Afghanistan Economic Outlook
August 2025
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.
National Private Sector Conference Held in Kabul
The National Private Sector Conference was held with the participation of officials, the European Union, and the United Nations.
The conference emphasized comprehensive support for small, medium, and large businesses in the country. Minister of Industry and Commerce, Nooruddin Azizi, said at the gathering that 193 projects are being implemented in cooperation with national and international institutions.
He urged these organizations to support long-term employment opportunities and fundamental projects across Afghanistan, giving priority to returning refugees.
Azizi added: “The programs we are following are limited to specific provinces. We call on the representatives of international organizations present here to cover the whole of Afghanistan.”
Abdul Latif Nazari, Deputy Minister of Economy, stated: “Afghans who are skilled and return to the country can play a significant role in creating job opportunities.”
Organizers of the conference highlighted access to financial resources as a fundamental requirement for the growth of small and medium enterprises, stressing that addressing challenges faced by entrepreneurs must be a top priority.
Program director Sayedur Rahman Niazi noted: “We have faced challenges in domestic and foreign markets. Products are being produced, but we lack proper mechanisms for packaging, meeting standards, and exporting them to international markets.”
EU Chargé d’Affaires in Afghanistan, Erik Beumul, said: “At the moment, we actually have a significant portfolio of partnerships in support to private sector development and microfinance. We have a total of 60 million euros of active partnerships, which is part of our much larger investment in support to the people of Afghanistan..”
Similarly, UN representatives in Afghanistan highlighted the crucial role of small and medium-sized businesses in job creation, economic growth, and reducing dependency on foreign aid, calling for further efforts to support the private sector.
UN Secretary-General’s Special Representative for Afghanistan, Roza Otunbayeva, stated: “In past conferences, we pledged that each province should have a market for women and a representative of the women’s chamber of commerce. I have traveled across Afghanistan, but unfortunately, I have only seen such initiatives in Bamiyan, Maimana, and a few other places. In many new areas I visited, when I wanted to buy something, there were no markets available for women’s products.”
UNDP Director Stephen Rugers added: “In UNDP, we are working very closely with the government and with many of the partners to support MSMEs. Over the last few years, we have helped to start or strengthen over 80,000 businesses, including more than 70,000 that were led by women. And these businesses have helped to create hundreds of thousands of jobs.”
According to UNDP figures, small and medium-sized businesses account for about 80 percent of Afghanistan’s economy, with much of it managed by women and youth. However, only 20 percent of these enterprises have access to financial resources.
Mes Aynak Copper Mine Contract Extended for More 15 Years with Chinese Firm
The Ministry of Mines and Petroleum announced that the contract for the exploration and extraction of the Mes Aynak copper mine in Mohammad Agha district of Logar province has been extended for another 15 years.
This project was handed over to the Chinese company MCC 17 years ago, but significant progress in its extraction has yet to be made. Insecurity, the country’s past political situation, concerns over the destruction of historical artifacts at the mining site, and a lack of infrastructure such as electricity and railways have been cited as key reasons for the project’s delays.
The Ministry of Mines and Petroleum told that to enable more effective and efficient copper extraction, the contract has been extended for 15 more years, increasing the total duration to 45 years.
The ministry emphasized that with this extension, all core conditions of the contract remain unchanged.
These conditions include:
Establishing copper processing factories inside Afghanistan
Prioritizing Afghan labor
Protecting historical artifacts at the mining site
According to the spokesperson, multiple practical steps will be launched at the site this year.
He added: “Last year, the company started part of the practical work. One component was the extension of a road measuring 8.9 kilometers, which is now nearly complete. Surveys and studies have also been conducted in several areas, along with power generation assessments, which are now being implemented. Overall, most of last year’s planned activities have been completed, and we hope that this year, operations will advance more effectively.”
Key commitments in the Mes Aynak copper mine contract, signed in 2008, include:
Establishing smelting and copper processing plants in Afghanistan
Building a railway line
Establishing electricity generation facilities
Job creation and training for Afghan labor
Adhering to environmental standards and preventing environmental damage
Protecting and relocating existing historical artifacts at the mine site
Paying royalties and revenues to the Afghan government
Although the contractor had previously promised to begin project implementation this year, the project has faced widespread criticism in Afghanistan over the years due to delays by the Chinese side.
Economic experts believe that extending the contract could offer the company a fresh opportunity to fulfill its commitments and stop treating this national asset arbitrarily.
Mir Shaker Yaqubi, an economic analyst, stated: “Efforts should be made to engage with the Chinese side and their investors so they pursue the Mes Aynak project with greater financial, technical, and operational seriousness. The MCC company should no longer be allowed to delay, obstruct, or neglect the terms of the contract. This issue can be resolved through dialogue, diplomacy, and active economic negotiations.”
