Udenrigsudvalget 2021-22
URU Alm.del Bilag 198
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AFGHANISTAN:
Socio-Economic Outlook
2021-2022
AV E RT I N G A B A S I C N E E D S C R I S I S
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ACKNOWLEDGMENTS
This first edition of the Afghanistan Socio-Economic Outlook
2021-2022 was prepared by the United Nations Development
Programme (UNDP) Team in Afghanistan under the overall direction
and guidance of Abdallah Al Dardari (UNDP Resident Representative
in Afghanistan), and was led by Zafiris Tzannatos (Strategy and
Policy consultant).
Individual sections were contributed by the UNDP Afghanistan
modelling team: Adnan Mazarei (macro), Chokri Thabet (C-CGE
modelling), Fawaz Sabri (private sector and banking), Michel Del
Buono (energy), Renata Rubian (SDGs), Sebnem Sahin (A-GTAP
CGE), Stephen Kidd (social protection), Taoufik Rajhi (C-CGE
modelling) and Zafiris Tzannatos (gender).
The report has benefitted from comments from Kanni Wignaraja
(UNDP Regional Director, Asia-Pacific), Andrew Rizk (Chief Financial
Officer, UNDP), Stanislav Saling (Communications Specialist, UNDP
RBAP), Swarnim Waglé (Chief Economic Advisor, UNDP RBAP),
Surayo Buzurukova (Senior Deputy Resident Representative, UNDP
Afghanistan) and Saurabh Sinha (Head of Development Policy Unit,
UNDP Afghanistan).
Additional comments and inputs were provided by the UNDP
Afghanistan Team: Ahmad Farin Sadiq, Ahmad Ramiz Sultani, Anisha
Thapa, Etab Al Taki, Bishwa Nath Tiwari, Fazulrahim Rahim, Hiba
Abd El Hamed, Najibullah Gulabzoi, Sainey Ceesay, Sayeed Farhad
Zalmai, Shakeel Ahmad and Usha Rao.
The report also benefited from discussions with Anna Custers and
Tobias Al Haque (World Bank), Azim Sadikov (International Monetary
Fund) and Kiyoshi Taniguchi (Asian Development Bank).
This edition is based on data availability as of mid-January 2022.
Preliminary analysis was first released in December 2021. Further
updates will be provided through the Afghanistan Socio-Economic
Outlook series, pending new data availability.
EDITOR
Lance W. Garmer
DESIGN
Camilo Salomon @ www.cjsalomon.com
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Contents
Acronyms
Executive Summary
1.
4
6
10
11
11
11
12
13
13
15
16
17
20
23
26
27
29
32
34
Introduction and Summary
1.1
1.2
Objective of this report
The social conditions in 2020 and the then-required
amount of aid
Post-august 2021: a ‘wait-and-see’ situation
The initial impact of asset freeze and reduced
aid on the economy
The impact on social conditions
UNDP’s projections and the prospects for humanitarian relief
Outline of the report and key policy proposals
1.3
1.4
1.5
1.6
1.7
2.
Multiple shocks to an already weak and deteriorating economy
2.1
The macroeconomic situation in 2021 and the
short-term outlook
The role the private sector and banking during
the humanitarian crisis (and beyond)
Energy: a key sector for household welfare and production
2.2
2.3
3.
An intensifying humanitarian crisis
3.1
3.2
Poverty has increased sharply
Gender: a human rights issue with significant effects
on the economy and household incomes
SDGs: their attainment was already off course,
with further derailment expected
Social protection: starting from nearly zero base
but can make an impact
3.3
3.4
4.
Concluding remarks
36
38
46
Annexes
Endnotes
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Tables
Table 1:
Effects on household consumption from a reduction
in female employment
Table 2:
Three options for providing social protection transfers
Table A-1:
Summary of cash transfer options
31
35
43
Figures
Figure A-1:
Illustration of children entering a child benefit
at 0-3 years in 2022
Figure A-2:
Budget required each year for three social
protection options
Figure A-3:
Number of direct recipients of the social protection
benefits, over 5 years
42
43
44
Annexes
Annex 1:
The Poverty Gap
Annex 2:
Social Protection: Alternative cash transfer options
40
41
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B A M YA N , A P R OV I N C E
I N C E N T R A L A F G H A N I S TA N .
P H OTO C R E D I T U N D P
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Acronyms
A-GTAP
A-SAM
ABADEI
ABP
ADB
AFN
ALCS
C-CGE
CEDAW
CO(2)
COVID-19
CPA
DAB
DABS
DSSI
ESRA
FAO
GDI
GDP
GHGs
HCI
HDP
HRP
ICIEC
ICRC
IDP
IELFS
IEO
ILO
IMF
Afghanistan Global Trade Analysis Project
Afghanistan Social Accounting Matrix
Area-Based Approach to Development Emergency Initiatives
Area-based Programme
Asian Development Bank
Afghan Afghanis
Afghanistan Living Conditions Survey
Country (Afghanistan) Computable General Equilibrium
UN Convention on the Elimination of All Forms of Discrimination
Carbon Monoxide (Dioxide)
Coronavirus Disease 2019
Country Programmable Aid
Afghanistan Central Bank
Da Afghanistan Breshna Sherkat (energy company)
Debt Service Suspension Initiative
Energy Sector Regulatory Authority
Food and Agriculture Organization
Gender Development Index
Gross Domestic Product
Greenhouse Gases
Human Capital Index
Humanitarian-Development-Peace nexus
Humanitarian Response Plan
Islamic Corporation for the Insurance of Investment and Export Credit
International Committee of the Red Cross
Internally Displaced Person
Income, Expenditure and Labor Force Survey (2019-2020)
Independent Evaluation Office (UNDP)
International Labour Organization
International Monetary Fund
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IOM
IsDB
MDB
MDPP
MIGA
MOWA
MTFF
NIS
NOx
NTMs
OCHA
OECD
OFAC
PARRs
RBAP
SDGs
SME
SOx
TEF
UBI
UNAMA
UNCTAD
UNDP
UNFPA
UNHCR
UNICEF
WFP
WHO
WTO
International Organization for Migration
Islamic Development Bank
Multilateral Development Bank
Martyrs and Disabled Pension Programme
Multilateral Investment Guarantee Agency
Ministry of Women's Affairs
Medium-term Fiscal Framework
National Institute of Statistics (Afghanistan)
Nitrogen Oxides
Non-tariff Measures
United Nations Office for the Coordination of Humanitarian Affairs
Organization for Economic Cooperation and Development
Office of Foreign Assets Control (USA)
Priority Areas for of Return and Reintegration
(UNDP) Regional Bureau for Asia and the Pacific
Sustainable Development Goals
Small and Medium-sized Enterprise
Sulphur Oxides
Transitional Engagement Framework
Universal Basic Income (social protection)
United Nations Assistance Mission, Afghanistan
United National Conference on Trade and Development
United Nations Development Programme
United Nations Population Fund
United Nations High Commissioner for Refugees
United Nations International Children's Emergency Fund
United Nations World Food Programme
World Health Organization
World Trade Organization
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Executive Summary
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P H OTO C R E D I T U N D P
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Afghanistan ended 2020 with significant economic and development challenges. The country’s
international partners assessed the extent of these challenges at the time and pledged more than
US$13 billion in November 2020 over the following four years. This amount, which is indicative of the scale
of the challenges facing the country, was expected to be augmented by an increase in domestic resources
derived from a revival in growth. However, not only would this have required significant domestic reforms
to improve governance, promote the private sector and reduce corruption, but it is unlikely that sufficient
additional revenue could have been generated by a revival in growth alone to satisfy the needs of the
country, including those for reducing poverty and improving social conditions
The political change on 15 August 2021 has created new conditions. The
de facto
authority headed by
the Taliban has yet to be internationally recognized. This, combined with the uncertainty arising from
the divergence between official announcements and actions on the ground, has led to a sudden stop in
international aid and the freezing of Afghan reserves held abroad. The drop in foreign aid that previously
accounted for 40 percent of GDP has had an immediate and significant impact on the economy, which was
already in decline. The country is also coping with one of the most severe droughts in decades, the impacts
of the pandemic, and the rapidly increasing levels of food insecurity. As a result, Afghanistan has already
entered a twin humanitarian and development crisis that is becoming graver and needs to be immediately
addressed to save lives and protect livelihoods.
To assist the humanitarian effort, this UNDP report examines the likely impact of the sudden stop in external
financial support to social sectors. The results of an assessment of the economic outlook for the country
are alarming. Although there is considerable uncertainty regarding the future course of the country, the
estimates suggest an economic contraction by around 20 percent of GDP within a year, a decline that may
reach 30 percent in the following years. The sizeable imports upon which Afghanistan critically depends
for its energy and food need, may drop by half. Inflation has accelerated and the exchange rate has already
depreciated considerably. The absence of foreign aid has taken its toll on investment and therefore on
current and future production, as well as on private consumption. The banking sector also is very much
under stress, raising the risk of financial instability.
The report’s findings indicate a bleak prospect for social sectors. The combination of falling incomes and a
growing population may more than double the 'poverty gap’, requiring an estimated US$2 billion to lift the
incomes of all poor people up to the poverty line. This alone is indicative of the relief required to avoid a
humanitarian catastrophe of an unprecedented scale. COVID-19 is damaging lives, livelihoods, basic and
essential health care, emergency responses and efforts to eradicate polio. Having barely recovered from
the 2018 drought, Afghanistan declared a national drought last summer that may turn out to be the worst
the country has had in decades. The number of people that would require food assistance is expected to
reach a record of nearly 23 million, more than half of the population. The prices for food, cooking oil and
fuel have risen sharply; wages have fallen; and unemployment may double over the next couple of years.
Using the Sustainable Development Goals (SDGs) as a summary measure for economic and social
progress, the findings of this report suggest that the most severe impacts are likely to be felt on poverty
(SDG 1), hunger (SDG 2), clean water and sanitation (SDG 6), employment (SDG 8) and inequality (SDG 10).
Education (SDG 4) has already taken a hit, as girls are not being allowed to return to their schools. Related,
past gains in gender equality (SDG 5) have been swiftly reversed by restricting women from working and,
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more generally, depriving them of representation and confining them in the private sphere, where they are
afforded few of their internationally recognized human rights. This report estimates that restricting female
employment may inflict an immediate economic loss of between US$600 million and US$1 billion (3 percent
to 5 percent of GDP). The income of households with working women will fall accordingly. This estimate
can be compared with an earlier one by UNDP in 2020 that showed that, prior to 2021, Afghanistan would
have needed US$300 million a year to meet the SDGs by 2030. The expected loss of output can be
an underestimate, as it ignores the adverse effects on productivity from the acute gender segregation in
employment that restricts women from working in certain sectors and positions and thereby reduces their
productivity and limits their potential contribution to the economy. It also ignores that a failure to adequately
educate half of the population today – namely, girls – will compromise Afghanistan’s prospects for years to
come as the economic impact of educating a girl in Afghanistan (the ‘rate of return to education’) is more
than double that for educating a boy.
Based on the developments since August 2021, this report provides a preliminary assessment of their likely
economic impact and then focuses on their effect on different social sectors. It also considers two other
sectors that can support the humanitarian effort and are also critical for economic growth. One of them is
banking, including Islamic finance, which can be used as a channel for funding humanitarian assistance.
The other sector is energy, which is critical for both household welfare and production and would be difficult
to finance from domestic sources alone, since international aid has stopped and most energy is imported.
An interruption of electricity imports might leave over 10 million people, a quarter of the population, in the
dark. International humanitarian assistance to Afghanistan should ensure that electricity imports are not cut,
but that, if they are, whatever little energy is produced internally will continue and therefore ease the stark
everyday energy poverty of ordinary households.
Against this background, UNDP is reorienting its operations to focus on mitigating and hopefully averting the
immediate impacts of the crisis on lives and livelihoods. UNDP has estimated that supporting households
through modest cash transfers at an annual cost of US$300 million can have a significant impact on poverty.
The selection of households for support would be based on the number of household members who are
children, elderly or people with disabilities. This programme can be complemented by a ‘cash-for-work’
programme at an annual cost of about US$100 million and by a ‘cash-for-markets’ programme of transfers
to small businesses, whose costs would be US$90 million per year.
Although nobody can expect to solve, in a year or two, problems that have not been solved for decades,
it is now recognized by the international, regional and bilateral partners of Afghanistan that dialogue
with the Taliban should continue and focus on the immediate humanitarian needs. This should be done
without violating international laws or compromising established principles. While providing support to the
humanitarian effort in Afghanistan, the international community and several countries that have generously
donated significant amounts of development and humanitarian aid to Afghanistan in the past, are expecting
the Taliban to adhere to their announcements and to demonstrate respect for human rights, with women’s
rights being at the centre.
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Already the poorest country in Asia,
Afghanistan’s economic base has long been
too small to support its population
of 40 million. Amongst the key findings of the
Afghanistan Socio-Economic Outlook 2021-2022” are
inter alia:
Afghanistan’s GDP
is expected to contract by 20% within a year, from
US$20 billion
(2020) to
US$16 billion.
If action is not taken, this decline
may reach 30%.
Annual per capita income
may decline by nearly one-third, from just over
US$500
in 2020 to about
US$350
in 2022.
Restricting women from working
could result in an immediate economic loss
between
US$600 million
to
US$1 billion
— or up to 5% of the country’s GDP.
Male unemployment
may almost double from
15%
(2019)
to
29%
(2022).
With falling incomes and a growing population,
it could take
US$2 billion
(up to 15% of GDP) just to lift the incomes of all people in extreme poverty up
to the poverty line.
Up to 97% of the population
may be at risk of falling below the poverty
line by 2022.
It will require between US$6 billion and US$8 billion in international
aid
every year to fund basic services needs and support economic growth.
The budget deficit could double
as a percentage of GDP and reach
US$660 million
in 2021.
Imports could fall
by almost half to
US$3.2 billion.
