By: Catherine Kannam, Daniel Vose/Devex
As negotiations between the government of Afghanistan and the Taliban raise hopes for peace, it remains as important to stay focused on what comes next. It is time to start thinking about, and working toward, prosperity and the conditions that will ensure the entire country can realize the dividends from this achievement.
The economic benefits from peace must be felt by a wide, inclusive swath of Afghan citizens to ensure that all sides remain committed to its enduring success. The Afghan government, peace negotiators, and the international community all must rally around a set of strategies to unlock inclusive, broad-based growth that touches all levels of society, including ex-combatants, returnees, internally displaced persons, the emerging middle-class of urban citizens, successful businessmen, and women.
A peaceful Afghanistan has tremendous economic potential, but Afghanistan will need help in three key areas to achieve that potential — infrastructure improvement, private sector engagement, and job creation — to ensure peace benefits all.
Invest in essential infrastructure
From increased power generation to improved roads and border crossings, the right infrastructure is essential for sustained economic growth. International donors must work closely with Afghanistan’s government to rapidly expand the infrastructure that will enable growth in previously underserved areas.
Access to energy is key to private sector growth at all levels, including home-based businesses run by women. However, significant progress remains to be made as roughly only 34% of the Afghan population is currently connected to the national grid. The recent announcement that four U.S. Agency for International Development-supported independent power producers have signed power-purchase agreements with Afghanistan’s energy utility, Da Afghanistan Breshna Sherkat, is an example of tangible progress — and potential — in this area.
Investments in additional power generation, as well as overall improvements in energy sector governance and performance, are critical.
Afghanistan’s strategic location at the crossroads of Central Asia, the Indian subcontinent, the Middle East, and China make it equally important for investment in other sectors. As a landlocked country, developing multiple avenues for trade with regional partners is essential to enable export-led growth.
With four major regional airports, air export of Afghanistan’s high-value products such as carpets, gemstones, and saffron, presents massive untapped potential for unlocking growth. Roads and border crossings, too, must be upgraded to facilitate cross-border trade. And, as Afghanistan’s regional and international exports fuel growth, its ability to build and maintain relationships with its trading partners through membership with the World Trade Organization and regional and bilateral trade agreements is essential. Promote private sector engagement to drive inclusive growth
Starting in 2001, Afghanistan’s economic growth was rapid, with construction and agriculture contributing in large part to this expansion. Billions of aid and security dollars were poured into the country to support the growing economy.
However, between 2011 and 2014, there was a drawdown of international troops, resulting in increased physical and political insecurity. According to the World Bank, Afghanistan’s gross domestic product growth dropped from 12.75% in 2012 to 2.90% in 2019. And the GDP per capita went from 8.97 in 2012 to 0.55 in 2019.
As a result of COVID-19, the World Bank estimates a further 5.5% to 7.4% economic contraction in 2020. As security spending and international commitments are likely to continue to decline over time, international trade — and specifically increased export of value-added goods — will play a critical role in building a robust Afghan economy.
Fortunately, Afghanistan’s 2018-2022 National Export Strategy lays out a bold vision for export-led growth that, if realized, can reverse these economic trends. However, in many areas, significant international support is needed for the Afghan government to make this vision a reality.
To boost sustainable growth, donors must support the government’s capacity to partner with the Afghan and international private sector to inform, implement, and resource these investments.
By building the government’s capacity to develop transparent and fair public-private partnerships, the government can leverage private sector resources in countless ways. Promoting partnerships to implement internationally recognized quality standards, for example, would help increase exports while meeting international commitments.
Investing in the growth of Afghanistan’s export-oriented industries and strengthening the private sector can also provide significant opportunity for women under the right conditions. As new markets open, women entrepreneurs and businesses that successfully leverage skilled female employees are poised to benefit.
These strategic investments can therefore help to ensure women have expanded opportunities to engage productively in the economy and begin to realize the benefits of expanded growth.
Support widespread, market-oriented job creation
For peace to endure, all Afghans — including former combatants — will need opportunities to support themselves and their families, whether through paid employment or entrepreneurship.
Without viable options, some demobilized Taliban foot soldiers will find it hard to resist joining extremist armed groups that resolutely oppose peace. Displaced populations in Iran and Pakistan who could contribute to Afghanistan’s economic future are not likely to return if there are no real opportunities waiting for them.
Wisely targeted donor support could help expand employment opportunities in rural and peri-urban areas where ex-combatants and returnees are more likely to settle.
This could initially entail large-scale market-oriented job creation programming to generate positive momentum, build trust, and kick-start the process of engaging the private sector to support sustainable livelihoods.
Similar approaches to job creation in insecure settings, such as Libya, have resulted in rapid success. Demobilized fighters will likely need a full complement of job readiness services to transition to licit employment. From there, job creation efforts could focus on agriculture and manufacturing value chains, supporting business growth strategies, especially where demand is likely to grow with the increased returnee population.
Some jobseekers, especially former combatants, could benefit from support given to microenterprises and entrepreneurs in places with less industry opportunities. At the same time, this would require major investments in skills-based workforce development and vocational training that align to the employment market.
Today, more than ever before, it seems Afghanistan is on the brink of a peaceful future, but only if the nation, its people, and the international community persist.
While a peace accord will mark an incredible achievement for a country that has known only conflict for decades, the donor community has a continued obligation to maintain engagement through targeted investments in economic growth at multiple levels. With the right support, we can unlock the country’s untapped potential and ensure that all Afghans benefit from a country at peace.