Afghanistan Economic Outlook

November 2023

Afghanistan Economic Outlook, is a creative initiative of the Afghanistan Economic and Legal Studies Organization (AELSO) which reflects most important & the latest economic events that happened during a month in Afghanistan.

By reading this economic newsletter, that has designed in three languages (Pashto, Dari & English), you can get a wider overview of Afghanistan’s economic situation.

Herat hosts 8th National Saffron Festival, aiming to expand global market presence

The 8th National Saffron Festival commenced in Herat province on Thursday, marking an initiative to enhance the market for Afghanistan’s saffron and secure a more prominent position in global markets.

Local saffron processing companies, farmers, and exporters gathered at the exhibition to showcase their products.

According to the Saffron Farmers Union in Herat, saffron yields have surged by 50% this year compared to the previous year. Union Head Bashir Ahmad Rashidi expressed optimism, anticipating a harvest of 30 tons of saffron this year.

However, saffron producers and sellers noted challenges this year due to cold weather and drought, resulting in a smaller harvest compared to previous years and obstacles in the saffron export process.

Officials from the Herat Chamber of Commerce and Investment reported a 30% increase in saffron exports. In just one week, 21,864 kilograms of saffron, valued at $21.5 million, were exported.

Local Taliban officials in the Department of Agriculture stated that saffron cultivation covers over 8,000 hectares of land in Herat province, with more than 20,000 farmers actively engaged in the fields.

Pir Mohammad Halimi, head of Taliban agriculture in Herat, emphasized the significance of saffron, referring to it as “red gold” and one of Afghanistan’s crucial products.

Herat, situated in the western region of the country, takes the lead in saffron cultivation and production, attributed to its favorable climate.

The saffron produced in this province has earned global recognition. The cultivation of Herat saffron is primarily concentrated in districts such as Pashtun Zarghun, Ghorian, Zindajan, Injil, Kahesan, and Guzereh.

World Bank reports 8 percent rise in Afghanistan revenue collection

Revenue collection in Afghanistan for the first five months of the fiscal year 2023 reached 76 billion afghanis, which shows an 8 percent increase compared to the same period in the previous year, the World Bank said in a new report.

Revenue collection in the period, however, is lower than the five-monthly target by AFN 7 billion, the report said.

Customs duty and Business receipt tax accounted for 60 percent of the collection.

According to the report, for the first seven months of 2023, imports reached US$4.4 billion, marking a 32 percent increase from the same period in 2022.

While exports grew three percent in the first seven months of 2023 compared to the same period in 2022, monthly export data indicates a decline in trend since February 2023 due to a decrease in coal exports, the report said.

World Bank said that despite the widening trade deficit, Afghani has appreciated since the beginning of 2023. Between January and August 24, 2023, Afghani appreciated against the US dollar by 7.3 percent.

“In addition to unidentified external flows, the AFN’s gains partly stem from the ban on foreign currencies for domestic transactions, limited domestic money supply, higher remittances, and UN dollar shipments. In 2023, UN inflows were around US$1.12 billion,” the report said.

The report also said that since April 2023, the country has experienced deflation, likely due to improved supply, appreciating AFN, and the economy still adjusting to structurally lower aggregate demand.

Qashqari oil field extracting 400 metric tons per day

The Ministry of Mines and Petroleum (MoMP) says Qashqari oil wells in Sar-e-Pul province are pumping out at least 400 metric tons per day.

According to MoMP, oil extraction will start from new wells in the near future in the province, which will significantly increase the amount extracted.

Chamber of Commerce and Investments officials meanwhile say that the country holds a lot of oil and that the Ministry of Mines and Petroleum needs to encourage domestic investment.

“A joint company should be established and everyone should have their share and also a favorable environment for domestic investors in order to invest,” said Khanjan Alkozi, a member of ACCI.

Economic experts also believe that Afghanistan is rich in various natural resources, especially in oil, and if proper planning is done to utilize these resources, it can have a deep and positive impact on the economic development of the country.

