October 15 marks two months since the Taliban captured Kabul and established its hegemony over Afghanistan. In the following weeks, US and foreign troops withdrew, concluding the ‘war on terror,’ and rebel resistance in the Panjshir Valley came to an end. For now, it does appear that active fighting in the country has ended.
However, the end of war does not mean peace for the majority of people in one of the poorest countries in the world. Today, the majority of Afghans are grappling with day-to-day questions of survival, which have intensified due to a lack of cohesive governance. There is little information on whether the Taliban’s new administration has a domestic economic recovery plan and if so, what it entails.
Rising economic hardship
Though war-torn Afghanistan has been grappling with systemic economic problems for long, the apparent end of conflict has brought the issue to the center now. According to UN estimates, more than three-fourths of the population is living in poverty and many of these people will soon be in absolute poverty if no immediate steps are taken. According to the UN, more than half of Afghanistan’s roughly 38 million people today need urgent humanitarian assistance.
Most sectors of the economy need urgent revitalization in order to address chronic issues, such as lack of employment opportunities and scarcity of essential commodities.
Persistent fighting has destroyed Afghanistan’s infrastructure and especially agriculture which contributes at least one-fourth of the GDP and is a source of income for almost 60% of its population. Almost three-fourths of Afghans live in rural areas where there is a severe lack of food and medical supplies due to war, drought and the failures of successive administrations in Kabul.
The rising prices of essential commodities have taken them out of the reach of poor people in rural areas. Many Afghans quoted by Pajhwok news agency in provinces such as Nangarhar have complained about the price rise. Last week, reports said that a sack of 50 kg of flour was being sold at 2,600 Afghani (roughly USD 28) and 10 liters of cooking oil cost 1,400 Afghani. The per capita income in Afghanistan, according to the World Bank, is USD 508.
One of the main reasons for the price rise is lack of sufficient imports and rising prices of the dollar vis-a-vis the Afghani. Some reports also indicate growing smuggling of dollars across the border with Pakistan which has further affected the value of the local currency.
Reports indicate that a large number of employees have not been paid their salaries for months now. This, along with the shutting down of many private businesses, has led to a sharp decline in purchasing power. The lack of liquidity has intensified due to the closure of banks and limits on withdrawal imposed following the Taliban’s takeover.
The Taliban government has blamed the US and IMF for the cash crunch in the country as both of them have stopped it from accessing billions of dollars in assets.
The result is rising hunger. According to a WFO report, anywhere between 60-70% of the population in northern Afghanistan is facing hunger and the situation is similar in most other parts of the country.
Foreign engagement or domestic initiatives
Responding to the desperate calls of the UN, a recent G-20 meeting decided to provide aid to Afghanistan without recognizing the Taliban government. The UN had warned of a looming “humanitarian crisis” in the country and an alarming rise in poverty and hunger. It appealed for greater foreign engagement with the new regime in Afghanistan.
The G-20 decision to maintain a level of humanitarian engagement with the Taliban regime may bring some immediate relief. Some countries such as China, Iran and Qatar are already providing essential material aid. Still, the issues of chronic unemployment and poverty will require a more lasting intervention.
However, the Taliban’s reluctance to take demonstrative steps vis-a-vis the rights and security of women and minorities has led to a mistrust of its intentions. The UN secretary general Antonio Guterres has already expressed his alarm at the Taliban breaking its promises. This, along with Taliban’s failure to deal with growing violence from groups such as Islamic State in Khorasan Province (ISKP), may affect peace and stability and delay economic recovery.
Though foreign aid has been welcomed by most in the country, several Afghans have also argued that the government in Afghanistan needs to devise a more concrete plan for domestic economic recovery and growth in production. That may require the Taliban to adopt a more inclusive approach towards all sections of the society, including women who contribute immensely in the country’s economy, and chart a plan for the revival of the public sectors.