For the first time in months, Afghan trucking company owner Ratmatullah says that he’s hopeful about the future.
About seven months ago he and many other truckers here in Kandahar lost the majority of their business when Pakistan closed off NATO supply routes to Afghanistan and international forces began relying more heavily on northern routes.
Local truckers say that the change shifted business to trucking and logistics companies in the north, leaving many in Kandahar jobless. Mr. Ratmatullah, who like many Afghans uses only one name, says his small company used to employ about 100 trucks weekly. After the border closed that number dropped to just 10. Within his company that cost about about 270 people their jobs, says Ratmatullah.
With the route only recently reopened, business has yet to return, but Ratmatullah says, “We’re very optimistic about the future because we will have work when it starts again.”
Still, the loss of business has given him cause to worry, he says, about its long-term future. “When the foreigners leave in 2014, I’m sure we’ll lose thousands of jobs. When there are no bases who will we supply? There will be no need for us.”
The experience of truckers in Kandahar serves as a preview of the economic ripple effect likely to spread as the US drawdown eliminates a number of Afghan jobs that have sprouted up to support the international presence here. Many worry that while the Afghan government has focused on security, it has no plan to deal with the economy.
According to the World Bank, international donor and military spending is about 97 percent of the Afghan GDP. Even after years of healthy economic growth, the nation suffers from high unemployment – 8 percent – and 48 percent underemployment. More than 90 percent of Afghan jobs can also be classified as “vulnerable” because they are not stable, often without formal employment agreements, and they don't provide enough income for someone to live off.
When jobs created by international forces disappear, despite hopes for the mining sector and other industries here, the local economy is not likely to create many new jobs. If the mines become operational, they stand to create thousands of jobs for Afghans, including truckers. Chinese and Indian firms have already invested in some mines here, but it could take years before the sector is operational.
“The government does not have any plan. It does not have an economic vision,” says Hameed Farouqi, a professor of economics at Kabul University. “They were just happy to see that this transition is taking place, but as for the consequence of this transition, they were only watching [the] security and the military effect on the Afghan situation, not the economic and social effect of the transition.”
Built this city on trucking
Located in southern Afghanistan along the border with Pakistan, Kandahar has been a major shipping hub and a cornerstone for the economy. A number of businesses – snack shops, restaurants, and hotels – have sprung up around the trucking industry. The mayor of Kandahar City estimates that as many a third of residents make their living working in jobs connected to trucking.
“This road [from Pakistan to Kandahar] directly creates many jobs for people. When the road is open there will be many more people busy with different businesses here,” says Mayor Qazi Mohammad Omar. “The municipal government also receives taxes from these trucks.”
When the road was closed, Mr. Omar estimates that the city lost about 40 percent of their vehicle tax revenues.
Prior to the NATO supply route's closure, NATO received 28 percent of its supplies through Pakistan and 41 percent from the North. After the closure, the northern route began handling 60 percent of the resupply load, according to US transportation command officials.
Local businesses in the area say they were hard hit by the route closure. Ahmad Shah runs a small snack shop in a rest stop just outside Kandahar city. Just two weeks before the route reopened, Mr. Shah says business had gotten so bad that he sold his shop for 40 percent of what he originally invested in it.
“There was nothing. I was just sending my little brother to sit in my shop. Only a few people from the companies here would buy yogurt from me, and I couldn’t sell anything else because there were no drivers. There are no houses here to sell to. Only drivers,” he says.
When he got news that the route was reopened, he decided to buy the shop back, but at a loss that amounted to one month’s salary during good times.
Even as business returns to Kandahar, many Afghan investors say the days of large foreign contracts is coming to an end.
“If the international community leaves Afghanistan, one of the biggest problems will be for those people who own trucks or who are in the trucking business. They will be in very big trouble,” says Mohammad Darwesh, who owns three trucks. He says his main hope now is to recoup the cost of his trucks and break even by 2014. He is looking at more stable investment opportunities such as food storage.
Still, some economists say that concern is overblown, pointing out that the majority of aid money sent to Afghanistan goes into the pockets of international companies responsible for the work. One economist estimated that only 38 cents per dollar spent on aid in Afghanistan actually reaches the local economy. This could mean that fewer Afghans than originally thought are actually dependent on aid and international spending, meaning the less of a ripple effect when the money eventually dries up.