“I am sure that the amount of oil production and extraction will increase and even we should be able to produce more than 1,000 tons, but the Taliban (Islamic Emirate) must take basic steps in this area and equalize all investment conditions,” said an economic analyst.

Local officials in Sar-e-Pul however said that the amount of oil extracted from Qashqari oil wells has increased to 900 tons daily, earning $600,000.

Fly Dubai Flights to Kabul Resume

Fly Dubai, a UAE-based airline, resumed flights to Kabul on Wednesday, 24 Aqrab, after stopping for two years and four months.

According to flydubai.com, the daily flights occur at 9:30 and 14:55, Afghanistan Time.

Haji Obaidullah Sader Khail, head of the Afghan Business Council in the UAE, told TOLOnews that the company will increase its flights, and soon another airline, Air Arabia, will also start flights to Kabul.

Referring to a related issue, Sader Khail said that soon the problem of businesspeople’s visas will also be addressed.

The head of the Afghan Business Council in the UAE added that the flights of this airline have been resumed as a result of the efforts of businesspeople in the council and officials in the Islamic Emirate.

“Today, I’m very delighted that after two years and four months Fly Dubai started its flights to Afghanistan, and I myself came on its first flight. We have worked a lot on this, and we succeeded today as Fly Dubai’s flight landed in Kabul airport safely,” Sader Khail said.

Officials of the Islamic Emirate said they consider the resumption of Fly Dubai flights valuable for the growth of the country’s economy and transit, and they welcomed the decision by authorities of Fly Dubai.

Fly Dubai will now make two flights a day from Kabul, and reportedly next month this will increase to four flights.

“Other foreign airlines will also start their flights in the future. The Ministry of Transport and Civil Aviation has made and continues to make all its efforts to provide standard services,” said Imamuddin Ahmadi, spokesman for the Ministry of Transport and Civil Aviation.

Officials of the Ministry of Transport and Civil Aviation also noted that Afghanistan’s airspace is safe for any kind of flights.

“The Ministry of Transport and Civil Aviation is striving to bring more facilities for the citizens and to cooperate with them economically. Fly Dubai flights will have a very positive effect on prices,” Abdul Sattar Gharwal, said the General Director of Afghanistan Airports.

“All our services meet standards in the field of airport security, aviation … traffic, firefighting and meteorology,” said Abdul Hadi Mohammad, director of Kabul International Airport.

Meanwhile, the Chamber of Commerce and Investment also said the start of flights of foreign airlines to Kabul will benefit the country’s economy.

“If foreign companies fly in Afghanistan, it is in the interest of the people of Afghanistan, the private sector, and Afghanistan’s business,” said Khan Mohammad Sarferazbaz, an official of the the Chamber of Commerce and Investment.

According to Haji Obaidullah Sader Khail, head of the Afghan Business Council in the UAE, the flights will soon increase.

“In the past, Fly Dubai had four flights every day. Now, from the 22nd, three daily flights will be started, today there is two flights, and from December, four daily flights will start. The price now of a round trip is 1100 Dirham (around $300) and it is expected that round trip tickets will eventually be $200,” Sader Khail said.

Afghan Currency Rises Against US Dollar

The money-exchange union of Sarai Shahzada, Kabul announced that today (Sunday, 12th November) 66.70 Afs were exchanged for $1 USD, a week ago it was 73.50 Afs/dollar.

The spokesman for the money-exchange union said that the rise was caused due to the ban on thr use of foreign currencies, particularly Pakistani rupees, in business deals in the country.
“The main reason is that Da Afghanistan Bank has announced deadlines for the provinces which were using Kaldor [Pakistani rupees] for the past years,” he said.

“Within the past three-months, the value of afghani currency has increased gradually and the [US] dollar is dropping. This is good news for the economy of Afghanistan,” said Mohammad Dawood Nazari, a money exchanger.

To stabilize the value of the afghani, the union also stressed the use of Afghan currency in the markets.

This comes as Da Afghanistan Bank (Central Bank) said that it has a sufficient amount of Afghan currency which it can inject into the market if needed.

