Economy
Afghanistan is one of the world's poorest countries. Many years of war and political instability have left the country in ruins, and dependent on foreign aid. The main source of income in the country is agriculture, and during its good years, Afghanistan produces enough food and food products to provide for the people, as well as to create a surplus for export. The major food crops produced are: corn, rice, barley, wheat, vegetables, fruits and nuts. In Afghanistan, industry is also based on agriculture, and pastoral raw materials. The major industrial crops are: cotton, tobacco, madder, castor beans, and sugar beets. Sheep farming is also extremely valuable. The major sheep product exports are wool, and highly prized Karakul skins. Afghanistan is a land that is rich in natural resources. There are numerous mineral and precious stone deposits, as well as natural gas and yet untapped petroleum stores. Some of these resources have been exploited, while others have remained relatively unexploited. Afghanistan's economy is recovering from decades of conflict. The economy has improved significantly since the fall of the Taliban regime in 2001 largely because of the infusion of international assistance, the recovery of the agricultural sector, and service sector growth. Despite the progress of the past few years, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid, agriculture, and trade with neighboring countries. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Criminality, insecurity, and the Afghan Government's inability to extend rule of law to all parts of the country pose challenges to future economic growth. It will probably take the remainder of the decade and continuing donor aid and attention to significantly raise Afghanistan's living standards from its current level, among the lowest in the world. International pledges made by more than 60 countries and international financial institutions at the Berlin Donors Conference for Afghan reconstruction in March 2004 reached $8.9 billion for 2004-09. While the international community remains committed to Afghanistan's development, pledging over $57 billion at three donors' conferences since 2002, Kabul will need to overcome a number of challenges. Expanding poppy cultivation and a growing opium trade generate roughly $3 billion in illicit economic activity and looms as one of Kabul's most serious policy concerns. Other long-term challenges include: budget sustainability, job creation, corruption, government capacity, and rebuilding war torn infrastructure. The economy of Afghanistan has improved significantly since 2002 due to the infusion of billions of US dollars in international assistance and investments, as well as remittances from expats. It is also due to dramatic improvements in agricultural production and the end of a four-year drought in most of the country. However, Afghanistan still remains one of the poorest and least developed countries in the world that is highly dependent on foreign aid. As of 2009, the nation's GDP is $14 billion and the GDP per capita is $1,000. About half the population suffer from shortages of housing, clean drinking water, electricity and employment. The Government of Afghanistan and international donors have remained committed to improving access to these basic necessities by prioritizing infrastructure development, education, housing development, jobs programs, medical care, and economic reform over the recent years. The replacement of the opium trade, which probably makes up about one-third of the country's GDP, is one of several potential spoilers for the economy over the long term.
Agriculture The Afghan economy continues to be overwhelmingly agricultural, despite the fact that only 12% of its total land area is arable and less than 6% currently is cultivated.[citation needed] Agricultural production is constrained by an almost total dependence on erratic winter snows and spring rains for water; irrigation is primitive. Relatively little use is made of machines, chemical fertilizer, or pesticides. The country's fruit and nut exports are at $113 million per year and could grow to more than $800 million per year in 10 years given the proper investment. Badghis and Samangan Province in the north of the country are famous for pistachio cultivation but the area lacks proper marketing and processing plants. It is claimed that some Indian companies buy Afghan pistachios for a very low price, process it in India and sell to western countries as Indian products. However, the Afghan government is planning to build storage facilities for pistachios since receiving bumper crops in 2010. Pomegranates from eastern Afghanistan Wheat and cereal production is Afghanistan's traditional agricultural mainstay. The overall agricultural production dramatically declined following four years of drought as well as the sustained fighting and instability in rural areas. Soviet efforts to disrupt production in resistance-dominated areas also contributed to this decline, as did the disruption to trance 2002, more than 4 million refugees returned back to Afghanistan. Many of these former refugees are now involved in the farming industry. Some studies indicate that agricultural production and livestock numbers may only be sufficient to feed about half of the country's population. Shortages are exacerbated by the country's limited transportation network, which is currently being rebuilt. A report by the Food and Agriculture Organization (FAO) states that Afghanistan was nearing self-sufficiency in grain production. the attractiveness of the greater capital it generates. In turn, a lot of these men involved in the poppy cultivation invest the money they generate into small businesses and shops, as seen in the village of Deh Dehi. Most villagers have very limited economic options. There are money lenders prepared to provide loans on relatively good terms for opium production and the estimated annual profit from poppy cultivation for a single farmer is 1,000 to 2,000 Lakhs, as opposed to the 20 lakhs from cultivating wheat.[9] Hence there are an abundance of farmers willing to risk dealing with organized crime and criminals to have a chance at prosperity and why many farmers refuse to switch back to growing wheat.
