Press conference Steven Rodriguez, UNDP resident representative in Afghanistan, joins virtually from Kabell. They have a report to talk to...

Afghanistan: Release of UNDP’s Socio-Economic Review

 

Press conference



Steven Rodriguez, UNDP resident representative in Afghanistan, joins virtually from Kabell. They have a report to talk to you about, the UNDP socio-economic review of Afghanistan called Fragile Gains. Deepening livelihoods in security, why the Afghanistan story is different, in our deep dive. So you will see that this is a story of what I call "divergence," which is unusual in a lot of economic analysis. This is the first time since 2019 that we have seen positive GDP growth, and it's at 2.7%. And that's because there are more substantial revenues from cross-sector trade, tax collections, mining, etc.

 

Normally, if you see a positive increase in GDP, which has had negative growth rates for the last 5 years, you would think that that actually means an increase in living standards at the household level. But our UNP report actually looks at the household economy. It looks at what life is like for households in Afghanistan today, and you see that it is different. It even shows a decline in basic indicators if you look at the security data that we have collected. Now, that is reversible, and the good news is that there is more income that is actually going to ordinary Afghan men, women, and children. Let me give you three or four data points that really tell the picture. First, the data shows that about 75% of Afghans are now in what we call livelihood insecurity, and that has been the case since 2023. That means they are basically living hand to mouth, and about 90% of them are exposed to major natural or economic shocks and are unable to cope with those shocks.

 

That's up significantly from 2023, which was around 65%. Yes. Now, the two most pressing and striking basic needs issues are the decline in the quality of housing and the quality of health and health care. The majority of women say they earn their income through casual labor. Uh, and you know this: you can see the almost complete disappearance of women from the formal labor force, and finally, the report shows some strange regional disparities. So, if you look at the northeastern region close to the Tajikistan border and the southern region close to the Pakistani border, I think they are the ones that are lagging the most in terms of household income. Although the biggest decline is in the central highlands, that may also be due to the harsh climate conditions and, you know, the natural disasters that hit Afghanistan last year. So, to end my comments, let me say a couple of things. First, the math is obvious.

 

This country, by not allowing 50% of its workforce, which is women, to really contribute fully to the economy, is likely to lose about a billion dollars in 2023 and 2024. That's about six percentage points of GDP. For the UNP, we work very closely with women in business. Our goal is to see how we can develop micro-enterprises. We work with about 80,000 women micro-enterprise owners who are trying to scale up to small and medium scales because that will really have a huge impact on the household economy because the number of people they employ and all the goods they produce will triple. I close with one thought, which is that we learned the hard way from Afghanistan that not investing early on directly with the community and delaying development for the household has had a huge cost.

 

while the economy is showing signs of bottoming out after a prolonged period of decline that was kind of referred to. Now we have a mix of chronic structural problems combined with new challenges that are emerging And the data in this new report tells us that we should see it as a sign of difficult times to come for the Afghan people.

 

We have seen the trade deficit ballooning, and the data is in the report. We have seen the international payments system collapse, which is further crippling trade and commerce in the country. International banks will not do business with local banks, and so on. The World Bank and others are projecting stagnant economic growth, and for the past three months, the government has been struggling to pay the salaries of public sector workers, and that is evident on the streets of Kabul and in the major cities as more people go hungry and are unemployed every day. Our data also shows that household incomes and consumption are falling significantly in 2024. More stable forms of income, such as formal employment, are declining for all groups in society and have been replaced by reliance on informal sources of income, remittances from casual labor, and humanitarian aid. Now, all of this is happening in a context where humanitarian aid is being drastically cut in half in 2024 compared to 2023. It was around 3.2 billion in 2023, down to 1.6 billion in 2024.

 

By 2024, we also have over 800,000 Afghans who were forcibly repatriated from Pakistan. And this year, our projection is between 600,000 and 1.5 million more will return. We have to remember that Afghanistan is the sixth country in the world in terms of climate change impacts. So every year, we go to provinces, districts, and villages to visit thousands of households that have lost everything: homes, livelihoods, and crops destroyed by flash floods and drought. And we still have almost 600,000 former opium farmers and workers who still have no alternative livelihoods three years after the opium ban.

 

We are now facing a protracted compound crisis, and frankly, we are really going backward, and we see a reversal even in some of the progress that has been made. Now, of course, we at the UN, with our partners, are acting on many elements of the crisis in the UNP, for example, we have provided needed small-scale community infrastructure that has benefited over 5.9 million Afghans so that they have access to water, irrigation, and basic health services. We refer to the fact that we have supported almost 100,000 micro, small, and medium enterprises, of which about 80,000 are run by women. We are providing off-grid energy to social services, hospitals, health centers, and schools, as well as to small businesses.

 

And we continue to provide as much support as we can to thousands of former opium farmers so that they can have alternative sources of income. But again, the message here is that we are not able to operate at the scale that is required to address the magnitude of the challenges that we are seeing. And now, as global funding cuts are taking their toll, we are seeing the reversal of the gains that have been made. For example, in the last 3 to 4 weeks alone, we have seen over 400 health facilities that normally provide critical, life-saving services close, and more are scheduled to close in the coming weeks. We must accelerate the transition away from a reliance on dwindling humanitarian aid and toward the kind of investments that can kick-start economic recovery, create meaningful jobs, and provide people with access to basic but sustainable social services.

 

We must shift to investments in basic water, energy, community infrastructure, banking, and microfinance services that channel capital into the hands of entrepreneurs, especially women entrepreneurs, insurance products, and credit guarantee schemes that reduce the risk of lending. And, of course, we must continue to lobby the de facto authorities to roll back the very restrictive policies imposed on women and girls and make the kind of policy and regulatory reforms that are needed to catalyze private sector growth and job creation. The Gulf States, Qatar, Saudi Arabia, etc., have played a key role in lobbying the de facto authorities to roll back these restrictive policies as well.

 

So, we see a coalition of member states involved in a variety of issues. So, it's not just the UN or the international NOS that is active. It's a variety of stakeholders that are active both in humanitarian and basic needs assistance to the country, as well as in terms of human rights advocacy, women's rights, and girls' rights. US funding. The US government as a whole, not just USAD across its departments, remains one of the most significant funders of humanitarian and basic needs assistance in Afghanistan. This is not just before 2021 but also after 2021. So yes, the cuts in US funding will have a significant impact on the living conditions of the people in Afghanistan. That's for sure. However, one of the significant problems with the fiscal policy of the de facto authorities is that about 50% of the country's budget is allocated to security and defense. It doesn't go into creating infrastructure that supports business. It doesn't go into human resources, into health and education for the people. It doesn't address the policy and regulatory reforms that are needed to give international investors confidence in the country. So there are a lot of shortcomings, from allocating more than 50% of the country's budget to defense to enforcing the very strict morality laws that they have implemented. Now, coming to the question of whether they are aware, we must remember that, like any other government, it is not homogeneous.


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