“We are assuring our countrymen that Da Afghanistan Bank holds sufficient banknotes in a bid to release it in the market based on monetary policies,” said Haseebullah Noori, a spokesman for DAB.

Meanwhile, the residents complained that despite the surge in value of afghani currency against US dollars, the price of food materials has remained high.

“We call on the government to bring changes in the prices. The oil dropped and so did the flour. We are poor people, and we don’t care about the dollar,” said Faisal, a resident of Kabul.

“The prices of one dollar were once 130 Afs but now $100 is exchanged for 6,800Afs,” said Mohammad Amir, a resident of Kabul.

This comes as the prices of dollars in the neighboring countries, including Pakistan and Iran, have risen.

Women Empowerment Exhibition Opens in Kabul

The first national and international exhibition for women, called Khadijat-ul-Kubra Empowerment Exhibition, was opened in Kabul.

The head of the Women’s Chamber of Commerce and Industry said the purpose of holding this exhibition is to encourage women artisans and businesswomen, and said that 850 women have booths.

At the same time, analysts said holding such exhibitions are beneficial for the sake of marketing and the development of women’s handicrafts.

Organizers of the International Women’s Exhibition said that this exhibition will continue for 7 days and the artisans and business women will exhibit their handicrafts.

The head of the Women’s Chamber of Commerce and Industry said holding this exhibition is important for the introduction and marketing of handicrafts and other women’s products.

“They should be encouraged more, more work should be done on their licenses and the identities of their products, more attention should be paid to them, and it is necessary to be in this market format,” said Salma Yousufzai, head of the women’s chamber of commerce and industry.

On the other hand, some economic analysts said that holding this kind of special exhibition for women is beneficial for the development of handicrafts and creating more opportunities to introduce and market products produced by women.

“In order to speed up the business process of some women entrepreneurs, the government can use a series of business ideas, such as reducing the amount of taxes, paying a series of fixed IDs, and reducing the amount of customs tariffs so that they can better export their business goods to foreign countries,” said Abdul Zohor Mudaber, an economic analyst.

“Women’s access to foreign markets can be effective in improving the further growth of their business,” said Mir Shekib Mir, an economic analyst.

The International Exhibition of Khadijat-ul-Kubra, which was launched by the Women’s Chamber of Commerce and Industry and its partner institutions in the capital, will continue for seven days, during which various products produced by women from all provinces will be displayed in 850

MoIC: Trade Worth $247M Made With Russia in Past Seven Months

The Ministry of Industry and Commerce (MoIC) said that in the first seven months of the solar year, trade worth 247 million dollars has been made with Russia.

The MoIC’s spokesman, Akhundzada Abdul Salam Javad, added that although the country’s export to Russia is two million dollars, it has slightly increased compared to the past year.

“There are around 2 million dollars in exports and 245 million dollars in imports. Most of the items exported to Russia are raisins, juices, soft drinks, grapes, other fruit juices, dried apricots and talc stones,” the spokesman said.

“The more exports we have, the more we can create employment opportunities and we can raise the production level. Increasing of exports will also help the value of the afghani,” Abdul Naseer Reshtia, an economist, told TOLOnews.

Meanwhile, the Afghanistan Chamber of Commerce and Investment (ACCI) said that in order to increase exports to Russia, they are trying to provide more facilities to businessmen.

“Currently, compared to the past year where only one car was going in two to three days, now there are dozens of cars, and our exports are more, especially grapes and pomegranates,” said Mohammad Yunus Momand, the first deputy of ACCI.

Some businessmen consider Russia a suitable market for Afghan fresh fruit, dried fruit, precious and semi-precious stones, saying that challenges in the export sector should be resolved soon.

“Expanding economic and trade relations with Russia is a very good move, and the export of our country’s items is good, and most of our traders are satisfied with this, and if more facilities are provided in trade with Russia, we can increase the export of agricultural items,” said Omid Haidari, a businessman.

According to the information of the Afghanistan Chamber of Commerce and Investment (ACCI), the amount of trade between Afghanistan and Russia reaches 300 million dollars annually.