Afghanistan’s economy is suffocating. After the Taliban seized power a year ago, the country was plunged into a serious financial and humanitarian crisis. In total, 75% of the country’s budget depended on international aid, which was suspended with the return of religious fundamentalists. Unemployment has exploded and 70% of Afghan families are unable to meet their basic needs; 90% of the population lives below the poverty line and 20 million Afghans, almost half of the population, are hungry.
Banks lack liquidity and are required to impose limits on weekly withdrawals. The Afghan central bank was deprived of international reserves and $7 billion in assets were frozen in the United States after the Taliban took power.
While the economic troubles began long before the Taliban returned, the shift in power has put the country of 38 million people on the brink.
Thousands of companies collapsed. Those that survived are struggling, victims of international sanctions weighing on the country led by a government whose legitimacy has not been recognized by any country so far.
In the commercial district of Herat, there is nothing lacking on store shelves, but prices have doubled in a year.
“Rice used to cost around 1,800 Afghanis, today it costs 3,000. And the oil, which comes from Russia, used to cost 450 Afghanis and today it costs 900”, says trader Aziz Ahmad Amiri.
That amount is a fortune for a large part of the population, which has fallen into extreme poverty since the Taliban took power. Aziz Ahmad Amiri has had to lay off around 15 employees in recent months. He says that he lost 50% of his clientele and that he struggles to keep his business.
“Most of the rich people left the country. And without rich or well-off people, we can’t do good business. The people who stayed are poor, so we give them credit and we have customers who owe us money but who have left Afghanistan.”
Entrepreneurs are also suffering under the weight of international sanctions. Jalil Ahmad Karimi is a saffron producer. Red gold is the great pride of Herat, but the product lost 80% of its revenue.
“Before, we would ship our products by plane directly to India, China, Europe or the United States. Now it’s complicated because we have to send everything by truck to Iran and then send the parcels to other countries.”
There is no other option, because international carriers no longer do air freight in Afghanistan. Another problem, according to the businessman, is the end of the banking agreement with other countries. As a result, Jalil Ahmad Karimi has not received money for a year and has been waiting several months for the equivalent of €334,000 from an India-based customer to whom he sent 200 kilograms of saffron.
“As the Afghan state is not recognized, bank transfers from abroad are prohibited.”
Najibullah Khairandish Fushanji imports wholesale flour from Kazakhstan, oil from Malaysia, milk and preserves from China and rice from Pakistan and India. But, in addition to international sanctions, inflation, due to the war in Ukraine and the economic crisis in Iran and Pakistan, has a direct impact on its activity. However, he highlights some positives:
“We pay 200,000 Afghanis at customs, or €2,200 for each truck loaded with goods. It was bribe. Nothing was cool. Now, each product is taxed according to a tariff schedule. Now it’s all cool.”
Like many business leaders, he expects diplomatic recognition from the Islamic Emirate of Afghanistan, which would mean lifting international sanctions.