This will significantly affect
food and energy consumption, with attendant humanitarian implications.
Investment could fall
from
US$3 billion
to almost
US$1 billion
in 2022 and
even decrease to just a couple of hundred million dollars the year after.
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1. Introduction
and Summary
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A 3RD GRADE
SCHOOL GIRL IN
G H OZO - O M E R Z S C H O O L .
P H OTO C R E D I T U N D P
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1.1 Objective of this report
Afghanistan’s political change on 15 August 2021 took place while the country was already in need of
significant development and humanitarian support. The political uncertainty that has ensued and continues
as the current
de facto
authorities have not yet been internationally recognized, adds to the challenges
that ordinary citizens face. The economic conditions have worsened from the previously already low
levels. Both the Taliban and the international community acknowledge the urgent need for alleviating the
economic impact on social sectors. This report aims to provide an initial assessment of the likely course of
the economy and the implications for humanitarian relief in the short run, albeit a tentative one, given the
uncertainties surrounding the Taliban’s intentions and the future role of international donors. Its objective is
not restricted to awareness-raising but also offers a basis for a productive dialogue and joint action among
the involved stakeholders and identifies areas for partnerships and modalities for joint programming to
increase resource mobilization to avoid the unfolding humanitarian crisis.
1.2 The social conditions in 2020 and the then-required amount of aid
By 2020, economic growth had stalled, and annual per capita income had declined precipitously to just over
US$500 compared to nearly US$650 in 2012. Internal displacement arising from conflict and environmental
crises had affected 3.5 million people, posing serious challenges for housing and livelihoods. The advent
of COVID-19 had a direct impact on lives, affecting livelihoods through lockouts, social distancing and
disrupted economic activities. This had ripple effects on the availability of basic and essential care as well
as on emergency responses while millions of children remained unvaccinated and the risks of measles,
acute watery diarrhoea and malnutrition were rising. The poverty rate was estimated to have increased
to more than 70 percent after the pandemic, compared to 47 percent before. Overall,
THE NUMBER OF
THOSE IN NEED OF HUMANITARIAN ASSISTANCE WAS ESTIMATED TO BE 18 MILLION BY THE END OF
2020S, NEARLY HALF OF THE POPULATION, MOST OF THEM CHILDREN.
It was estimated that Afghanistan would require US$6 billion to US$8 billion in international grants
per
year
between 2020 and 2024 to fund basic services, support faster economic growth, and consolidate
and sustain the then-expected peace settlement with the Taliban.
1
Though well short of this figure, the
international community at the Geneva Conference (November 2020) pledged more than US$13 billion
over the same four-year period. As this amount would have not been enough to turn the economy around,
the Conference also acknowledged that there should be an increase in domestic resource mobilization
through growth, a reduction in corruption, improved governance, and significant structural reforms. Still,
that amount of donor support is indicative, first, that Afghanistan has been facing many real development
and humanitarian challenges Afghanistan; second, that Afghanistan could not face the future without
significant external support; and, third, that international partners remain engaged, at least with respect to
humanitarian needs.
2
1.3 Post-August 2021: A ‘wait-and-see’ situation
The announcements made by the Taliban soon after they took power suggested that
THERE WOULD BE
SIGNIFICANT DIFFERENCES BETWEEN THE ‘TALIBAN OF YESTERDAY’ AND THE ‘TALIBAN OF THE
FUTURE’.
The announcements included granting a ‘general amnesty’ to those who had been associated
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with the previous government, such as civil servants, judges and those who had worked with foreign
forces, as well as promises for inclusive approaches and respect for human rights – notably allowing girls
to continue their education and women to work.
However, the situation on the ground has reportedly started to diverge from the official announcements
regarding the way justice is being administered, house-to-house searches for former officials, the treatment
of ethnic and religious minorities, the forms of acceptable entertainment, and whether males should grow
beards. Women have been excluded from public life, including from positions that the
de facto
authorities
have created as ministers or at deputy minister level. Women working in the public sector have been
told not to return to work “until procedures are in place to ensure their safety”.
3
They are required to be
accompanied by a male family member in public places, something that also applies to female aid workers
in the very few provinces where they are allowed to work. Girls, especially those above the age of 12, have
been barred from returning to schools. These differences are being seen as ‘broken promises’, hindering
the international recognition of the
de facto
authorities.
4
The Taliban have stated that they welcome foreign assistance and trade. However, they face an increasing
credibility gap in terms of commitments and practices. The differences between announcements and
actions have resulted in a ‘wait-and-see’ reaction by global and regional leaders. The previous international
partners of Afghanistan as well as prospective ones, such as China, Iran, Pakistan and Russia as well as its
regional neighbours such as Tajikistan, Uzbekistan and Turkmenistan, have yet to recognize the
de facto
authorities. The result so far is that there is no consensus on how and when to fully resume vital financial
assistance, and this has brought to a halt the transfer of foreign funds upon which Afghanistan heavily relies.
1.4 The initial impact of asset freeze and reduced aid on the economy
The foreign exchange reserves of Afghanistan’s central bank held abroad have been frozen while
international organizations and other donors have paused planned disbursements. The economy is facing
a shock from the sudden drop in aid that has led to cash shortages, with a weakened banking sector
and local banks restricting withdrawals.
5
The national currency has depreciated; inflation has accelerated,
particularly with respect to food, cooking oil and fuel; trade has declined; and the bill for much of the
country’s imported electricity remains unpaid.
These effects have taken place while the economy already was in decline since 2020 and, in combination
of the expected severe drought, the continuing effects of the COVID-19 pandemic and the incomplete
political transition are likely to result in a cumulative reduction of GDP by up to 30 percent, according to the
IMF.
6
Similar results have been reported by the World Bank and the Asian Development Bank. In parallel,
UNDP has conducted its own analysis and the results presented in this report support the view that the
adverse impact of shutting off foreign aid are imminent and massive, both on the economy and the social
sectors (see Section 2).
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1.5 The impact on social conditions
In the words of the Secretary-General of the UN,
AFGHANISTAN IS FACING “AN EPIC HUMANITARIAN
CRISIS AND IS ON THE VERGE OF A DEVELOPMENT CATASTROPHE”.
7
Having barely recovered from
a drought in 2018, a national drought was officially declared this year, one of the worst in three decades,
with 80 percent of the country now classified as being in either severe or serious drought.
8
According to
recent estimates, only 5 percent of the population has enough to eat, while the number of those facing
acute hunger is now estimated to have a reached a record 23 million.
9
Almost 14 million children are likely
to face crisis or emergency levels of food insecurity this winter, with 3.5 million children under the age
of five expected to suffer from acute malnutrition,
10
and one million children risk dying from hunger and
frigid temperatures.
11
By the end of October 2021, the number of internally displaced civilians had reached
700,000 and the number of returnees had exceeded one million. Already many of previous and current
ordinary government employees as well as thousands of soldiers, police and security personnel reportedly
are not being paid their salaries. For those still at work, wages have declined by between 8 percent and
10 percent.
12
Health services are under threat, including those aiming to contain the pandemic, eradicate
polio and care for maternal and child health.
13
1.6 UNDP’s projections and the prospects for humanitarian relief
UNDP’s projections show that poverty may become nearly universal, affecting more than 90 percent of the
population by mid-2022.
THE COMBINATION OF FALLING INCOMES AND A GROWING POPULATION
MAY MORE THAN DOUBLE THE DEPTH OF POVERTY:
The resulting ‘poverty gap’ would require an
estimated US$2 billion to lift the incomes of all people in extreme poverty up to the poverty line. The
restrictions on female employment can reduce production by between US$600 million and US$1 billion
and shave off nearly US$500 million a year from household consumption.
Last year, UNDP had assessed that the attainment of the SDGs, a good framework for assessing economic
and social progress and the guiding rod of the international community, was already off course before
2021. The recent developments are likely to derail further, and to a significant extent, the progress towards
the SDGs, especially with respect to the top goals of no poverty, zero hunger, good health and well-being,
quality education, and gender equality (see Section 3). Restrictions on female education will reduce output
further in the future by lowering the human capital investment on half of the country’s population. This will
adversely affect the SDG for inclusive and sustainable economic growth and will reduce the prospects for
productive employment and decent work for future generations.
While the international recognition of the
de facto
authorities is pending, donors have vowed to sustain
delivery of the much-needed humanitarian aid to Afghans and to support the continued provision of basic
services. The UN has already pledged U$1.3 billion and this amount is expected to be supplemented by
several bilateral funds; in fact, it is already accelerating and expanding its humanitarian activities (Box 1).
The US is now permitting humanitarian assistance to flow into Afghanistan and is to provide US$500 million
in aid in Afghanistan and for Afghan refugees in the region.
14
Other bilateral donors and neighbouring
countries, including China, India, Pakistan, Russia and Iran, have already provided or plan to dispatch relief
assistance to tackle the humanitarian crisis.
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BOX 1
THE UN HUMANITARIAN RESPONSE TO THE CRISIS
The UN is maintaining its strong humanitarian support for Afghanistan and already has plans to substantially increase
it, as pledged funds are received, and to expand its coverage to the extent that security conditions allow.
Other parts of this report refer extensively to how social conditions have been affected since the economic crisis
that began in August 2021. The following statistics can be used to summarize the immediate prospects of the social
sectors as averting a famine but cannot be a precondition for achieving all other objectives of humanitarian assistance.
According to the Integrated Food Security classification, 19 million had already reached high food insecurity levels
by October 2021, with nearly 7 million classified as being in Phase 4 (one level before the highest level, Phase 5:
‘catastrophe/famine’). And the FAO is distributing wheat cultivation packages for Afghanistan’s winter wheat season
across 31 of 34 provinces.
1
These two indicators for food insecurity are projected to increase to 23 million (up from 19 million) and nearly 9 million
(up from 7 million) by March 2022. Specifically for food security, the World Food Programme (WFP) calls for humanitarian
assistance to be scaled up especially for populations already in Crisis 3 phase (IPC 3) and Emergency phase (IPC
Phase 4) to prevent them from sliding into higher levels of food insecurity. This assistance should be augmented to
provide livelihood support during the winter wheat season, for the spring season crops, and for vulnerable herding
households to prevent further deterioration of conditions of the rural population. These efforts should also include
priority interventions for women and children, with programmes targeting pregnant and lactating women and children
under the age of five.
2
The latest OCHA report covering activities between 1 September and 31 October 2021 reveals that 4 million people
received food assistance across 34 provinces, nearly 90,000 children and 35,000 lactating women received treatment
for acute malnutrition across 27 provinces, and another 90,000 received Emergency Shelter/Non-Food Items (NFI)
assistance.
3
With respect to health, more than 700,000 people received emergency medical kits to meet urgent needs,
600,000 benefited from primary and secondary health care, and 150,000 people were reached with health promotion
and COVID-19 risk communication activities. In addition, hygiene promotion and hygiene kits reached 340,000 people
and trucks delivered water to 200,000 drought-affected people. Additional support was provided to education (e.g., in
the form of new community-based classes).
UNICEF has restarted a polio vaccination programme after more than 3 million children missed polio vaccination in
the last three years.
4
More would, however, be required. WHO estimates that, as of the end of October 2021, only
2.4 million people had received at least one dose of the COVID-19 vaccine and all elements of the COVID-19 response
have declined, including a significant drop in testing at public laboratories. In the meantime, there are 1.6 million unused
doses of the vaccine that need to be urgently administered before they expire. The officially confirmed 155,000 cases
of COVID-19 and 7,200 deaths as of October 2021 are recognized as underestimates due to underreporting of cases
and limited testing.
5
Sources: UNDP staff compilation including from:
1
2
3
4
5
www.ipcinfo.org/ipcinfo-website/alerts-archive/issue-49/en/; https://news.un.org/en/story/2021/11/1106212
www.wfp.org/news/half-afghanistans-population-face-acute-hunger-humanitarian-needs-grow-record-levels
https://reliefweb.int/sites/reliefweb.int/files/resources/ocha-afg-humanitarianresponse-20211104.pdf
www.aljazeera.com/news/2021/11/8/polio-vaccination-programme-resumes-in-afghanistan
www.emro.who.int/images/stories/afghanistan/Situation-Report_Issue-7-9-oct-2021.pdf?ua=1
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THE PLEDGED FUNDS ARE UNLIKELY TO MATCH THE PRE-EXISTING AND LOOMING HUMANITARIAN
NEEDS.
It is therefore most important that they be spent in a way that ensures the maximum impact and
that are directly channelled to Afghan citizens, until the
de facto
authorities are recognized internationally
and their plans and actions are known. This calls for a coordinated and swift approach that can contribute
to the humanitarian relief, especially for food and medical supplies, “without violating international laws
or compromising established principles”.
15
All in all, while outsiders should not think that they can “solve
the problems they couldn't solve for decades […] it is important to engage", in the words of the UN
Secretary-General, António Guterres.
16
1.7 Outline of the report and key policy proposals
This report expands on these observations. In line with the recommendations of the UN Executive Committee
working group on Afghanistan,
17
the humanitarian relief should be swift, well-coordinated, grounded in
partnerships and based on the One-UN concept by using the combined resources and collective knowledge
of the development partners.
18
The proposals in this report aim to address the multidimensional aspects of
poverty and vulnerability, to deepen social cohesion and to enable the rehabilitation of critical infrastructure,
local markets and livelihood opportunities that may come under threat due to economic collapse.
A key recommendation of this report is the introduction of several social protection measures such as ‘cash
transfers’ (e.g., for families with children, elderly members and persons with disabilities), ‘cash-for-markets’
(e.g., to support small businesses), and ‘cash-for-work’ (e.g., for maintenance or building community
infrastructure). UNDP has estimated that the cash transfers can cost US$300 million per year with a
significant impact on poverty, and the ‘cash-for-markets’ programme can cost US$90 million per year.
The annual costs of the ‘cash-for-work’ programme would be around US$100 million. From their side, the
Taliban launched a ‘food-for-work’ programme in Kabul in October 2021, offering wheat in exchange for
labour to more than 40,000 unemployed men, with the intention to progressively expand it to other areas.
