Listening To Women Entrepreneurs in Afghanistan 1713704602

Listening to Women
Entrepreneurs in Afghanistan:
Their Struggle and Resilience
United Nations Development Programme
Research paper authors: Feride Inan (Director of Geoeconomics Center, TEPAV), Sibel Guven
(Director of Sustainable Governance Programme, TEPAV), Anil Ismet Aşçı (Researcher, TEPAV),
Paul Vercoustre (Senior Assessment Officer, REACH), and Johannes Sahmland-Bowling
(Private Sector Resilience Specialist, ICPSD UNDP)
Acknowledgements
The key informant analysis and secondary data compilation was also conducted by Homayoon Yousoufi (REACH
Assessment Officer). The report benefited from comments from Chris Paci, (REACH Global Cash and Markets Specialist),
Muhammad Nassim Attahi (UNDP Country Economist), Fawaz Sabri (UNDP SDG Finance Specialist), Cosima Cloquet
(Gender and Inclusion), IMPACT Initiatives Research Department, Luciana Trindade de Aguiar (UNDP ICPSD), Mélissa
Cornet (GiHA Co-Chair, CARE), Rehab Al-Sanabani (Gender and Crisis Data Specialist, UNDP), Yunis Sharifli (SSTC Fellow,
UNDP ICPSD), Devika Iyer (Regional Policy Specialist, Inclusive Growth UNDP), Nazneen Ahmed (Policy Advisor, UNDP),
Doina Munteanu (Advisor for Countries in Crisis and Complex Situation, UNDP), and Stephen Rodrigues (Afghanistan
Resident Representative, UNDP). The report was copy edited by Julia Stewart and designed by Tomas Bakos.
The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United
Nations, including UNDP, or the UN Member States.
Copyright © UNDP 2024. All rights reserved.

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The findings, analysis, and recommendations of this report do not represent the official position of the UNDP or of any of
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Cover photo: Afghan women walking field in Bamyan. © UNDP Afghanistan

Back-cover photo: Afghan entrepreneur in UNDP workshop. © UNDP Afghanistan
Layout & Design: BakOS DESIGN
Foreword
Amidst formidable challenges, Afghan women continue to build, sustain, and scale their businesses
Afghanistan is home to a wealth of talented and resilient women who possess tremendous potential to drive economic
growth and create positive change within their communities. However, since the August 2021 takeover, the challenges
faced by Afghan women have intensified – including bureaucratic, economic, and cultural constraints, alongside gender-
based discrimination.
UNDP’s latest report draws on the voices and perspectives of women-led businesses and entrepreneurs in the country
to gather insights not only on the challenges they face, but also the opportunities and entry points for national and
international partners and stakeholders to support their continued survival and growth. The report also recognises the
remarkable resilience of these women entrepreneurs and women-led businesses, and the pragmatic approaches they
have adopted to find solutions to ever-present obstacles. The report synthesizes insights gleaned from multiple UNDP-
led primary data collection activities including in-depth individual interviews in 2022, focus groups discussions in 2023,
and a quantitative survey in 2024. The report serves as a poignant portrait of the hurdles faced by women entrepreneurs
in Afghanistan, ranging from limited access to finance and inputs, to discrimination against women. It exposes a stark
reality: women-led enterprises rely heavily on personal savings, loans from friends and family, and the sale of personal
assets as their primary sources of financing. Barriers to accessing finance have been compounded by restrictions on
women’s mobility, high collateral requirements, limited sharia-compliant products, elevated interest rates, and
discouraging license/registration prerequisites. For women engaged in exporting goods such as carpets, honey, saffron,
dried fruits, and nuts, the report unveils a significant reduction in business due to restrictions on payment systems,
closed air corridors, and travel limitations, leading to women often selling their products domestically at lower prices.
The in-depth interviews conducted in 2022 revealed, among other things, that suppliers, shopkeepers, and wholesalers
were reluctant to do business with women-led enterprises due to the policy environment. This reluctance further
exacerbated the noticeable decline of women-led businesses observed over the period 2021-2022. The focus group
discussions in 2023 highlighted the challenges that women-led businesses face, particularly in obtaining loans due to
requirements such as the need for financial guarantors, shura approval and collateral. Despite this difficult situation,
the 2024 survey of women-led enterprises showed a positive shift, with almost two-thirds of the 3,122 respondents
reporting growth in their businesses.
The underlying story behind the data is one of continued perseverance of women-led businesses which have
demonstrated resilience and an admirable ability to thrive whilst navigating a myriad of challenges. Under the current
de facto administration regulations, women are permitted to work in the private sector, and many have taken advantage
of this relatively ‘safe space’. These entrepreneurs continue to leverage the collective strength of women business
associations, community savings and loans groups, families and friends, and international partners to access corridors
of power, secure technical and financial support, find and enter new markets, and build supportive networks for their
businesses.
Recognising the changed political, social, and economic environment since August 2021, UNDP has provided targeted
support to over 75,000 women-led Micro, Small, and Medium Enterprises (MSMEs), generating or supporting more than
900,000 jobs for women and youth across 28 provinces. UNDP also continues to support women business associations
across the country.
We firmly believe that women entrepreneurship is a pivotal driver of economic growth, social development, and gender
equality in Afghanistan. Women entrepreneurs not only create job opportunities and generate income for themselves
and their families but also contribute to the resilience and recovery of their communities and the country as a whole.
This report identifies the current challenges and gaps faced by women entrepreneurs in Afghanistan. It also offers a
comprehensive set of recommendations to address these issues. These recommendations aim to unlock the full potential
of women entrepreneurs and their contribution to the recovery and development of Afghanistan.
We hope this report will serve as a valuable resource and a catalyst for action for all those who are committed to
supporting women entrepreneurship in Afghanistan. This report is dedicated to the Afghan women entrepreneurs
and business leaders who have shown remarkable resilience in facing and overcoming significant challenges, and who
continue to provide for themselves and their families.
Stephen Rodriques
Resident Representative
UNDP Afghanistan
3
Contents
Executive Summary................................................................................................................................................................................................. 6
Lack of access to finance ............................................................................................................................................................................... 6
Decrease in demand for local products .................................................................................................................................................. 7
Decrease in exports for women-led businesses .................................................................................................................................. 8
Discrimination against women preventing access to suppliers and markets ........................................................................... 8
Need for licensing............................................................................................................................................................................................ 8
Concerns for safety and security................................................................................................................................................................ 8
Supply-side challenges and needs............................................................................................................................................................ 9
Skills, equipment, and networking needs............................................................................................................................................... 9
Absence of formal payment channels...................................................................................................................................................... 9
Introduction.............................................................................................................................................................................................................. 10
Methodology............................................................................................................................................................................................................ 11
1. Afghan economy................................................................................................................................................................................................ 12
1.1 The Afghan economic situation......................................................................................................................................................... 12
1.2 The Afghan economy, labour force and education over the prior two decades............................................................. 12
1.3 Private sector............................................................................................................................................................................................ 14
2. Challenges for women entrepreneurs in Afghanistan................................................................................................................... 15
2.1 Access to finance...................................................................................................................................................................................... 16
2.2 Sources of finance................................................................................................................................................................................... 16
2.3 Reasons for limited access to finance.............................................................................................................................................. 17
2.4 Addressing barriers to loan access.................................................................................................................................................... 18
2.5 Payment systems..................................................................................................................................................................................... 18
2.6 Reduced market demand..................................................................................................................................................................... 19
2.7 Export restrictions ..................................................................................................................................................................................20
2.8 Supply side challenges in different sectors .................................................................................................................................. 21
4 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

3. Restrictions and discrimination against women after 15 August 2021.................................................................................23
3.1 Restrictions on women’s mobility ....................................................................................................................................................23
3.2 Reluctance of businessmen to interact with women ...............................................................................................................23

3.2.1 Loss of access to export markets and production inputs......................................................................................................24
3.3 Barriers to Employment........................................................................................................................................................................25
3.4 Safety for women entrepreneurs......................................................................................................................................................26
3.5 Registration and licensing....................................................................................................................................................................27
3.6 Networking and information access ...............................................................................................................................................28
4. Recommendations............................................................................................................................................................................................29
4.1 Strengthen business support and trade facilitation for women entrepreneurs .............................................................29
4.2 Provide vocational training and information-sharing ..............................................................................................................29
4.3 Support acquisition of equipment, inputs and infrastructure...............................................................................................30
4.4 Improve access to finance....................................................................................................................................................................30
4.5 Enhance digitalization initiatives....................................................................................................................................................... 31
4.6 Facilitate market research and business expansion................................................................................................................... 31
4.7 Support licensing processes................................................................................................................................................................ 31
4.8 Create safe and suitable workplaces................................................................................................................................................ 31
5. Conclusion ............................................................................................................................................................................................................32
Annex 1: Sectors with export potential for Afghanistan..................................................................................................................33
References..................................................................................................................................................................................................................36
RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 5

