For a decade since 2002, Afghanistan witnessed an encouraging 9.5 per cent growth rate and single digit inflation, but it was widely sustained by the inflow of donor funds and developmental aid. With the International Security Assistance Force (ISAF) drawdown drawing close, the growth rate began to dip in 2013 and reached 3.8 per cent by early 2015. With little indigenous infrastructure or capacity, Afghanistan is set to face a downward spiral, especially as donor funding is beginning to dry up. While the Strategic Partnership Agreement with the U.S. in 2012 provides it a stopgap retrieve (including financial support for another decade from 2015-2024), along with the trickling in of some donor pledges made during the 2012 Tokyo conference, Kabul will ultimately have to devise concrete plans to reboot its economy.
Meanwhile, Afghanistan could focus on its other strengths such as agriculture and livestock. Only 6 per cent of its land is cultivated; it could increase the yield to its full potential and help switch over from a predominantly opium-driven sector to alternative crops. This will address its issue of food insecurity. It could also harness its upper-riparian position and enter into water-sharing agreements with neighbours, especially with Iran and Pakistan. It could further build on its expanding service sector, undertake measures to plug corruption, and try bring its vast informal economy within the formal tax net. Scams such as the Kabul Bank fraud, one of the worst in international banking history, should be checked and an earnest effort to structurally reform the sector should be undertaken. Only by evolving a robust economy will it become a bulwark.