Afghanistan Analysts Network – English

Recommended Reads

“90% real” – The rise and fall of a rentier economy: Stories from Kandahar

AAN 2 min

AREU, November 2015

In AREU’s Working Paper 38, authors Giulia Minoia and Adam Pain look into the ups and downs of Kandahar city’’s economy since 2001-. The paper is based on four interesting case studies, taking up the pre-war tradition of ‘bazaar structure studies’: focused on three sub-sectors of the informal street vendor economy: the selling of tarpaulins, clothes and mobile phones (a sector that is new to the post-Taleban economy) and, “in the higher reaches of the city economy”, experiences of two local contractors who had been able to acquire military and reconstruction funding,

The study found “that many of those who had secured a foothold in it were migrants from Kandahar’’s rural districts, and they were often landless, driven out by insecurity and a lack of employment owing to drought. They had also been pulled into the city at a time when prospects were better. …  in the boom years, being a street vendor provided a significantly better living than people had had before. But now times are harder, insecurity is greater and there has been a general economic downturn.” On the contractors, the authors confirm that “the flow of funds from the military and reconstruction economy created an extreme rentier economy. This was captured and regulated by powerful figures to their advantage, with access to the economy being subject to their control.” They conclude that .”now this reconstruction boom has collapsed and the legacy in terms of key public goods –– notably electricity and water –– is limited.”

There is another important conclusion that points way beyond the economic sphere: “A recent report on the private sector in Afghanistan argues that the Afghan government, supported by international donors, must provide the preconditions for an inclusive, productive, rule-based and formalised market economy. However, the basic political preconditions are not in place. The challenge is to work out the first steps to move away from an economy characterised by social regulation, power and predation.”