Editor in Chief: Moh. Reza Huwaida Thursday, March 28th, 2024

Afghan Economy is Facing Serious Challenges

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Afghan Economy is Facing Serious Challenges

The role of economy is very much vital for a country. It, for a country, is as important as circulatory system within a human body. As without circulatory system blood cannot be pumped through different parts of the body, in the similar fashion without economy, money and other basic requirements of life cannot reach to different parts of a country. Most of the other systems in the country, like social and political systems are highly dependent on the economic system. There are few thinkers who even believe that the nature and characteristics of others systems are determined by the structure of the economic setup. Therefore, it is vital that all the countries in the world must maintain strong economy so as to have stability and integrity.

There are different aspects of an economic system. Businesses play a vital role within an economy. If within a system there are consistent investments and different businesses, the system is on a track towards development and prosperity. Since the very inception of human society, human beings have required businesses so as to have their requirements fulfilled. Throughout human history, businesses have taken different forms and characteristics and today have reached to a very advanced form. From the barter system to today's advanced era when the businesses are taking place online, there has been a series of different practices, but the vitality of the business has never been lost.

The under-developed and developing countries of the world that need to establish strong economic system require evolution and nourishment of different businesses to a large extent. The authoritative people in such societies have to make sure that the way to the businesses is paved properly.

There are different pre-requisites for businesses and investments to flourish. Among them stability and security play a dominant role. If different systems within a country are stable and there are not major fluctuations every now and then, the ground is said to be ready for the investors and businessmen to jump in and establish their businesses. Businessmen want consistent outcomes from their investments and they abhor seeing political and social changes disturb their businesses. The evil like insecurity also plays major role in discouraging businesses and investments. Different incidents of terrorism and killings compel the businesses to shut down, and frighten the investors to invest. The societies marked with insecurity do not have consumers going to the markets and enjoying the luxury of shopping different products.

Afghanistan is one of the same kinds of country where insecurity and uncertainty have been influencing the economic life to a large extent. Both national and international businessmen are not readily willing to invest in all the sectors and they do not see positive prospects of their businesses. As insecurity and uncertainty have been overwhelmingly influencing the country, the development in the basic infra-structure has been meager.

The doubts and uncertainties of the Afghan market have made the international investors to think thousand times before they take an initiative to start their businesses in the country. Though there are great opportunities in Afghanistan and the country is blessed with different types of mineral and other natural resources, the economic infra-structure has not been able to get enough attention.

A recent survey conducted by Afghanistan Chamber of Commerce and Industries, supported by German organization GIZ, has revealed that the business environment has deteriorated in the last three months and small and medium enterprises (SMEs) have suffered more due to the unstable condition.

The survey that was revealed on Wednesday Aug 13, said the companies in general had an optimistic outlook in March 2014, compared to their judgment on the real situation in July 2014 regarding the future order books.

Security was cited as the most important factor behind business development, followed by lack of market and demand, poor infrastructure, administrative burdens and lack of access to finance.

Several companies were closed or downsized. At least 9.9 percent of the employees of the companies surveyed lost their jobs in a most favourable season of the year

Supported by the German organisation GIZ, the Business Tendency Survey asked managing directors of businesses for their opinion on the current situation and their expectations for the next six months in Kabul, Balkh, Kandahar, Nangarhar and Herat.

The overall business climate indicator in March 2014 for Kabul, Balkh, Kandahar and Nangarhar regions altogether valued 27 points and in July 2014 it decreased to 0.02. Since Herat has shown a comparatively better climate, the overall business climate indicator for all five regions in July 2014 is 0.78 points.

At least 9.9 percent of the employees of the surveyed companies lost their jobs in the most favorable season of the year, which is unprecedented and indicates a dire situation of business, mainly caused by political confusions.

Apart from that there are other factors as well that have been influencing the economic system of Afghanistan. The insufficient and unfavorable business laws are also one of the issues affecting Afghan economy. There have to be strong business laws governing the society and controlling the business. The laws should not only safeguard the rights of investors and businessmen but also make sure that the competition within the system is maintained on strong and fair footings. The evils like monopoly based on unfair competition must be tackled with properly and there should be strong bodies that control the prices within the markets, which at the present are non-existent and the businessmen are fixing the rates on their own.

Afghanistan needs to have strong economy so as to go through the transition period and most importantly to survive after the international troops' withdraw from the country in 2014. The international aid and assistance that have been coming to the country for the last some years will be diminished and Afghan economy will be tested to a large extent. The country has to start from the basic infra-structure development and have to reach to a stable economy, wherein the businesses are able to function without any fear and inconsistency. An environment has to be developed that can be galvanizing for both the national and international investors. Moreover, the golden opportunities wherein Afghanistan can exert maximum and can get the best outcomes from must be discovered and they should be strengthened so as to push the country towards self sufficiency. On the other hand, the businessmen and investors must also keep the national interests in their consideration while they establish their businesses and start getting the outcomes from them. They have to keep this in their minds that the society as a whole has certain rights that have to be fulfilled by them.

Dilawar Sherzai is the permanent writer of the Daily Outlook Afghanistan. He can be reached at Outlookafghanistan@gmail.com 

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