Livestock
The availability of land suitable for grazing has traditionally made animal husbandry an important part of the economy. There are two main types of animal husbandry: sedentary, practiced by farmers who raise both animals and crops; and nomadic, practiced by animal herders known as Kuchis. Natural pastures cover some 7,500,000 acres (30,400 km2) but are being overgrazed. The northern regions around Mazār-e Sharif and Maymanah were the home range for about six million karakul sheep in the late 1990s. Most flocks move to the highlands in the summer to pastures in the north. Oxen are the primary draft power and farmers often share animals for plowing. Poultry are traditionally kept in most households. Much of Afghanistan’s livestock was removed from the country by early waves of refugees who fled to Pakistan and Iran. In 2001, the livestock population in Afghanistan had declined by about 40% since 1998. In 2002, this figure was estimated to have declined further to 60%. An FAO survey done in the northern regions in spring 2002 showed that in four provinces (Balkh, Juzjan, Sar-e Pol, and Faryab), there was a loss of about 84% of cattle from 1997 to 2002 and around 80% of sheep and goats. In recent years, USAID has been helping to improve once again the animal husbandary in Afghanistan. This is done by providing to Afghan villagers training and the first animals to start with.
Fishing The nation has plenty of water reserves and suitable climate for fish farming. Fishing takes place in the lakes and rivers, such as in Sarobi and Mahipar area. Fish constitute a smaller part of the Afghan diet today because fish farmers are unable to produce enough fish to keep up with the demands of customers. Using explosives for fishing, called dynamite fishing, became popular in the 1980s and is still practiced by some even though it is illegal today. The annual catch was about 900 tons in 2003. Most fish and seafood is imported from neighboring Pakistan, Iran, the United Arab Emirates and other countries. In recent years, USAID has helped many Afghans in establishing fish farms across the country. There are about 300 fish farms throughout the country and the largest one is at the Qargha, which supplies fish eggs to the other ones. Forestry Afghanistan’s timber has been greatly depleted, and since the mid-1980s, only about 3% of the land area has been forested, mainly in the east. Significant stands of trees have been destroyed by the ravages of the war. Exploitation has been hampered by lack of power and access roads. Moreover, the distribution of the forest is uneven, and most of the remaining woodland is presently found only in mountainous regions in the southeast and south. The natural forests in Afghanistan are mainly of two types: dense forests of oak, walnut, and other species of nuts that grow in the southeast, and on the northern and northeastern slopes of the Sulaiman ranges; and sparsely distributed short trees and shrubs on all other slopes of the Hindu Kush. The dense forests of the southeast cover only 2.7% of the country. Round wood production in 2003 was 3,148,000 cubic metres, with 44% used for fuel. The destruction of the forests to create agricultural land, logging, forest fires, plant diseases, and insect pests are all causes of the reduction in forest coverage. Illegal logging and clear-cutting by timber smugglers have exacerbated this destructive process.
Trade and industry
 Afghan rug weavers in Herat province  Afghanistan-Tajikistan bridge after completion in 2007 is one of several bridges used for trade between Afghanistan and Central Asia. The current trade between Afghanistan and other countries is at US$5 billion a year. In 1996, legal exports (excluding opium) were estimated at $80 million and imports estimated at $150 million per year. Since the collapse of the Taliban government in 2001, new trade relations are emerging with the United States, Pakistan, Iran, Turkmenistan, the EU, Japan, Uzbekistan, India and other countries. Trade between Afghanistan and the U.S. is beginning to grow at a fast pace, reaching up to approximately $500 million per year. The Afghan hand-woven rugs are one of the most popular products exported from the country. Other products include hand crafted antique replicas, precious and semi-precious stones as well as leather and furs. Afghanistan is endowed with a wealth of natural resources, including extensive deposits of natural gas, petroleum, coal, marble, gold, copper, chromate, talc, barites, sulfur, lead, zinc, iron