Executive Summary
The business activities of women entrepreneurs in Afghanistan were reduced significantly following the August
2021 takeover. To understand the situation, in September 2022, UNDP conducted in-depth interviews with 49
women entrepreneurs from six provinces in Afghanistan, encompassing both licensed (formally registered) and
unlicensed businesses. In August 2023, UNDP conducted 10 focus group discussions in Bamyan, Herat and Balkh
provinces, involving 100 women and 30 men entrepreneurs who corroborated the findings on the challenges
faced by women entrepreneurs. Additionally, to capture the escalating impact of business situation of women-
led businesses and increasing restrictions on women, UNDP surveyed 3,122 women-led small and medium-
sized enterprises (SMEs) between February and March 2024 across 8 regions and 18 provinces of Afghanistan.
The findings in this report summarize1 the main insights Lack of access to finance
gathered from these three data collection exercises
which included qualitative interviews, focus group
discussions, and a quantitative survey that analysed » According to the 2022 in-depth interviews, the
the difficulties encountered by women-led SMEs and majority of respondents reported that even before
women entrepreneurs in sectors vital for Afghanistan’s August 2021, the lack of access to finance for
export and growth potential. These sectors include working capital was a significant challenge for their
carpet weaving, dried fruits and nuts, saffron, and businesses. This continued into 2024 as, according to
honey production. Following the events of August 2021, the UNDP 2024 survey of women-led SMEs, access to
the majority of respondents temporarily halted their finance (52%) was identified as the main challenge
activities but subsequently resumed them, albeit with for the respondents who reported a decrease in their
reduced capacity. Women-led SMEs reported a significant business activity.3 Moreover, 19% of women-led SMEs
decline in demand in 2022 compared to the period reported discrimination in accessing credit as one of
preceding August 2021. Among the respondents of the the constraints affecting their business operations.
2022 in-depth interviews, 34 out of 48 (who responded to
this question) cited a decrease in demand as the primary » The 2024 women-led SME survey revealed that the
reason for reduced revenue during 2021-2022. majority of women-led businesses obtained loans
from family (61%), friends (45%), and other businesses
The 2024 survey data highlighted a broad range of (21%). A smaller percentage received loans from
impediments. However, the results also indicated a formal banks (5%) or remittances from abroad (5%),
positive shift, where 66% of respondents reported while 2% each obtained loans from microfinance
an increase in business activity. The main factors institutions and community savings groups. Only
accounting for this positive shift were as follows: 59% 0.3% reported receiving loans from money service
cited the reduction in business operation costs due to providers or hawala.
donor assistance, 44% attributed it to higher demand,
and 43% to higher product quality. Other contributing » Nine out of 43 in-depth interview respondents
factors mentioned were lower prices (29%), cheaper reported that discrimination against women
inputs (13%) and reduced competition (9%).2 Out of the entrepreneurs, along with physical limitations on
14% of respondents that declared a decline in business their interactions with suppliers and buyers, has cut
activity, 21% attributed the demise to the gender related them off from valuable sources of finance. Moreover,
mobility restrictions. However, women-led businesses sectors such as carpet weaving have significant
in Afghanistan have persistently found entrepreneurial requirements for working capital. However,
solutions to a gender-adverse business environment, wholesalers and suppliers who have previously
such as adapting to household production, providing provided cash advances to women-led enterprises for
services in safe spaces for women, or switching to production were no longer willing to work with them
producing traditional clothing. because of pressure from the de facto authorities.
3
1
These findings were also corroborated by UN Women’s 2022 survey, which
The results of the interviews and the survey are presented in terms of valid cases identified lack of access to finance as the top challenge for women-owned
or the number of respondents replying to a particular question. businesses. 53% of respondents reported that their businesses had ceased to
2
2024 survey of women-led SMEs had selected multiple choice options. function, of which 89% cited lack of access to finance.

I Afghan entrepreneurs processing dried nuts. © UNDP Afghanistan
» Very few interviewed women entrepreneurs were Decrease in demand

willing to borrow from banks both prior to and for local products
following August 2021. None of the respondents
(0/49) from the 2022 individual interviews received
a bank loan between August 2021 and September Between 2021 and 2022, 34 of 48 women-led businesses
2022, and only a few (4/49) received a bank loan operating in the carpet, honey, valuable stones, and
before. saffron sectors experienced a decrease in local demand
for their products.
» Nineteen percent of respondents (9/48) cited the
inability of banks to provide sharia-compliant » Respondents in the clothing sector have also
products as an impediment to obtaining bank loans, experienced a decline in demand for women’s
while others (9/48) pointed to new restrictions on clothing, particularly school uniforms and professional
women’s mobility. For seven out of 48 respondents, attire. This decline is attributed to the ban on girls’
high interest rates were a significant barrier in and women’s education and employment. Some
securing bank loans. respondents reported switching from production of
fitted clothing to hijabs (head coverings) and burqas
» In August 2023, focus group discussions with (outer garments).
women entrepreneur MFI clients also highlighted
the difficulty in obtaining financial guarantors » However, the 2024 survey of women-led SMEs
and shura approval. For rural entrepreneurs, there indicates that 66% believed the business environment
were additional challenges in accessing financial had improved over the last year. As the main reason
institutions due to the long distances involved. for the increase in their business, 59% cited the
reduction in business operation costs due to donor
» According to the 2022 in-depth interviews, the most assistance, 44% attributed it to higher demand, and
commonly perceived requirement to access bank 43% to higher product quality. Other contributing
loans was a license or legal business permit (18/43). factors mentioned were lower prices (29%), cheaper
The 2024 survey indicated that 70% of women-led inputs (13%), and reduced competition (9%).5
businesses operate without a license in the informal
sector, rendering them ineligible for formal financing
from certain banks due to loan access requirements. 4
4
Not all financial institutions require registration or licensing. However, banks that
5
provide larger SME or corporate loans require such documentation. The 2024 women-led SMEs survey had select multiple choice options.

Decrease in exports for
women-led businesses Need for licensing
» For 2022, 14 of 49 women entrepreneurs reported » In the 2022 in-depth interviews, a majority of
a reduction in exports due to restrictions on respondents indicated the necessity of a business
payment systems and closures of air corridors. license, particularly among women, yet 31 out of 49
Women exporting carpets, honey, saffron, dried respondents lacked one. This was reaffirmed in the
fruits, and nuts were no longer able to export to 2024 survey of women-led SMEs, which showed that
former customers, including those in Canada, Dubai, only 28% of women-led enterprises were registered
Germany, India, Kuwait, Russia, and the United States. and licensed.
» The 2024 survey highlighted the small proportion » Respondents highlighted that holding a business
of women-led SMEs selling their products to license allows companies to operate formally,
international markets. Whereas 93% of women-led leading to increased sales and exports, access to
enterprises sell their products in the Afghanistan business exhibitions, improved relations with de
market, 2% cater to both domestic and international facto authorities, and reduced likelihood of fines.
markets, and only 4% are focused solely on exports. In the 2024 survey of women-led SMEs, 24% of
respondents admitted to making unofficial payments
» Carpet producers have reported a loss of European to sustain their businesses. Among this group, the
customers to Pakistan, which has led to a loss in majority (60%) operated without proper licensing or
market share for Afghan producers. The decrease in registration.
exports has caused these businesses to reduce their
workforce. » In-depth interview respondents (4/48) highlighted
the advantages of being licensed, such as access
Discrimination against to bank loans, participation in exhibitions (8/48),
involvement in export trade (5/48), and collaboration
women preventing access with non-governmental organizations for projects.
to suppliers and markets
» Unregistered respondents cited financial constraints
or lack of information as reasons for not obtaining
» A majority (36/49) of respondents highlighted a licence. According to the Afghanistan Central
discrimination-based operational challenges. These Business Registry (ACBR), the fee for a business license
include prohibitions against women traveling to local increased from AFN 2,500 (USD 30) in 2018 to AFN
markets, other provinces or abroad, or attending 17,500 (USD 200) in 2022, and further to AFN 16,000
exhibitions without a mahram (a husband or close (USD 223) in 2024. Such high fees render licenses
male family member). unaffordable for most women-led SMEs.
» Due to the implicit pressures of the current policy » The de facto authorities are strictly enforcing the
environment and ambiguities in the de facto business license requirement, leading to pressure
authorities’ policy towards women, suppliers, and intimidation against women. Many women
shopkeepers, large traders and/or wholesalers were entrepreneurs operating without a license reported
reported to be reluctant to interact with women facing interrogation, fines, or threats of business
entrepreneurs. closure.
» Women-led SMEs (20/49) reported discrimination by Concerns for safety and security
the business community, especially in export-related
sectors where women often work with large traders
and wholesalers. As a result, some of these SMEs » Despite some improvements in the overall security
reported having to sell their products domestically at situation after August 2021, safety concerns remain a
lower prices. major challenge for women’s businesses. In the 2022
in-depth interviews, more than half of respondents
» The 2024 women-led SME survey also indicated that expressed feeling unsafe in operating their business,
gender discrimination hindered 32% of respondents primarily due to newly imposed restrictions on
from accessing markets and 28% from sourcing inputs women’s activities. The lack of access to a safe work
from suppliers. environment has a detrimental impact on production.

Half of the respondents reported having changed » Respondents across sectors emphasized the
their business location due to new restrictions on need for skills training in marketing and business
women. management. Specifically, those in the handicraft
sector underscored the necessity of acquiring
» However, the findings from the 2024 survey indicate marketing skills to facilitate access to international
an improvement in the safety of women-led markets.
businesses from 2023 to 2024. When asked about
their sense of safety while operating their businesses, » Respondents from the food processing and saffron
89% responded positively, while 11% expressed sectors expressed a demand for modern technology,
feeling unsafe. improved processing and packaging facilities, and
enhanced storage capabilities.
Supply-side challenges » During the 2022 in-depth interviews, more than

and needs half of respondents reported membership in a
business organization, which remains important for
networking and keeping up to date with current
» Production and profits of women-led enterprises economic issues. However, the vast majority reported
have declined due to rising prices of raw materials disruptions to the business organizations’ activities.
and diminishing supply. Businesses in Afghanistan
are grappling with high prices of increasingly scarce » The majority of the respondents pointed to new
domestically produced inputs, further exacerbated by restrictions on women’s mobility as a reason for
inflation and closures of input-producing businesses. the disruption of their organizational activities, in
particular the inability to attend meetings without a
» Among the women-led businesses surveyed in 2024 mahram. In response, online meetings replaced in-
that reported a decrease in business activity, 41% person meetings, but active participation of women
attributed the decline to the lack of access to inputs. decreased.
Border closures, soaring prices, and challenges
in accessing international payment systems all
contributed to disrupting access to inputs (World Absence of formal
Bank, 2022a).
payment channels
» The country has faced a series of disasters over the
reporting period, including droughts, floods, and » Most respondents (36/49) used cash-based payments
earthquakes, which have significantly impacted both before and after August 2021, including for
industries such as honey, dried fruits, and nuts. workers’ salaries. Among focus group participants, 16
Climate change is projected to intensify extreme out of 49 indicated a shift in their payment methods
weather events in Afghanistan, with prolonged after 2021. The majority of these respondents
droughts already leading to reduced crop yields transitioned from formal banking to using informal
and honey production. These challenges further money traders (hawalas) or strictly cash transactions. 6
compound the difficulties encountered by women-
led SMEs. » Among key challenges identified by respondents in
utilising informal money traders include the need
to travel to the market with a mahram, as well as the
Skills, equipment, and high fees collected by hawalas.
networking needs » The majority of respondents (34/49) reported an
inability to use digital payment systems. This limitation
» The migration of skilled workers appears to have was attributed to factors such as inaccessibility to
particularly affected sectors such as carpet weaving, computers and smartphones, which also extended
clothing, and handicrafts. Respondents in these to their employees (19/49).
sectors highlighted the pressing need for additional
skills training.
6
According to World Bank Private Sector Rapid Assessment 2024, businesses using banks for domestic payments dropped from 45% to 13%, and cash usage rose from 30% to
89% between August 2021 and April 2023.

