Over 100 factories shutdown in Afghanistan due to limited banking system

Factories in various provinces of Afghanistan began to close after the Taliban takeover on 15 August.

The closures of factories not only led to the relocation of investors from Afghanistan and would also increase unemployment in the war-riddled country. Industrialists said that closures of banking system, lack of remittances, declining demand and Taliban occupation have also led to the closure of factories in the country.

Traders in Afghanistan face severe difficulties in importing raw materials due to limited banking system, which is also one of the reasons behind the closure of factories in the country. Thus, the sources said that about 100 factories in the western province of Herat have closed down since the Taliban takeover in middle of August. Herat is one of the industrial cities of the country where 300 to 350 factories were operating but now there are less than 50 factories operating in Herat Industrial Estate.

The sources said that due to the current crises, investors are waiting for banks to transfer their capital abroad.

The industrialists who have invested billions of dollars over the past twenty years are now moving to safer countries. The sources said that if this continues, the country will be facing shortage of goods and rampant unemployment.

According to traders who have invested more than $6 million in a food processing factory in Herat Industrial Park, their factory has been out of order for the past several weeks. The factory had 240 employees but now due to lack of raw materials and unfavorable conditions, the factory has stopped and the employees have been sent on unpaid leaves.

The owner of another factory in Herat city said that his factory had stopped production a month ago due to non-availability of raw materials. The owners aid that banks are not allowing factories to transfer funds for raw materials. He said that they are not allowed to access their bank assets to resume the operation. The factory owner said that he has no hope therefore; he has shut-down the factor.

Meanwhile, despite the Taliban government’s tax cuts, investors are not ready to take the risk of investing in Afghanistan.

Afghan businessmen demanded that the Taliban government immediately to activate the banking system for industrialists so that they can import raw materials to resumes the factories operation. They warned that if the trend continues, the rest of the factories will close soon.

Aziz Buneri
Aziz Buneri
Author is a senior journalist and working in the field of journalism since 2004. He covers Financial, Social, Political and regional issues for Pakistan today and Profit. He can reached at [email protected]
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