Afghan Migrant Workers’ Impact on Afghanistan’s Economy

By: Hussain Sakhizada

The international community has been instrumental in aiding Afghanistan‘s national economy, which is largely driven by the Afghan workforce living abroad. This workforce is largely composed of young, expert, professional, literate, and experienced individuals, as well as illiterate, nonprofessional, and senior citizens who are working either legally or illegally in different countries. It is important to note that Afghan migrants have left Afghanistan with four distinct characteristics and are now employed in foreign countries.

1- Workers who have legally departed Afghanistan with a valid work visa and are now employed in foreign countries.

2- Workers who legally departed Afghanistan with a tourist visa, but began working clandestinely upon their arrival in the other country.

3- Workers who were smuggled out of Afghanistan but subsequently obtained legal documents allowing them to stay in countries that accepted immigrants and began working legally.

4- Workers who left Afghanistan illegally and settled in other countries, working without any legal documentation.

All four categories of forces have left Afghanistan to live and work in other countries, sending their wages (wholly or partially) to their families and relatives in Afghanistan. Businessmen in the host countries or fellow Afghans outside of Afghanistan take cash from these workers and pay the equivalent in Afghan currency to the families of these workers. These traders use the wages of the Afghan workforce to buy and import foreign goods to Afghanistan, which brings great economic benefit to families in Afghanistan and, consequently, to the national economy of Afghanistan. The direct effects of the migrated Afghan workforce on the countrys economy can be seen in the increasing level of gross national income, trade deficit, and expanding livelihood resources, which directly impact the Afghan economy. Furthermore, many other effects are caused due to the import of goods in exchange for migrant labor, which cannot be discussed here. It is important to note that the number of Afghan workers living abroad has a direct relationship with the growth of national economic indicators in Afghanistan.

Accurate statistics on the exact number of displaced Afghans, particularly the migrant workforce, are not available. However, it is possible to estimate the number of Afghan immigrants based on the numerous statistics provided by international organizations, such as the United Nations High Commissioner for Refugees.

Gross National Income Sees Increase

It is necessary to distinguish between Gross National Income and Gross National Production before analyzing the quantitative increase in Gross National Income using the labor force of Afghan immigrants.

Gross National Income (GNI) is a measure of the total value of the final goods and services produced by the labor force and entrepreneurial ability of the citizens of a country, regardless of whether they are working within or outside of the country. Only values obtained by nationals of a country from within their country or foreign countries, but consumed only within the country, are considered in the GNI.

Conversely, Gross National Product (GNP) encompasses the income of all citizens and businesses of a nation, regardless of whether it is generated domestically or abroad. This income can be consumed both domestically and abroad.

Therefore, the income of the labor force of Afghan immigrants has an impact on Afghanistan‘s economy, as it includes all values obtained by Afghan nationals from all over the world and consumed only within Afghanistan. Consequently, the gross national income can be a more powerful and specific representation of this concept. Additionally, its use as an economic indicator to examine the effects of the migrated Afghan workforce on the Afghan economy leads to more accurate and effective results.

In order to explore the quantitative results of the labor force of Afghan immigrants and obtain accurate results, it is impossible due to the lack of demographic information. Data on the number of Afghan workforce in foreign countries, their salary, and the amount they transfer to Afghanistan is scarce, making it difficult to reach a true result. However, using the limited data and information available, it is possible to reach a hypothetical result, which may be indicative of the importance of one of the basic backgrounds of Afghanistan‘s economy. According to the statistics and findings of the Central Statistics Office of Afghanistan, the amount of money sent by Afghan immigrants from abroad is estimated to be equivalent to about 1.7% of the gross domestic product. However, as the workers use an informal method (the remittance system) to send cash, the real value of these figures may be much higher than what is reported. Surveys conducted in host countries suggest that the total amount of income sent by migrant Afghan workers to Afghanistan can be ten times higher than what is reported [1].

It is evident that at least three million Afghan workers are employed in foreign countries when estimating the total amount of cash deposited to Afghanistan using the principles of economics. According to the average income of ordinary workers in the host countries and the World Bank‘s estimation that this figure is ten times higher than 1.7%, the cash that enters Afghanistan annually is estimated to be at least AFN 209.59 billion. This amount is much greater than the statistics presented by the Central Statistics Organization. Consequently, when considering the cash value of remittances from Afghan immigrants based on the World Bank‘s statistics, it can be seen that this value increases by 17% of the gross national income, thus demonstrating the significant role that the Afghan migrated workforce plays in increasing the national gross income of Afghanistan.

It is noteworthy that these figures were obtained using limited data. Consequently, given the large number of Afghan labor abroad and the exclusion of nationals of other countries from Afghanistan‘s gross domestic product, the proportion of cash generated through labor wages sent to this country is likely to be greater than 17%.

Trade Deficit

It is clear that Afghanistan is facing a significant trade deficit due to a lack of productive resources. The income of Afghan nationals living abroad could reduce the depth of this deficit. According to the hypothesis, AFN 209.59 billion, equivalent to $US 2.354 billion, is imported into Afghanistan annually from the total estimated income of the Afghan migrated workforce. In 2022, the value of Afghanistan‘s exports was recorded as $US 850 million, while its imports in the same year were recorded as $US 5.307 billion [4]. This means that the income of Afghan nationals living abroad is approximately 44.35% of the value of Afghanistan‘s imports. Despite this, it has a great contribution to Afghanistan‘s trade balance and is considered one of the main factors that sustain Afghanistan‘s foreign trade and economy. Therefore, it can be concluded that one of the sources of providing materials from abroad for Afghanistan and helping to cure the deficit in Afghanistan’s trade balance is the income of Afghan nationals who work abroad and send their wages to Afghanistan.

Expanding Livelihood resources

Due to a lack of economic development, production bases, and infrastructure, Afghanistan is one of the few countries that suffer from a scarcity of resources. The trade balance in Afghanistan is profoundly deficient, leading to widespread poverty and lack of access to food, meaning that the resources available in this country provide the essentials for less than 20% of the population. Consequently, the needs of the remaining Afghans are met through international aid and the wages of the labor force of Afghan nationals working abroad. International businessmen or fellow Afghan entrepreneurs buy and import goods to Afghanistan with the cash they receive from Afghan workers, meaning that these goods are obtained solely through human power and expand the level of resources for the residents inside Afghanistan.

The Afghan workforce, both legally and illegally employed abroad, has a direct or indirect effect on the economy of Afghanistan. This is due to the fact that the income of Afghan displaced labor is either fully or partially sent to their families, thus increasing the national gross income within Afghanistan, reducing the trade balance deficit, and expanding the livelihood resources.