According to geological studies, the Mes Aynak mine, considered one of the largest copper deposits in the region, holds reserves of 12 million tons and, if extracted properly, could turn Afghanistan into a significant global copper exporter.
Afghanistan Has Around 400 Kilometers of Active Railway Lines
Afghanistan currently possesses around 400 kilometers of main and subsidiary railway lines, which connect four key border ports – Hairatan, Aqina, Torghundi, and the Herat–Khaf railway – with Uzbekistan, Turkmenistan, and Iran.
According to the Ministry of Public Works, in order to further expand this network, construction work is underway on the first phase of the fourth section of the Herat–Khaf railway, as well as the reconstruction of the Hairatan–Mazar-i-Sharif line.
The ministry also stated that a memorandum of understanding, worth 500 million dollars, has been signed with Kazakhstan for the construction of the Torghundi–Herat and Herat–Kandahar railways.
The ministry’s spokesperson, Mohammad Ashraf Haqshinas, said: “For the further development of the country’s railway networks, construction work is ongoing on the first phase of the fourth section of the Herat–Khaf railway, and the repair of the Hairatan–Mazar-i-Sharif line. At the same time, agreements worth 500 million dollars have been signed with Kazakhstan for the construction of the Torghundi–Herat and Herat–Kandahar railways.”
The ministry added that in the field of port infrastructure, an agreement worth 5 million dollars has been signed with Turkmenistan for the expansion of the Torghundi port, with practical work expected to begin soon.
Haqshinasfurther explained that the contract for the detailed survey and design of the Herat–Kandahar railway – with a total length of 737 kilometers and a value of 264 million dollars – has been finalized with the private sector, and work is currently underway. He noted that the survey and design of the 737-kilometer route has been divided into five sections under a contract worth 264 million Afghanis between the Ministry of Public Works and the private sector, and practical work has already started.
Economic experts believe that once the railway network is completed, Afghanistan will emerge as a transit hub of the region.
Economic analyst Mohammad Nabi Afghan added: “In trade and economy, the most important sector is transport, as without it, exchange cannot take place. Among these important sectors, after maritime shipping, railways come next. However, since Afghanistan cannot connect to sea routes, we must prioritize railways. If we simultaneously work on three to four sections quickly, we will be able to build them, maintain them, and even achieve self-sufficiency in this field – because Afghanistan lies at the heart of Asia.”
It is noteworthy that the survey of the 561-kilometer railway line from Balkh to Herat has been completed by Uzbekistan. According to the Ministry of Public Works, if these projects and transit agreements such as “Afghan Trans” are implemented, Afghanistan will become a key regional transportation hub, providing fast and easy transfer of goods between Central and South Asia.
Female Entrepreneur and Complaints of Market Slowdown
Some Female entrepreneur complain about the lack of job opportunities and the slowdown of markets.
Despite educational restrictions and economic challenges facing women in Afghanistan, a number of women continue to strive by initiating small businesses to create work opportunities for themselves and others.
One tailoring training workshop, launched by a female entrepreneur a year ago, teaches tailoring skills to women and girls.
Shakiba, the trainer, says: “We teach proper techniques, sewing, and even designing party dresses. Once students graduate from here, they don’t need to start tailoring lessons again; upon graduation, they can contribute to their families as an achievement.”
Khorshid, one of the tailoring trainees, says: “Our request from the Emirate is to open the doors of education for women so that they can at least meet their family’s needs through tailoring or other courses.”
In another room of the workshop, 19-year-old Mahriya is busy sewing clothes on a machine. She says she once had higher ambitions than tailoring, but now she has chosen this profession to earn income and support her family.
Another tailoring student, also named Mahriya, says: “My hope is to gain more experience here so that one day I can establish my own workshop, providing opportunities for women who want to work and stand on their own feet.”
The head of the training workshop says her goal is not only to earn personal income but also to encourage other girls and women to learn professional skills and engage in work. She cites lack of market access, financial difficulties, and social restrictions as her key challenges.
Malalai Alimyar, the workshop supervisor, says: “One of our challenges is that market prices are not controlled. Most goods are imported from outside Afghanistan, and our products are undervalued. I hope the day comes when our government supports such workshops, so we can present our products to our people’s markets more easily and at fair prices.”
Meanwhile, the Ministry of Economy says it is working to expand women’s economic activities and create more opportunities for entrepreneurship through its programs and support.