Introduction
Within the past two years, Afghan women have faced numerous challenges and barriers to economic
empowerment and entrepreneurship. The decrees and restrictions imposed by the de facto authorities have
prevented women from accessing formal education from primary school to university, prohibited the operation
of beauty salons which employed 60,000 people across Afghanistan, and imposed restrictions on women’s
work in certain sectors. UNDP model-based estimates suggest that restrictions on women’s employment could
lead to an annual 3 to 5 percent reduction in GDP, translating to an economic impact of USD 600 million to USD
1 billion (UNDP, 2024a).
In spite of these obstacles, women entrepreneurs and challenges and barriers faced by women-led businesses,
business leaders have demonstrated tremendous including issues related to accessing international
resilience, adaptability and creativity. They have found markets, transportation, securing business financing,
practical ways to survive and, in some cases, grow their and obtaining vocational skills.
businesses. They continue to tap into the supportive
networks of families and friends, local communities, For the second round of data collection, UNDP
business associations and, importantly, national and conducted focus group discussions in 2023 with 100
international development partners to find the strength women entrepreneurs and 30 male entrepreneurs in
and resources needed to sustain their operations. Some the provinces of Balkh, Herat and Bamyan. Additionally,
have also relocated business operations, adjusted UNDP conducted a survey of women-led SMEs between
production processes, switched to new products and February and March 2024, covering eight regions and
services, and adopted e-commerce and digital payment 18 provinces of Afghanistan. A total of 3,122 women-
systems as pragmatic solutions and workarounds to led SMEs participated in this survey,7 providing valuable
the challenges which emerged in the wake of the insights into the prevailing conditions and challenges
unconstitutional change of government in August 2021. faced by women entrepreneurs.
This study draws on in-depth interviews conducted The report also utilizes secondary quantitative data
in 2022, focus group discussions in 2023, and a survey sources from REACH to analyze gender-related and
of women-led SMEs in 2024, all led by UNDP. A large economic indicators, leveraging their Humanitarian
proportion of the respondents are entrepreneurs Situation Monitoring (HSM), Joint Market Monitoring
engaged in carpet weaving, dried fruits and nuts, Initiative (JMMI) and Whole of Afghanistan (WoAA)
saffron, and honey production. Dried fruits, carpets, assessments. The information was complemented by
and rugs, and saffron collectively represented 23% other secondary data, including the UN Women Rapid
of Afghanistan’s total exports in 2023, equivalent to Needs Assessment for Women-Owned Businesses
441,000 USD (NSIA, 2023). These sectors not only hold and the World Bank’s Private Sector Rapid Survey.
significant potential for growth, but also play a critical By triangulating data from multiple sources, both
role in the Afghan economy, benefiting both women primary and secondary, the study aims to provide a
entrepreneurs and workers. comprehensive understanding of the experiences and
complex challenges faced by women entrepreneurs and
The United Nations Development Programme - Istanbul women-led businesses.
International Center for Private Sector in Development
(UNDP-ICPSD), the Economic Policy Research In the final section of the paper, policy recommendations
Foundation of Turkey (TEPAV) and REACH undertook this are provided to address the challenges faced by
joint research to investigate the challenges encountered women entrepreneurs involved in both domestic and
by women-led SMEs in Afghanistan after August 2021. export markets. These recommendations particularly
emphasize issues faced by women who produce
The initial phase of the data collection involved in- solely for the domestic market in sectors such as
depth individual interviews conducted in September food production and processing (i.e., jams, pickles,
2022 with 49 women entrepreneurs from six provinces homemade sweets, pastry, bakery, dairy, poultry,
in Afghanistan. This sample included licensed (formally mushrooms, tomato paste), clothing (i.e., burqa,
registered) and unlicensed businesses. The data traditional clothing, tailoring, shawls) and handicrafts
collected during this phase shed light on numerous (engravings, woodcraft, furniture, etc.).
7
The provinces where interviews were conducted: Badghis, Baghlan, Balkh, Bamyan, Daikundi, Farah, Faryab, Ghor, Herat, Jawzjan, Kabul, Kandahar, Kapisa, Khost, Kunduz,
Nangarhar, Samangan, and Sar-e-Pul.

Methodology
The research aims to analyze the key challenges confronting women-led enterprises in Afghanistan. The study
relies on three sets of primary data collected between 2022 and 2024: in-depth individual interviews conducted
in 2022, focus group discussions in 2023, and a quantitative phone survey carried out in February-March 2024.
The 2022 in-depth interview sample is representative Although the sample size of 49 may seem small, the
of the regional distribution of women-led enterprises, findings, combined with insights from the focus group
aligning with data provided by the Afghanistan Women discussions and the subsequent 2024 survey, provide
Chamber of Commerce and Industry (AWCCI), which an empirical understanding of the challenges faced by
indicates that the majority of women-led enterprises women entrepreneurs in Afghanistan. The study did not
are concentrated in the Balkh, Herat and Kabul regions address specific regional infrastructure needs, which
(AWCCI, 2021). The sample included enterprises from may require further investigation.
Baghlan (3), Balkh (12), Herat (7), Jawzjan (1), Kabul (23)
and Paktya (3). In August 2023, UNDP conducted 10 focus group
discussions in Bamyan, Herat, and Balkh provinces,
Within the sample, 20 respondents held a business involving a total of 100 women entrepreneurs and 30
license, 17 did not, and 12 were uncertain about their men entrepreneurs. These discussions validated the
licensing status. Business size ranged from 1 to 250 findings and confirmed the ongoing challenges faced
employees, with an average of 33 employees. Some 33% by women entrepreneurs in 2023. Geographically
of businesses had between 1 and 10 employees, 45% distributed, the focus group discussions consisted of
had between 10 and 50 employees, and 21% had more three sessions with 40 participants in Bamyan, three
than 50 employees. The average age of businesses was sessions with 50 participants in Balkh, and four sessions
nine years, ranging from 3 to 18 years. Only 17% of the with 50 participants in Herat.
sample indicated that they were operating in multiple
provinces. The 2024 survey was carried out between February
and March 2024, encompassing 3,122 women-led SMEs
Respondents of 2022 in-depth interview were across eight regions and 18 provinces of Afghanistan.
working in the following sectors - Percentage The sample included enterprises from various provinces,
(Number of Women-led Businesses) and specific including Badghis (73), Baghlan (1), Balkh (395), Bamyan
subcategories:8 (320), Daikundi (245), Farah (4), Faryab (1), Ghor (98),
Herat (121), Jawzjan (2), Kabul (380), Kandahar (361),
» Food production and processing – 45% (22): Kapisa (96), Khost (316), Kunduz (303), Nangarhar (401),
Jams, honey, pickles, homemade sweets, pastry, Samangan (3), and Sar-e-Pul (2). Within the sample, 28%
bakery, dairy, poultry, mushrooms, tomato paste of the women-led SMEs had a license, while 63% were
unlicensed or unregistered; the remaining 9% were
» Dried fruits and nuts – 8% (4)
uncertain of their legal status. The surveyed enterprises
» Honey production – 10% (5) spanned a wide range of sectors, with 43% engaged
» Handicraft – 55% (27): Carpets, valuable stones, in manufacturing, 30% in services, 19% in trade, 7%
engravings, woodcraft, furniture in livestock and agriculture, and 1% in agribusiness,
healthcare, information and communication, and sales.
» Carpet weaving – 16% (8)
» Valuable stones – 6% (3)
» Clothing – 16% (8): Bags, clothes, burqas, traditional
clothing, tailoring, shawls
» Saffron – 4% (2)
8
Some women entrepreneurs were engaged in more than one sector.