19
This indicates that there are areas of common concern that can be addressed to limit the impact of the
humanitarian crisis (see Section 3 and Annex).
The sections that follow present a likely future course of the economy with its implications for humanitarian
needs amid the political, economic and social uncertainties that the country faces. This is followed by a
short description of the social conditions that prevailed in Afghanistan prior to August 2021 and a discussion
of their prospects. The report concludes by presenting the case for introducing a basic social protection
system in Afghanistan.
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2. Multiple shocks to an already
weak and deteriorating economy
16
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2.1 The macroeconomic situation in 2021 and the short-term outlook
At US$20 billion in 2020, Afghanistan’s economic base is too small for supporting a population of around
40 million people. International aid has been contributing as much as 40 percent of GDP and 80 percent
of the budget expenditures that were equally split between civilian and security objectives, the latter being
10 times higher as a share of GDP than in an average low-income country.
20
The limited fiscal space,
combined with weak institutions and rule of law, especially in rural areas, and with anaemic drivers for
private sector development, rudimentary infrastructure, including for the energy sector, and extensive
corruption, have all stalled economic growth. The 2020 Global Corruption Perception Index (CPI) ranked
Afghanistan 165th among 179 countries.
21
Corruption has been consistently cited by Afghans as one of
the biggest frustrations of their daily lives
22
while significant amounts of donor funds have not been used
for their intended purposes or have been leaked to safe havens abroad.
23
Bribes have been estimated to
constitute almost 9 percent of GDP.
24
In addition, Afghanistan is the low-income country most affected by
natural disasters, being second only to Haiti in the number of fatalities in the last four decades.
Since the events of 15 August, economic conditions have been deteriorating quickly and sharply. The
economy was already in decline before (GDP declined by about 2 percent in 2020). Though its size and
duration are still to be determined, the sudden drop of aid will further reduce the level of GDP and diminish
the prospects of economic growth. Moreover, as of now, the US Treasury has frozen about US$9 billion
of Afghanistan’s central bank reserves (Da Afghanistan Bank: DAB), an amount that could sustain around
15 months of imports. The International Monetary Fund (IMF) has suspended Afghanistan’s access to financial
support until the
de facto
authorities gain international recognition as a government. The World Bank, which
administers a massive, internationally backed trust fund, has paused its disbursements to Afghanistan.
The short-term outlook is highly pessimistic. Already, the latest available statistics for late 2021 indicate a
slowdown in trade, with a reduction in the imports from Pakistan alone reaching 40 percent since August;
a depreciation of the national currency by more than one-third since the beginning of August 2021 (from
AFN80 to AFN113 to US$1 by mid-December 2021); accelerating inflation, with the price of wheat reaching
more than 20 percent year-on-year, the price of flour increasing by 31 percent and the prices of cooking oil
and of fuel rising by 69 percent and 74 percent, respectively; and wages declining by between 8 percent
and 10 percent compared to 2020. Daily customs revenues are reported to have reached AFN220 million
(almost equal to AFN235 million average daily customs collections in 2020), but this is the result of ending
the previous 30-percent ‘discount’ on duties.
25
The downward economic trend will accelerate for reasons other than the drop in foreign inflows and the
freeze on DAB’s reserves and continuing sanctions (Box 2). Debt servicing problems could intensify once
the Debt Service Suspension Initiative (DSSI) by the G20 expires at the end of 2021, perhaps leading to
default on sovereign debt, undermining the chances of a resumption of assistance from the international
financial institutions and global banking services.
26
Although public debt is low (at 7.5 percent of GDP at
end-2020),
27
the IMF and World Bank have classified Afghanistan as a country at high risk of distress.
28
In addition, conditions in the banking system are deteriorating sharply due to liquidity pressures and
balance-sheet deterioration.
29
Banks are now experiencing a run on deposits, and deposit withdrawals
limits (initially set at US$200 per week and now increased to US$400 per week) have been introduced,
though this ceiling might only be relevant for large depositors in a country where the per capita income is
barely US$500 per year.
30
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BOX 2
THE ROLE OF THE UNCERTAIN COURSE OF SANCTIONS IN AFGHANISTAN
There is a strong direct and indirect effect of sanctions on humanitarian needs. Though sanctions typically target
the governing authorities of the day, they also impact the private sector and ordinary citizens. They are decided by
governments but generally operate through restrictions affecting the private sector that is coerced to refrain from
operations in the targeted country. They constrain economic growth and impoverish people, mainly those in greatest
need. They reduce the fiscal space for providing public services and deprive the poor from income-generating
opportunities. They affect not only the private sector in sanctioned countries but also those in the countries that
prescribed the sanction as well as the operation of non-profit organizations in both countries. Sanctions have collateral
impacts that are far beyond those intended by those who impose them, irrespective of whether sanctions are driven by
justified concerns or driven by foreign policy considerations. Their enforcement ranges from the prohibition of selling
products and providing services domestically to the prohibition of conducting global financial transactions.
The post-August 2021 political change in Afghanistan has been accompanied by an exacerbation of the already dire
economic situation of the country due to the cutting off of external support, which used to be as much as 40 percent
of GDP. There has already been a massive macroeconomic effect on inflation, trade, balance of payments and the
exchange rate. This effect is cascading across the economy, the social sectors and poverty, creating a development
emergency that is leading to a humanitarian crisis. Yet there is global agreement to ensure that ordinary Afghan citizens
are not victimized by being denied access to humanitarian relief.
Human rights violations, including against girls’ education and women’s work as well as against ethnic and religious
groups, create conditions for resisting the removal of existing sanctions on the Taliban and the Haqqani Network,
whose members have assumed senior roles in the
de facto
authorities since August 2021. While these sanctions may
be clear in some narrow legal way, they can be less clear with respect to guiding what can or cannot be done by the
private sector, international and non-government organizations (NGOs), and governments that have not imposed the
sanctions. Their unintended effects, at least with respect to their intensity, are equally difficult to assess.
The case of Afghanistan regarding sanctions is even more complex, if not unique, compared to other sanctioned
countries. It does not apply just to individuals or some organizations but also to a previously rebel group that has
become the
de facto
authority of the country: “There has never been a case […] in which a designated terrorist group
has assumed the control of an entire jurisdiction. Exactly what the Taliban’s status as a sanctioned entity means for
the Afghanistan government and for the jurisdiction of Afghanistan is uncertain.”
1
This uncertainty is likely to constrain
foreign and domestic investors all the way to the global banking community, which faces a web of fiduciary obligations.
Beyond this general uncertainty, it is not clear how the Taliban will be seen in the future and what specific sanctions will
be applied and to whom. For example, the sanctions can be limited to specific parties such as those identified to be
working with the Taliban but will not extend to the Government of Afghanistan or the jurisdiction of Afghanistan, a recent
case of such type being Burma after the 2021 coup against its elected government.
2
Alternatively, sanctions can apply
to the Taliban government but not to the entire jurisdiction of Afghanistan as long as activities are undertaken outside
the government and do not involve sanctioned individuals or entities or certain prohibited activities, an approach
adopted in the case of Venezuela.
3
Finally, in the most severe form, sanctions can extend to both the government and
the jurisdiction of Afghanistan that would amount to an embargo and prohibition of any transactions within Afghanistan
in a way similar to those imposed on Iran, Cuba, North Korea and Syria.
The future course of sanctions in Afghanistan, in terms of existing ones or introducing new ones and with what intensity,
is not clear. The frozen assets of DAB in the US can be interpreted as a sanction that applies to the entire Government
of Afghanistan, although DAB is not a sanctioned entity. However, together with the UN and other international and
regional donors, the US is permitting humanitarian activities to parties seeking to deliver humanitarian assistance such
as food, medicine and related items.
Either way, whatever approach is adopted, sanctions should, first, be flexible to allow the maximum and best humanitarian
relief that ordinary Afghans can receive; second, reduce uncertainty to the private sector and non-government
organizations as well as the international community; and, third, be adjusted to changing realities. In the words of the
UN Secretary-General, “Injecting liquidity into the Afghan economy can be done without violating international laws or
compromising principles.”
4
1
US Senate Committee on Banking, Housing, and Urban Affairs (2021). Hearing “Afghanistan’s Future: Assessing the National
Security, Humanitarian, and Economic Implications of the Taliban Takeover”. Testimony of Adam M. Smith. 5 October 2021.
US Executive Order 14014, “Blocking Property with Respect to the Situation in Burma,” 10 February 2021.
US Executive Order 13884, “Blocking Property of the Government of Venezuela,” 5 August 2019.
https://news.un.org/en/story/2021/10/1104102
2
3
4
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The analysis by UNDP is based on two different computable general equilibrium models (CGE). The first
model, Afghanistan – Global Trade Analysis Project (A-GTAP CGE), is a multi-country, multi-regional dynamic
computable general equilibrium model to which detailed simulation modules have been added to analyse
changes in the banking and the financial sectors. The second model, a Country Computable General
Equilibrium (C-CGE), is a conventional dynamic general equilibrium model. These models consider the
effect of the sudden stop of foreign funds on Afghanistan’s external position, including foreign exchange
reserves and imports; the depreciation of the exchange rate; public finance; investment; private sector
production; and private consumption.
The key results of these models are as follows:
•
GDP may contract by around 20 percent within a year (from US$20 billion in 2020 to US$16 billion), a
decline that may reach 30 percent in the following years.
•
The contraction in GDP due to restrictions on female employment could be between 3 percent and 5
percent (that is, up to US$1 billion), depending on the severity of restrictions.
31
•
Per capita income may decline by nearly one-third, from just over US$500 in 2020 to about US$350
by 2022, if the resident population increases as in the recent past (2.5 percent annually).
•
The budget deficit could double as a percentage of GDP and reach US$660 million in 2021.
32
•
Imports could fall by almost half to US$3.2 billion within a year. This would significantly affect food and
energy consumption, with attendant humanitarian implications.
•
Investment could fall from US$3 billion to almost US$1 billion in 2022 and even decrease to just a
couple of hundred million dollars the year after.
•
Male unemployment may almost double from 15.2 percent in 2019 to 29 percent by 2022.
33
UNDP analysis also suggests that economic growth will not turn positive in the near term unless several
conditions are met. These include:
1. the removal of restrictions on female employment;
2. aid for combatting COVID-19 of US$250 million per year continues; and
3. the easing of sanctions to allow for humanitarian assistance.
Additional conditions include improvements in trade and transport, an increase in imports and partial revival
of business and financial services. Still, such a turnaround may not take place in less than two to three years
partly because the economy was in a downturn even before August 2021.
These scenarios are, of course, subject to a wide margin of error because much depends on the policy
course that the Taliban will pursue and the corresponding response from the international community,
especially with respect to sanctions. Yet, these
ESTIMATES CLEARLY IMPLY THAT THE ECONOMIC
SHOCK COULD BE SIGNIFICANT, AND HUMANITARIAN AID WOULD BE VITAL FOR AFGHANISTAN
TO MAKE A REAL DIFFERENCE IN THE LIVES OF THE ORDINARY AFGHAN PEOPLE.
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The UNDP’s pessimistic outlook is shared by international financial institutions. The IMF has indicated
that Afghanistan may experience a contraction of GDP of up to 30 percent.
34
The World Bank foresees
a contraction of similar magnitude.
35
The Asian Development Bank (ADB) has also prepared several
scenarios.
36
Under the worst-case scenario, a prolonged suspension of development and humanitarian
assistance, combined with a continued freeze of the DAB’s foreign reserves and the imposition of
economic sanctions, could lead to a decline in real GDP by up to 30 percent. Under a less pessimistic
scenario premised on some strengthening of economic and commercial ties with those countries granting
recognition to the new regime, some inflows of foreign investment from some countries, particularly in the
utilities and mining sectors, and the international community’s support for humanitarian relief, could lead to
a short-term decline of up to 20 percent in real GDP.
2.2 The role the private sector and banking during the humanitarian
crisis (and beyond)
Promoting economic growth is one of the two fundamental roles the government plays in any society,
the other being making, enforcing and maintaining law and order. With respect to economic growth, a
prerequisite is the availability and quality of public goods, in addition to reducing red tape and corruption
and applying the rule of just law, including the enforceability of contracts. Public goods include roads,
community infrastructure, education, health and energy, among others, all of which can reduce the costs of
private production.
Yet, public goods have been in short supply while a lack of security has held back the growth of the private
sector. As a result,
THE PRIVATE SECTOR HAS REMAINED SMALL AND POORLY DIVERSIFIED IN TERMS
OF PRODUCTION AND SOURCES OF FINANCING
and will therefore not be able to contribute adequately
to alleviating the humanitarian crisis. The Afghan economy consists of a complex mix of informal, formal,
illicit, and aid-sustained elements. Small establishments are dominant and the 500,000 micro-enterprises,
with fewer than five employees, are largely in the informal sector and employ 90 percent of Afghans
workers. On the latest accounts, the formal private sector contributed a mere 10 to 12 percent to the
country’s official gross domestic product.
37
The small size of the formal private sector, combined with illicit
activities and smuggling across the country’s external borders and internal channels, is constraining the tax
base from growing, thereby limiting the domestic mobilization of funds that could be used for productive
and social purposes.
The private sector faces a difficult business environment. There are numerous regulatory and non-regulatory
barriers, including corruption, limited access to finance, burdensome regulations, lack of coordinated
support for local industry and illicit activities influenced by local warlords. Poor connectivity with its
neighbours reduces the potential benefits from trade. Domestic connectivity is constrained by lack of safe
and reliable transportation and, more broadly, of critical infrastructure, particularly in rural Afghanistan; such
infrastructure includes irrigation systems which, given the economic importance of agriculture, are essential
for domestic consumption and can reduce food insecurity and increase exports, if value-chain development
projects are implemented. Exports have remained basic (mostly agricultural), with their value being less
than one-fifth the value of imports. Notwithstanding some progress since the early 2000s,
38
the private
sector has played a minimal role as a force for economic growth, which has been driven predominantly by
20
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external grants (both on- and off-budget). The private sector can also act as a conducive mechanism for
the attainment of the SDGs, as many of them are dependent on it, including for employment creation and
sustainable livelihoods.
