Afghanistan’s economy has stabilised after the profound collapse caused by the Taliban’s retaking of the country in 2021, but there is little hope that the country will achieve a recovery. UN agencies believe restoring women’s rights is one way to help the economy to recover, but the Taliban continues to deepen its repression of the female population, excluding them from the workforce and public spaces. 

A report from the UN Development Programme (UNDP) has a grim outlook for the economy should the de facto government continue its present course. The UNDP finds that while the economy has stabilised, it has signally failed to rebound from the cumulative 27% contraction since 2020, and now seems to be stagnating at a low level of activity, according to its report, “Two years in review’, looking at the period from August 2021 to August 2023. 

“On the one hand, there appears to have been progress in maintaining stability, improving security, anti-corruption efforts, and combating opium production and illicit trade. On the other hand, it continues to experience a multi-faceted crisis where the economy is bottoming out of a cumulative 27% contraction since 2020, and nearly seven out of 10 Afghans lack access to the most basic items, opportunities and services needed for subsistence-level living conditions,” said Stephen Rodriques, resident representative at the UNDP in Afghanistan, in his introduction to the report. 

The economic and humanitarian crises are worsened by the growing number of steps take to exclude women from the workforce, with mass dismissals of female workers detailed in a separate report from the UN Assistance Mission in Afghanistan (UNAMA).

Multiple shocks

Afghanistan's economic woes are a result of a perfect storm—conflict, corruption, the COVID-19 pandemic and droughts. The macrofinancial crisis has taken a toll on productive capacity, with industrial production plummeting, and the vital agriculture sector facing a double whammy of severe droughts and climate events.

The slump in 2021-2022 followed an already marginal growth rate averaging 1.6% from 2014 to 2020. Initially, the Taliban takeover in 2021 led to an immediate 20.7% GDP decline, and despite some signs of recovery in 2022, the National Statistics and Information Authority reported a further 6.2% contraction.

Industrial production declined by 17.8% in 2021-22. The agriculture sector contracted by 15.7% in the two years due to severe droughts and climate events.

During the year, all sectors, especially services, experienced significant contractions, contributing to heightened poverty and unemployment, particularly in urban areas, according to the UNDP. 

Afghanistan’s already underdeveloped financial system was plunged into crisis by the regime change. Bank runs and a loss of public confidence led to a significant deterioration in the banking system, with a 25.6% drop in deposits in 2021.

Despite a slight restoration of trust in the latter half of 2022, total loans sharply declined by 34.5%, and borrowers plummeted by 50.5% in the past two years.

Projections suggest minimal real GDP growth in 2023, with potential further declines in per capita income given the combination of economic stagnation and a growing population. 

Low growth ahead 

The UNDP forecasts that while the initial shock to the economy has passed, a period of low growth is seen ahead, with no immediate prospect of revival. 

“In 2023 … the economy may bottom out to a period of insufficient growth. This could lead to a state of equilibrium characterised by low aggregate demand, high unemployment, and a substantial trade deficit,” the report said. 

The only way of averting this would be to remove critical barriers to the recovery of the productive sectors. 

“To recover from the prolonged crises of the past decades and severe shocks of the past two years, the country’s productive sectors must have access to a functional and affordable financial system, supporting institutional and regulative frameworks, and market opportunities,” Rodriques said. 

“Investments in human capital formation must be scaled-up significantly, and women must have equal opportunities to access paid work and education,” he added. 

Shut out of the workforce 

Since assuming control of Afghanistan in 2021 after the departure of US and Nato forces, the Taliban has enforced numerous restrictions specifically aimed at women. 

Women have been removed from key government positions, resulting in a loss of expertise. Employment data reveal an overall loss in the female workforce. The previously vibrant small and medium sized enterprise (SME) sector, where many women worked, has been devastated by political upheavals and lack of finance. 

The ongoing loss of technical expertise and capabilities, especially among women employees in public institutions, is worsening the economic situation, according to the UNDP.

“Public institutions, particularly in the economic sector, continued to lose the technical expertise that is required to design and implement the policies, programmes and services that fuel private sector activity,” the report said. 

Specifically, the Taliban’s ministries of agriculture, rural development, public works, commerce, and others have lost national technical advisors (NTAs), including female staffs, who were “instrumental in the effective running of the sectoral ministries that facilitated and fueled economic activity”. 

Across the economy, the share of women’s employment slumped from 11% in 2022 to 6% in 2023. At the same time, men’s share of employment increased 11%, indicating a gender-based labour substitution, rather than an overall contraction in the workforce. 

Meanwhile, women-led micro and small enterprises have suffered a 60% contraction since 2021.

Restrictions tighten 

A separate UN report, released on January 22, details how the Taliban is imposing restrictions on Afghan women's ability to work, travel and access healthcare if they are unmarried or lack a male guardian. 

Covering the period from October to December, the report from the UNAMA indicates a tightening of the Taliban's control over Afghan women's participation in public life.

The United Nations reported that the Taliban government forcibly removed hundreds of women from their jobs, accusing them of non-compliance with Islamic law requirements imposed on women nationwide. 

The report states: “The de facto authorities continue to enforce and promulgate restrictions on women’s rights to work, education, and freedom of movement.”

In one incident detailed in the report, three female health workers were detained because they were going to work without a mahram (chaperone), and only released when their families signed a written guarantee that they would not do so again. 

The de facto Department for the Propagation of Virtue and Prevention of Vice regional division of the ministry prevented 400 women from working at a pine-nut processing facility in eastern Nangarhar province, the report said. The decision was made without offering explanations, and male employees were allowed to retain their positions. 

A power plant under Taliban control in northern Balkh province also terminated the employment of 200 women, attributing the decision to financial constraints. Again, male staff members did not lose their jobs.

Zabihullah Mujahid, the Taliban's chief spokesman, dismissed the UN report, attributing its findings to “misunderstandings” and a failure to take into account Islamic Shariah law. In a statement, Mujahid said that with an Islamic government in control in Afghanistan, it is imperative to "fully implement all aspects of Shariah for both men and women”.