1.
Afghan economy
1.1 The Afghan 1.2 The Afghan economy,
economic situation labour force and education
over the prior two decades
Since August 2021, Afghanistan has faced a severe
humanitarian and economic crisis. The economy
contracted sharply, with real gross domestic product During 2001-2021, international aid was the main
(GDP) reported to have declined by 6.2% in 2022, driver of economic growth in Afghanistan. Official
following a 20.7% contraction in 2021 (UNDP, 2024c). The development aid inflows to the country reached a peak
sudden reduction in international aid, which previously of over 50% of GDP in the late 2000s, gradually declining
constituted 75% of total on-budget and off-budget to about 21% of GDP in 2020 (World Bank). Throughout
expenditures and contributed nearly 40% of the GDP, this timeframe, the Afghan economy transitioned from
led to cash shortages, depreciation of the national being agriculture-based to service-based. The share of
currency, inflation, decline in trade and production, and agricultural and manufacturing sectors in the economy
macroeconomic instability. decreased, while Afghanistan’s export sophistication10
and human capital indicators11 also saw a decline. In
Despite a relative increase in security throughout 2002, the agriculture and service sectors contributed
the country following August 2021, the private equally to the Afghan GDP, accounting for 39% and 36%
sector continued to face significant constraints due respectively. However, by 2020, services, dominated
to suppressed demand and financial restrictions. All by transport and storage, constituted over half of GDP
enterprises have been impacted by low consumer (55%), while the agriculture sector contributed 27%
demand and purchasing power. The current situation, (OECD, 2019).
marked by disruptions in payment systems and closure
of air corridors, exacerbates this trend. Gender inequality remains a significant challenge in
Afghanistan. In 2022, Afghanistan ranked 162nd globally
Both SMEs and large enterprises report that most on the Gender Inequality Index out of 166 countries
businesses continue to operate below capacity, despite with available data (UNDP, 2024b). Recent additional
initial signs of recovery with a larger percentage of restrictions on women’s participation in public life
enterprises resuming operations.9 In 2023, the World since August 2021 have further exacerbated women’s
Bank Private Sector Rapid Survey reported 57% of rights in the country (UNDP, 2023b). The literacy rate
enterprises operating at reduced capacity or closing amongst women in Afghanistan remains alarmingly low,
their businesses, compared to 75% in 2022 (World Bank, standing at just 23% in 2021. This is in stark contrast to
2024). It is clear from all data sources that women- neighbouring countries like Uzbekistan, which reported
led businesses are the most negatively impacted by a 100% women’s literacy rate in 2022, and Iran, where
the changes that have occurred since August 2021. the rate was 85% in 2022 (World Bank, 2022c).
According to the 2022 World Bank Private Sector Rapid
Survey (PSRS), 42% of the women-owned firms surveyed Although there have been improvements in secondary
had temporarily closed, compared to 26% of firms school enrolment rates in Afghanistan, with total
owned by men (World Bank, 2022b). enrolment increasing from 13% in 2003 to 55% in 2018,
challenges persist, particularly for girls. In 2019, 44%
of women in Afghanistan completed lower secondary
9
WB June 2022 data compared to November 2021), (World Bank, 2022a).
10
Afghanistan’s economic sophistication, as measured by the Economic Complexity Index showing the level of diversification and complexity in a country’s export basket, has
dropped significantly, from 0.32 in 2001 to -0.88 in 2020. Moreover, Afghanistan’s Economic Complexity Outlook Index (COI), which captures the ease of diversification for a
country, has dropped from -0.08 to -0.69. The share of cross-border exports to neighbours in total exports increased from 11% to 48% between 2000 and 2020 pointing to a
lack of presence and competitiveness of Afghan goods in global markets.
11
The average annual growth of the Human Development Index of Afghanistan decreased from an average of 2.95% between 2000 and 2010 to an average of 0.59% between
2010 and 2021. This is one of the sharpest drops among countries that have low human development even prior to the pandemic and political change. (UNDP, 2022a)

Figure 1: Countries with the lowest female labor force participation rates (% of ages 15 and older; 2021)
Djibouti
State of Palestine
Syria
Algeria
Egypt
Afghanistan
Iran
Jordan
Iraq
Yemen
0 5 10 15
school, compared to 93% in Uzbekistan (World Bank, Female labour force participation in Afghanistan has
2019b). The resumption of school for Afghan girls fluctuated over the years. It increased from 15% in
over the age of 12 has been indefinitely delayed since 2000 to 21% in 2019, but then dropped back to 19% in
September 2021, affecting 1.1 million girls and young 2020 and 18% in 2021 (World Bank, 2021b). Although
women who are now deprived of formal education. total household employment increased from 41% in
Currently, 80% of school-age Afghan girls and young 2022 to 44% in 2023, the proportion of female workers
women, totalling 2.5 million, are out of school, with decreased from 11% in 2022 to 6% in 2023 (UNDP,
nearly 30% of them never having enrolled in primary 2024c). With the most recent restrictions on women’s
school (UNESCO, 2023). Comparatively, the expected ability to work at NGOs and UN agencies coupled with
years of schooling for women in Afghanistan is 7.7 years, the closure of beauty parlours in Afghanistan, female
while it is 14.7 years in Iran and 12.4 years in Uzbekistan labour force participation and women’s income are likely
(UNDP, 2023b). to have declined even further. The lack of formal labour
contracts, social protection, and safety nets characterize
These restrictions on education for female students Afghanistan’s labour market, explaining why women’s
worsen the already low female enrolment rate compared vulnerable employment stood at 91%, compared to 76%
to the region. In 2017, nearly 65% of young women and in South Asia (World Bank, 2022d).
girls in Afghanistan were not in education, employment,
or training, marking the highest proportion in the world.
In contrast, the figure for men stood at 20% (World
Bank, 2021a). By 2023, there was a noticeable decline in
education attendance among girls in Afghanistan, while
boys saw an increase. Following the bans on women’s
education, girls’ attendance dropped from 44% in 2022
to 39% in 2023, contrasting with boys whose attendance
rose from 63% in 2022 to 75% in 2023(UNDP, 2024c).

I Beehive keeper in Afghanistan. © UNDP Afghanistan
1.3 Private sector
According to a study by Rasoli et al. (2019), 55% of The 2024 UNDP survey of women-led SMEs also
Afghan businesses have fewer than 10 employees, indicated high informality with 64% of women-led
while 30% have 10 to 24 workers, 12% have 25 to 49 enterprises being unlicensed. Some 47% of women
workers, and 3% have 50 to 100 workers.12 A reported entrepreneurs were operating their businesses in rural
80% of Afghanistan’s economic activity is informal areas, while 40% were operating in urban areas. The
(UNDP, 2022b). Only 3.1% of the private sector received remaining 13% of women-led SMEs were operating in
domestic credit in 2020 (World Bank, 2020). both rural and urban settings. Notably, many women-
led enterprises are situated in border regions, indicating
The share of women business owners was a mere 2% in that cross-border trade plays a pivotal role in their
Afghanistan in 2018, indicating severe gender disparity operation and in private sector-led development.
in entrepreneurship (World Bank, 2018a). As of March Furthermore, women entrepreneurs serve as significant
2021, 56,910 women-led businesses were registered employers of women: a study by the AWCCI, based on
with the AWCCI, however it is understood that many a sample of 1,325 women-led businesses, revealed that
more unregistered women-led businesses operate women comprised 88% of the aggregate workforce
in Afghanistan. Among 17,639 businesses for which employed by these enterprises.
detailed information is available, a staggering 95.7%
are unlicensed. According to AWCCI data, among the
2,471 licensed businesswomen, the majority hail from
Balkh, Herat, and Kabul, while the 54,539 unlicensed
businesswomen are concentrated in Baghlan, Balkh,
Herat, Jowzjan, Kabul, and Paktia (AWCCI, 2021).
12
According to the Afghanistan Ministry of Industry and Commerce definition, a micro-enterprise has fewer than five employees (Ministry of Industry and Commerce, 2018).

2.
Challenges for women
entrepreneurs in Afghanistan
This section analyses both challenges common to the private sector and those specific to women, based on semi-
structured interviews carried out with women-led SMEs across different regions and sectors of Afghanistan.
Women employers and employees are prominent in horticulture, including almonds, grapes, honey, raisins and
saffron (Afghanistan Research and Evaluation Unit, 2017). In 2020, 54% of the female labour force was employed
in the agricultural sector, 26% in the industrial sector, and 20% in the service sector.
By 2021, female employment accounted for 20% of the pandemic further exacerbated these challenges. Before
7 million employed, playing a crucial role in providing the takeover, security concerns were the most frequently
services in education, health, and infrastructure (UNDP, cited challenge among women entrepreneurs
2024a). Women workers and entrepreneurs dominate interviewed (37/49 respondents). Respondents also
the carpet weaving sector, which in 2019 employed mentioned a lack of access to finance or credit (14/49)
over one million Afghans, making it the second largest and corruption (14/49) as significant obstacles. During
employer in the country after agriculture. Women make the Covid-19 pandemic, decreased or insufficient market
up 90% of workers in textile manufacturing, mostly in demand (12/49) and pandemic restrictions (10/49) were
carpet weaving (World Bank, 2019a). Carpet weaving, common challenges.
dried fruits and nuts, honey and saffron production
sectors are critical not only for women entrepreneurs In the 2024 survey of women-led SMEs, when asked
but also for Afghanistan’s business landscape and about the challenges of operating a business, 51%
exports (See Annex 1). reported no constraints, while 32% cited discrimination
in accessing markets, and 28% mentioned difficulties
Among the main challenges identified from the in sourcing input supplies. Additionally, 19% noted
interviews are low demand and export restrictions due discrimination in accessing loans (formal or informal),
to payment blockages, supply side challenges (including while 6% mentioned other constraints, such as
access to inputs and finance), and restrictions on financial issues, operational challenges (e.g., marketing,
women’s economic activities due to discrimination and machinery, and skills/training), restrictions on women
mobility constraints. These findings primarily focus on imposed by the de facto authorities, and power supply
women entrepreneurs in handicrafts (carpet weaving), challenges.
food production (honey and dried fruit and nuts), and
saffron, which form the main body of Afghanistan’s During the 2022 in-depth interviews, respondents,
exports. The power shift in August 2021, the shutting especially those in handicrafts and food production and
down of air routes, and the limitations imposed on processing sectors, highlighted a lack of equipment and
payment systems have taken a toll on the export
capabilities of carpet weavers and producers of dried
fruits and nuts. While direct exports to western markets Figure 2: Being a woman, what constraints do you
have diminished considerably, re-exports from Pakistan face in the operation of your business?
appear to be helping to mitigate the decline.
No constraints 51
Even prior to August 2021, SMEs faced challenges in Market access
discrimination 32
their economic activities amidst ongoing warfare. Poor
security, weak and underfinanced public institutions, Input supply 29
difficulty
corruption, lack of access to finance and credit, and
inadequate infrastructure (roads, electricity, water, Loan Access 19
discrimination
internet, etc.) contributed to disruptions in production,
low productivity, low demand, and poor access to Other 6
markets, both internal and external. The Covid-19 0% 50%

