Over the course of the past twenty years (2002-2021), USAID has worked tirelessly to reinvigorate and expand the Afghan economy, which had been largely stagnant during the initial rule of the Taliban from 1996-2001. Along with creating jobs and livelihoods, significant efforts were undertaken to enable Afghanistan's private sector to become more resilient and better integrated into the international economy. USAID partnered with the business community, the former Government of Afghanistan (GOA), international organizations, and neighboring countries to help Afghanistan create the institutions and market linkages to better manage public finances, form a viable market-based economy, and secure reliable access to international capital markets.
USAID supported significant growth of the private sector including the facilitation of market formation, and the expansion of the Afghan trade networks.
Facilitated Market Formation
Competitiveness of firms increased as they became more productive, better administered, and able to produce goods that were of better quality and matched with consumer requirements.
Trade linkages with regional and global markets enhanced, including improved customs policies and operations; expanded exports to India, the UAE, and the EU for agricultural goods, gems/jewelry, and carpets.
The investment climate improved so firms could allocate capital and produce profitable goods and services. Specific improvements included the creation of a banking system and the Afghani currency; strengthened monetary management; and improved ability to formalize and conduct deals with international corporate partners.
Legal frameworks created for commerce, including establishing a commercial code, joining the WTO, implementing international road transportation system (TIR), providing commercial and trade law clinics, and educating the Afghan government and businesses on commercial law.
Expanded Trade Networks
Afghanistan joined several key international trade organizations:
The World Trade Organization and Trade Facilitation Agreement in 2016.
Afghanistan rejoined TIR in 2021.
Afghanistan acquired observer status with the Central Asia Trade and Investment Framework Agreement in 2014.
Over the course of USAID’s interventions in the country, Afghanistan acquired valuable trade policy experience, improved its data collection, and trained now-seasoned negotiators who can discuss important deals such as the Afghanistan Pakistan Trade and Transit Agreement (APTTA).
Preserving Private Sector Gains
Preserving the gains achieved in the private sector is vital to help ensure key sectors of the economy continue to maintain existing livelihoods, as well as create new job opportunities for Afghans. The ongoing economic crisis is likely to impoverish the vast majority of Afghanistan’s people in the coming years. Preventing the collapse of agricultural production, resuscitating exports and trade, and seeking opportunities to strengthen the country’s dire investment climate will all be critical to reduce the suffering of ordinary, vulnerable Afghan people struggling to adapt under the new regime.