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SIGAR issues pessimistic economic forecast for Afghanistan

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(Last Updated On: February 20, 2022)

Afghanistan’s economy suffered severe contraction in 2021, with the UN Development Programme (UNDP) and IMF estimating up to a 20–30 percent drop, the US Special Inspector General for Afghanistan Reconstruction (SIGAR) reported.

According to SIGAR’s latest report, annual per capita income is estimated to have fallen from $650 in 2012, to $500 in 2020, and is expected to drop to $350 by 2022.

SIGAR stated that male unemployment in Afghanistan may nearly double from 15.2 percent in 2019 to 29 percent by 2022.

“In the worst-case scenario modeled by the Asian Development Bank, unemployment could increase by more than 40 percent in the short run and household consumption could contract by 44 percent,” read the report.

The devaluation of the afghani has also impacted the Afghan economy and further diminished Afghan households’ ability to purchase food and
other necessary items, because much foreign trade was settled in US dollars.

Since August last year, the afghani has depreciated against the US dollar, from approximately 77 afghani to the dollar to around 105 as of January
2, 2022.

SIGAR also reported that adding to the pressure on the country’s limited cash reserves, Afghanistan lacks the technical capabilities to print its own currency.
According to SIGAR, the IEA has not yet secured or developed a domestic printing source for afghani banknotes.

SIGAR reported that Afghanistan’s largely cash-based economy has continued to struggle with an acute cash shortage since November, which has limited day-to-day economic activities.

“Banks are at the center of a liquidity crisis, with lost access to international financing and depositors attempting to recover their funds,” read the report.

According to a UNDP report, Afghanistan’s banking system is in “existential crisis.” Total deposits had fallen to the equivalent of $2 billion as of
September 2021 from $2.8 billion the month.

As the Afghan economy has struggled to find areas of sustainable economic growth in recent years, the country has increasingly relied on remittances from Afghans working abroad, especially in neighboring Iran.

By 2019, remittances accounted for the equivalent of 4.3 percent of Afghanistan’s annual GDP, an increase from 1.2 percent in 2014, according to World Bank data.

However, officials from the UN’s International Organization for Migration estimate this figure could have been as high as 15–20 percent, given that many remittances are sent through the informal hawala money-transfer system.

According to officials at Médecins Sans Frontières, with the absence of a functioning banking sector, many NGOs have also been forced to rely on
hawalas to pay expenses within Afghanistan.

In November 2021, the IEA announced a complete ban on the use of foreign currency in Afghanistan, interfering with remittance activities and
worsening the country’s liquidity crisis.

However, SIGAR reported that indicators suggest that the currency ban is not being actively enforced against the US dollar, which continues to be widely used in Afghan markets.

Business

Samanagan almond farmers happy with this year’s yield

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(Last Updated On: September 25, 2022)

Samangan officials said local farmers have reported a substantial increase in almond crops and that they collectively stand to earn more than 1.1 billion afghanis from this year’s harvest.

Samangan Agriculture, Irrigation and Livestock Department director Najibullah Joya said: “During the last few days, the officials of this department have visited various parts of the province, where the most almond orchards are located.”

He said the estimated volume to be harvested will be about 4,620 tons, compared to last year’s 2,887 ton harvest.

“According to their calculations, gardeners will earn more than 1.1 billion afghanis from the sale of almond crops,” he said.

Meanwhile, dried fruit and nuts traders welcomed the increase.

One trader, Haji Naqibullah, from Aybak city said: “This year, Samangan almonds have a high yield,” adding that he has bought more than 50 tons of almonds already from farmers and sold them on.

Samangan officials said 40% of Samangan almonds are sold domestically while 60% are exported by companies and traders to India, Pakistan, and the United Arab Emirates.

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New road, rail link sees Chinese cargo arrive in Hairatan after only 11 days

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(Last Updated On: September 23, 2022)

The first load of freight from China to Afghanistan on a new road and rail route transiting Central Asia arrived in Hairatan, in northern Afghanistan, on Thursday.

Twelve containers, carrying mostly vehicle parts, took only 11 days to reach Afghanistan.

The new multimodal route starts in China’s northwestern Xinjiang province then passes through Kyrgyzstan and Uzbekistan before entering Afghanistan.

The cargo traveled along the first stage – around 500 kilometers from the city of Kashgar in Xinjiang to Osh in southern Kyrgyzstan – by road since there is no rail link, although one is planned eventually.

The first containers left Kashgar on September 13, the RailFreight.com website reported.

At Osh, the cargo was loaded onto trains to link up with Uzbekistan’s rail network across the border in Andijan.

They then crossed eastern Uzbekistan and headed south into Afghanistan to arrive at Hairatan, which links with the northern Afghan city of Mazar-e-Sharif along an Uzbek-built railway line.

The journey on the new route took only 11 days – compared to one to three months for the current route used to send cargo from China to Afghanistan through Pakistan via the seaport of Karachi and overland.

China and Afghanistan have been trying to get a rail connection off the ground for years.

In 2016, the first cargo train traveled from China to Hairatan through Kazakhstan and Uzbekistan, loaded with textiles and household goods. But it took another three years before any cargo moved back along the route to China, when a train loaded with talcum powder made the journey in 2019.

The route across Kyrgyzstan and Uzbekistan is now undergoing a three-month pilot, and should eventually carry some 4,000 containers annually.

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History in the making as 18 tons of pine nuts to be shipped overland to Italy

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(Last Updated On: September 22, 2022)

The Ministry of Industry and Trade said Thursday that a local company was preparing to export 18 tons of pine nuts to Italy overland.

According to ministry officials, the private company meets international standards and will dispatch its consignment within the next few days.

Officials also said in the first three months of this year, $19 million worth of pine nuts was exported and that there is a growing demand for the local produce.

It is estimated that Afghanistan harvests around 30,000 tons of pine nuts every year.

However, this Italian-bound consignment will for the first time be shipped overland via Turkey.

“This is a new export by land, which will be exported from Afghanistan to Turkey first, and then to Italy, and now we have the capacity to prepare our products according to the standards of European markets,” said Abdulsalam Akhundzada Jawad, the spokesman of the Ministry of Industry and Trade.

In the past, pine nut distributors have complained about the export process as the produce was first sent to Pakistan and from there sold on to international buyers.

The Chamber of Industries and Mines says that 30,000 tons of pine nut oil is produced annually in the country and is exported to China, Saudi Arabia, United Arab Emirates, India and Pakistan by air and land.

“We consider it important to export Afghan black pine nuts to Italy, and since there is a high export capacity in Afghanistan, the Ministry of Industry and Trade should provide the conditions for export,” said Mohammad Karim Azimi, executive director of the Kabul Chamber of Industries and Mines.

Economic experts say that if the Ministry of Industry and Trade solves the transit problems faced by exporters, Afghanistan will be able to substantially increase sales of dry and fresh fruits to international markets.

“Exporting black pine nuts to European markets is very important. Besides black pine nuts, we have other very important trade and export items in the country, which should be provided for export, which is considered very important for the Afghan economy,” said Taj Mohammad Tala, an economic analyst.

Following the collapse of the former government, air cargo corridors used for exporting fresh produce were stopped. However, business owners are hopeful that newly launched overland trade corridors will now fill the gap and open up even wider markets.

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