Afghanistan: A Difficult Road Ahead, But Change Is Inescapable

By Abdallah Al Dardari and Zafiris Tzannatos

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Afghanistan has made hard won gains in the last two decades, including the increase in education enrollments, expansion in health services, infrastructure development, improvements in regional connectivity, and progress ranging from doing business to gender equality. Last year could have been a turning point as peace talks were initiated, violence diminished during the early months of the year, and donors reiterated their support to Afghanistan by pledging critical funding and technical assistance.

Unfortunately, a peace agreement is yet to be reached. Violence has increased following the initiation of intra-Afghan negotiations last September. Improvements in governance and expanding national outreach have been delayed. Since the onset of the pandemic, GDP has shrunk by 5 percent, the budget deficit has increased, investment has collapsed, and exports have been reduced. The U.N. has estimated that half of the population will be in need of humanitarian assistance in 2021, a six-fold increase compared to four years ago.

“The best time to plant a tree was 20 years ago. The second-best time is now.” In the spirit of that proverb, the government’s Afghanistan National Peace and Development Framework (ANPDF II) outlines objectives and priorities that can turn the tide around. To support this effort, the United Nations Development Program (UNDP) in its most recent report on Afghanistan has assessed Afghanistan’s current constraints, opportunities, and challenges and proposes several policies and programs in line with triple axis of peace building, state building, and market building envisaged in ANPDF II.

Peace building requires that peace is achieved first. UNDP has estimated that if peace is achieved and observed for the next four years, GDP in Afghanistan will increase by 7 percent. This will also increase the government’s revenues and ability to fund aspirational development and social programs.

State building requires that governance improves, and funds are allocated and used transparently and effectively. Although both depend on peace, corruption would also need to be addressed head on, as Afghanistan is among countries most affected by it.

Market building is vital for accelerating economic growth and improving livelihoods. Combined with lack of progress toward peace and governance, the relatively fast population growth compared to low economic growth in the last decade has resulted in declining per capita incomes and increasing poverty. UNDP has estimated that while the economy may recover its pre-pandemic level in the next two to three years, per capita incomes may still be lower by nearly 10 percent in 2024 compared to 2019.

UNDP has also estimated the likely impact on economic growth of improvements in the business environment and the investment climate, easing access to credit, reductions in trade costs, agricultural improvements, and strengthening governance. If pursued individually, each can add between 1.5 and 2.5 percentage points to the economic growth rate. However, if these policies are pursued in tandem, GDP could increase by more than 40 percent by 2030 compared to the business-as-usual scenario.

Pursuing the triple objective of peace/state/market building will have significant effects in the medium-to long-term. In parallel, social protection should be strengthened in the short-run as the pandemic may increase the poverty rate by one-third, to 70 percent. UNDP has estimated the fiscal cost of a package consisting of public works for the working age population, a social pension for the elderly, and cash assistance for the internally displaced people and returnees would be less than 2 percent of GDP, and each can reach 1 million beneficiaries. 

The road ahead will not be smooth. International experience with fragile states suggests that peace may come, but conflict may not go. Low-income countries have a high probability of reverting to conflict within five to 10 years until they reach a per capita income of at least $5,000. To reach that level the economy of Afghanistan would need to grow annually at a steady rate of 8 percent for a generation. Moreover, reaching a peace agreement is not only a matter between the Afghan government and the Taliban, as there 20 or so other non-state actors operating both from abroad and domestically.

But change for the better is always possible, if only because necessity makes it inescapable. This year Afghanistan was globally ranked last in the World Happiness Index and among the lowest by the Social Progress Imperative and in terms of quality of public services. It is the country most affected by violence, one of the most environmentally threatened countries today, and is forecast to be the least resilient to ecological disasters by 2050.

If peace is achieved soon, Afghanistan can face the future with optimism. It can take advantage of its strategic location at the crossroads of Central Asia, the Indian subcontinent, the Middle East, and China, and its wealth of (licitly) unexploited mineral resources. It has export potential from several high-value products such as carpets, gemstones, and saffron, and a vastly untapped human capital due to high unemployment and the limited role of Afghan women in the economy and public life.

Peace cannot be anything other than Afghan-led and Afghan-owned. However, Afghanistan is not alone in its efforts to break from the past. UNDP proposals are anchored to the ANPDF II and the U.N.’s Sustainable Development Goals (SDGs) for which the government and its international partners have already established priorities and worked out implementation modalities. UNDP is ready to support Afghanistan along the road ahead working with domestic stakeholders and its development partners to make the journey as smooth as possible.