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Image: Economy and trade

Economy and trade

The government in Kabul is struggling to get the country back on its feet economically, but has to cope with armed conflict, corruption, high crime rates and a weak state apparatus. The Afghan economy has shown signs of improvement after the fall of the Taliban in 2001, but this is overshadowed by the informal economy and aid dependency.

The Afghan economy is in a rebuilding process after decades of war. Although it is still both underdeveloped and fragile, Afghan cities bear witness to the untiring enterprise of the locals. New shops and services sprout up at an amazing speed, from ice cream vendors to office supply stores. However, most Afghans live off agriculture in the countryside, where the lack of transport links makes it hard to get fresh produce to faraway markets. Agriculture, both livestock and cultivation, is the main source of livelihood and subsistence for around 80% of the rural population in Afghanistan, and is crucial for the national food security and growth in the formal economy. Wheat and other cereals that are used for local consumption are the mainstay of agriculture production.

Aid dependency and a poorly developed export industry

Most of Afghanistan's agricultural produce is sold in local markets. Due to a lacking infrastructure, the export industry is quite limited to preserved or non-perishable produce. Photo: Bente Elisabeth Skjefstad. Afghanistan is one of the poorest countries in the world with high poverty and unemployment rates. The official unemployment rate is 35% and around 42% of the population lives on less than $1 a day, according to the most recent statistics (2009). The country is almost entirely dependent on international aid. Export industries are hampered by security concerns, but also by the lack of proper infrastructure. Agriculture has not yet grown into a sizeable export industry. Much of Afghanistan‘s agricultural produce has to be consumed locally because there are neither facilities to prepare it for export, nor proper roads to take it to distant markets. Therefore, the main exports consist of preserved or non-perishable produce that won‘t be damaged on the way: dried fruit, nuts, animal skins, wool, cotton, carpets and the like.

The mountains hold enormous riches

The Afghan mountains are a goldmine, in a figurative and a literal sense. Photo: Ronny Hansen. The Afghan soil and rock contain enormous riches, both oil, gas and minerals. In 2010, U.S. scientists estimated that Afghanistan had untapped mineral resources worth 1 trillion US dollars: lithium, copper, gold, lapis lazuli, coal, iron ore, and other types of minerals and gemstones. The mineral riches are only extracted to a minimal degree but more licences are being processed and international mining companies are increasing their foothold in Afghanistan.  There are many who doubt that the mineral wealth will bring an instant improvement in living standards for ordinary Afghans. Even if violence abates, it takes years to build up infrastructure. And even when the Afghan mining sector takes off, the profits will not trickle down to the public as long as corrupt politicians and officials syphon off large sums of money.

Opium

Although not a part of the formal economy, illegal opium production and export provide a significant income to some. Opium is easy to grow, easy to transport and provides good economic returns. The medicinal and narcotic effects of opium have long been known in the region. It is considered one of the world‘s oldest pain relievers. Opium and derivatives thereof have therefore not only been an important source of income to farmers, but have also been used to drive world events and fuel wars since the 19th century. Today, however, this trade has no direct benefits for the state, - quite the contrary, and there is not always a solid economic benefit for the farmers who grow it.* The profit rather goes to illicit criminal networks that often are intertwined with militias.

Opium fields are stunningly beautiful but the harvest is hampering economic development and food security in Afghanistan. Photo: Elisabet Eikås.

In 1991, Afghanistan became the world’s largest source of illicit opium production, surpassing Burma (Myanmar). Today, it is estimated that over 90% of the world‘s opium is produced in Afghanistan. There is a strong link between opium production and insecurity. Most of the production takes place in the volatile southern provinces, with half of all Afghanistan‘s opium being grown in the troubled Helmand province. The international society has been assisting the Afghan authorities combating opium production with varying results, mostly by eradicating poppy fields.



*Many say that there are minimal economic incentives for farmers to grow poppy and that they are often forced to do so by militias. However, after a price jump in 2010, the UNODC‘s periodic opium surveys have consistently seen farmers cite high selling price as the main reason for choosing to grow poppy.

Norwegian Afghanistan Committee
Addresse:  Nawai Watt, Street # 03 •  Postal addresse:
work # 148 Shahr-i-Naw, KabulAfghanistan

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