In addition to weak institutions, the growth of the private sector has been hindered by geographical
segregation, lack of physical and logistical infrastructure, and conflict across the whole country. As a
result, the private sector is affected by ‘bad fragmentation’.
39
The legacy of conflict has given rise to rentier
behaviour in different areas of the country, resulting in ‘atomistic’ production benefiting certain groups
of differing importance, as well as different political and economic objectives that may not be compatible
with the interests of the nation. In addition to this division, there is acute segregation between women and
men in public life and employment, which further reduces possibilities for taking advantage of low local
labour costs.
The prospects for private-sector-led economic growth, and a significant contribution to the alleviation of the
current humanitarian difficulties, are not favourable. The sudden political transition has created uncertainty,
led to a loss of private sector qualified managers and professionals, and resulted in the freezing of the
country’s reserves held abroad, all of which, together with the onset of recurring droughts, have added
new challenges to the private sector. Though Afghanistan has large quantities of minerals, most projects
in extractive activities have a five- to 10-year lead-time and will require significant improvements in security
and a more investor-friendly regulatory environment. The same is true for any transformative efforts on
transit-trade development. Thus, for some time, the economy will rely on basic activities and agriculture in
which opiate production accounts for a large part of the economy despite efforts to eradicate it that have
proved insufficient or unsustainable.
40
Furthermore, agricultural growth is hampered by recurring droughts
and will require major investments in irrigation and more-effective water management, both of which have
long lead-times.
However, channelling aid through the private sector by supporting women-led enterprises, innovation
and start-ups, SMEs and trade companies can be a viable and practical way to make an impact. Hence,
supporting the private sector is crucial for absorbing the shock and boosting ‘domestic financing’. The
sanctions might complicate this task, but it will be possible to deliver support to the private sector “without
violating international laws or compromising principles”
41
in an approach characterized by ‘informed risk
tolerance’ combined with flexible and proactive measures to get around implementation obstacles and
constraints. For example, the US is now allowing its humanitarian aid to continue, creating a way around
legal restrictions that carry the threat of penalties on those who do business with the Taliban and that could
discourage aid. It has also determined that personal remittances from Afghans and others outside the
country to relatives and other Afghans in need, are important to maintain and carry a minimal risk of being
diverted to the Taliban.
42
However, in early November, the Taliban announced a complete ban on the use
of foreign currency in Afghanistan. This can cause further disruption to the private sector and more broadly
to the economy, thus accentuating the already substantial adverse impact arising from the withdrawal of
international financial support.
43
Historically, the banking sector has made a limited contribution to economic growth. Lending to the private
sector has been subdued, with credit to the private sector at barely 4 percent of GDP compared to nearly
30 percent on average in low-income countries. The loan-to-deposit ratio is particularly low at 15 percent.
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This means that banks rely on their own deposits to make loans to their customers and may not be earning
as much or growing as they could. Foreign Direct Investment (FDI) and Public-Private Partnerships (PPPs)
have been constrained by the weak rule of law and lack of contract enforceability, thereby failing to
attract ventures and to enhance state-owned enterprise performance and facilitate trade. This situation
has induced many Afghan business groups, even those headquartered overseas, to maintain a strong
commercial base in their region of origin, where they often have ties to the ethno-political establishment.
Although this practice helps businesses to reduce risk in the volatile and insecure environment and to
maintain investment in the Afghan economy, it adds to the economic fragmentation by perpetuating the
existing configuration of interests and by side-lining entrepreneurs.
44
With the necessary requirements in
place, Islamic finance can play a role in addressing several of these issues (see Box 3).
BOX 3
THE ROLE OF ISLAMIC FINANCE
The state of Islamic banking in Afghanistan is far from its potential. Based on real economic activities and assets
underlying transactions, together with its five principles,
1
it can be a suitable vehicle for supporting the humanitarian
and development of effort of Afghanistan. It can promote financial inclusion in the predominantly Muslim country by
encouraging people, including women, to use the banking system more through deposits and loans. It can also reduce
the recourse to non-banking transactions, like the traditional system of
hawala,
whereby money is paid to an agent who
then instructs an associate in the relevant country or area to pay the final recipient.
The private sector can play a major role in the development of the Islamic banking industry by creating new
Shariah-compliant
financial institutions or by promoting and investing in existing and new ones. This requires
the realization of conditions and the overcoming of challenges such as the absence of
Shariah
audits in financial
institutions, the lack of qualified
Shariah
supervisory board members in banks, weak research and development in
the field of Islamic finance and economics, inadequate training for staff, the lack of public awareness and the absence
of guidelines.
The Islamic Development Bank has been contributing to the support of the Afghan economy through the extension
of concessional loans and investments in different crucial development sectors of the country. ICIEC, the Islamic
Corporation of Investment Insurance and Export Credit, the sovereign risk insurance arm of the Islamic Development
Bank (IsDB), continues to offer sovereign risk cover for foreign investors in the country. In case the
de facto
authorities
respect the agreements signed by the ousted Islamic Republic of Afghanistan Government, this source of support for
the national economy and the private sector can become a critical tool of support for Afghanistan’s economic growth.
The same principles are applied to agreements previously signed with the Multilateral Investment Guarantee Agency
(MIGA), the World Bank, the Asian Development Bank (ADB), other multilateral development banks (MDBs) and donors.
Though the Taliban did not establish risk-sharing, anti-usury Islamic financial principles for the banking system the last
time they were in power, the
de facto
authorities of today may expand the Islamic finance framework, building on what
already exists, with considerable implications for bank intermediation. DAB, Afghanistan’s Central Bank, already has
in place a regulatory framework for Islamic banking and several Afghan banks have been operating Islamic finance
windows as a part of their operations. It issued its first fully Islamic banking license in 2018.
From a humanitarian perspective, channelling the aid and benefits of the ABADEI Programme through the Islamic
banking system can produce a higher impact by benefiting from the advantages of the five principles of Islamic finance
in addition to the wider acceptance of the Islamic finance principles by a very large proportion of the population.
Furthermore, the establishment of
Shariah-compliant
humanitarian funds like the women-led SMEs Fund, the Innovative
and Start-ups Fund, the Export SMEs Fund and the Strategic Impact Investment Fund, would allow the country to
benefit from the growing Islamic finance instruments available in the global markets.
1
The principles are: sharing (profit, loss and risk); no unfair gain; no speculation; no uncertainty; and no investments that are not
in the public interest.
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The economic and humanitarian crises are also being aggravated by the deteriorating conditions in the
banking sector. With the changes since 15 August, the banking sector is in very serious difficulty, raising
the risks of financial instability. The pandemic had already weakened Afghanistan’s small banking system.
Although banks had an overall strong capital adequacy ratio, the number of non-performing loans rose,
weakening bank profitability. Now, banks are facing a liquidity crisis, as depositors are trying to redeem their
funds, and the prospects of further declines in asset quality are considerable, given borrowers’ currency
and credit risks. According to a UNDP report, total deposits had already fallen from US$2.8 billion to
US$2 billion as of September 2021 and non-performing loans had nearly doubled to 60 percent compared
to a year earlier.
45
Local bank executives acknowledge that this can create an "existential crisis”
46
with
harmful impact on bank intermediation, especially for SMEs, and on economic growth. Moreover, banks’
operations and profits are likely to be hurt by financial sanctions abroad and cuts in correspondent banking
relations. These could divert some financial transactions, such as remittances, away from banks to the
informal
hawala
system.
47
2.3 Energy: A key sector for household welfare and production
The availability and reliability of energy are generally a development matter, as they are a key input and a
significant cost of production. In addition, they have major implications for the welfare of families, especially
during humanitarian crises.
The energy sector in Afghanistan is dependent on high amounts of imports of electric power and petroleum
products. Households make extensive use of traditional fuels for cooking and space-heating, such as
wood, charcoal and agricultural residues. The electrical power grid provides electricity to 34 percent of
the population, almost exclusively in cities (80 percent of the urban residents) and in few rural ones.
48
The
latter rely mostly on solar home systems and solar end-use devices, such as solar lanterns or kits for lighting
and battery-charging. For cooking and space-heating, most households (including many in cities) rely on
traditional fuels.
The production and consumption of energy from conventional sources have some deleterious effects,
notably pollution in the form of greenhouse gases (GHGs), carbon monoxide (CO), nitrogen oxides (NOx),
sulphur oxides (SOx) and others. Traditional fuels (including renewable wood fuels) used in food preparation,
and often space-heating, also create indoor air pollution (CO, CO
2
, smoke/soot/particulates) that can be
particularly harmful to women and girls, who typically cook and spend most of their time at home. Modern
fuels for cities, kerosene and LPG are entirely imported and may also have been negatively impacted by the
instability that has drastically reduced the external transfers that financed these imports, among others. As
in other crisis-affected cities, people in urban areas of Afghanistan, even in high-rise buildings, may revert
to firewood for cooking.
Energy consumption affects welfare at several levels. At the most elementary level, energy is necessary for
basic survival, as it must be used to cook food and, indeed, the availability of sustainable, affordable and
clean energy for all is enshrined in SDG 7. Thus, it would be bitterly ironic if Afghan households were able
to procure food but had no way to cook it. As such, energy supply is therefore intimately linked to food
security (SDG 2) and is of considerable importance. For instance, modern lighting is credited with making
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evening work and activity safer, especially for women and girls, who were often preyed upon under the
cover of darkness. At another level, energy conditions production and, by facilitating and empowering
most productive processes, it is essential for employment and income generation and hence for economic
activity generally. An interruption or major reduction in energy supply, as may happen should imports of
electricity be cut, can therefore inflict grievous harm on socio-economic systems and human welfare by
stopping most productive processes.
AFGHANISTAN IMPORTS ABOUT 80 PERCENT OF ITS TOTAL ELECTRICITY CONSUMPTION,
49
recently costing about US$220 million annually.
50
Promising alternatives for renewable energy, including
hydro, solar and, to a lesser extent, wind, remained largely unexploited. As rivers in Afghanistan are shared
with neighbouring countries, the absence of water-sharing agreements among the countries of the region
has hampered hydroelectric development. Moreover, hydro generation in Afghanistan is seasonal due to
low rainfall and the fact that most hydroelectric plants are run-of-river and have little or no storage. Against
its sizeable hydroelectric potential, only 1 percent has been harnessed.
51
Solar energy is just beginning to
be exploited for electricity generation. The recent addition of a solar photovoltaic grid-sized plant (solarPV)
and a gas-fired generating plant have not significantly altered the picture. The discovery of commercially
viable gas deposits in the northern part of the country holds promise for cheap, quick electricity generation
using this fuel, but this has yet to bear fruit.
52
The diesel/heavy fuel oil (HFO) plants are mostly small,
inefficient and highly polluting; hence, they are barely used. In early 2021, a number of projects for solar
and hydro generation were under consideration or at various stages of preparation; their fate is now even
more aleatory.
Overall, the energy sector also suffers from various other shortcomings. A main issue is an institutional (and
regulatory) vacuum since the Ministry of Energy and Water was abolished in 2020. This has been replaced
by the Forum for the Coordination of Energy Sector Stakeholders (FORCES), which is essentially run by
Da Afghanistan Breshna Sherkat (DABS), the vertically integrated, state-owned monopoly utility company,
together with ESRA (Energy Sector Regulatory Authority), whose affiliation is unclear. However, DABS,
which essentially runs FORCES,
53
has an obvious conflict of interest, being a participant in the electric
power industry and its
de facto
regulator. Moreover, there is no clear legislation allowing private investors
to build power plants and sell their electricity, though it seems that private generators must only sell to
DABS and not directly to any other large user – say, a manufacturing plant or a city utility – for
further distribution.
THE ELECTRICITY SUPPLY HAS RECENTLY BEEN FURTHER THREATENED BECAUSE DABS IS
UNABLE TO PAY ITS FOREIGN SUPPLIERS AND HAS BEEN ACCUMULATING ARREARS.
DABS
revenues have dropped significantly because sales at subsidized rates for small residential customers,
who are least likely to pay, have risen while demand by industrial and commercial customers, who paid
higher tariffs and paid more punctually, has fallen by 30 percent. Government customers were already
not paying in 2020 and have presumably not paid since. With millions in arrears already owed by DABS,
neighbouring countries may not be willing to continue supplying energy to Afghanistan for much longer
unless the accounts are settled or some of the arrears are cleared.
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In conclusion, international humanitarian assistance to Afghanistan would need to consider supporting the
maintenance and continued development of energy supply and help maintain what little production is still
going on, as well as ease the stark everyday energy poverty of ordinary households. A large reduction
in energy supply, as may happen in Afghanistan should imports of electricity be cut, can therefore inflict
grievous harm on socio-economic systems and human welfare by stopping most productive processes and
might leave over 10 million people, a quarter of the population, in the dark, especially in cities.
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3. An intensifying
humanitarian crisis
26
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A F G H A N I S TA N H E A LT H FAC I L I T Y.
P H OTO C R E D I T U N D P
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The situation in the social sectors was wanting even before 2021. The already low per capita income, one of
the lowest in the world, has been declining for nearly a decade. Now, food insecurity has been rising amid
increases in the prices of food and basic goods and loss of income, including among public sector workers.
Hundreds of thousands of soldiers are also now jobless. The housing sector has been under pressure
due to the large population displacement. The social protection system has been grossly inadequate to
meet the needs of the country’s 40 million people. Health series have equally been inadequate in terms
of coverage and quality and have been further stressed with the advent of the COVID-19 pandemic. Social
indicators, including those for education and health, are among the lowest in the world, though they
had been improving during the last two decades. Among the few countries so burdened outside Africa,
Afghanistan has one of the highest rates of orphaning, reaching 10 percent.
