The "aid bubble" bursts

11 July 2013

by Jawed Nader

BAAG director Jawed Nader says unemployment is starting to bite in Kabul

It was early in the morning when my friend, Amin Shafiee, arrived at a call centre in centre Kabul to find 300 people patiently waiting  for him. 

They were all looking for jobs.

Amin was astounded.  As head of a consultancy firm recruiting call centre staff for a big company, he had privately decided to take on 30 extra workers.  But he hadn’t yet advertised the posts.  The Kabul grapevine had clearly been at work.

He was even more shocked to find out how over-qualified most of the applicants were.

The jobs involved were neither highly skilled nor highly paid.  Yet  around 70-80 per cent of the people waiting for him that day had completed some form of higher education.  Half of them had degrees - one or two per cent were doctors or engineers.  The salary on offer was well below the level that most of these people were used to.

Their presence was indicative of the worsening economic situation faced by many Afghans as international forces prepare to withdraw from Afghanistan after 2014.

The troop pullout, already underway, was always likely to have a massive impact.  A huge range of Afghans work for NATO-led forces in Afghanistan.  Some are employed directly  as interpreters, office staff, or construction workers.  Others own businesses providing supplies for frontline troops or the mixed military-civilian Provincial Reconstruction Teams (PRTs),  delivering aid to rural areas.  As the soldiers leave and the PRTs close down, many of these people are losing their jobs.

But it’s not just those working with the military who are affected.  The billions of dollars of international aid pumped into Afghanistan since 2001 has also funded many thousands of jobs in aid agencies and other fields. 

Now that aid bubble has finally burst.   

The United Nations’ humanitarian coordinator, OCHA, says humanitarian funding for Afghanistan dropped by around half in 2012.  And with further cuts expected as the troop pullout continues, it predicts another tough year in 2013. 

Aid projects are winding down.  The withdrawal of core funding, or uncertainty about future grants, means that many NGOs and international organisations have either already laid off staff, or are planning to do so. 

The UN’s Mine Action Coordination Centre of Afghanistan, (MACCA), recently told DAWN newspaper it had lost 1,000 deminers due to “very unstable funding”

One of the longest established NGOs in Afghanistan, Aschiana, was forced to scrap its programmes to help more than 11,000 street working children after its crucial EU funding ended in March.  This left Aschiana with the resources to look after only a few hundred children.  It was forced to lay off more than 100 staff.

Businesses are also being hit.  During my visit to Kabul I noticed that small businesses like furniture showrooms were closing down.  Housing and rental prices have dropped by 30- 40 per cent from their high point a few years ago.   

People talk about fears of a “brain drain” and “capital flight”.  Some business people, worried about the security situation after international forces leave,  are making contingency plans, salting their money away abroad.  Amin, the recruitment consultant, says more than half of his circle of 50 or so friends  - all of them college graduates - are currently planning to leave Afghanistan.  One of those young men has already paid tens of thousands of dollars to a smuggler to take his family to Europe.

The Afghan government admits that it needs to create 500,000 jobs a year to combat growing unemployment.  It has tried to allay public fears by accusing the media of spreading negative stories about Afghanistan’s prospects after transition.  In an interview with  Reuters news agency in January, Finance Minister Omar Zakhilwal said  “It is the fear about 2014, and this generated fear by the media, that is more of concern than any of the real substantive issues”.

But the Afghan government needs to do more than just blame the media.  It needs to act more decisively to build Afghans’ fragile confidence in the country’s economy.  It needs to point out that Afghanistan’s economic growth remains relatively healthy; that donor money, while reduced, is still coming in.  It needs to tackle corruption decisively, to ensure that donors channel more aid directly through the government.  It needs to invest to make the agricultural sector, where more than 60 per cent of Afghans work,  more productive.  And it needs to ensure that major mining contracts being negotiated with foreign firms, worth billions of dollars, are transparent, accountable, and provide tangible benefits for the Afghan people. 

It’s an uncertain time in Afghanistan.  Afghans are clearly worried about what will happen after 2014.  But the Afghan people are known for their resilience - their ability to get by, whatever the circumstances.  What they need now is strong leadership from their government - and continued support from donors - to make the transition process as painless as possible.