access to raw materials (10/49). They also mentioned the According to the 2023 Women Peace and Security
lack of support from de facto authorities for women- Index, women’s financial inclusion in Afghanistan is at
led businesses (8/49) and cultural barriers (6/49) as 4.7%, significantly lower than in Pakistan (13.5%) and
factors constraining business performance. These Uzbekistan (38%) (WPS, 2023).
issues resulted in reduced production, limited business
opportunities, and challenges in collecting payments.
Many women entrepreneurs shut down their business 2.2 Sources of finance
operations in the months following the takeover, only
slowly resuming at a reduced capacity. The majority of
respondents pointed to a decrease in profit/revenue In-depth interviews conducted in 2022 revealed a
(33/49). variety of financing sources relied upon by women-
led enterprises. The most reported sources of finance
The 2024 women-led SMEs survey reveals a steady were personal savings (35/49), loans from relatives
improvement, with 66% of respondents reporting an and friends (16/49), and sale of personal assets (11/49).
increase in business activity. However, 14% of women- The reliance on borrowing from family and friends
led businesses also reported a deterioration in their is significantly higher in Afghanistan than in other
business situation due to factors such as lack of demand, countries in the region. In 2021, 64% of women-led
limited access to finance, and discrimination against enterprises in Afghanistan borrowed from family and
women. friends, whereas the corresponding rates for the same
year were 24% in Kazakhstan, 20% in Pakistan, and
18% in Uzbekistan (World Bank, 2021e). None of the
2.1 Access to finance respondents had received a bank loan since 15 August
2021. Two respondents mentioned relying on bank
loans as a secondary source of finance, while two others
Nearly all respondents in the 2022 in-depth interviews indicated receiving assistance from international non-
expressed concerns about business disruption due to governmental organizations as their primary source of
lack of access to credit. Financial issues, such as access to finance.
finance, were cited as the most pressing challenges for
women entrepreneurs. These findings are supported by Among the respondents, over half (28/49) reported no
UN Women’s 2022 survey, in which 53% of respondents changes in their sources of finance for their business
reported that their businesses were no longer functional, since 15 August. Three respondents believed that their
89% of them attributing this to the lack of access to relatives and friends were no longer able to provide
financial resources (UN Women, 2022). financial support after the economic contraction
following 15 August 2021. Another three respondents
Even before August 2021, respondents reported lack of explained that their primary source of finance was now
access to working capital as a major challenge. According their business. The number of respondents who said
to the 2019 OECD Social Institutions and Gender Index they were using credit (some only when necessary)
(SIGI), 45.6% of Afghan women had restricted access to (11/49) and not using credit (15/49) was similar. When
productive and financial resources (OECD Statistics). Few asked about their preferred source of credit, most
women in Afghanistan own land or agricultural assets, respondents (25/49) cited borrowing from relatives and
limiting their ability to provide collateral guarantees friends, with a few reporting obtaining a bank loan.
(USAID, 2012). Unfavourable inheritance and land
titling systems, along with limited income and savings,
collectively undermine women’s ability to access formal Figure 3: If yes, where did you take those loans?
loans (OECD, 2019).
Family 25
In 2021, the disparity in women’s access to financial Friends 18
services between Afghanistan and its neighbours was Businesses 8
stark. Only 5% of Afghan women owned accounts at
financial institutions, a significantly lower rate than Remittances 2
in Uzbekistan (39%) and Pakistan (13%) (World Bank, Formal bank 2
2021c). Furthermore, when it came to borrowing money Community Saving Group 1
from formal financial institutions, only 1% of women in
Afghanistan engaged in such transactions (World Bank, MFI 1
2021d). These disparities underscore the challenges that Hawala 0
women in Afghanistan face regarding financial inclusion. 0% 30%

Box 1: Sources of Finance: Joint Market Monitoring Initiative (JMMI) data
The data from JMMI regarding traders illustrates shift in the sources of finance utilized by traders between and after
August 2021. In June 2021, among traders who reported borrowing money to support their business, 67% of key
informants (Kis) indicated borrowing from their suppliers, while 27% borrowed from family and friends. By October
2022, borrowing from suppliers had decreased to 51%, while borrowing from family and friends had increased to 36%.
Additionally, during the same period, the percentage of Kis reporting borrowing from informal financial services, such
as hawalas, saw an increase from 3% to 11% (REACH, 2022a).
Responses to the 2024 survey of women-led SMEs The majority of respondents refrained from applying
revealed that the main sources of loans for women-led for bank loans due to negative experiences recounted
businesses were family (61%), friends (45%), and loans by their relatives in accessing loans. When asked their
from other businesses (21%). A smaller percentage perception of the most common requirements to access
reported receiving loans from formal banks (5%) or bank loans, having a license or legal business permit
remittances from abroad (5%), while 2% each obtained emerged as the most frequently cited requirement
loans from microfinance institutions and community (18/49), particularly amongst unlicensed respondents.13
savings groups. Only 0.3% reported receiving loans from Other perceived requirements included collateral or
money service providers or hawalas. In urban areas, 19% bank guarantees, property guarantees or statement
and 22% of women-led SMEs reported receiving loans of assets (mentioned by 8 out of 49 respondents),
from friends and family, respectively. In rural areas, and credit history (7/49) or history/background of the
these figures were slightly higher, at 19% and 29%, business. The time required to receive formal loans may
respectively. Regarding loans from formal sources, only also act as a deterrent, as noted by respondents who
2.1% and 1.2% of respondents in urban areas reported had previously received a loan from the bank before
receiving loans from formal banks and microfinance 15 August (5/49), with some indicating the process took
institutions, while in rural areas, these figures dropped one to three months.
to 1% and 0.2%, respectively.
In August 2023, focus group discussions with women MFI
The 2024 survey of women-led SMEs found that 59% of clients underscored the difficulty in obtaining financial
respondents had no debt. Among urban respondents, guarantors and shura approval. Rural entrepreneurs
39% reported having debt, compared to 43% in rural faced additional hurdles in accessing financial
areas. institutions, given the considerable distances involved
in travel. Discrimination against women entrepreneurs
and restrictions on their interaction with suppliers and
2.3 Reasons for limited buyers might have deprived those entrepreneurs of
access to finance valuable sources of finance. Respondents in sectors
like carpet weaving expressed substantial demands for
working capital. However, wholesalers and suppliers,
Among the obstacles to accessing finance, several of the who previously provided cash advances for production
2022 in-depth interview respondents cited lack of bank purposes, might now be reluctant to engage with
financing, gender-related mobility restrictions, or the women-led businesses due to ambiguous gender-
inability to meet documentation prerequisites essential related edicts issued by the de facto authorities.
for loan approval. Among key concerns preventing Given that loans from other businesses were cited as a
access to bank loans, most respondents cited the lack of prevalent financial source, discrimination from business
sharia-compliant financial products, new restrictions on partners is likely to severely impact women-led SMEs’
women’s mobility making it difficult to visit banks , and access to finance.
high interest rates. Other reasons included uncertainty
about ability to repay on time, inflexible deadlines, and
inability to meet the bank’s requirements.
13
Many microfinance institutions in Afghanistan provide loans to unlicensed
businesses.

Box 2: Money transfer systems: JMMI data
The JMMI data indicates a consistent preference for hawalas as the most frequently used functional money transfer
system, with their usage gradually increasing post- August 2021. 86% of key informants (Kis) reported using hawalas in
June 2021, which rose to 91% in October 2022. Conversely, the utilization of banks, the second most reported money
transfer system, experienced a notable decline after August 2021 - 55% of KIs reported utilizing banks in June 2021,
dropping to 27% of KIs in September 2021. While banks are increasingly utilized by KIs for money transfers, the usage
remains below pre-August 2021 levels, with 40% of KIs reporting bank usage in October 2022 (REACH, 2022a).
Note: This analysis does not differentiate between domestic and international money transfers, with domestic transfers being
less impacted than international ones.
2.4 Addressing barriers

to loan access 2.5 Payment systems
When asked about solutions to barriers in accessing A majority of respondents stated that prior to 15 August
loans, respondents suggested various measures. First, 2021, they primarily made payments in cash (36/49),
they emphasized the importance of removing the especially for workers’ salaries. A smaller proportion
restrictions on women, as well as easing loan conditions, (14/49) also made payments through banks. However,
such as reducing collateral requirements or simplifying as noted in earlier sections, the collapse of international
the documentation process (12/49). Additionally, some payment systems posed a significant challenge for
respondents (6/49) proposed solutions involving women exporters in sectors such as carpet making,
the international community, such as providing honey, saffron, and dried fruits.
international assistance, supporting Afghan banks, and
assistance in enhancing women’s capacity building. After 2021, 16 out of 49 respondents indicated changing
Others (4/49) suggested that international organizations their payment methods, mostly transitioning from formal
and non-governmental organizations could provide banking to using informal hawalas or relying solely on
support. There were suggestions to remove restrictions cash transactions. Among women entrepreneurs, 4 out
on banks by the international community and address of 48 respondents reported switching to hawalas for
the lack of cash. Several (4/49) mentioned the need payments. However, some reported difficulties with this
to make interest-free loans available specifically to system due to its high costs and challenges in travelling
women’s businesses. Lastly, a few (4/49) suggested to the bazaar to access money exchange offices,
easing bureaucratic procedures to secure loans for especially due to the mahram requirement.
businesswomen.
Digital payment channels remain limited in Afghanistan.
During the focus group discussions in 2023, participants Data shows that only 4% of women made or received
advocated for group guarantor mechanisms in which digital payments in recent years, compared to higher
a cluster of three to five MFI clients would guarantee rates in Tajikistan (34%), Uzbekistan (36%), and Pakistan
each other, as opposed to relying on individual financial (11%).14 Moreover, women’s cell phone usage rate in
guarantors, which are harder to obtain. They also Afghanistan was 37% in 2022, down from 52% in 2017
stressed the importance of flexible repayment deadlines (WPS, 2023).
aligned with seasonal cycles for agricultural producers.
Finally, respondents expressed a preference for the The majority of respondents (34/49) reported an inability
ability to use movable collateral, such as livestock or to use digital payment systems, citing inaccessibility
vehicles, as opposed to property deeds. of computers and smartphones (19/49), including for
their employees. In the carpet sector, one respondent
expressed an interest in digital payment systems and
online sales but lacked access to the internet and ICT
equipment.
14
World Bank, 2021f.

