won't have any income until they find new employment.

• Many people in Kabul worked as cleaners, cooks, drivers, child care, security, etc. for the wealthy, western diplomats and business people who have now fled the city. These people will have lost their employment.

• Five million people live in Kabul.

• Eighty percent of the Afghan population lives in rural areas. The average land-holding is 1.4 hectares. Nearly half the workforce is involved with agriculture, and 60 percent of households derive some of their income from agriculture.

• Estimates are that three-quarters of the spending of the collapsed government was funded by foreign aid. If Western governments are peeved by their defeat by the Taliban and cut of their financial support to the nation, it will have a serious impact on the local people. The US has already frozen billions of reserves owned by the Afghan central bank. The IMF has already withheld $450 million of aid that was due to be sent.

• Afghanistan is not self-sufficient in food. It relies on imports for about twenty percent of its food supply. With a weakened economy and devaluation of the currency, it might struggle to import sufficient food to meet the needs of everyone.

• Only an eighth of the land is arable. Much of the land is only suitable for pastoral activities, and a huge amount of land is mountainous or arid or semi-arid, so agricultural activities are tough going.

• Afghanistan is rich in mineral deposits, including iron, copper, gold, lithium, chromium, lead, zinc, and many of the rare earth minerals needed for modern electronics and electric cars, but they are not easily accessible. Unfortunately, most of the income from efforts to extract minerals usually goes to the large mining companies and rarely benefits the local population. It is hard to see how Afghanistan will be different.

• Afghanistan has low levels of debt, but increased borrowing might not be a wise option.

• Opium poppies have been the best-paying crop for many Afghan farmers. When the Taliban came to power the first time, they banned the production of opium, but when the North Alliance took control with US support, opium production got underway again. It is not clear what the Taliban will do about opium production this time around.

Even if the war is over, and I hope it is, the suffering of the Afghan people is like to continue for some time.