54
The ultimate manifestation of
poverty is the selling of girls to reduce poverty among the remaining ‘family’ members. Sexual violence, also
against boys, is not always seen as a crime in some communities. Those who allege cultural irregularities
can be exposed to death threats.
55
Even before the crisis, Afghanistan had one of the lowest scores in
the Human Development Index, being ranked 169 among the 189 countries assessed by UNDP in 2020,
with practically all countries below Afghanistan being in sub-Saharan Africa.
56
IT WAS ESTIMATED THAT
AFGHANISTAN WOULD REQUIRE US$6 BILLION TO US$8 BILLION IN INTERNATIONAL GRANTS
PER YEAR
BETWEEN 2020 AND 2024
to fund basic services, support faster economic growth, and
consolidate and sustain the then-expected peace settlement with the Taliban.
57
The situation is expected to worsen following the emerging humanitarian crisis. ADB has estimated that,
under its worst-case scenario, unemployment would increase by more than 40 percent in the short run
and household consumption could contract by 44 percent. In the less-pessimistic scenario, unemployment
would increase to 26 percent and household consumption would fall by 27 percent. Described below,
these results are supplemented by UNDP’s own analysis focusing on poverty, gender, the impact on the
future course of the SDGs, and the potential role of social protection.
3.1 Poverty has increased sharply
Afghanistan’s per capita income was estimated at US$507 in 2019,
58
having decreased from a peak
of US$641 in 2012. This suggests that poverty must have increased before the advent of COVID-19 in
March 2020 as well as after international grants were frozen in August 2021. Indeed,
OFFICIAL DATA
SHOW THAT THE NATIONAL POVERTY HEADCOUNT RATE IS HIGH AND HAS BEEN RISING.
The national poverty headcount rate was 34 percent in 2007/2008 and rose to 55 percent by 2017.
58
Somewhat unexpectedly, given the overall decline in per capita incomes and the severe drought of 2018,
the latest Income, Expenditure and Labor Force Survey (IELFS 2019-2020) suggests that the percentage of
those below the poverty line was 47 percent. Since then, following the pandemic, the poverty headcount
rate has likely risen to more than 70 percent.
60
According to the latest estimates by UNDP, assuming a
10 percent to 13 percent reduction in GDP, poverty may increase by mid-July 2022 to as much as 97 percent
of the population.
61
The latest available estimates (2017) for those Afghans below or around the poverty line indicated that
81 percent of the population was living daily on less than AFN57 (US$0.74).
62
In fact, the poorest half of the
population was living on less than AFN30 (US$0.39) per day, indicating an extreme level of deprivation.
Even the 5 percent of the population at the top of the distribution averaged only US$2 per day per
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BOX 4
THE POVERTY GAP HAS DOUBLED SINCE 2019
The IELFS 2019-2020 estimated the poverty headcount rate to be 0.47, or nearly 19 million Afghans. The same survey
set the poverty line at AFN 2,268 per person per month, and the poverty gap at 13.5 percent (that is, the average
income of the poor was 13.5 percent lower than the poverty line income).
Elimination of the poverty gap would have required US$900 million annually, or 5 percent of the then GDP, assuming
perfect targeting and no implementation costs. This estimate also assumes that (a) the poverty gap had stayed at
13.5 percent, (b) GDP had not declined and (c) the population had not increased. The increase in the poverty rate to
0.72 after COVID-19 has raised the poverty gap to US$1.4 billion (or 7.6 percent of the then GDP).
In the absence of policy measures and humanitarian aid, an increase in the poverty rate to 0.97 post-August 2021
would increase the fiscal outlay to nearly US$2 billion (10 percent of GDP in 2019 or nearly 15 percent of GDP, if its
post-August 2021 contraction reaches 30 percent).
Source: UNDP staff estimates, Annex 1.
person. Following the onset of the pandemic, only 31 percent of those in the top 20 percent of the income
distribution were assessed to be non-vulnerable.
63
Household incomes have been widely fluctuating over
short periods of time. In 2017, nearly 60 percent of households had been negatively impacted by a shock
in the previous 12 months. COVID-19 has exacerbated the crisis since March 2020.
64
The increase in the
poverty gap has been considerable (see Box 4).
65
Thus,
THE FISCAL RESOURCES NEEDED TO ELIMINATE THE POVERTY GAP HAVE MORE THAN DOUBLED
IN THE LAST THREE YEARS.
The percentage of the population who are in poverty and food-insecure was
already predicted to rise drastically by the end of 2020.
66
This estimate was driven by a combination of the
increasing number of internally displaced people, fast population growth and rapid urbanization, environmental
impacts (especially droughts) and the COVID-19 pandemic. These factors are still present and have worsened:
40 percent of crops have been lost in 2021, with resulting increases in food prices.
67
The latest estimate by FAO and the WFP brings the number of those that would require food assistance in
2022 to a record of nearly 23 million people, or more than half of Afghanistan’s population. The increase
in poverty and rising food insecurity have therefore added to the challenges of the past. Even prior to the
onset of the COVID-19 pandemic, on any given day, as many as 70 percent of children aged between
6 and 23 months did not consume iron-rich foods; over three-quarters of children aged 6 to 23 months
were unable to access a minimally acceptable diet; and 41 percent of children under five years of age were
stunted while nearly 10 percent were wasted.
68
The pandemic has also revealed the fragility of the health system and more generally has limited access to
essential services, including education. Even before the pandemic, only 70 percent of boys and 50 percent
of girls aged 7 to 12 years attended school, with the proportions dropping to 50 percent of boys and
25 percent of girls among children aged 13 to 18 years.
69
After the onset of the pandemic, the number
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of children out of school likely rose from 5.6 million to 9.7 million.
70
This number has worsened since
the Taliban have restricted girls from attending secondary schools. According to WHO, the post-August
2021 economic crisis is threatening the heath sector, including the closing of almost all (90 percent)
of the Sehatmandi-supported clinics that provide health, nutrition, and family planning services across
Afghanistan.
71
3.2 Gender: A human rights issue with significant effects on the economy
and household incomes
Significant gains had been made in ensuring women’s and girls’ rights over the last two decades. Through
local and donor support, the number of girls in primary schools alone rose to over 2.5 million from practically
zero in 2001, raising the share of girls to four out of 10 students.
72
The number of girls in higher education
increased from around 5,000 in 2001 to more than 90,000 in 2018. The female literacy rate more than
doubled from 13 percent in 2000 to 30 percent in 2018.
73
Schools and universities employed nearly 80,000
women instructors, including over 2,000 university professors. Thousands of women were employed as
health professionals, journalists, media presenters, civil society representatives, judges, prosecutors,
defence attorneys, police and army personnel, and entrepreneurs. Maternal mortality has declined from
1,600 to 638 per 100,000 live births and women’s life expectancy has risen by 20 percent – a gain of
10 years.
74
In the last elections, millions of women voted and 89 of the 352 members of parliament were women.
Women held 13 seats as ministers and deputy ministers and four served as ambassadors. Eight women
served as deputy governors, mayors and deputy mayors, including two as district governors. Overall, of the
nearly 400,000 civil servants, more than 100,000 were women.
75
These gains in gender equality are under threat of being reversed, notwithstanding the fact that Afghanistan
was ranked second-last (after Yemen) with respect to gender equality among the 189 countries assessed by
UNDP in 2020.
76
Despite early announcements, the situation has been turned around in the short period
of two months after the Taliban took power. Soon after the political change, the Taliban stated, “We assure
the international community that there will be no discrimination against women, but, of course, within the
frameworks we have.”
77
However, in practice, the Taliban’s frameworks have taken precedence over what
the international conventions consider discrimination, including the Convention on the Elimination of All
Forms of Discrimination (CEDAW), which Afghanistan signed in 1980 and ratified in 2003.
78
The Taliban have effectively barred women from the public sphere. Together with most forms of
entertainment, the Taliban have banned women from participating in sports and their presence in stadia.
79
They have also banned girls from going to school, especially after the age of 12.
80
Female government
employees have been told not to go back to work until officials prepare a ‘new plan’.
81
The
hijab
(head
covering) has become part of a compulsory dress code and it is not yet clear whether this will be extended
to the
niqab
(face covering) or the
burka
(covering the whole body from head to feet).
82
Clothing shops have
been asked to remove the heads of female mannequins.
83
Women are now expected to be accompanied
by a male relative when outside the home or when they travel long distances by road (defined as more than
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45 miles/72 kilometres). Taxi drivers have been advised not to offer services to women who do not follow
the prescribed Islamic dress code.
84
Afghan women have been completely excluded from ministerial
positions in the
de facto
authorities that the Taliban announced in September 2021, including at the deputy
minister level. The Ministry of Women's Affairs (MoWA) has been abolished and the Ministry for Propagation
of Virtue and Prevention of Vice has been reinstated.
85
THE RESTRICTIONS ON WOMEN’S EMPLOYMENT WILL AFFECT BOTH THE ECONOMY AND
SOCIETY.
Losing existing workers and their experience and forbidding new young and educated females
from entering the labour market will reduce the number of workers, productivity and the rate economic
growth. It will also reduce the incomes of households whose female members are working, thereby
reducing their consumption at the micro-level and aggregate demand at the macro-level.
UNDP has estimated the impact of restricting employment on GDP and on household consumption. These
results are tentative, as the scope and severity of the enforcement of restrictions that apply to female
employment are not yet clear. For example, according to statements made so far, the restrictions do not
include women in the health and education sectors, although the latter is of little relevance if, as might
happen, girls cannot attend schools and female teachers are replaced by male teachers.
86
The Taliban have
said that women will also continue to work at police stations and in passport offices across the country as
“they are needed, according to the Islamic law”.
87
However, the Taliban’s approach to women’s rights in
areas that used to be under their control before the political change last August had not been uniform: in
some districts, they did not allow girls to go to schools, while, in others, women were granted waivers to
attend university. And, after August 2021, female aid workers in a handful of provinces have been allowed
to offer their services, but, in other provinces, they are prohibited from doing so or, if they are allowed, they
must be escorted by a male family member.
88
AFGHAN WOMEN WORKERS AMOUNTED TO 20 PERCENT OF EMPLOYMENT BEFORE THE
CRISIS.
89
At face value, the employment restrictions apply to female government employees and to an
uncertain number of women in the private sector. In fact, it will be difficult to enforce the restrictions in
the informal sector, agriculture, and family work. However, reducing the number of female workers in the
government and the formal sectors, can disproportionally affect production relative to their numbers, as
women workers in these sectors tend to be more educated than their counterparts employed in other
sectors of the labour market.
A COMPLETE BAN ON FEMALE EMPLOYEES, WHO ACCOUNT FOR ABOUT 3 PERCENT OF
TOTAL EMPLOYMENT, MAY REDUCE OUTPUT BY THE SAME PERCENTAGE
in the immediate
short run.
90
This will be so because the labour market takes some time to adjust. Moreover, it is not
necessarily the case that the replacement of women who lost their jobs would be by men who are
equally qualified, experienced or motivated. Typically, when the labour force participation rate
of women is low, as in the case of Afghanistan, these women workers are a ‘self-selected’ group
among women, in the sense that they are those who have more education and higher ambitions,
drive and capacities and are more productive. It is these qualities, rather than the level of wages
per
se,
that bring them to the labour market. As the GDP of Afghanistan is around US$20 billion, losing
3 percent of its workers can, therefore, reduce production also by 3 percent, or US$600 million. This
is not an amount the country can afford to forfeit in view of the predicted deep and likely prolonged
contraction of GDP.
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To these numbers, two relevant statistics can be added, though there are no specific estimates available
for Afghanistan. First, the empirical literature suggests that, when women are not paid like men and do not
work in the same jobs as men, the output loss across different world regions averages from 3 percent to
6 percent. In Afghanistan, employment segregation is probably the most acute in the world, and output
loss arising from it is likely to be at the highest end of these regional averages and probably higher than
them.
91
Second, also as suggested by the international literature, there can be an output loss from the
low rate of women’s participation in the labour force. For South Asia, such a loss averages 17 percent of
GDP and, among Arab countries, which also have Islamic values, it reaches 20 percent.
92
Again, such a
loss in the case of Afghanistan can be higher than even for those in the Arab region, given the stricter
interpretation of
Shariah
in Afghanistan regarding women’s employment and, more generally, how the
position of women is regarded in public and private lives.
From the perspective of household consumption, the UNDP has estimated that the GDP contraction from
the foreign assets freeze and reduction in aid post-August 2021 can be lower by 3 to 5 percentage points
if there are no restrictions on female employment.
93
Alternatively, the cumulative loss in output from a
reduction in female employment by half (that is, 10 percent of total employment) may reach US$1.5 billion
between 2022 and 2024.
94
Overall, there can be a reduction in consumption by 5 percent. This will be
additional to the reduction in consumption due to other adverse effects on the economy. The impact will
be greater for more affluent households (Table 1). This is in line with the facts that most female employees
live in households of higher socio-economic status and that there is a relatively low level of inequality in
Afghanistan, where most households are at or around the poverty line and the Gini inequality index is
also relatively low.
95
The consumption of the top quantile will be reduced by nearly 4 percent, while that
of the other four quantiles will be reduced by 2 percent. This can provoke political economy reactions
by the better-off Afghans, while the majority, who are already poor, can hardly afford any reduction in
their consumption.
TABLE 1:
EFFECTS ON HOUSEHOLD CONSUMPTION FROM A REDUCTION IN FEMALE EMPLOYMENT
Consumption (millions, US$)
Quintile
Q1 (poorest)
Q2
Q3
Q4
Q5 (richest)
Total
In 2020
1,456
2,112
2,734
3,666
7,549
17,517
Average annual decrease,
2022-2024
-30
-44
-58
-79
-276
-487
Share in losses (%)
6%
9%
12%
16%
57%
100%
Source: UNDP staff estimates based on the C-CGE
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All in all, upholding the human rights of Afghan women (as well as those of children and ethnic and religious
minorities) is an issue not only of human rights, but also of sound economics. Restrictions on women’s
employment are bound to affect current production adversely, though the extent of output loss is hard to
predict in the absence of knowledge about their scope and the intensity of their enforcement. Restrictions
on female education will reduce output further in the future by lowering the human capital investment on
half of the country’s population: the rate of return on education for Afghan females has been estimated to
be more than double that for Afghan males.
