Afghanistan Economy

By | September 9, 2021


Until a decade ago, the primary sector was by far the most important and profitable. Today (2018 data) agriculture, with livestock, engages 38.6% of the active population and affects the GDP for more than 23.9% (2017); it is a sector that boasts ancient traditions, especially as regards irrigation (in some areas done with kārēz, that is with underground canalization), a vital technique for an arid country, which is still largely uncultivated or unproductive. River waters are Afghanistan’s most precious asset and in recent decades large dams have allowed greater exploitation of this resource. Visit for Asian agriculture. The damming and canalization works of the Helmand and Arghandāb rivers, implemented by the Americans, have allowed the conquest of new lands that were previously desert; in the Kābul valley, in Jalālābād, other projects had been started by the Soviets. Cereal cultivation is developed (wheat, rice and maize), while among the industrial crops the first place is occupied by cotton, which feeds some textile industries in Gulbahar, Jabal-us-Seraj and Kābul. Another important crop is sugar beet, with sugar factories in Baghlān, Jalālābād, Kondūz, followed by some oil crops (sesame, flax). Fruit growing is a peculiar sector of Afghanistan and gives valuable products such as melons, apricots and citrus fruits and above all grapes, widely used for the production of raisins. Some of the fertile and lush lands, such as those around the city-oases scattered along the river valleys, eloquently exemplified by Kandahār, Middle East, they gave way in the last decades of the twentieth century to minefields and the devastation of intra-ethnic and religious guerrillas. The destruction of the vegetation, crops and above all the irrigation systems of these areas has contributed to compromising one of the most profitable activities in the country’s economy. An important role is played by breeding, a fundamental resource of nomads who, depending on the group, raise sheep (including karakul sheep), goats, cattle, donkeys and camels: the production of karakul skins (especially those of the northern areas) constitutes one of the main sources of foreign trade.


The industrial sector, one of the most affected by the war years, is limited to a few sectors with isolated plants located in the Kābul and Surkab valleys, where some hydroelectric plants operate, however insufficient to cover the national needs. To these complexes are added cement factories, factories, brick factories and canning plants. The handicraft, also given the general economic conditions, can be considered flourishing above all thanks to the production of carpets. Mineral resources are not significant: coal, with deposits near Karkar, Ishpushta and Dara-i-Soof, copper, near Ainak, oil, near Herāt, and natural gas, near Sheberghan and Mazār-e Sharīf, the latter connected by a 120 km long gas pipeline to the Uzbek border. The production of natural gas, in the past quite high and exported almost entirely to the Soviet Union, it has greatly decreased and is destined only for internal consumption; Furthermore, at the end of the 1990s, thanks to the collapse in the price of oil, the agreements between Afghanistan and some foreign partners (Argentina, Italy and others) for the construction of a new network of gas and oil pipelines failed. In 2003, however, an agreement was signed between Afghanistan, Pakistan, India and Turkmenistan for the transport of oil and natural gas from the latter to other countries. Famous are the lapis deposits of  Badakhshan, whose stones are then worked in Kābul. In 2017, the sector contributed 22% to the formation of GDP and engaged 17.6% of the population.


The backwardness of the country is also attested by the scarcity of communication routes: the Soviets and the Americans are responsible for the start of the construction of a first basic road network, which in 2017 reached an extension of 34,870 km (of which just under 12000 km are asphalted) including the road that connects Herāt with Kābul and the Khyber pass and the one that from Kābul leads to Mazār-e Sharīf through the Salang pass (3748 m). The railway network is practically absent, extended for only 123 kilometers (2017 data). The difficulties in transport affect commercial activities, which are poorly developed except in some areas closer to the borders. Foreign exchanges concern the export of typical national products (karakul, wool, fruit, carpets, etc.) to Pakistan, India and Russia, and import of consumer goods, capital goods and clothing mainly from Pakistan, USA, Germany, India and Turkmenistan. In 2001, a program of reform and regulation of the banking and financial system was launched, the first results of which have attracted the interest of several foreign banks in Afghanistan. One of the major obstacles, in addition to those mentioned, towards this transformation, and more generally for the development of the entire economic sector, however, remains the presence of a parallel, informal (if not often illegal) and competing financial circuit compared to the official one.. While this system, on the one hand, allows many to access funds quickly and advantageously, from the another undermines economic growth and constitutes one of the preferential channels for the recycling of money deriving from the opium trade. Despite the difficulties, in the last decade the tertiary sector has experienced strong development, contributing 54.1% to the formation of GDP (2017 figure) and employing 43.8% of the population (2018 figure).

Afghanistan Economy