ore,[15] salt, precious and semi-precious stones, and many other materials. In 2006, a U.S. Geological Survey estimated that Afghanistan has as much as 36 trillion cubic feet (1.0×10^12 m3) of natural gas, 3.6 billion barrels (570×10^6 m3) of oil and condensate reserves. According to a 2007 assessment, Afghanistan has significant amounts of undiscovered non-fuel mineral resources. Scientists also found indications of abundant deposits of colored stones and gemstones, including emerald, ruby, sapphire, garnet, lapis, kunzite, spinal, tourmaline and period. In 2010, U.S. Pentagon officials along with American geologists have revealed the discovery of nearly $1 trillion in untapped mineral deposits in Afghanistan. Plans are being made by the Afghan government to begin extracting these but with the Taliban insurgency and the corruption there is no telling what will happen. We know that the extraction efforts are challenged by remote locations, some of which are in areas controlled or at least threatened by the insurgency. There's weak infrastructure. This is obviously something that we are trying to expand for the benefit of Afghanistan's economy... So it is a potentially important development. We're not underestimating the challenges involved here. But obviously, if these things can be developed over time, that offers the ability for Afghanistan to have the resources necessary to develop a modern economy, a legal economy, as opposed to the economy they currently have now, which is heavily dependent on narcotics... —U. S. State Department spokesman P. J. Crowley, June 2010 A memo from the Pentagon stated that Afghanistan could become the "Saudi Arabia of lithium”. Some believe, including Afghan President Hamid Karzai, that the untapped minerals are worth at least $3 trillion. Afghanistan had sign a copper deal with China (Metallurgical Corp. of China Ltd.) in 2008, which to be a project that involves the investment of $2.8 billion dollars by China and an annual income of $400 million dollars to the Afghan government. The country's Ainak copper mine, located in Logar province, is one of the biggest in the world and is expected to provide jobs to 20,000 Afghans. It is estimated to hold at least 11 million tones or 33 billion US dollars worth of copper. Experts believe that the production of copper could begin within two to three years and the iron ore in five to seven years as of 2010. The nation's other most important resource has been natural gas, which was first tapped in 1967. During the 1980s, natural gas sales accounted for $300 million a year in export revenues (56% of the total). Ninety percent of these exports went to the Soviet Union to pay for imports and debts. However, during the withdrawal of Soviet troops in 1989, Afghanistan's natural gas fields were capped to prevent sabotage by the Mujahideen. Restoration of gas production has been hampered by internal strife and the disruption of traditional trading relationships following the collapse of the Soviet Union. Gas production has dropped from a high of 8.2 million cubic meters (2.9 × 108 cu ft) per day in the 1980s to a low of about 600 thousand cubic meters (2.2 × 107 cu ft) in 2001. After the formation of the new government under Hamid Karzai, production of natural gas is planned to be restored again. A locally owned company, Azizi Hotak General Trading Group, is currently the main supplier of diesel fuel, gasoline, jet fuel and LPG in Afghanistan. Trade in goods smuggled into Pakistan once constituted a major source of revenue for Afghanistan. Many of the goods that were smuggled into Pakistan have originally entered Afghanistan from Pakistan, where they fell under the Afghan Trade and Transit Agreement (ATTA). This permitted goods bound for Afghanistan to transit through Pakistan free of duty. This resulted in considerable problems for the Pakistani government, particularly its customs bureau who realized that many of the items being resold on the black market in Pakistan were the very same items being allowed duty free exemption from Pakistani ports (notable Karachi) on their way to Afghanistan. When Pakistan clamped down in 2000 on the types of goods permitted duty-free transit, and introducing stringent measures and labels to prevent such practices, re-routing of goods through Iran from the Persian Gulf increased significantly. The pre-2000 smuggling trade provided undocumented jobs to tens of thousands of Afghans, but also helped fuel the black economy, often intertwined with the drug cartels, of both countries.