Enabling digital payment systems by providing Figure 5: Proportion of Afghan carpet exports by region
affordable access to the internet and ICT equipment,
as well as training in digital skills, would circumvent
19% 35% 11%
restrictions on women’s mobility and thus support
women businesses. This would eliminate the need for
7%
additional travel to markets for hawala exchanges and
avoid the high fees collected by hawaladars. 7% 5%
77%
73%
2.6 Reduced market demand

14%
1%
50%
In 2022 in-depth interviews, the majority of women
entrepreneurs (34/49) cited a drop in demand as the
main reason for reduced revenues. Respondents
mentioned factors such as loss of customers, decrease
in purchasing power and the country’s economic
crisis as key contributors to this trend. Though some
respondents noted a gradual increase in demand in
the months leading up to September 2022, it remained
lower than prior to August 2021.
2020-1H 2021-1H 2022-1H
JMMI data also reflected the impact of the takeover on Western countries Uzbekistan
customer demand. Key informants from the trade sector
reported a decline in demand for non-food items from Other countries Pakistan
August 2021 (66% of KIs) through October 2022 (57%
of KIs). Additionally, household economic capacity Source: NSIA Year Book 2022
decreased significantly between August 2021 and
August 2022, with average income dropping by 17% and
average expenditure by 16% (REACH 2021, 2022c).
and saffron attributed the decline in demand to the
The decrease in demand can largely be attributed departure of wealthy clients and foreigners who had
to income losses and the increased cost of living. previously resided in Afghanistan.15
Respondents in the clothing sector also noted a
reduction in demand for school uniforms and hospital Findings from the 2024 survey of women-led SMEs
garments due to restrictions on girls’ school attendance revealed varying trends in business activity. While
and women’s work. Similarly, businesses in sectors such 64% of respondents reported an increase in their
as carpet making, honey, dried fruits, valuable stones, business activity over the past year, indicating a
positive trajectory, 20% indicated no change, while 14%
reported a decrease in business activity. Among those
experiencing a decline, 50% cited the lack of demand
Figure 4: Reasons for decrease in business activity as a contributing factor. Conversely, among those
reporting increased activity, 44% attributed it to higher
Lack of access to inputs 52 demand, suggesting that demand fluctuations continue
Low demand 50 to play a significant role in business performance.
Access to inputs 41
Mobility restrictions 21
Supplier discrimination 7
Family discrimination 2
15
Other 1 In the domestic market, Afghan carpets may be non-competitive vis-a-vis
cheaper machine made, carpets from Iran, Pakistan and Turkey (Nasrat and
0% 50% Karimi, 2016). With declining income levels, this trend may have been further
aggravated.

2.7 Export restrictions entrepreneurs reported a shortage of skilled labour and
raw materials as reasons for altering their production
activities.
The 2024 survey of women-led SMEs revealed that 94%
of the businesses exclusively sell in the Afghanistan Several respondents moved away from carpet weaving
market, while 4% focus solely on exports, and 2% to other products. One respondent from Kabul,
cater to both the Afghanistan market and exports. who employed 362 workers and engaged in diverse
According to the in-depth interviews conducted in production, including carpet weaving, leather making
2022, women entrepreneurs (14/49) who used to export (bags and shoes) and clothing, discontinued her carpet
earlier indicated that they are either no longer able weaving and leathercraft activities after 15 August 2021.
to do so or their exports have significantly reduced Their main clients had been wealthy local customers and
due to restrictions on payment systems and closure export traders, exporting products to Australia, Belgium,
of air corridors. Women exporters in carpets, honey, Canada and the United States.
saffron and dried fruits, and nuts indicated that they
are no longer able to export to their former customers, Another respondent from Kabul reported a reduction in
including those in Canada, Dubai, Germany, India, carpet weaving activities and started a new production
Kuwait, Russia, and the United States. Some women line for wool thread. Before August 2021, their main
exporters reported having had to reduce their workforce clients were exporters of carpets and large traders who
as a result. exported their products to Germany and the United
States, as well as big internal markets, production
The value of carpet exports to western countries corporations, and trading corporations. However, after
dropped from USD 4.85 million to USD 1.8 million 15 August 2021, their clients decreased to 20%, and they
between the first half of 2021 and the first half of 2022, now trade with only one domestic company purchasing
while carpet exports to Pakistan almost doubled (from their goods at a lower price. Restrictions on women
USD 6.94 million to USD 12.48 million16). Reports from impacted their dealings with large traders, as well as the
2018 already indicated that traders from Pakistan composition of the workforce.
bought Afghan carpets for re-export (Nickel, 2018). An
“
earlier study in 2016 found that Pakistani tradesmen
benefited as much as 80% through carpet exports from Our business relations with larger traders to
Afghanistan by re-exporting these items (Nasrat and sell our products is cut. Imposed restrictions
Karimi, 2016). on women affected our business activities
or products. We also lost young women
The delinking from western markets poses a significant
challenge and represents a missed opportunity for workers.”
producers of carpets, dried fruits and nuts, saffron, and
honey, as a large proportion of demand originates from In the carpet sector, one respondent reported a
these markets. In 2021, Western markets, including the reduction in exports to Pakistan. Two carpet producers
United States, Germany, UK, Japan and Switzerland, from Mezar-ı Şerif noted losing their European
accounted for 72.9% of total global imports of hand- customers to Pakistan.
made carpets. Similarly, the share of western markets
in total imports of dried fruits and nuts,17 saffron18 and Online sales in the honey sector, including those to
honey19 were 50.2%, 41% and 77.6%, respectively. foreign countries, were interrupted after August 2021.
All three respondents interviewed from Kabul used to
With barriers to exports arising from restrictions in sell their products online, but only one continues to do
payment systems and the closure of air corridors, so. The other two no longer engage in online sales.
coupled with low demand in domestic markets, some
women-led SMEs (14/49) switched to producing
goods with local demand or adjusted their production
offerings. In addition to decreased demand, some
16
Exports in the first of half of 2020 also appear to be low, possibly in response to the Covid-19 pandemic.
17
In 2021, the largest importers of dried fruits and nuts worldwide were Germany, China, Italy, India and Spain, important potential markets for Afghanistan.
18
In 2021, the largest importers of saffron worldwide were China, India, Saudi Arabia, Spain and the United States, important potential markets for Afghanistan.
19
In 2021, the largest importers of honey worldwide were China, France, Germany, Japan, the United Kingdom and the United States, important potential markets for
Afghanistan.

2.8 Supply side challenges In the carpet sector, women entrepreneurs faced a
in different sectors significant challenge in accessing high-quality raw
materials, particularly top-grade wool. Even before
August 2021, the Afghan carpet industry grappled with
2.8.1 High input prices and substantial obstacles, including the scarcity of high-
lack of input availability quality wool due to a reduction in livestock numbers
during wartime conditions. Despite the superior quality
Among the numerous challenges facing Afghan of local wool compared to imports, the disruption
businesses are the high prices of domestically produced in wool production exacerbated the situation. This
inputs and their unavailability due to inflation and to shortage also affected thread and yarn businesses,
closures of input-producing businesses. Additionally, leading to increased dependence on imports. With
access to imported inputs has been interrupted by Afghanistan being a landlocked nation with inadequate
border closures, high prices, and difficulties in accessing road infrastructure, carpet producers were compelled
international payment systems (World Bank, 2022a). to rely on lesser-quality wool from Iran and Pakistan,
adversely impacting the global competitiveness of
During in-depth interviews conducted in 2022, women Afghan handmade carpet (Nasrat and Karimi, 2016).
entrepreneurs reported a decrease in revenue due to
a surge in the price of raw materials and a decline in 2.8.2 Skills and equipment
their supply, particularly notable in 2021. As a result, 13
out of 49 respondents’ businesses were impacted by A migration of skilled workers, or “skills drain,” seems
additional costs in their production process, a decrease to have primarily affected respondents from the carpet
in production, stoppages or delayed production, and weaving, clothing, and handicraft sectors, with women
issues accessing raw materials in time or using them entrepreneurs in these sectors emphasizing the need for
prior to expiration. Many respondents cited the high skills training. Exporters among women entrepreneurs
cost of raw materials combined with high transportation in the carpet, handicraft, honey, and valuable stones
costs, mainly attributed to the significant increase in fuel sectors, emphasized the need to acquire marketing skills
costs. Among the women-led businesses surveyed in to access international markets, with a specific focus on
2024 that reported a decrease in business activity, 41% digital marketing.
attributed the decline to the lack of access to inputs.
Digital marketing holds significant potential for women
Changes in prices were further exacerbated by natural to access international markets, offering a means to
disasters and climate change. Respondents in the dried circumvent gender-related restrictions and third-
fruits and nuts and the honey sectors reported that party sellers that discriminate against them. However,
droughts led to further increases in the price of raw for women entrepreneurs to fully leverage digital
materials and reduced production. For instance, the marketing, they need access to affordable internet, ICT
surge in extreme weather phenomena due to climate equipment, and digital skills. While mobile apps and QR
change and natural disasters destroyed honeybee payments are accessible, they remain in severely limited
boxes, leading to a decrease in bee populations. use. In 2017, only 9% of the Afghan population had
experienced digital payments, according to the Findex
2017 report, with just 2.7% of women having used
these services. As of 2021, the situation has worsened,
particularly for women, with the percentage of women
recipients of digital payments dropping to just 1.6%,
according to 2021 Findex data (UNCDF, 2023).
Box 3: Pricing trends in Afghanistan

JMMI data indicates the 36% increase of the petrol price and 67% of diesel price between August 2021 and October
2022. The percentage of vendors reporting difficulties in obtaining adequate commodities rose from 10% of KIs in June
2021 to 38% of KIs in August 2021. However, these supply chain issues have gradually decreased since then, with only
8.2% of Kis reporting such difficulties in October 2022. The most prevalent reason reported by traders facing difficulties
to supply commodities was insufficient cash, which increased from 61% in June 2021 to 91% in August 2021. (REACH,
2022a).

