Economic Causes of Afghanistan’s Humanitarian Crisis

Since the US withdrawal and the Taliban takeover in August 2021, Afghanistan has been suffering from a worsening humanitarian crisis. Acute malnutrition is now entrenched across the country. For nearly a year, over 90 percent of households have not been able to get enough food.

Almost 20 million people – half the population – are suffering either level-3 “crisis” or level-4 “emergency” levels of food insecurity under the assessment system of the World Food Programme (WFP). Recently, the WFP reported that tens of thousands of people in one province, Ghor, had slipped into “catastrophic” level-5 acute malnutrition, a precursor to famine. The WFP has stated that Afghanistan “continues facing the highest prevalence of insufficient food consumption globally.”

Humanitarian organizations have continued to warn about the sheer scale of the crisis and the increasing likelihood of catastrophe, citing the country’s economic shocks as the primary factor in driving hunger and deaths. In late July, the WFP pointed to an “alarming” 10 percent drop in households’ already highly reduced income levels, as well as rising food costs.

The World Health Organization (WHO) has reported that tens of thousands of children are being admitted for emergency medical treatment for acute malnutrition monthly; many others in remote areas are unable to get help and have starved to death. Over one million children under 5 – especially at risk of dying when deprived of food – are suffering from prolonged acute malnutrition, meaning that even if they survive, they face significant health problems, including stunting.

The International Rescue Committee noted earlier this year that “[u]naddressed, the current humanitarian crisis could lead to more deaths than 20 years of war.” The Afghanistan country director of Save the Children said in mid-February:

I’ve never seen anything like the desperate situation we have here in Afghanistan. We treat frighteningly ill children every day who haven’t eaten anything except bread for months. Parents are having to make impossible decisions – which of their children do they feed? Do they send their children to work or let them starve? These are excruciating choices that no parent should have to make.

An Afghan humanitarian official told Human Rights Watch in mid-July: “People have nothing to eat. You may not imagine it, but children are starving…. The situation is dire, especially if you go to the villages.” He noted that he personally knew a family who had lost two children to starvation in the last two months, ages 5 and 2. Saying that he was unaware of any food shortages, he described the causes of the crisis as economic: “A functioning banking system is an immediate and crucial need to address the humanitarian crisis.”

The root causes of Afghans’ loss of access to food, water, shelter, and health care are almost all economic: millions of dollars in lost income, spiking prices, and the collapse of the country’s banking sector. Other factors have contributed to the country’s humanitarian crisis, including a major drought and the effects of decades of war, but economic shocks have been the primary causes of the deteriorating situation.

Since August 2021, more than four out of five Afghan households have experienced significant decreases in income or have lost their source of income. At the same time, the country’s overall economy and banking system has been almost completely incapacitated by decisions by the US and other governments in August 2021 to cut off Afghanistan’s Central Bank, officially the Da Afghanistan Bank, from the international banking system. This has led to a massive liquidity crisis and nationwide shortages of banknotes in both US dollars and the Afghan currency, afghanis.

As Save the Children’s country director said in early 2022, “There is no shortage of food here – the markets are full. Yet children are starving to death because their parents can’t afford to pay for food. This could, and should, have been prevented.” But income and assistance have not improved in 2022, and in May and June wage levels fell, according to WFP surveys.

Private Afghan banks continue to struggle to cover withdrawals by depositors, including humanitarian aid organizations. Even when funds are transmitted electronically into banks to pay for humanitarian operations, wages, or remittances, banks’ lack of cash means that funds cannot be withdrawn. The Central Bank of Afghanistan, because of the shortage of both US and Afghan banknotes, has severely restricted transfers of banknotes to private banks and imposed limits on withdrawals of afghanis, while also prohibiting many types of electronic transactions in US dollars. Private banks lack adequate local currency to cover withdrawals, have few or no dollars in cash, and, without significant assets on deposit, are unable to extend credit.

Banks are also facing difficulties settling incoming dollar transactions via correspondent accounts at private banks outside the country, most likely due to foreign banks’ fears that they may be violating UN and US sanctions on the Taliban.