Four Years Later: Afghanistan’s Fragile Balancing Act Hinges on Economic Recovery and More
By Ehsan ZIA, Homa NADER and Omar SAMAD
August 15 marks four years since the Taliban Islamic Emirate's return to power and the collapse of the U.S. backed Islamic Republic - a seismic shift that continues to reverberate - less inside Afghanistan, but more beyond the country's borders. Despite the absence of active conflict and a semblance of territorial stability, the country teeters on the edge of economic distress, exacerbated by international sanctions, humanitarian funding shortfalls and policy discrepancies. With over 23 million Afghans in need of basic assistance, experiencing loss of livelihoods, sweeping restrictions on girls' education and women’s work rights, the country is navigating a paradox: grassroots resilience amid selective repression. This analysis argues that unless creative measures are adopted as part of urgent economic relief and improved governance, Afghanistan’s current trajectory risks deepening into an irreversible collapse - not only for the Afghans who endured the brunt of five decades of warfare and displacement, but also for stability and growth within the region and beyond.
The Ground Reality
The country stands at a perilous crossroads. The World Bank's economic monitor reports that “Afghanistan’s economy is gradually recovering, but at a slow pace, and the outlook remains uncertain due to fiscal pressures, a widening trade deficit, and persistent poverty and food insecurity.” Despite attempts by authorities to pivot toward an "economy-centric" strategy to circumvent foreign aid cuts, banking restrictions, and soaring unemployment, the nation’s economic crisis can deteriorate if corresponding policies are not revisited.
Furthermore, the continued forced return of more than two million Afghans from Iran and Pakistan since 2023, coupled with collapsing humanitarian aid, and a limited labor market, has left millions facing acute food insecurity and rising child malnutrition. According to international aid agencies on the ground, almost 10 million people, over a quarter of Afghanistan’s population, face acute food insecurity. One in three children are suffering from impaired growth development. Hunger is no longer a looming threat - it is a daily reality, as millions of families unable to earn their daily living, still rely on some level of basic humanitarian assistance. This at a time when US humanitarian aid earmarked via UN and other aid agencies, estimated at more than $885 million for 2023-2024, has now been halted by the United States Administration.
Despite efforts to create low-paying jobs, persistent high unemployment is estimated to be between 15-17% (not counting women) prior to the return of more than 1.5 million Afghan refugees in the past few months. Most Afghans survive through low return, home-based, informal and agricultural activities. Increasingly, families also rely on remittances from relatives abroad, estimated at $300-$500 million yearly. This number could, in reality, be much higher.
On the agricultural side, although poppy cultivation and heroin and opium production have been restricted in many parts of the country since a decree was issued in April 2022, many farmers, who used to rely on the profitable cash crop, continue to face harsh conditions, failing to find similar alternative livelihood solutions. Furthermore, climate shocks and periodic droughts have also limited farmer revenues in a country where agriculture and husbandry employ more than 75% of the population (estimated t0 be around 36 million). Private sector and micro-enterprise activities (both open to women), are mostly centered near urban settings but face investment, market access, banking fragility and regulatory (over-taxing) challenges. As poverty expands, in some sectors, corruption is once again raising its ugly head.
Practical Pathways
John Madeley, in his book (When Aid is No Help, 1991) critical of foreign aid in countries such as Mali, the Philippines, Bangladesh, Nepal, and India, argues that "despite decades of donor support, aid has consistently fallen short of fostering sustainable development.” Afghanistan is a textbook example of this failure, where for almost two decades, billions of dollars in aid proved to be “no help” or little help, as the country still lacks a basic foundation for development. Despite some achievements in rural development, construction and roadbuilding, the country faces serious problems with water management, power generation, regional connectivity, and agribusiness infrastructure. Systemic corruption, erratic strategizing, lack of oversight, accountability on all sides and mismanagement further aggravated the situation that was inherited by the current authorities. However, in the last four years, overnight, Afghanistan went from the largest recipient of foreign aid to almost the smallest.
Today, the crisis demands more than emergency relief. It requires a bold, integrated approach that combines smart government interventions, private sector ventures, and donors’ technical support with practical development strategies focused on primary consumer needs, structural reforms, public-private partnerships, regulatory and tax incentives, land/water/power facilitation, technical training, import/export facilitation and standardization/quality control.
The questions now are whether international donors are willing to assist in technical knowhow, and whether the caretaker government has the resolve to dismantle human rights and socio-political barriers to fulfill their responsibilities to restore livelihoods and foster self-sufficiency?
A first meaningful step could be a practical grassroots blueprint for breaking Afghanistan’s aid dependency and unleashing an economic revival driven by Afghans themselves. The message is clear and has been for several years: recovery cannot be outsourced. It must be owned by communities, led by local ingenuity, and designed to put resources, power, and opportunity directly into the hands of those who need it.
Afghanistan has a stark choice: continue down the path of collapse or seize this moment to forge a new future, one built on self-reliance, local resilience, and the untapped potential of its people and resources. A multi-prong strategy is needed for immediate relief paired with long-term transformation:
Urgent job creation and phased cash for work schemes through labor-intensive public works, injecting cash into struggling households while rehabilitating or building crumbling infrastructures in the urban settings, with the involvement of municipalities.
