Editor in Chief: Moh. Reza Huwaida Tuesday, October 26th, 2021

How to Tackle Capital Flight from Afghanistan?

Businessmen have a very important role to play in a capitalist economy. It is businessmen activities that generate most of a nation’s wealth, creates the lion’s share of jobs, and provides most of the funds that go towards government spending. 
In recent years Afghan businessmen have left Afghanistan due to lack security and a safe economic environment. Economic experts believe that If government does not ensure businessmen safety and the safety their properties and markets, they will leave Afghanistan and invest in other countries. The rate of kidnapping and threating businessmen have been on the rise in 2021. It is understandable the private sector to be worried about the issue.
1,500 Businessmen Left the Country in 2020
At least 1,400 Afghan businessmen have left for Turkey due to insecurity in 2020. Each of these businessman had a minimum capital of $ 200,000, and the total capital that have taken out of the country has been almost $1.5 billion. At the absence of ensuring security by security institutions, each Afghan businessmen inside the country must spend 25% of their income to ensure their security.
Causes and Consequences of Capital Flight
Adequate human and physical capitals are considered as the man factors of economic development in any country. Considering the insecurity in the country, we not only are incapable to attract the investors but our own businessmen take their capitals out of the country.
Capital flight is one of the challenging issues of Afghanistan indicating the structural problems in economic and political areas. Capital had flight negative consequences on economic development of Afghanistan in the recent past years. It has increased development gap between Afghanistan and other countries. It also has increased economic gap between the Afghan population. Lack of security, wide spread corruption, political and economic instability are the main local factors of capital flight while the global macro-economic policies are considered as the external causes of capital flight from the country.
In general, electoral tensions during the 2019 polls allowed the Taliban to gain ground. It also followed a deadlock in the intra-Afghan peace talks between the Afghan government and Taliban representatives. The talks began in September last year and have failed to make any progress in the peace process. Some Businessmen leave Afghanistan due to the US and its allies troop withdrawal fearing a repeat of events as the one which led to the fall of the Moscow-backed communist regime in the 1990s, following the departure of the former Soviet Union’s troops
Afghan businessmen have bitter experiences from the past which led to internal war in the country. As a result, 60 percent of the private sector has ended activities in recent years. Unfortunately, factories have closed, and only those involved in businesses such as food and fuel items operate.  
Some of the companies that are more heavily dependent on the military and the aid economy, like construction and logistics businesses, are trying to stay put by reconfiguring toward the few areas where analysts feel Afghanistan might have growth potential, like mining or trade.
Measures to Tackling Capital Flight
Their first priority to tackle capital flight from Afghanistan is the government must ensure security of the businessmen and businesses. It shall take all the necessary measures to try to pursue a policy minimize political and economic instability. Other measures include primarily reducing budget deficits, setting realistic exchange rates and achieving lower rates of inflation. Nevertheless, it is beyond dispute that more stable economic and economic policy conditions are essential if citizens’ confidence in the economy of their own country is to be restored and hence capital flight curbed.  Businessmen fleeing and moving their businesses to outside Afghanistan is one of the big problems of the country. Capital flight is a critical challenge to economic development in Afghanistan. The problem is serious and won’t go away on its own. It is urgent, therefore, to mobilize political capital around strategies to prevent further financial outflow from Afghanistan by curbing capital flight. It is clear that the loss of capital and investors have a long-term impact on the already shaky economy of Afghanistan which has mainly relied on foreign funds since the Taliban’s ouster in the US-led invasion of 2001. The capital flight will cause the economy to slow down, closure of factories and joblessness, and gradually an economic crisis, as well as psychological fears about the future of Afghanistan. As a result, in addition to putting in place realistic policies to curb the capital flight, the Ministry of Interior said security forces must ensure the safety of businessmen across the country.