Economic development and recovery
 New commercial buildings such as this one in Kabul are constructed across the country to help modernize the financial sector  Stacking USAID-Donated Wheat, 2002 Afghanistan embarked on a modest economic development program in the 1930s. The government founded banks; introduced paper money; established a university; expanded primary, secondary, and technical schools; and sent students abroad for education. In 1956, the government of Afghanistan promulgated the first in a long series of ambitious development plans. By the late 1970s, these had achieved only mixed results due to flaws in the planning process as well as inadequate funding and a shortage of the skilled managers and technicians needed for implementation. The nation's banking system has improved recently with over fourteen different banks operating as of 2003. They include Da Afghanistan Bank, Afghanistan International Bank, Kabul Bank, Azizi Bank, Pashtany Bank, Standard Chartered Bank, First Micro Finance Bank, and others. Money can be transferred electronically in and out of the country. A new law on private investment provides three to seven-year tax holidays to eligible companies and a four-year exemption from exports tariffs and duties. As a result of the new banks in the country, Afghans living overseas are sending more money back home to their family or relatives. According to a UN report in 2007, Afghanistan has received over $3.3 billion from its expatriate community in 2006. UN officials familiar with the issue said remittances to Afghanistan could have been more if the banking regulations are more convenient. However, in early September 2010, one of the principal owners of the Kabul Bank, at the center of an accelerating financial crisis in Afghanistan, said depositors had withdrawn $180 million in the past two days. He predicted a “revolution” in the country’s financial system unless the Afghan government and the United States moved quickly to help stabilize the bank. The UN and the international community continue to provide considerable humanitarian relief. Since its inception in 1991, the UN Office for the Coordination of Humanitarian Affairs (OCHA) to Afghanistan has channeled more than $1 billion in multilateral assistance to Afghan refugees and vulnerable persons inside Afghanistan. The US, the European Union (EU), and Japan are the leading contributors to this relief effort. One of its key tasks is to eliminate from priority areas—such as villages, arable fields, and roads—some of the 5 to 7 million land mines and 750,000 pieces of unexploded ordnance, sown mainly during the Soviet occupation, which continue to litter the Afghan landscape. Afghanistan is still a heavily mined country; mine-related injuries number about 60 per-month. Without successful mine clearance, refugee repatriation, political stability, and economic reconstruction will be severely constrained. The United States has not delivered $5 billion worth of aid it pledged to help rebuild Afghanistan, and other donors have fallen short by about that same amount, reported The Agency Coordinating Body for Afghan Relief on March 25, 2008. Since 2001, the international community has pledged $25 billion in help but has delivered only $15 billion. The reconstruction of Afghanistan requires a sustained and substantial commitment of aid. Too much money meant for Afghanistan aid is wasted, with a vast amount spent on foreign workers' high salaries, security and living arrangements. An initial concept design called the City of Light Development, envisioned by Dr. Hisham N. Ashkouri, Principal of ARCADD, Inc. for the development and the implementation of a privately based investment enterprise has been proposed for a multi-function commercial, historic and cultural development within the limits of the Old City of Kabul along the southern side of the Kabul River and along Jade Meywand Avenue, revitalizing some of the most commercial and historic districts in the City of Kabul, which contains numerous historic mosques and shrines as well as viable commercial activities among and within war-damaged buildings. Also incorporated in the design is a new complex for a new Afghan National Museum. The design has garnered interest from President Hamid Karzai, and has support from Ambassador Said Tayeb Jawad, who signed a Memo of Understanding regarding the development.
Other Facts
National accounts
GDP: purchasing power parity - $27.01 billion (2009 est.) GDP - real growth rate:
GDP - per capita: purchasing power parity - $1,000 (2009 est.)
GDP - composition by sector:
Note: data excludes opium production
Population below poverty line:
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices): 13% (2007)
country comparison to the world: 183 Labor force: 15 million (2004 est.) Country comparison to the world: 40 Labor force - by occupation: agriculture 78.6%, industry 5.7%, services 15.7% (2009 est.) Unemployment rate: 35% (2009) country comparison to the world: 181
Budget:
Industries: small-scale production of textiles, soap, furniture, shoes, fertilizer, and cement; handwoven rugs; natural gas, petroleum, coal, copper, marble
Electricity - production: 839 million kWh (2007) Electricity - production by source: fossil fuel: 36.3%
hydro: 63.7%
nuclear: 0%
other: 0% (2001)
Electricity - consumption: 1.418 billion kWh (2007)
Electricity - exports: 0 kWh (2007)
Electricity - imports: 608 million kWh (2007) Oil - production: 0 barrels per day (0 m3/d) (2003 est.)
Oil - consumption: 5,036 barrels per day (800.7 m3/d) (2006)
Oil - proved reserves: 1,600,000,000 barrels (250,000,000 m3) (2006 est.)
Natural gas - production: 220 million m³ (2001 est.) Natural gas - consumption: 220 million m³ (2001 est.) Natural gas - proved reserves: 15.7 trillion cubic feet (2006 est.) Agriculture - products: opium poppies, wheat, fruits, nuts, karakul pelts Exports: $327 million; note - not including illicit exports or reexports (2007)
Exports - commodities: opium, fruits and nuts, hand woven carpets, wool, cotton, hides and pelts, precious and semi-precious stones
Exports - partners: United States 26.47%, India 23.09%, Pakistan 17.36%, Tajikistan 12.51% (2009) Imports: $4.85 billion (2007) Imports - commodities: capital goods, food, textiles and petroleum products Imports - partners: Pakistan 26.78%, United States 24.81%, India 5.15%, Germany 5.06%. Russia 4.04% (2009) Debt - external: $2.7 billion (2008) Current account balance: -$67 million (2007)
Currency: Afghani (AFN)
Exchange rates: Afghanis per one US dollar ($1) - 50.25 (2008), 50 (2007), 46 (2006), 47.7 (2005), 48 (2004) Fiscal year: 21 March - 20 March |