Figure 6: Afghanistan Hand-made Carpet Export (Source: NSIA Year Book 2022)
220 216 100

200 90
184
180 80
160 150 70
145
140
60
120
98 50
100 86 89
40
80 67 70
30
60 49 44
19 38 20
40 31
25 22 24
4 18 17 15 10
20 1 1 0
0 0
Share of carpet export Amount of carpet export by USD
2.8.3 Packaging and processing facilities
Women entrepreneurs in the dried fruits, honey and Packaging also presents a significant challenge for
saffron sectors emphasized the pressing need for saffron producers. A small-scale saffron producer from
processing and packaging equipment, machinery, and Paktia stated that she faces challenges in exporting
storage facilities. In particular, inadequate processing due to the lack of standardized packaging facilities.
and packaging facilities have long posed challenges Another respondent from Kabul, who exported saffron
for Afghan honey exporters. Raw honey is often sent to before August 2021, previously outsourced packaging to
Pakistan for processing and packaging before being re- Iran. However, border closure had rendered this option
exported under the ‘made in Pakistan’ label. Similarly, in unavailable. This respondent used to procure chemical
the dried fruit sector, a respondent from Herat expressed fertilizers, bottles of various sizes, and decorative boxes
the need for production machinery. for packaging of saffron from Iran.
A Kabul-based respondent who recently transitioned to Although not explicitly mentioned by the women
dried fruits and dairy production emphasized the need surveyed, the carpet sector also grapples with
for financial investment in dry fruit processing. Another inadequate cut, wash, and finishing facilities, primarily
respondent from Kabul stressed the importance of due to electricity and water shortages and limited
acquiring standard machinery, especially for packaging, accessibility. As a result, a significant portion of Afghan
along with support for building cold storage facilities carpets are sent to Pakistan for these services, from
and obtaining chemical fertilizers. where they are sold wholesale.20
20
In 2009, 85% of Afghan carpet cutting, washing, and wholesaling was performed in Pakistan (Ministry of Commerce and Industry, 2009)

3.
Restrictions and discrimination against
women after 15 August 2021
3.1 Restrictions on 3.2 Reluctance of businessmen
women’s mobility to interact with women
During the data collection period spanning 2022, 2023, Women-led SME respondents (20/49) indicated that
and 2024, the de facto authorities enacted additional they faced discrimination and apprehension from
decrees, including prohibiting women from attending the business community. Suppliers, shopkeepers,
formal education from primary school to university, large traders, and wholesalers are reluctant to
banning the operation of beauty salons, and imposing engage professionally with women due to concerns
further restrictions on women’s mobility and access to about reprisals from the de facto authorities. This
employment. discrimination has particularly impacted respondents
in export sectors. The reluctance of these stakeholders
These restrictions have limited women entrepreneurs’ to engage in business with women poses a significant
ability to access markets and exhibit their products, obstacle to women entrepreneurs in sectors such as
while also increasing their transaction costs, particularly carpet weaving, honey production, valuable stones,
for transportation. According to JMMI data, access to saffron, dried fruits and nuts, clothing, and handicrafts
markets for women has decreased, with more women (including engravings, woodcraft, and furniture). The
reporting having no access to markets at all (4% in June 2024 survey of women-led SMEs further confirmed this
2021 compared to 11% in October 2022). In June 2021, challenge, with 32% citing discrimination as a barrier to
61% of respondents reported that women could access accessing markets.
markets unaccompanied, compared to 50% in October
2022 (REACH, 2022a). Importantly, the modalities of For instance, an entrepreneur from Herat who produces
access to markets for women have shifted, with a dried fruit described how she used to collaborate with
growing necessity for women to be accompanied by a large traders in the past. However, after 15 August 2021,
mahram (REACH, 2022b). Without a mahram, they are due to new restrictions and fear of reprisals from the
not allowed to travel to local markets, other provinces, de facto authorities, large traders prefer to conduct
or abroad to attend exhibitions (26/49). This requirement business with men rather than women. She stated:
poses an additional burden, as it doubles travel costs.
A few respondents (7/49) pointed to security issues

as the main obstacle in accessing marketplaces. “ After 15 August and the implementing
of restrictions, businessmen do not want
For instance, a respondent from Mazar highlighted to show their interest in business with
difficulties in accessing marketplaces due to the
professional businesswomen because
inappropriate behaviour of wholesalers towards women,
along with restrictions on women’s mobility and lack they prefer to avoid challenges with the
of transportation facilities. An additional challenge authorities.”
raised during focus group discussions with women
entrepreneurs in August 2023 is that many businesses
employing women exclusively were being hassled by de
facto authorities for being located close to businesses
with male employees.

Map 1: Percentage of KIs reporting woman cannot access markets.
Jawzjan Kunduz
Balkh Badakhshan
Takhar
Samangan
Faryab Baghlan
Panjsher
Sar-e-Pul
Nuristan
Badghis
Parwan
Kapisa Kunar
Bamyan Laghman
Kabul
Herat Maidan Wardak
Ghor Nangarhar
Logar
Daykundi Paktya
Ghazni Khost
Uruzgan
% of Kls reporting that women
Farah Paktika
Zabul cannot access the market
0%
1%-10%
Helmand
Kandahar
11%-20%
Nimroz
21%-30%
0 100 200 km
Greater than 31%
Data source: REACH, Afghanistan: Humanitarian Situation Monitoring, September-2022
3.2.1 Loss of access to export

markets and production inputs
The reluctance of large traders to work with women An entrepreneur who recently entered the carpet sector
entrepreneurs makes women-led businesses vulnerable, and aims to export carpets in foreign markets explained:
compelling them to sell their products at reduced
“
prices. This has been the experience reported by two
respondents (2022 survey) in the carpet sector, who We are forced to sell our carpets to domestic
continue to export. wholesalers for a small amount of money,
and they subsequently sell to foreign markets
Another businesswoman reported losing foreign traders
at much higher profits.”
after 15 August 2021, with a decline in the number
of national traders with which her business interacts.
Currently, her business sells products in Mazar and Discrimination against women entrepreneurs limits their
Kabul marketplaces, with export activity restricted to access to resources for production activities, particularly
dealing with a single large trader in India. She noted in industries with high capital requirements, such as
that business interactions with large traders have been carpet-making. Wholesalers who previously provided
impacted by restrictions on women, leading to reduced cash advances to women-led enterprises for production
exports and an inability to receive payment. may hesitate to collaborate with women, fearing
repercussions due to gender-related restrictions. This
In the carpet sector, the reluctance of businesspeople to was validated by the 2024 survey of women-led SMEs,
work with women has forced respondents to sell their where 29% of women entrepreneurs reported that
products at street markets or to male wholesalers who gender discrimination hindered their ability to source
have fewer challenges accessing international markets. input supplies.

Figure 7: Percentage of KIs reporting on women’s access to markets.
70%
60%
50%
40%
30%
20%
10%
0%
Don’t know Not at all Yes accompained Yes unaccompained
A carpet producer described the effects of businessmen’s 3.3 Barriers to Employment

reluctance to do business with women producers:
“
In 2023, women’s employment decreased by almost half,
Before 15 August 2021, our products were while men’s employment increased proportionally by
ordered by businessmen and wholesalers 11%, reflecting the impact of the de facto authorities’
and were supplied to the market through bans on women’s activities (UNDP, 2024c).
them. However, after 15 August 2021, we lost
The 2024 survey of women-led SMEs indicated that 60%
our previous customers, and we only have of women-led businesses are situated in female-headed
access to the free markets. With the latest households. This highlights the pivotal role of women’s
changes in the country and the restrictions business earnings in their family income, as 80% of
imposed on women, we faced many women-led enterprises depend on business revenues as
problems. For example, we cannot go to the the primary source of income.
market to sell our products without mahram
Households that include at least one employed woman
and paying the mahram is an additional
tend to earn more than those without any women
cost, as well as transporting the products to workers, and when those households lose the income
national markets and paying the rent for the from a woman employed in the formal sector, their
transportation.” per-person income could decrease by nearly 50%.
Prohibiting women from working could lower the
earnings of 5.3 million families by an average of 6%
(UNDP, 2024a)
According to the Humanitarian Situation Monitoring

(HSM) data (September 2022), 47% of the KIs reported
that women are not able to start or own a business
in their settlement, while 33% reported that women

Map 2: Percentage of
KIs reporting that women can
start and or own a business. Jawzjan Kunduz
Balkh Badakhshan
Takhar
Samangan
Faryab Baghlan
Panjsher
Sar-e-Pul
Nuristan
Badghis
ParwanKapisa Kunar
Bamyan Laghman
Kabul
Herat Maidan Wardak
Ghor Nangarhar
Logar
Daykundi Paktya
Ghazni Khost
Uruzgan
Farah Paktika
Zabul % of Kls reporting that women
can start and or own a business
Helmand 0%-20%
Kandahar
21%-40%
Nimroz
41%-60%
61%-80%
0 100 200 km
81%-100%
Data source: REACH, Afghanistan: Humanitarian Situation Monitoring, September-2022
cannot be employed. Among the KIs that reported should not work outside the home, 11.3% highlighted
women cannot be employed, 54% cited long-term security concerns as the primary reason (Cesifo Network,
cultural barriers or that women have never been able to 2022). The 2023 Women, Peace, and Security Index
be employed in their settlement, 16% pointed to new reported women’s perception of community safety in
bans or restrictions on women’s movement, and 14% Afghanistan at 39%, contrasting with 56% in Pakistan
cited lack of training opportunities for women to access and notably higher at 90% in Tajikistan. Respondents
local job opportunities (REACH, 2022b).21 The below map of the 2022 in-depth interviews cited new restrictions
highlights the stark differences between provinces in on women as the primary reason for not feeling safe.
Afghanistan of community leaders’ perceptions in the Among those reporting feeling safe while doing
ability for women to start a business, ranging from 6% in business, some mentioned feeling safe only at their
Helmand to 99% in Sar-e-Pul. home or workplace. One respondent reported being
harassed by wholesalers, while a few reported an
increase in incidents of robbery.
3.4 Safety for women
entrepreneurs Half of the respondents (24/49) reported being forced
to change business location after August 2021. The
most cited reasons for moving were security concerns,
During the in-depth interviews conducted in 2022, increased rent and/or the need to downsize business,
respondents noted persistent security concerns, restrictions on women’s mobility, or requests by elders
although these were reported less frequently than in the or family to relocate.
period before August 2021. According to a 2019 survey
conducted by the Asia Foundation, 18% of respondents Access to a safe work environment is impacting business
identified violence as the most significant problem activities, especially for women entrepreneurs engaged
faced by women. Among those who believe women in activities outside of the home. Women entrepreneur
21
HSM sampling strategy includes a broad range of population groups from host households, cross-border returnee households, IDPs households, and Pakistani refugee
households.

