IRIN Report 2016: Afghan Economic Collapse in Progress with US Military drawn-down

[BarakzaiAbdali]

IRIN | Afghanistan’s surprisingly predictable economic crash

“I have not seen anything that would indicate that we developed any programmes anticipating this tremendous negative impact on the economy,” John Sopko, the Special Investigator General for Afghanistan Reconstruction who reports to Congress on how US aid money has been spent, told IRIN.

“Shame on us,” he added.

Likewise, Afghan officials in former president Hamid Karzai’s administration seemed oblivious of the economic catastrophe that was bearing down on them.

“Not enough people grasped the meaning of it and looked at the macro and micro economic impact that it might have on Afghanistan,” said Omar Samad, a senior advisor to the current government and former ambassador to Canada and France.

“People assumed that it would be business as usual.”

It wasn’t though. Instead, a lot of business left with the Americans.

In comments included in a January report by Sopko’s office, SIGAR, President Ashraf Ghani said at least 100,000 jobs were lost in the transport sector alone, which had contributed about 22 percent of Afghanistan’s GDP. The construction sector and services connected to it had been driven by US military contracts and accounted for 40 percent of GDP.

The loss of the money flowing into the economy from jobs and contracts connected to the US military had an immediate effect. Economic growth plunged to 1.3 percent in 2014, down from an average of 6.9 percent from 2007 to 2012, according to the World Bank. The average yearly income per person fell from $730 in 2013 to $680 the following year.

Sopko said many US-funded programmes were successful, but overall reconstruction has been characterised by mismanagement and waste. Such a scattershot approach has led directly to the current economic crisis. While USAID and other agencies may have had their own strategies to ease Afghanistan through the transition period, there seems to have been little coordination and no overarching plan.

Afghanistan’s Finance Ministry also declined to comment.

[BarakzaiAbdali]

Perhaps most important sections of summary in a practical application sense:

That lack of focus meant that some sectors of the economy and some people benefited greatly, while others were left behind. A World Bank report shows that the poverty rate stayed at 36 percent between 2007 and 2012 even as there was strong economic growth, including an astonishing 21 percent in 2009. Instead of raising living standards for the majority of Afghans, inequality increased.

And the section well named:

Voting with their feet

Many Afghans have grown tired of waiting for things to get better. Instead, they are leaving the country in higher numbers than at any time since the Taliban. Afghans comprise the second largest number of arrivals in Europe after Syria, making up almost a quarter of asylum claims, according to the UN refugee agency, UNHCR.

[BarakzaiAbdali]

IRIN is pretty renowned for its impartiality in analyses... about it:
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