Afghanistan

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Area: 652,230 sq. km

Population: 32,007,000 (2014, est.)

Capital: Kabul

GDP: USD 20.4bn (2014, est.)

Exports: USD 2,785bn (2014, est.)

Imports: USD 6,390bn (2014, est.)

Currency: Afghanistan Afghani (AFN)

Exchange rate: 1 USD = 68.59 AFN (01/2016)

 

Economic Development:

In the last decade, Afghanistan’s domestic economy has experienced a period of constant growth, although in the last year the country has faced a decline in growth and investment. Companies, investors and consumers are waiting for the 2014 presidential election and the subsequent constitution of a new government. A somewhat slow growth is therefore expected for the near future. Afghanistan’s ranking in the Human Development Index has improved but nevertheless remains at a very low level. Since 2002 an estimated 5 million refugees have returned to their homeland. Another success story is the expansion of the Afghan school system. 100,000 new teachers are now employed at schools, meaning that 8 million children are able to attend regular school lessons. One-third of these pupils are girls, which would have been unthinkable under the Taliban regime. Furthermore, 80% of Afghans have access to healthcare. However, despite the successful progress in recent years, one-third of the population continues to suffer from shortages of housing, clean water, electricity, medical care and employment.

Urban areas in particular have experienced positive development throughout the last decade. Large corporations as well as small- and medium-sized enterprises have been founded, expanding their businesses in Afghanistan and beyond. Service-providing entities have benefited from this rising Afghan and international demand. Modern telecommunications, for example, has become a booming market, with Afghanistan’s mobile telecommunications covering 80% of the domestic population. A thriving construction sector has also been established. Due to the reconstruction of roads and the international support for civil aviation, national and regional transport links have improved, leading to the emergence of profitable Afghan companies in this sector. In rural areas, private sector development projects financed by Germany and other donors have fostered agriculture and agricultural value chains in areas such as dairy products, carpet weaving and silk productions. Meanwhile, capacity building programs have improved skills among farmers and manufacturers; pressure from rural farmers to move into urban areas due to higher salaries and better living conditions remains high and – taking into account the consistently high birth rate in Afghanistan – will remain so in the coming years.

In passing several economic policies and programs (the Afghan Incentive Policy as the latest example), establishing and Afghan Chamber of Commerce and Industry (ACCI) and an Investment Support Agency (AISA), and inaugurating industrial parks throughout the whole country, the Afghan Government has tried to establish a consistent political and economic framework for the private sector in the country. However, government efforts have lacked the necessary implementation steps. Efforts have also been undertaken to enhance regional trade and open Afghanistan to international trade and investment. As a result accession negotiations with the World Trade Organization (WTO) have been opened, although they have not yet been concluded. Moreover, crucial legislation has not yet been passed in the fields of mining, banking regulation, and taxation. In summary, the Afghan government hast done too little to enhance regional trade and exchange. The support for private sector development in establishing a business-friendly political and legal framework has failed to release the full potential of the mining and agricultural sector.

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