The Economist - UK (2022-02-19)

TheEconomistFebruary19th 2022 49

Asia

Afghanistanincrisis

The limits of aid

T

he International Rescue Committee, a
big ngo, helps displaced Afghans with
cash, clean water and tents to shelter in. It
provides sanitation. It funds dozens of
clinics. It helps people find jobs and ar-
ranges training for development projects.
All this aid does not come cheap. Vicki
Aken, who runs its operation in Afghani-
stan, reckons she needs between $1m and
$2m every week to keep it going. But ever
since the Taliban took over the country in
August, foreign banks have refused to
transfer money to Kabul, the country’s cap-
ital, fearing hefty fines, or worse, for
breaching sanctions. Meanwhile, the Tali-
ban, worried about running out of curren-
cy, have capped withdrawals from ngos’
local accounts at $25,000 per month.
Instead, Ms Aken’s organisation is rely-
ing on the hawalanetwork, an informal
money-transfer system that originated in
India. Used for centuries by pilgrims, mi-
grants and merchants all around the Islam-
ic world, it operates on the basis of trust: an
agent in one country receives cash and a
counterpart in another disburses it, even

thoughnomoneyactuallycrossesborders.

Manyotherngos aredoingthesame.The

surgeindemandforhawalaserviceshas

pushedfeesupfromaround2%earlylast

yeartobetween4%and13%today.

The withdrawal of American forces

fromAfghanistansixmonthsagowasfol-

lowedbyanothercalamity:thewithdrawal

ofAmericanandotherWesternfunding

fromAfghanistan,andthefreezingofthe

government’s overseas assets. Until Au-

gustforeignaidcovered75%ofthestate

budget.Afghanbankscouldtransactwith

those abroad. Businesses could obtain

credit.Allthatstopped.Thecountry’sfi-

nancialsystemgroundtoa halt.

Thathascauseda liquiditycrisisthatis

cripplingtheAfghaneconomy.Thestate

hasnomoneytopayforessentialimports

suchas food,medicine or electricity. A

privatesectorthatgrewoverthepasttwo

decadesiscrumblingwithoutcashtopay

salaries or suppliers. Many factories in

Kandaharhaveshutbecauseofelectricity

shortages.A businessmaninKabulsayshe

doesnothavetheforeigncurrencyforma-

terialsforhisplasticsfirm.Hehasslashed

hisworkers’payfromaround 450 afghanis

($4.90)to 300 afghanisperday.

Atleast500,000peoplehavelosttheir

jobssinceAugust,roughly5%ofthework-

force. Teachers and doctors have gone

monthswithoutpay.Withdrawalsfromin-

dividual accounts have been capped at

30,000afghanisperweek.Themoneythat

remainslockedupislosingvaluefast.The

afghanihasdroppedbyaround12%against

thedollarsincemid-August.Qamarulba-

natQuraishy,a 24-year-oldinKabulwith

sevensistersandfivebrothers,sayssheis

tryingtocutcosts byskippingmeals.“I

don’tthinkwecancontinueinthissitua-

tion,”shesays.Shehasrunoutofsavings.

Thecountryisfacinganescalatinghu-

Humanitarian assistance is no substitutefora functioningeconomy

→Alsointhissection

50 Okinawa’straditionalhooch

51 ThemanywaystodieinIndia

51 SuccessioninTurkmenistan

52 Banyan:A bigtradepactgetsbigger

Immobile money

NGO operations in Afghanistan

“How are you affected by the following challenges?”

Dec 26th 2021, % responding*

Source:Norwegian

RefugeeCouncil *Onlinesurvey of 2 NGOs

1

Closureofbankbranches

inAfghanistan

Limitsoncashwithdrawals

100806040200

Blockagestointernational

banktransfers

Inflation& exchangerates

Criticalissue Urgent No issue/moderate