96
Whether there will be significant changes in the practices of the Taliban in the near term remains to be seen.
What is certain is that the Security Council unanimously adopted a resolution that renewed the mandate of
the UN Assistance Mission in Afghanistan (UNAMA) and acknowledged that women’s “equal and meaningful
participation” in public life has been restricted under the Taliban and required “all parties to allow full,
safe and unhindered humanitarian access”.
97
The humanitarian challenge will become graver if women
continue to be excluded from employment, with significant consequences for household incomes today.
The need for humanitarian relief can also persist in the future, as long as female education is restricted, thus
compromising productivity gains and the prospects for economic growth.
3.3 SDGs: Their attainment was already off course, with further
derailment expected
The attainment of the Sustainable Development Goals in Afghanistan had been off-track even prior to
2021. The compounding effects of the COVID-19 pandemic, the political transition, and the already sizeable
economic impact from the reduction in aid are amplifying existing socio-economic challenges and prospects
to achieve the SDGs. Previous gains in the key goals for poverty eradication, zero hunger, good health
and well-being, quality education, gender equality, access to clean water, and employment are likely to
be reversed.
UNDP HAS ESTIMATED THE EFFECT OF THE POST-AUGUST 2021 SUDDEN STOP IN INTERNATIONAL
FINANCIAL ASSISTANCE TO AFGHANISTAN ON SELECTED SDGS, SHOWING A BLEAK SCENARIO.
The estimates are subject to many qualifications, as they depend on much deficient data and various
assumptions of how an economic shock can affect the SDGs individually and collectively, in addition to the
fact that changes in one SDG can independently affect another. The discussion below summarizes the state
of selected SDGs as of 2020, followed by their likely course in the short term.
SDG 1 Poverty:
About half of the population was already living below the national poverty line
even before the pandemic and the recent increase in poverty (Annex 1: The Poverty Gap). Regional
disparities are prevalent, and poverty remains largely a rural phenomenon (three out of four
people living in poverty are in rural areas).
98
Child poverty was more pronounced, with nearly 60 percent of
children living in poverty
99
in 2019. Under a ‘sudden stop’ of grants scenario and with a decline in GDP by up to
30 percent, more than 90 percent of the population could be pushed below the poverty line.
100
Goal 2 No hunger:
The estimates for the number of those facing food insecurity in 2020 have
been revised upwards and now suggest that the number may reach 23 million during the winter
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season (November-March). In the 2021 Global Hunger Index, Afghanistan was already ranked 103 out of
the 116 most food-insecure countries. On average, food consumption absorbed more than 80 percent of a
household’s income, and the decline in incomes, fast-rising prices for wheat and cooking oil, among others,
and the expected severe drought are bound to adversely affect food security further.
SDG 3 Health:
The already limited outreach and low quality of health services have been severely
compromised since the onset of the COVID-19 pandemic. Maternal and child health services
have taken a hit. More than three million children have not been vaccinated against polio since
2018.
101
The risks of measles, acute watery diarrhoea and malnutrition, especially among children, have
been rising. As of the end of October 2021, only 2.4 million people had received at least one dose of the
COVID-19 vaccine, but all elements of the COVID-19 response have declined, including a significant drop in
testing at public laboratories. According to a recent report, life expectancy in Afghanistan is now the lowest
in the world, lagging behind 22 developing countries, all in sub-Saharan Africa
.102
SDG 4 Education:
Since the start of the pandemic, up to 13 percent of lifetime schooling has been
lost, a figure that reaches 21 percent for girls.
103
This number has worsened during the current
academic year (2021/2022) following the Taliban’s banning of girls from attending secondary
schools. Unlike the impact on poverty that is mainly due to economic reasons, the regression of the SDG
for education is the result of a deliberate policy by the
de facto
authorities.
SDG 5 Gender Equality:
Afghanistan was already ranked fifth-lowest in the world with respect
to gender equality in 2019, above only Mali, Central African Republic, Chad and Yemen.
104
The recent restrictions on girls’ education and women’s work do not augur well for an improved
score in the future.
SDG 6 Clean Water:
Access to improved drinking water had increased from 48 percent of the
population in 2010 to 67 percent in 2017.
105
Yet, droughts and poor water resources management
are causing water shortages and large regional disparities between urban and rural areas:
96 percent of the urban population is covered, compared to only 57 percent of rural areas.
106
The effects
of the economic crisis on investment (see Section 2) are likely to lead to a deterioration in maintenance
services, while major investments in irrigation and more effective water management can be significantly
delayed and both have long lead-times to show results.
SDG9DecentWorkandEconomicGrowth:
OneoutoffourAfghansisofficiallyunemployed,withmore
being discouraged from seeking employment, and many are underemployed.
107
Returnees – around
1.5 million over the last two years – and a similar number of internally displaced persons further add
to the pressure on the labour market. Seasonality and informality affect most Afghans. While unemployment
is expected to nearly double in the next couple of years, wages have fallen year-on-year by between
8 percent and 10 percent. The restrictions on women’s employment are bound to affect the incomes
of households with female working members.
In 2020, UNDP estimated that Afghanistan would need US$300 million a year to meet the SDGs. Post-August
2021, the financial gap to make progress toward the SDGs has increased considerably. Given the immediate
pressure for providing humanitarian relief, which can continue for several years, the attainment of the SDGs
seems more remote today than it seemed just over a year ago.
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3.4 Social protection: Starting from nearly zero base but can make an impact
Current conditions
AFGHANISTAN’S FORMAL SOCIAL PROTECTION SYSTEM IS SMALL COMPARED TO THE
POPULATION OF NEARLY 40 MILLION.
A Public Service Pension programme provides a pension to
114,000 former public servants, with nearly 60 percent of recipients being under 50 years of age and
less than 15 percent over 60 years of age.
108
OF THE RECIPIENTS, ONLY 10 PERCENT ARE FEMALES.
The other main programme is the Martyrs and Disabled Pension Programme (MDPP), which provides
benefits to 90,000 persons with disabilities and 220,000 others affected by conflict, mainly survivors.
109
These two schemes reached only 1.5 percent of individuals directly and less than 10 percent of the entire
population (when other household members are regarded as indirect recipients).
Therefore, most older people were particularly vulnerable.
110
In the absence of a comprehensive old-age
pension system, older people have either had to continue working or, as they become increasingly frail,
been obliged to depend on others for their subsistence. Women, as they age and are widowed, are in
a particularly vulnerable position, as they do not have a history of independently generating their own
incomes and become increasingly dependent on others.
The percentage of the population living with a severe disability is 3.2 percent.
NEARLY 20 PERCENT
OF HOUSEHOLDS HAVE A PERSON WITH DISABILITY AMONG THEIR MEMBERS.
Many have faced
discrimination and other challenges in accessing employment, while they have substantially higher costs
than the rest of the population, due to their disability. These expenses comprise, for example, higher
expenditure on transport, education, rehabilitation, assistive devices, medicines and care needs.
Overall, standards of living in households comprising older people, persons with disabilities, and children,
who are another vulnerable group, are almost certainly lower than among the rest of the population. More
than one-third of households include an older person, with 85 percent of older persons living in a household
with at least one child aged 14 years or under.
The onset of the pandemic exacerbated the crisis with its impact on lives and livelihoods; employees in
small establishments, as well as the retail, construction, agriculture, and personal services sectors, have
been hit particularly hard.
111
Advancing the humanitarian agenda
The simplest means of addressing poverty during the current crisis would, in principle, be a Universal Basic
Income (UBI). Poverty targeting is not a sensible option, given that the poverty rate is extremely high and
there is significant churning above and below the poverty line. The main concern with a UBI is its fiscal cost.
At US$3 per person per month, it would cost US$ 1.3 billion, or 7.5 percent of GDP.
112
As this fiscal outlay is beyond the current means of Afghanistan, an alternative option would be to select
members of society who would be regarded by the rest of the population as ‘deserving’, so that their
selection would be accepted within communities. The three clearest population categories would be
children, persons with disabilities, and older persons. Children and older persons would be relatively easy
to identify, while a methodology for assessing disability would have to be developed to identify qualified
persons. These three groups, alongside the costs of their respective measures, are summarized in
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TABLE 2:
THREE OPTIONS FOR PROVIDING SOCIAL PROTECTION TRANSFERS
Age of
eligibility
0-3 in year 1
0-64
65+
Monthly transfer
value (US$)
US$3
US$8
US$8
Monthly transfer
value (US$ PPP)
US$13.50
US$36.00
US$36.00
Annual cost
(US$ million)
US$150
US$56
US$93
US$299
Benefit
Child benefit
Disability benefit
Old age benefit
Total
Note: The estimates are for 2021 and assume 90 percent coverage for the child and old age benefits. They exclude administrative
costs, which could be 10 percent of the total cost, assuming no fraud or abuse by either the providers or the recipients.
Source: UNDP staff estimates
Table 2 and shown in more detail in Annex 2. The total annual cost of the measures outlined here would be
around US$300 million. If additional funding were available, the age of eligibility for the child benefit could
be increased.
Alongside the cash transfers outlined above, complementary cash support could be provided to support
employment and businesses. Two options are set out below.
A ‘cash-for-work’ programme could be offered to young women and men. By providing seasonal/short-term
employment, this programme could serve a double objective: first, a social one that would address poverty
and unemployment and, second, an economic/development one that would strengthen community
infrastructure by protecting against climate-change-related natural disasters or by providing care services
to the most vulnerable members of society. Employment could be offered for up to 75 days per year to
each participant at a daily wage of US$3 per day. Offering jobs to 500,000 people per year would require
US$113 million, plus administrative costs.
A ‘cash-for-markets’ programme could address gaps in existing markets, focusing primarily on access to
goods, employment generation and support to businesses. Cash subsidies could be given to 300,000
small businesses each year, run by women and men, so that they could grow their businesses, increase
their incomes and offer jobs to others within their communities. If an average of US$300 per year
were given to beneficiary businesses, the total budget would be US$90 million per year, plus
administrative costs.
In conclusion, the total cost of the above schemes would be significantly lower than the cost of a UBI. They
would, however, increase as the population increases. For example, assuming no children are removed
from the child benefit, the required budget would rise from US$299 million in the first year to US$470 million
in the fifth year. With the expansion in the child benefit, the system’s effectiveness in supporting families
would increase significantly, as would broader positive impacts on economic growth, employment and tax
revenues. Moreover, the administrative overheads could also decline over time due to learning-by-doing
and developing more advanced mechanisms for the selection of beneficiaries – for example, among
persons with disabilities – and better monitoring implementation.
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4. Concluding Remarks
36
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Global and regional leaders have underscored their concerns regarding the humanitarian impact of the
political change in August 2021 and of the economic crisis that has ensued. However, while the country
plunges deeper into economic crisis, there is no consensus on how and when to fully resume vital financial
assistance. Against this background, the UN and the international community have promised to continue
humanitarian aid to Afghans in need while also outlining the conditions under which financial support may
be granted in the future, including the containment of terrorism, as well as the protection of the rights of
girls, women, and ethnic and religious minorities.
The overall response must save lives and livelihoods. In doing so, policies and aid must ensure that
the combined effects of the economic crunch, the drought and the pandemic do not turn a crisis into a
catastrophe. To avoid this, international support for Afghanistan should first and foremost contribute to food
security and help Afghans cope during the harsh winter season. The vaccination effort should intensify, not
only for COVID-19 but also for the millions of children who have gone unvaccinated for polio in recent years.
Targeting pregnant and lactating women and children under the age of five should be a priority. Many
UN agencies and other organizations are already active in these areas. However, these efforts should be
complemented and supported by Afghanistan’s de facto authorities by providing safe access and support
to aid workers, including local ones. The recently imposed restrictions on the deployment of female aid
workers go against the spirit of such cooperation.
UNDP recognizes that for local economies to regenerate progress, it takes an integrated approach to
economic and social activity at local levels. Interventions and investments are needed to ensure decent
shelter, functioning community infrastructure and services, safe passage to engage in education and
livelihoods, and protection from environmental disasters. People should be able to live in dignity and
earn a decent income and have access to adequate public social services. A continuous dependence
on short-term relief and what is handed-out to them, obviates from these goals. Yet, these ‘next stage’
objectives are difficult to meet, given the limited resources supporting an agenda of social and economic
recovery from the bottom-up.
The call is for the seeds for achieving these objectives to be sown now. Available domestic and international
resources should be mobilized to their full extent, to drive a domestic ‘peoples’ economy’ recovery. In this
regard, highlighting the role and support to commercial banks and private sector mobilization; and the
essential role of women as entrepreneurs, service providers and local investors are two essential factors
that need to be prioritized in the support. Limiting the space for women to work and to train and gain
a full education including at tertiary levels, severely undermines this goal of socio-economic recovery
for the whole country. Restricting the roles of women, who are a critical one-fifth of the labour force and
marginalizing their contributions to the future of Afghanistan by restricting women and girls’ education
and the full space to work, will have an immediate adverse on households, and severely compromise
Afghanistan’s future sustainable development progress and peace.
Three social protection measures are proposed by UNDP to meet the twin objectives of achieving
immediate basic needs and setting the foundation for future economic and social development. The cash
transfer programme, though modest in nominal terms, will lead to a significant increase in household real
incomes in purchasing power parity terms. The public works programme can provide employment and
contribute to infrastructure maintenance and building. The cash for markets programme will facilitate local
private sector activities and, in doing so, cascade further employment and incomes.
