Business Daily Afghanistan: Can its private sector step up?
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Oct 29, 2025 Kate Clark, Co-director of the Afghanistan Analyst Network, shares insights on Afghanistan's deteriorating economic landscape post-Taliban takeover in 2021. She discusses the staggering 25% GDP decline and the challenges of a struggling banking system amidst severe international sanctions. Local businesses face collapsing consumer demand, particularly impacting women entrepreneurs. Despite these hurdles, Clark highlights the potential of the private sector to drive recovery, emphasizing the need for improved banking and investment to foster self-sufficiency.
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Shock From Sudden Aid Withdrawal
- Afghanistan's economy collapsed after 2021 because foreign military spending and government-targeted aid stopped overnight.
- Kate Clark says the economy contracted by about a quarter and public services like clinics and education lost major funding.
Tailor-Made Competition Shrinks Retail Sales
- A Kabul children's clothes manufacturer reported sales fell so much they downsized production and struggled against home-tailored copies sold cheaply.
- The business owner said consumers prioritise food, so non-essential clothing demand collapsed.
Sanctions And Banking Block Economic Flow
- A malfunctioning banking system and sanctions sharply limit payments, remittances and international transactions.
- Kate Clark highlights that waivers haven't removed practical barriers to doing banking in Afghanistan.