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November 15, 2012

Afghan Economy Slows

by Sharon Behn

For the past 10 years, Afghanistan's economy has been heavily dependent on foreign aid and contracts linked to the needs of thousands of coalition troops. That will largely end in 2014 as foreign combat forces leave the country. The government is downplaying the potential impact, but business owners in Kabul say they are worried about the country's economic future.
 
Row upon row of heavy construction equipment lies idle along Kabul's Jalalabad Road as international contracts begin to dry up with international forces pulling out. Machines like these had been used to build the heavily fortified bases that coalition troops established around the country.
 
Business owner Haji Abdul Khalil Ahmadzai used to sell 10 - 15 of these machines a month. Now he is lucky if he sells one.

"The country's situation is getting worse, we can't sell our equipment, or send them out, sometimes the insurgents burn our vehicles," Ahmadzai said. "Our country is going through hard times. Work is slowing down, it's not like it was in the past."
 
Ahmadzai's worries are echoed across the business community.
 
In an effort to prevent a steep economic downturn which could further destabilize already weak government institutions, U.S. and Afghan officials are trying to attract investment in the country's mineral, agricultural and energy resources.

Noorullah Delawari, governor of Afghanistan's Central Bank, says the country's GDP growth is healthy and that a pledge of $16 billion in international aid will help.

"We have been given assurance, people are hopeful, we are all hopeful in accordance with agreements we have with the donors that will carry us at least to 2020 even 2024," said Delawari.  "So with those negotiated or promised support to Afghanistan, I believe we can carry on our economic activities at the same level we have had as we have in the past few years."

But some say businessmen are beginning to cash their money in for dollars.

Former minister and current economics professor Hamidullah Farooqi says the government has failed to create a healthy economy.

"The majority of our economy is, unfortunately, illegal, and the forces of the mafia system and mafia economy are huge, and that creates enough difficulty for the legal economy, for the economic forces which were in the society," Farooqi noted.
 
Farooqi predicts even tougher economic times are ahead, if Afghanistan's government doesn't start working harder for its people.