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Country Snapshot - Afghanistan  

HighlightsRankingsQuantitative DataLegislationAnalytical WorkProject Portfolio
  • South Asia
  • Low income
  • 30,605,401 (2011)
  • 517
Afghanistan Flag
Below are select highlights for the data included in the profile.

  1. According to Enterprise Surveys (2008), the top three constraints to firm investment in Afghanistan are (i) crime, theft and disorder, (ii) lack of electricity, and (iii) lack of access to finance. Moreover, access to credit is severely restricted, with only 3.37% of firms with lines of credit or loans from financial institutions, compared to 27.43% in the region, and 34.77% for all countries.
  2. Afghanistan is among the countries with least overt statutory restrictions on foreign ownership as measured by the Investing Across Sectors indicators. The country is an interesting example of the fact that the absence of foreign equity ownership restrictions across sectors, while necessary, is not a sufficient condition for attracting FDI.
  3. Afghanistan’s economic freedom cannot be graded due to the lack of reliable data. Political uncertainty and security challenges remain formidable and government compilations of official economic data have been inadequate. Despite a decade of serious political and social upheavals, the Afghan economy has achieved uneven but noticeable development. Nowadays, construction is the main driver of growth in the formal, legitimate economy. Massive foreign assistance has permitted some improvements in areas such as health and education. Overall, the economic, political, and security environment tends to suppress entrepreneurial activity, and there has been little growth in productivity. Additionally, mid-level government officials can impose bureaucratic delays on approvals. The judicial system is weak. Continued political instability and corruption are serious challenges to economic development.

Subnational Doing Business Report

Doing Business in South Asia 2007 is the third in a series of regional Doing Business reports based on the methodology of the annual global Doing Business report. Doing Business investigates the scope and manner of regulations that enhance business activity and those that constrain it. New quantitative indicators on business regulations and their enforcement can be compared across Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka and over time, together with global best practices. Doing Business in South Asia also builds indicators for 12 cities in India, 6 in Pakistan and 4 in Bangladesh.

Main Findings

  • In 2005-2006, the pace of reform was slower in South Asia than in any other region, with only India and Pakistan starting to improve their business environment.
  • The report found that entrepreneurs in South Asia face large regulatory obstacles to doing business. More than a year (425 days) was needed to register property in Bangladesh. Taxes were high: a standard company in India paid 81% of commercial profits in taxes.
  • The top ranked countries in the region were the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138), and Afghanistan (162).
  • As a region, South Asia performed comparatively well in business start-up and protecting investors. It lagged far behind, however, on the ease of employing workers, enforcing contracts, and trading across borders.

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