Afghan private sector ‘hit hard’ by political crisis

KABUL (Tolo News): A survey conducted by the World Bank indicated that the Afghan private sector was “hit hard” as the economic activities were “substantially affected” due to the political crisis triggered after the August collapse.
According to the report, the survey was conducted in October-November 2021. “The majority of surveyed businesses reported a drastic decline in consumer demand for their products and services and have been forced to scale back operations, reduce investments, and lay off employees,” the report said.
The survey shows that small businesses have been hit hardest with 38 percent of surveyed small firms temporarily shut down, as compared to 25 percent of medium firms and 35 percent of large firms. According to the survey, Afghan women have been more vulnerable due to the negative impact of the fractured political state in the country, as 42 percent of women who owned firms temporarily closed their businesses “compared to 26 percent of firms owned by men.”
The report cited that 82 percent of firms that participated in the survey reported a decline in demand. Surveyed businesses of all sizes and sectors have cut jobs, laying off more than half of their employees, on average. The survey also highlighted a massive reduction in jobs as businesses of all sizes and sectors have cut jobs, laying off more than half of their employees, on average, the report said.
“Women employees in surveyed businesses faced more severe job losses than men employees – overall, three-quarters of women workers were laid off from surveyed firms since August 2021.” The survey’s findings reflected that the Afghan domestic inputs have become more expensive, scarce, and difficult to obtain due to supplier closures and supply chain disruptions as well as price inflation.
Due to the closing of borders, obtaining foreign currency and the increase in the price of inputs, access to imported inputs has become difficult, according to the survey. Due to the limitation of the banking system, the survey said banks have “increased reliance on cash transactions and informal money transfers.”
“Domestic transactions are adversely affected by constrained liquidity in the banking sector and by a lack of access to bank accounts and/or payment services,” the World Bank said. However, the survey underscored that three-fifths of surveyed men-owned firms reported that security had improved following the cessation of active fighting in the cities, whereas two-thirds of women-owned firms felt that security had deteriorated.