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COVID-19 Hit Businesses in Afghanistan Leaving Workers Vulnerable

Kabul, Afghanistan, September 1, 2020 — The average businesses in major economic hubs of Afghanistan have signaled they may only be able to remain open for another two months under the prevailing impacts of the COVID-19 pandemic.  
These finding have been revealed in a survey, the COVID-19 Business Pulse Survey, of over 380 businesses with five or more employees in the agriculture, manufacturing and services sectors. It was conducted by IFC and World Bank in partnership with the USAID. The survey was conducted to help policymakers monitor the effects of the pandemic.
The survey shows at least 64 percent of workers are in businesses facing a high level of vulnerability and are more likely to run into liquidity problems and potential closures. In just 60 days under COVID-19, 23 percent of workers had lost their jobs, and 37 percent of firms reported laying off at least one employee.
“The impact of the COVID-19 pandemic on sales has been significantly high across all types of businesses, with 88 percent experiencing a slump in sales, leading to job losses or employers sending workers on leave without pay or reducing work hours,” said Wagma Mohmand IFC Senior Country Officer for Afghanistan. “Interestingly about half the businesses surveyed intend to use online and digital services to survive the crisis, signaling a real shift.”    
Thirty-nine percent of businesses have already started using online services for marketing while 34 percent reported using it for sales.
The vulnerability can be seen in firms of all sizes but the fraction of workers facing a higher level of a vulnerability is considerably higher in firms with at least one female shareholder (72 percent), exporting firms (79 percent) and businesses with a higher share of female workers (70 percent). Ninety-eight percent of the firms in the survey reported that they had not received any government support in response to the COVID-19 pandemic.
The closure of international borders also hampered businesses as 38 percent of the firms reported border closures as the most significant driver of disruption in accessing immediate inputs, raw materials or finished goods needed for production or trade.  
“The survey findings reveal a serious challenge to small, medium, and large businesses in Afghanistan due to the impact of COVID-19,” said Rolf Behrndt, South Asia Manager for Enabling Environment Advisory Services “The pandemic has significantly impacted sales of businesses across all sectors, leaving nearly 64 percent of workers as highly vulnerable and rising uncertainty for the businesses.”
Following the 88 percent reduction in sales, an overall declining trend seems set to continue as 61 percent of the firms expect further sales contraction of up to 28 percent over the next three months due to more uncertainty.
The sampling frame was drawn from a database of over 35,000 active businesses registered with the Central Business Registry – Ministry of Industry and Commerce.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
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