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However, there cannot be a bottom-up socio-economic recovery without some systems being ringfenced
and supported at national level. Two key elements in this regard: a) safeguarding the energy supply and
moving to investing in renewables to sustain a lower cost but universal access to energy, (currently very
scarce, import-dependent and further threatened by foreign exchange and fiscal crunch); and b) reversing
the collapse of the banking and finance sector, which would need the core elements of central banking
function to be restored, without which commercial banks and private sector cannot operate as needed, for
progress of the legal economy.
The precondition for such national infrastructure and capabilities to be engaged and invested, would be
the commitments that must be agreed between the Taliban and the international community to pave the
way for the resumption of financial assistance to jump-start social and economic progress in Afghanistan.
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Annexes
S A L A M P R OJ E C .
P H OTO C R E D I T U N D P,
AW R OZ A H M A D I
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Annex 1: The poverty gap
The upper part of the table shows the calculations for the poverty headcount rate of 0.47 before the
pandemic. The lower part shows simulations for the other two poverty headcount rates (post-COVID-19
and post-August 2021). The latter two have not been adjusted for population growth, decline in GDP or the
likely increase in the poverty gap.
2020
1
2
3
4
5
6
7
8
9
10
11
12
Respective rows
GDP pc (current AFN)
Poverty rate
Population
Number of poor
Poverty line (AFN monthly, per person)
Poverty gap
Poverty gap in AFN monthly per person
Total poverty gap in AFN, annual
GDP in AFN
Poverty gap % of GDP
GDP in US$
Poverty gap in US$
34,696
0.47
40,000,000
18,800,000
2,268
0.135
306
69,074,208,000
1,387,845,119,572
5.0%
18,094,460,490
900,576,375
5x6
4x7x12 months
1x3
8/9
x-rate 76.7 (avg 2020)
10*11
3x4
Poverty headcount rate
2020
Post-COVID-19
Post-2021
Poverty gap % of GDP
5.0%
7.6%
10.3%
US$ million
901
1,380
1,859
0.47
0.72
0.97
https://data.worldbank.org/indicator/SP.POP.TOTL?locations=AF
Source
Population:
GDP:
Exchange rate:
Poverty measures:
0.47
0.72
0.97
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=AF
www.moore.af/resources/taxation-resources/exchange-rates
Income, Expenditure and Labor Force Survey 2019-2020: Afghanistan NIS
World Bank (2020). Afghanistan Development Update: Surviving the Storm.
UNDP (2021). Economic Instability and Uncertainty in Afghanistan after 15 August 2021.
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Annex 2: Social Protection: Alternative cash transfer options
This Annex supplements the results presented in Table 2 of this report, which discussed the basic social
protection option for the immediate humanitarian response. The discussion rests on the same principles as
those underlying the basic option, which are that the measures would need to be as simple as possible and
would need to be backed up by administrative systems that ensure that the right people receive the right
amount of cash at the right time.
Costs
As discussed in the text, the cost of a Universal Basic Income (UBI) in its first year of operations would
be US$1.3 billion. This cost is based on providing a cash benefit of US$3 to every person in Afghanistan
each month.
A more modest option would be to select members of society who would be regarded by the rest of
the population as ‘deserving’, so that their selection is accepted within communities. The three clearest
categories would be children, persons with disabilities, and older persons. Children and older persons
would be relatively easy to identify, although a simple methodology for assessing disability would have to
be employed to identify persons with disabilities.
Three cases are presented below, from low to high cost. The eligibility criteria for children, disability and
old-age benefits would be:
•
Children:
Their ages can vary.
•
Older persons:
The benefit would be provided to everyone aged 65 years and above.
•
Persons with disabilities:
The benefit would be provided to all persons with severe disabilities –children
and adults – up to 64 years of age.
113
Children with disabilities would be able to receive the disability
benefit and the child benefit, since these benefits have different purposes.
The options would therefore vary in terms of the age of eligibility of children in the first year:
•
Option 1:
All children aged 0-3 years. This option would prioritize reaching the youngest children, given
that the first few years of life are the most important period for a child’s development.
•
Option 2:
All children aged 0-7 years. This option would also cover children of early primary school age
to ensure a good start to education.
•
Option 3:
All children aged 0-11 years. This option would offer support to all children from birth up to
the end of primary school.
To ensure that all children who enter the child benefit receive long-term support and that all new-born
children can enter the scheme in future years, no child would be removed until he or she reached 18 years
of age (assuming the programme continues long-term). How this would work for Option 1 is illustrated by
Annex Figure A-1, and the same principle would be applied to the other two options.
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FIGURE A-1:
ILLUSTRATION OF CHILDREN ENTERING A CHILD BENEFIT AT 0-3 YEARS IN 2022 AND REMAINING
ON THE SCHEME UNTIL THE 18
TH
BIRTHDAY
2036
18
16
14
AGE IN YEARS
12
10
2022
8
6
4
2
0
Start child benefit
reaching all children
aged 0-3 years
Child benefit reaches
universal coverage of
children aged 0-17 years
0-17
2029
Child benefit reaches
universal coverage of
children aged 0-10 years
0-10
0-3
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
YEARS
The transfer values would be the same for each option, at US$3 per month for children and US$8 per month
for persons with disabilities (children and adults) and older persons. These would be the equivalent of
US$13.50 and US$36 per month in purchasing power parity terms. Each household could receive multiple
transfers, with more vulnerable households receiving higher amounts. For example:
•
A household with one older person, one person with disabilities and one eligible child would receive
US$19 per month, the equivalent of US$85.50 in purchasing power parity terms.
•
A household with two older persons, a person with disabilities and two eligible children would receive
US$30 per month, the equivalent of US$135 per month in purchasing power parity terms.
To address the challenge of inflation, the value of the transfers in the Afghani (AFN) would be calculated in
US dollars each month and converted to the national currency on the day of the transfer. The three options
are summarized in Appendix Table A-1, assuming 90 percent coverage for the child and old age benefits
(the disability and old age benefits are not repeated for Options 2 and 3).
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TABLE A-1:
SUMMARY OF CASH TRANSFER OPTIONS
Monthly transfer
value (US$)
Monthly transfer
value (US$ PPP)
Annual cost
(US$ million)
Benefit
Option 1
(US$ million)
Disability benefit
Old age benefit
Total
Option 2
Child benefit
Total
Option 3
Child benefit
Total
Age of eligibility
0-3 in year 1
0-64
65+
US$3
US$8
US$8
US$13.50
US$36.00
US$36.00
US$150
US$56
US$93
US$299
0-7 in year 1
US$3
US$13.50
US$293
US$443
0-11 in year 1
US$3
US$3.50
US$432
US$581
The total cost of the schemes would be significantly less than a UBI, with Option 1, incorporating children
aged 0-3 years, costing US$299 million over the first year, as also was reported in the report (see Table 2).
Option 3, the most expensive option, would be US$581 million. Assuming no children are removed from the
child benefit, the required budget would rise year on year (Annex Figure A-2). However, the impacts from
the schemes would also increase, as the budget and coverage grow.
FIGURE A-2:
BUDGET REQUIRED EACH YEAR FOR THREE SOCIAL PROTECTION OPTIONS,
ASSUMING THAT NO CHILDREN ARE REMOVED FROM THE CHILD BENEFIT
Option 1
800
700
US$ million
600
500
400
300
200
581.4
442.2
299.0
Option 2
Option 3
750.8
612.5
469.6
Year 1
Year 2
Year 3
Year 4
Year 5
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FIGURE A-3:
NUMBER OF DIRECT RECIPIENTS OF THE SOCIAL PROTECTION BENEFITS,
OVER 5 YEARS
Option 1
20
Option 2
Option 3
17.8
Number of direct
recipients, millions
16
12
8
4
0
Year 1
Year 2
Year 3
Year 4
13.5
9.7
5.7
14.0
10.1
Year 5
It will be necessary to add administrative costs to the transfer budget. At this stage in the design process,
it is not possible to estimate the administrative costs accurately. However, as a benchmark, an additional
10 percent could be added to the transfer budget in Year 1 and 5 percent in subsequent years.
Number of recipients
The number of direct recipients of the schemes would increase year on year, as newborn children enter the
child benefit. The approximate number of direct recipients each year is set out in Annex Figure A- 3. Option
1 would begin with 5.7 million direct recipients and, by year 5, would increase to 10.1 million. Coverage
would be much higher under Option 3: it would begin with 13.5 million direct recipients, or around one-third
of the population, and increase to 17.8 million by year 5. The proportion of households in receipt of the
schemes would be much higher and would likely reach over 90 percent in Option 3.
Implementation requirements
Establishing a system of social protection outside government channels will not be easy, but it is possible.
This section outlines some of the core measures that can be taken to build the system.
United Nations’ role: The social protection system can be established under the leadership and supervision
of the United Nations, with different agencies working together under the coordination of UNDP. It would
be necessary to gain the agreement with the
de facto
authorities to set up the social protection system, but
it would be implemented outside their control. A central programme office can be established to oversee
all aspects of the implementation.
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Partnerships with NGOs:
The programme will require local capacity to oversee the registration of recipients
alongside subsequent case management, local monitoring and complaints from recipients and applicants.
There is a range of NGOs operating across Afghanistan and, in each local area, an NGO will be selected
to be responsible for local management. UN agencies have a large number of provincial offices and, as a
result, will be well placed to oversee the NGO implementation.
Digital management information system:
The operations of the social protection transfers will be facilitated
by a digital management information system (MIS), which will be based in the central programme office but
will be accessible by UN provincial offices and the local NGO implementers. As a result, registration, case
management and complaints information will be entered into the digital database at local level and directly
uploaded to the central MIS. This will not require a continuous mobile phone network, since data could be
entered off-line and uploaded once the network is accessible. The MIS would be able to provide a monthly
payroll list that will be given to the payment service providers, who will be paid the funds prior to making
the transfers. The reconciliation of payments will happen after the payments are made and, if there are any
discrepancies, they will be adjusted in the next transfer of funds. Finally, an effective MIS will help reduce
the fiduciary risk to the programme, but it will have to be backed up by robust monitoring mechanisms.
Payment service providers:
As far as possible, the social protection system will use electronic payment
systems, such as mobile money, although, in urban areas, banks may be an option. The use of electronic
payments, in particular mobile money, will mean that recipients will be able to receive their cash at any
location across Afghanistan. Therefore, the internally displaced population will be able to fully participate
in the social protection system, as will those who migrate internally in search of employment. However,
in some areas, the physical distribution of cash may be required, although this will be assessed during
programme design.
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Endnotes
1
World Bank (2019), Afghanistan will need continued international support after political settlement, Press Release,
5 December 2019.
OCHA (2021), Afghanistan Humanitarian Response Plan 2021, January 2021 UNDP 2021.
BBC (2021), Afghanistan: Taliban tell working women to stay at home, 24 August 2021.
Al Jazeera (2021), UN chief slams ‘broken’ Taliban promises made to women, girls, 11 October 2021.
CNN (2021), U.N. warns of 'colossal' collapse of Afghan banking system, 22 November 2021.
IMF (2021), Regional economic outlook. Middle East and Central Asia, October 2021 IMF (2021).
UN (2021), Act swiftly and with determination on Afghanistan, UN chief urges, Story, 27 October 2021.
Danish Refugee Council (2021), Drought crisis in Afghanistan intensifies risk of displacement, Press Release, 8 July 2021.
Reuters (2021), Pakistan Allows Indian Aid Transit to Afghanistan, 23 November 2021.
VOA (2021), UN Says Nearly 23 Million Afghans Face Acute Hunger, 25 October 2021.
Estimates are from World Food Programme (WFP) and the United Nations International Children’s Emergency Fund (UNICEF).
World Bank (2021), Afghanistan Economic Monitor: 15 October 2021.
It is reported that the Taliban have removed their objection to polio vaccination, though before (in 2009) they issued
fatwas
denouncing vaccination as a ploy to sterilize Muslim populations and killed medical personnel who administered vaccines.
USAID (2021), The United States announces more than $144 million in additional humanitarian assistance for Afghanistan,
Press Release, 28 October 2021.
UN (2021), Act swiftly and with determination on Afghanistan, UN chief urges, story, 27 October 2021.
Reuters (2021), 'A fantasy' to think U.N. can fix Afghanistan, Guterres says, 16 September 2021.
UNDP (2021), Special Trust Fund for Afghanistan, October 2021. Also, UNDP (2021), New UN Development Programme
emergency initiative to support Afghan people in need, Press Release, 21 October 2021.
Among the many agencies supporting the humanitarian effort in Afghanistan are IOM, FAO, UNFPA, UNHABITAT, UNHCR,
UNICEF and the International Committee of the Red Cross (ICRC).
Euronews (2021), Taliban launches food-for-work programme to tackle hunger crisis in Afghanistan, 25 October 2021.
United States Institute of Peace (2021), Afghanistan Study Group Final Report: A Pathway for Peace in Afghanistan, 3 February
2021 “Afghanistan Peace Process Study Group (2021). Final Report: A Pathway for Peace in Afghanistan. February.
Voluntary National Review 2021. Islamic Republic of Afghanistan. July.
Annual Survey of the Afghan People, carried out by The Asia Foundation from 2006 to 2020.
World Bank (2020), Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts, 18 February 2020.
Integrity Watch Afghanistan (IWA).
World Bank (2021), Afghanistan Economic Monitor: 15 October 2021.
Under the DSSI, Afghanistan has received US$112 million in debt service relief for the period of May 2020 to
December 2021 (see World Bank Brief: Covid-19 Debt Service Suspension Initiative, 23 November 2021). Down the road,
the international community could, in principle, provide Afghanistan with debt relief, including debt reduction, under the
G-20’s Common Framework.
Foreign debt is owed almost entirely to official bilateral and multilateral creditors.
See the debt sustainability analysis in IMF (2021).
Reuters (2021), U.N. warns of 'colossal' collapse of Afghan banking system, 23 November 2021.