Enterprise development via public-private partnerships (PPPs), shifting from aid handouts to market-driven growth, especially in sectors that cut import dependence and meet basic domestic needs.
Public works offer a vital short-term lifeline—injecting cash into struggling households while restoring dignity through purposeful labor. These initiatives not only rehabilitate infrastructure but also create immediate employment opportunities, especially for returnees, the youth and informal workers. With a critical role played by municipalities, public works include sidewalks, drainage, and roads using cobblestone. Cities will need to clear stormwater drainage systems to prevent flooding. Meanwhile, there is a need for more green spaces and planting. As Kabul's water table depletes, there is demand for sanitation facilities and installing rainwater harvesting systems.
The private sector needs to identify and define “champion products” that are locally produced. PPPs can help with staple foods like wheat flour, cooking oil, dairy, poultry, tomato byproducts and daily use items like soap, textiles, footwear and sanitary products. These will not only reduce dependency on imports but also stimulate local production and entrepreneurship.
In short, the public sector should enhance its role in terms of policy support, infrastructure building, subsidies and use of municipality funds. The private sector should continue to take care of investment, innovation and market access. Examples of potential PPP models include local food processing hubs, small-scale textile and garment cooperatives, and renewable energy for rural enterprises.
By integrating the two-prong system, short-term public works can transition into long-term enterprise development and create pathways from labor to ownership through training, microfinance and the formation of cooperatives.
Meanwhile, PPPs lay the groundwork for long-term resilience. Together, they form a bridge from crisis to opportunity, proving that Afghanistan’s greatest resource is not always foreign aid, but in fact, its very own people and productivity.
Some aid organizations have already demonstrated what’s possible. They have responsibly helped women acquire vocational skills and launch small enterprises in culturally accepted sectors such as tailoring, embroidery, livestock rearing, and food processing. These affordable, grassroots initiatives have opened doors to income generation—but scaling remains a challenge. Many still face barriers for technical training, market access, and structured support networks. It is time to move beyond the repetitive distribution of sewing machines and toward a more strategic restoration of livelihoods. With targeted support—through microfinance, digital platforms, and trade fairs—women and youth entrepreneurs can diversify their products, reach wider markets, and become key drivers of economic recovery.
Small-scale income generation projects have also shown a powerful multiplier effect. In Herat, for example, a modest investment in inputs enabled one family to establish a poultry farm. Today, the owners are not only sustaining their own livelihood but are also helping other community members launch their own farms and contribute to different parts of the poultry value chain.
Leveraging private sector expertise and investment to address urgent development needs using PPPs are essential. With government incentives and facilitation, and private sector encouragement, they can help in the following areas:
Transport & energy, to include renewable energy
Telecommunications
Agri-business investment
Climate adaptation and emergency management
Housing and townships
Microfinance & entrepreneurship for unskilled and skilled workers
Banking systems, improve digital payments, and restore trust in financial institutions.
As a prerequisite, Afghan authorities must establish transparent legal frameworks to attract and protect private investment. Once again, lifting barriers on women’s participation, within acceptable cultural norms, is essential for inclusive growth and prosperity.
Lesson to Learn and Un-Learn
Afghanistan is a factory of lessons in failed peace-building, development, reconstruction, state and nation building. Many opportunities have been squandered over the years because of a combination of domestic and external disconnect, protracted conflict, strategic dissonance, misplaced priorities and unaccounted extravagance. Alas, the last four years saw more such examples emerge. Economic, governance and legitimacy concerns could have fairly easily been addressed were it not for failing to learn or un-learning from the past. Current prospects are mixed, but the trajectory and underlying premise are fraught with dangers. None of the stakeholders can afford to allow the country further down a frightening slippery slope. The population needs pathways to hope and certainty./
Ehsan Zia is former Minister of Rural Rehabilitation and Development, and Country Director for Afghanistan at USIP. He has been involved with peacebuilding and dialogue platforms.
Homa NADER is the Manager of Humanitarian Diplomacy and Strategic Partnerships for the International Federation of Red Cross and Red Crescent Societies in Afghanistan.
Omar Samad is a Non-res Senior Fellow at the Atlantic Council and a former Afghan Ambassador. He has been involved in reconciliation and intra-Afghan dialogues.
References:
https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=AF
https://data.worldbank.org/indicator/BX.TRF.PWKR.CD.DT?locations=AF
https://www.adb.org/sites/default/files/publication/1044336/afg-ado-april-2025.pdf
https://apnews.com/article/afghanistan-child-malnutrition-wfp-85173048b8bc50cbb2b7ea83647783d6
https://www.cfr.org/global-conflict-tracker/conflict/war-afghanistan
https://www.unhcr.org/us/emergencies/afghanistan-emergency
https://www.rescue.org/article/afghanistan-entire-population-pushed-poverty
https://www.amnesty.org/en/location/asia-and-the-pacific/south-asia/afghanistan/report-afghanistan/