Afghanistan - Market OverviewAfghanistan - Market Overview
Afghanistan has a poor, agrarian economy with a small manufacturing base, few value-added industries, and a mostly dollarized economy. Agriculture remains Afghanistan’s most important source of employment: 60-80% of Afghanistan’s population works in this sector, although it accounts for less than a third of GDP due to insufficient irrigation, drought, insufficient market access, insecurity, and other structural impediments. Most Afghan farmers are primarily subsistence farmers.
Corruption remains a persistent problem throughout the country, increasing the cost of doing business, particularly for foreign companies. Corruption hampers fair application of laws, regulatory bodies lack capacity, and financial data systems are limited. Furthermore, although government officials express commitment to a market economy and foreign investment, business leaders report that some government officials levy unofficial taxes and inflict bureaucratic delays to extract rents.
The government has undertaken several important reforms to attract Afghan private-sector and foreign investment. For example, it has streamlined the business license registration process under the Afghanistan Central Business Registry (ACBR), which extended the validity of business licenses to three years and reduced the licensing fee.
The World Bank’s Ease of Doing Business rating for Afghanistan increased in 2019 to #167 from #183 in 2018, driven by reforms in the ease of starting a business, getting credit, protecting minority investors, revenue collection, and a new insolvency law.
Afghanistan Trade Development and Promotion