The rising demand for liquidity—including from those who seek to leave the country—is pushing down real estate prices,
a key household asset. In a press release on 11 September 2021, the central bank announced that commercial banking activities
had resumed in Kabul and provinces (Central Bank of Afghanistan, DAB, Press Release, 11 September 2021).
The lower estimate of output loss (3 percent) assumes that the restrictions on women’s employment only apply to female
employees (that is, wage workers), while the higher estimate (5 percent) assumes that half of female workers will leave
the labour market.
An underlying assumption of the model is that the larger deficit would be financed from the use of the government’s cash
balances with DAB, something that may be feasible only in part.
The male unemployment is a more predictable indicator than the female rate now that many women are now facing employment
restrictions.
IMF (2021), Regional economic outlook. Middle East and Central Asia, October 2021.
World Bank (2021), Afghanistan in Crisis: Development Risks and Mitigation Options.
ADB (2021), Asian Development Outlook 2021 Update: Transforming Agriculture in Asia, September 2021, p. 163 ADB (2021),
Stockholm International Peace Research Institute (2015), Afghanistan’s Private Sector Status and Ways Forward, October 2015.
UNDP (2021), April.
Economic fragmentation can be ‘good’ when the economy is competitive and dynamic and in a position to profit from cost
reductions between the cheapest places to source inputs and the places where the finished goods and services are used.
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Afghanistan remains the world’s largest supplier of illegal opiates. Opium is one of the few reliable cash crops that Afghan
farmers can grow and remains an attractive activity as a nonperishable, low-weight, high-value substance with a store of
value. The crop generates between US$1.5 billion and US$3 billion per year at farm gate and provides more than 500,000
full-time-equivalent jobs. The estimated value of the opiate economy exceeded Afghanistan’s officially recorded licit exports
of goods and services benefiting local powerbrokers as well as national political actors (The Guardian, It’s our lifeline: the Taliban
are back but Afghans say opium is here to stay, 11 November 2021). According to the
de facto
deputy representative, there are
three and half million drug addicts. See https://www.khaama.com/world-bank-other-organizations-politicized-afghanistans-he-
alth-sector-taliban-5495867/.
UN (2021), Act swiftly and with determination on Afghanistan, UN chief urges, story, 27 October 2021.
The Washington Post (2021), Looming economic crisis overshadows Afghanistan talks at U.N., 23 September 2021.
Reuters (2021), Taliban ban use of foreign currency in Afghanistan –spokesman, 3 November 2021.
Sabri, Fawaz (2020). Afghanistan Private Sector. Paper presented to the Pledge Conference, Geneva November 2020.
UNDP (2021), Policy Brief: The Afghan Banking and Financial System Situation Report, 22 November 2021 UNDP. 2021.
Policy Brief: The Afghan Banking and Financial System Situation Report, November 22.
BBC (2021), Taliban: Afghanistan bank boss warns sector near collapse, 28 September 2021. Also, Reuters (2021), U.N. warns
of 'colossal' collapse of Afghan banking system, 23 November 2021.
Afghanistan was removed from the gray list of the Financial Action Task Force (FATF) in 2017. Considering the events since
15 August, there may be increased risks of money laundering and the financing of terrorism, prompting a reassessment
of Afghanistan’s compliance with FATF standards.
Voluntary National Review 2021. Islamic Republic of Afghanistan. July.
Total consumption is about 5000 Giga Watt hours (GWh), of which about 4000 GWh are imported. About one-third,
or 1300 GWh, was imported from Uzbekistan, almost another third from Turkmenistan and the last third from Iran and Tajikistan.
Prices varied between US$0.02 and 0.06 per kWh, but have risen to higher levels recently. DABS pays about US$25 million
per month for electricity imports. Source: DABS, Status during COVID Pandemic, April 2020.
DABS, Forces Meetings, 2021.
World Bank (2018), Afghanistan Renewable Energy Development Issues and Options, January 2018 World Bank; Renewable
Energy Development, Issues and Options. Washington DC, 26 June 2018.
The 68 MW gas-fired generation plant, if run for the full year, would generate approximately 500 GWh, or 50 percent
of the entire current generation of Afghanistan.
FORCES (mainly DABS and ESRA) received presidential authority to ‘coordinate’ energy sector investment, whatever that
may mean, including, say, permit the construction of power plants, set tariffs, etc.
World Bank (2008), For Protection and Promotion: The Design and Implementation of Effective Safety Nets). “For Protection
and Promotion”: p. 358.
Al Jazeera (2019), Amnesty urges release of Afghan men who exposed paedophile ring, 25 November 2019.
According to UNDP Human Development Report 2020, the female HDI value for Afghanistan was 0.40 in contrast with 0.60
for males, resulting in a GDI value of 0.66. In comparison, GDI values for Nepal, Pakistan and South Asia as a group were 0.93,
0.75 and 0.82, respectively.
World Bank (2019), Afghanistan will Need Continued International Support after Political Settlement, Press Release,
5 December 2019.
World Bank (2021), GDP per capita (current US$) – Afghanistan 1960 - 2020.
Central Statistics Organization of the Islamic Republic of Afghanistan (2018), Afghanistan Living Conditions Survey 2016-17.
Kabul, CSO. Afghanistan Living Conditions Survey - ALCS 2016-17.
World Bank (2020).
UNDP (2021), Economic Instability and Uncertainty in Afghanistan after August 15, 9 September 2021 UNDP (2021) Economic
Instability and Uncertainty in Afghanistan after August 15 | United Nations Development Programme (undp.org)
Central Statistics Organization of the Islamic Republic of Afghanistan (2018), Afghanistan Living Conditions Survey 2016-17.
Kabul, CSO. Source: ACLS (2016/17)
World Bank (2020), Afghanistan Development Update July 2020: Surviving the Storm, July 2020 World Bank (2020). Afghanistan
Development Update July 2020: Surviving the Storm. July
Ibid.
The ‘poverty headcount rate’ shows the incidence of poverty, that is, the percentage of the population whose incomes are below
the poverty line. A more comprehensive measure that takes into account both the incidence and depth of poverty is the ‘poverty
gap’, which measures the difference between the poverty line and the average income of the poor. This difference usually is
expressed as a percentage of the poverty line, but its absolute value, when multiplied by the number of the poor, indicates the
amount of money that, if given to the poor, would theoretically end poverty – omitting administrative costs and leakages due to
fraud or abuse.
OCHA (2020), Afghanistan Humanitarian Needs Overview, December 2020.
Guardian (2021), Afghanistan could start to run out of food by September, UN warns, 23 August 2021.
UNDP (2020), Afghanistan: Potential impact of the coronavirus pandemic on SDG attainment, Kabul, Afghanistan. UNDP. (2020).
Afghanistan: Potential impact of the coronavirus pandemic on SDG attainment. UNDP Afghanistan. Kabul, Afghanistan.
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Central Statistics Organization of Afghanistan (2016), Afghanistan Living Conditions Survey 2013-14. National Risk and
Vulnerability Assessment, Living Conditions Survey (ALCS) 2013-14. National Risk and Vulnerability Assessment. Kabul, CSO.
UNDP (2021), Achieving Afghanistan’s Long-term Goals amid Short-term Adversities, April 2021 UNDP (2021). "Achieving
Afghanistan’s Long-term Goals amid Short-term Adversities”.
Sehatmandi Project for Afghanistan is a US$600 million project supported by the World Bank, which aims to increase the
utilization and quality of health services across the country. See Devex, 13 September 2021: “Guterres warns Afghanistan
faces dramatic humanitarian crisis”; and World Bank: Afghanistan Sehatmandi Project Details.
Still, only 69 percent of boys and 50 percent of girls aged 7-12 years attended school, with the proportions dropping to
50 percent of boys and 25 percent of girls among children aged 13-18. And only 16 percent of Afghanistan’s schools were
girls-only. With the COVID-19 crisis, the number of children out of school had been expected to rise from 5.6 million to
9.7 million. (Source: UNICEF, Providing Education for All).
UNESCO (2021), UNESCO sounds a warning on what is at stake for education in Afghanistan, Press Release, 9 October 2021.
Central Statistics Organization of the Islamic Republic of Afghanistan (2018), Afghanistan Living Conditions Survey 2016-17.
Living Condition Survey 2016-19. CSO. Kabul, CSO. Afghanistan.
National Statistics and Information Authority, Afghanistan Statistical Yearbook.
See UNDP Gender Development Index calculations.
In August 2021.
UN (2021), Consideration of reports submitted by States parties under article 18 of the Convention on the Elimination
of All Forms of Discrimination against Women – Afghanistan, Combined initial and second periodic report, 23 September 2011.
The Times of India (2021), Taliban bans IPL broadcast in Afghanistan, 21 September 2021. Also, The Times of India (2021),
Taliban sack Afghanistan Cricket Board CEO Hamid Shinwari, 21 September 2021.
After taking control, the Taliban allowed boys and male teachers to go back to schools. Some schools reopened for girls
up to the end of primary education but not for high schools. (Source: Hindustan Times, 13 November 2021, “Taliban claim
75% of girl students back in Afghanistan schools”.)
According to the acting representative for higher education, women can attend university but only in gender-segregated
classrooms and in Islamic dress (Voanews: Taliban women can study in gender-segregated schools, 13 September 2021;
and Washington Post: Taliban tells Kabul’s female city government employees not to come to work, 21 October 2021).
Deutsche Welle (2021), Afghanistan: Taliban announce new rules for women and girls' education, 12 September 2021.
Taliban order Afghan shop owners to decapitate mannequins (france24.com), 05 January 2022.
Afghanistan: Taliban clamp down on women's taxi use, News DW, 26 December 2021.
BBC (2021), Afghanistan: Taliban morality police replace women's ministry, 17 September 2021.
The Taliban representative for education has stated that male teachers can be permitted “to teach women without violating
Islamic law. […] They should teach from behind a curtain or use [video] screens and other such facilities.” (Voanews: Taliban –
women can study in gender segregated universities, 13 September 2021)
The Washington Post (2021), Taliban tells Kabul’s female city government employees not to come to work, 21 October 2021.
Human Rights Watch (2021), Afghanistan: Taliban Blocking Female Aid Workers, 4 November 2021.
There were 4,761,000 men and 956,000 women working in 2020 (IELFS 2019-2020).
The proportionality is relevant in a labour-surplus economy where the marginal product of labour is typically constant.
Tzannatos, Zafiris (2008), “Monitoring Progress in Gender Equality in the Labour Market” in Mayra Buvenic, Andrew Morrison,
A. Waafas Ofosu-Amaah and Mirja Sjöblom (eds.) "Equality for Women: Where Do We Stand on Millennium Development Goal 3?”
Washington DC: World Bank.
David Cuberes, D. and Marc Teignier, M. (2012), Gender gaps in the labor market and aggregate productivity. Working
Paper. Gender Gaps in the Labour Market and Aggregate Productivity. Department of Economics, University of Sheffield ISSN
1749-8368. Economic Research Paper Series Number: 2012- 2017.
Based on A-GTAP CGE model.
Based in the C-CGE model.
The expenditure inequality as indicated by the Gini index was 0.29 in 2020 (IELFS 2019-2020: p. 86).
Montenegro, C. E. and H. A. Patrinos (2014). Comparable Estimates of Returns to Schooling around the World. Comparable
Estimates of Returns to Schooling around the World. World Bank: Policy Research Working Paper 7020.
UN (2021), Afghanistan: Security Council resolution calls for ‘equal and meaningful participation of women,’ 17 September 2020.
Islamic Republic of Afghanistan (2021), 2021 Afghanistan Voluntary National Review on the Sustainable Development Goals,
June 2021.
UNICEF (2019), Multidimensional Poverty in Afghanistan.
UNDP (2021), Economic Instability and Uncertainty in Afghanistan after August 15, 9 September 2021 UNDP (2021) Economic
Instability and Uncertainty in Afghanistan after August 15 | United Nations Development Programme (undp.org).
Al Jazeera (2021), WHO, UNICEF launch new polio vaccination campaign in Afghanistan, 8 November 2021.
WorldAtlas (2021), Countries by Life Expectancy.
Save the Children (2021), Afghanistan’s children are paying the price of global Covid-19 vaccine rollout failures, warns
Save the Children, 10 June 2021.
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UNDP (2020), Gender Inequality Index 2019, Statistical Annex Table 5. UNDP. 2019. Gender Development Index. Statistical
Annex Table 5.
Islamic Republic of Afghanistan (July 2021), 2021 Afghanistan Voluntary National Review on the Sustainable Development
Goals, June 2021 Afghanistan Voluntary National Review (VNR) 2021.
Ibid.
IELFS 2019-2020.
World Bank (2018). Implementation Completion and Results Report to the Islamic Republic of Afghanistan for an Afghanistan
Pension Administration and Safety Net Project (No. ICR000004385). Social Protection & Labor Global Practice, South Asia
Region. However, the same paper also claims that total recipients numbered 73,000. The ALCS 2016-17 indicated that
1.4 percent of households received a pension.
World Bank (2018). Implementation Completion and Results Report to the Islamic Republic of Afghanistan for an Afghanistan
Pension Administration and Safety Net Project (No. ICR000004385). Social Protection & Labor Global Practice, South Asia
Region.
Central Statistics Organization of the Islamic Republic of Afghanistan (2018), Afghanistan Living Conditions Survey 2016-17.
Kabul, CSO. Afghanistan Living Conditions Survey 2016-17.
World Bank (2020), Afghanistan Development Update July 2020: Surviving the Storm, July 2020. Afghanistan Development
Update: Surviving the Storm. World Bank. Washington, DC.
Given the average household size of around eight members, a UBI set at US$3 per person per month is equivalent
to an average monthly payment of US$24 per household. For comparison, this would be the equivalent of almost
40 percent of the minimum wage and, in purchasing power parity terms, would be the equivalent of US$108 per month.
For the purposes of the costings, it is assumed that 1 percent of children and 2 percent of working-age adults would
be reached by the disability benefits.
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