Abdul Rahman Habib, spokesperson for the ministry, states: “To strengthen household economies, a number of programs are underway by relevant ministries within the framework of laws, including support for small and medium enterprises, development of handicrafts, vocational training, and promotion and marketing of domestic products, so that women can access more work opportunities.”
According to some economic experts, the experiences of entrepreneurial women in Afghanistan show that investing in them can play a significant role in reducing poverty, creating jobs, and advancing economic development — an issue they say is more important now than ever before.
Excavation Work for 2nd Phase of Qosh Tepa Canal Reaches 93% Completion
Excavation work for the second phase of the Qosh Tepa Canal has progressed by 93%.
The National Development Company says that excavation of the second phase of the Qosh Tepa Canal project has reached 93% completion.
Officials have consistently emphasized that this canal, by irrigating agricultural land in the northern plains of the country, will provide a unique opportunity for the development of the food industry, job creation, and exports.
Nabiullah Arghandiwal, spokesperson for the National Development Company, said: “Excavation work for the second phase has progressed by about 93%. In addition, construction of the dam for this major canal has advanced by 82%, and work is also underway on several bridges and water-regulating structures along the canal’s route.”
He also assured that construction at the canal’s headworks is 82% complete, and work on 13 bridges is in progress.
According to him, the Qosh Tepa Canal project will be completed on schedule, meeting all international standards.
Some experts say that if the Qosh Tepa Canal project is completed and water distribution is managed well, it will not only create job opportunities for citizens but also boost the economy and pave the way for Afghanistan’s self-sufficiency in agricultural products.
Qutbuddin Yaqubi, an economic analyst, commented: “The Qosh Tepa Canal, which is considered a major canal in the region, will help provide water for agricultural lands after completion and will play a significant role in Afghanistan’s self-sufficiency in agricultural products.”
Currently, work is ongoing in various sections, including excavation of the second phase, bridge construction, and building of the canal’s headworks.
This canal, considered one of Afghanistan’s largest irrigation projects, is expected to irrigate more than 500,000 hectares of land in three provinces, including Balkh, Jawzjan, and Faryab.
Afghanistan producing 60% of its annual flour needs domestically
Afghanistan is now meeting about 60 percent of its annual flour requirements through domestic production, according to the Economic Deputy of the Office of the Prime Minister.
Official figures show that the country consumes roughly six million tons of flour each year, of which 3.5 million tons are supplied locally.
Around 200 flour factories are currently operating nationwide with a combined investment of nearly $150 million, employing more than 2,500 permanent workers. These factories produce about one million tons of flour annually, while local mills contribute the remainder.
The prime minister’s office noted that the defacto government has introduced a series of measures to strengthen domestic production and support farmers. These include reducing import tariffs on wheat and flour, curbing wheat smuggling, and ensuring fair purchase prices for farmers during harvest season.
Officials say the policies are designed to secure a stable and timely flour supply for Afghan households, reduce dependency on imports, and stimulate the rural economy.
Despite the progress, Afghanistan still relies on imports to cover about 40 percent of its flour needs, underscoring the importance of continued investment in agriculture and food processing to achieve self-sufficiency.
Afghanistan has its ‘sharpest surge’ ever of child malnutrition, UN agency says
Afghanistan is seeing its sharpest-ever surge of child malnutrition, the World Food Program said Monday, adding it needed $539 million to help the country’s most vulnerable families.
Almost 10 million people, a quarter of Afghanistan’s population, face acute food insecurity. One in three children is stunted.
The WFP said the rise in child malnutrition was linked to a drop in emergency food assistance over the past two years because of dwindling donor support. In April, the administration of U.S. President Donald Trump cut off food aid to Afghanistan, one of the world’s poorest countries.
The U.S. had been the largest funder of the WFP, providing $4.5 billion of the $9.8 billion in donations last year. Previous U.S. administrations viewed such aid as serving national security by alleviating conflict, poverty, extremism and curbing migration.
Food insecurity in Afghanistan is being worsened by mass returns from neighboring countries, which are deporting foreigners they say are living there illegally.
The WFP said it has supported 60,000 Afghans returning from Iran in the last two months, a fraction of those crossing the border.
Going forward, the WFP does not have sufficient funding to cover the returnee response at this time and requires $15 million to assist all eligible returnees from Iran,” said WFP Communications Officer Ziauddin Safi. He said the agency needs $539 million through January to help vulnerable families across Afghanistan.
Climate change is also hurting the population, especially those in rural areas.
Matiullah Khalis, head of the National Environmental Protection Agency, said last week that drought, water shortages, declining arable land, and flash floods were having a “profound impact” on people’s lives and the economy.
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