Economy and economic relations of Afghanistan needs substantial plans!

By: Hekmatullah Zaland

In recent years the context was likely favorable for economic growth of Afghanistan and using some opportunities resulted in economic empowerment, but lack of effective and fundamental economic plans caused the loosing of most the opportunities.

According to economic analysts, Afghan government’s officials in last one decade did not have economic philosophy and plans and therefore they did not played significant role in fundamental and stable economic growth of the country.

Most aspects like the Economic relations between Afghanistan and Pakistan, and investments and aids from international community which had great impact on economy of Afghanistan has been treated superficially, and has just been relied on Propagandas in this regard.

These days, Pakistani officials have made some decisions regarding the transport and transit with Afghanistan, based on that from 17 March 2014, the business transactions with Afghanistan will occur in U.S dollar and also most of trade transactions will take shape from Ghulam Khan port at the north Wazirestan in border with Afghanistan.

Afghan merchants say: this decision is taken in hurry and it was necessary to consult in this respect with Afghan government, traders and merchants, but they welcome the shift of transaction load to Ghulam khan port despite the security obstacles in both sides of the line.

In an exclusive interview with CSRS, Mr. Saifuddin Saihoon lecturer in Kabul University and economic analyst consider the increase of business transactions through the Ghulam khan port positive and adds that it will have positive effect on the economy of Afghanistan and it would help to decrease the costs of business goods.

He adds: it is important to improve more official ports along the Durand line, especially the Ghulam Khan port through which we can import goods from various parts like Waziristan to Khost, and then move through transit and transport without heavy costs.

According to him this step will insure the legalization of transit and business, and also secures the access to basic commodities and eventually results to legalization and effectiveness of business relations between Pakistan and Afghanistan which might have positive effect on security of Afghanistan as well.

But he points out to some obstacles in this port, along with security problems, the port institutions are not complete and the lack of active custom system, therefore fundamental institutions and suitable environment must be facilitated, so there won’t be the need of traversing Torkham, Chaman or other long routes.

Mr. Saihoon says: we have seven or eight official and about 90 illegal ports, if the illegal ports become legal and official ports, government’s income will increase and it will help to formalize the economy, if we don’t have these ports, the needy people will have the right to fulfill their needs through any possible way, therefore unfortunately we would witness illegal trades and businesses.

Mr. Saihoon says about the impacts of the decision through which all the transactions between Pakistan and Afghanistan after 17 March will be done through U.S dollar, believes: if the transactions with Pakistan take shape in U.S dollar, it might be stable, but it will have its own problems as well, since the goods will be first sold in US Dollar and then with Afghani, so the rates of goods for consumers will increase.

According to him: unfortunately we are an importing country, so we would suffer, and Pakistan as exporter would get advantage, the disadvantage for Afghanistan will be the increasing rates of US Dollar against Afghani which will harm our imports.

Since some expensive business transactions within the country are taking shape through Dollar, Mr. Saihoon says: transactions through dollar within Afghanistan are lawless, but when the transactions are being made through Dollar, the demand for Dollar increases and its rates get higher, which results in importing the goods more expensively, and also while changing the Afghani to dollar in order to import the goods, dollar will circle twice in the transactions which can result in escape of currency and the high rate of US Dollar against Afghani, and eventually we will face import inflation and the debasement of our currency.

 He mentions, since Afghanistan is not an exporting country, and most of the goods are being imported to Afghanistan so we will be affected by other countries’ economic pressures on us and we have to accept it.

Meanwhile, recently Afghanistan’s Investment Support Agency in its latest report has mentioned that investments in 2013 have increased 5%, while according to some businessmen the concerns over 2014 and the bilateral security agreement has caused the decline in investments.

Mr. Saifuddin Saihoon comparing the realities on the ground and the report published by AISA said: firstly, they must clarify that in which sections has the investments increased. According to Mr. saihoon probably the contracts of the natural resources extraction is the bigger part of the mentioned increase but that is not the real investment, even some internal sources have invested in Afghanistan mines industry, while these investments are not beneficial for Afghanistan and conversely it would empower the mafia of Afghanistan’s natural mines and resources.

Mr. saihoon says: I do not agree with AISA, our investments shows decline, but AISA is assuming optimistically which does not fit the realities on the ground and reality of Afghanistan’s economy.

He believes that the negative propaganda about 2014 has also affected the investment process and has resulted in declining investments and the distrust over the future. 

The other issue is lack of Poverty alleviation plans which still remains a challenge, despite the international community’s aids and wide range of opportunities. Ministry of finance has signed an agreement of 50 million US Dollar with the World Bank, which according to its officials might be beneficial in poverty reduction.

According to Mr. Saihoon: in economic philosophy and long term economic policies of a state; 50 million is not that much big amount through which a country could get able start the poverty reduction programs, they actually did not have poverty reduction programs and programs against unemployment or social security programs  in their strategies. Poverty reduction is a wide economic, social and cultural program, in which all the ministries must have a plan for poverty reduction, something we did not have and I think they will even not have from now onwards.