I Afghan women working in greenhouse. © UNDP Afghanistan
respondents in the saffron, valuable stones, handicraft, revealed that 52% of respondents in urban areas lacked
and clothing sectors emphasized the need for a safe and registration and licensing, while this figure rose to 71%
suitable workplace. Additionally, 11% of the respondents for respondents in rural areas. Sector-wise analysis
from the 2024 survey felt physically unsafe operating showed that 18% of respondents engaged in food
their businesses, while the remaining 89% reported production and processing, 23% in handicrafts, and
having only minimum safety for continued business 50% in clothing indicated that they were registered and
operations. licensed. Conversely, 17%, 26%, and 40% of businesses
in the same sectors were not registered and licensed,
respectively.
3.5 Registration and licensing
A significant number of respondents, especially
unlicensed business owners, reported being questioned
According to the Afghan Women’s Chamber of by the de facto authorities (19/49) about their license
Commerce and Investment (AWCCI), a large majority (7/49), their general activities (5/49), or issues specific to
(95.7%) of women- led businesses were unlicensed in the new restrictions, including being inspected for men
2021 (see Section 3.1). The types of licenses issued to and women working together in their place of business
women entrepreneurs varied, including municipality (5/49), being told not to allow men in their production
permits, licenses from de facto authorities for commerce, site (2/49), or being asked to follow hijab rules (3/49). A
industrial licenses, or general business licenses, with businesswoman in Kabul reported that the authorities
regional variations also observed. questioned her several times regarding her business
license and the activities in the market and expressed
The 2024 survey of women-led SMEs indicated that concern about her hijab.
64% of women-led enterprises were unregistered or
unlicensed, 28% affirmed holding licenses, while 7% Moreover, the de facto regime appears to insist on
were unsure, and 2% chose not to disclose. Urban areas licensing for reasons of security and taxation. The license
showed a higher proportion of registered and licensed requirement makes informal enterprises especially
businesses, with 40% of respondents confirming, vulnerable to pressure, intimidation, and persecution.
compared to only 20% in rural areas. Further analysis This is concerning as a significant portion of women-led

SMEs in Afghanistan operate in the informal sector and many respondents reported being unaware of the
work without a license (REACH, 2022). process required for registering their business. When
asked about the procedure for obtaining a license, many
3.5.1 Need for a license cited different institutions and procedures, which may
account for the 12 respondents uncertain about their
Most respondents (31/49) reported that they needed registration status. This highlights the complexity and
a license to operate their businesses, and some (9/49) lack of accessible information for women entrepreneurs
highlighted the importance of having a license, despite seeking to obtain a license.
not having one. Members of business organizations are
more likely to have a license than those who are not. Additionally, a respondent from Kabul noted that a
marriage certification was necessary to acquire a license.
Respondents reported that a business license provides She also recounted facing improper behaviour from
enterprises opportunities for increased sales and exports officials and being denied entry to the directorate when
(13/49) as well as access to business exhibitions (8/49). attempting to obtain a license.
Furthermore, official recognition from a governing body
means better relations with the de facto authorities, less
likelihood of paying fines, and ensuring public trust. 3.6 Networking and
Respondents (4/49) also reported that being licensed information access
provides access to bank loans.
As previously discussed, holding a business license, More than half of the women entrepreneurs (26/49)
has provided grounds for pressure and intimidation of interviewed during the 2022 in-depth interviews are
women. Respondents reported that without a license, members of a business chamber or association. The
people were less able to continue their businesses freely majority of them belong to the Afghanistan Chamber
and could be questioned, fined, or even shut down. of Commerce and Investment (ACCI) (15/26) and to
According to the 2024 survey of women-led SMEs, 24% the Afghanistan Women’s Chamber of Commerce and
of respondents admitted to making unofficial payments Industry (AWCCI) (14/26), or to both.
to sustain their businesses. However, the majority,
comprising 72%, did not engage in any unofficial Respondents confirmed the importance of membership
payments, while 4% preferred not to disclose whether in business organizations for networking and
they made such payments. Among the businesses staying informed about current economic issues.
making unofficial payments, a significant portion (60%) Nearly all (25/26) of the women entrepreneurs with
were unlicensed or unregistered, compared to 40% that organizational membership confirmed disruptions
had proper business documentation. in their organization’s activities after 15 August 2021.
Approximately half of those respondents (10/26) pointed
On the other hand, a few respondents spoke of the to new restrictions on women’s mobility as a primary
disadvantages of having a license. They mentioned that reason for the disruption of their activities, particularly
being licensed meant more reporting to authorities or their inability to attend meetings without a mahram or
being investigated by them. A few others mentioned to physically meet with other businesspeople, which
that being licensed could lead to restrictions in has reduced networking opportunities and access to
participation in meetings for women. information.
3.5.2 Barriers to obtaining a license The transition from face-to-face to online meetings has
for women entrepreneurs further hindered women’s active participation, driven
by significant disparities in internet access. In 2022,
Women who operate without a license often face while 25% of men reported having internet access,
financial constraints, either due to the escalating license only 6% of women did. Moreover, there is a noticeable
fees or a lack of awareness about the registration urban-rural divide, with 9% of urban women having
process. As noted by one respondent, the high cost of internet access compared to only 2% of women in rural
business licenses makes them unattainable for many areas (Gallup, 2023). These considerable disparities in
women-led enterprises. According to the Afghanistan internet connectivity are likely to exacerbate women’s
Central Business Registry (ACBR), the fee for a business challenges in maintaining business networks and
license was AFN 2,500 (USD 30) in 2018. However, this fee relationships, underscoring the urgency of addressing
increased to AFN 17,500 (USD 200) in 2022, and further digital inequalities for more inclusive professional
rose to AFN 16,000 (USD 223) in 2024. Furthermore, engagement.

4.
Recommendations
4.1 Strengthen business
support and trade facilitation 4.2 Provide vocational training
for women entrepreneurs and information-sharing
The main recommendation of this report is to Vocational training plays a crucial role in equipping
strengthen local trade facilitation and business support enterprises with much needed skilled labour, enabling
functions by identifying and leveraging local private them to diversify their skills and business activities.
networks, such as chambers of commerce, guilds, and Given the ongoing restrictions on women’s education
women’s cooperatives. Trade facilitation and business hindering access to technical and vocational training,
support platforms can support in various aspects, there is a pressing need to enhance community-based
including product development, input support, access training initiatives. These programmes should focus on
to finance, digitalization, technical assistance, market technical skills, such as marketing, digital proficiency,
research, support for expansion, e-commerce platforms, accounting, and information-sharing on international
networking, access to information, and licensing certification, quality control, markets, and emerging
assistance. technologies. Additionally, they could provide guidance
on export/import procedures, customs regulations,
Establishing dedicated platforms within existing shipping logistics, documentation requirements, and
business support structures can effectively bring accessing financing or grants for international trade.
together individual enterprises and cooperatives to pool Training sessions could be integrated into the above-
resources and seek external contributions, such as from mentioned business support platforms.
non-governmental institutions. Enabling a collaborative
environment can reduce expenses related to electricity, Specific industry needs include the following:
rent, equipment, licensing, business organizations
membership fees, internet, and ICT equipment, while » Women entrepreneurs in sectors like carpet weaving,
also strengthening the bargaining position of women clothing, and handicraft require trade-specific
entrepreneurs vis-à-vis large traders, input suppliers, technical skills to address the challenges of skilled
credit providers, de facto authorities, banks, etc. labour migration.
Finally, these platforms can facilitate the formalization » Women entrepreneurs in the dried fruits and
of women-led enterprises by enabling licensing and saffron sectors require training in the use of modern
membership in business organizations. One potential technologies, administering chemical preservers,
approach is to organize enterprises within a specific and storage techniques.
sector and region into clusters, functioning as a unified
entity for taxation, licensing, and business organization » Women need a dedicated fund, in collaboration with
membership. This strategy would significantly lower international organizations and non-governmental
costs and promote local solidarity among enterprises. organizations, to facilitate internships and
apprenticeships in order to gain both theoretical
knowledge and essential practical experience.
29
I Afghan women demonstrating machinery at UNDP workshop. © UNDP Afghanistan
4.3 Support acquisition 4.4 Improve access to finance

of equipment, inputs
and infrastructure Even before 15 August 2021, restrictive collateral
requirements for bank loans affected women more than
men. Women entrepreneurs often relied on personal
The productivity and profitability of women-led savings and loans from family and friends to finance
enterprises, as well as others, have been adversely their businesses. However, with the depletion of such
affected by the increasing prices and diminishing sources in the post-15 August era, women entrepreneurs
supply of raw materials. Discrimination against women face significant challenges in financing their businesses.
entrepreneurs further hampers their access to essential Although many women prefer not to pursue formal
inputs for production activities. Insufficient processing loans, some respondents noted banks’ reluctance to
and packaging facilities have long been a challenge for lend to women. Moreover, obtaining a licence, often
Afghan producers in key exports sectors, such as carpet a prerequisite for bank loans, proves challenging
weaving, honey, saffron, dried fruits, and nuts. Specific for most women-led enterprises due to high fees.
industry needs are mentioned below: According to the 2022 in-depth interviews and 2023
FGDs, respondents proposed to reduce the bureaucratic
» Carpet sector: Producers require cutting, washing, burden and costs in obtaining loans.
and finishing facilities, which depend on essential
infrastructure such as water and electricity. The pooling of resources by women’s businesses can
facilitate access to loans by increasing the potential for
» Saffron sector: Packaging facilities are essential for providing the collateral required for bank loans. For
standardizing products. example, implementing group guarantor mechanisms
to replace collateral may enable women-led micro and
» Dried fruits and nuts sectors: Producers need cold small businesses to easier navigate the requirements
storage facilities and chemical fertilizers. for financing. This model has been adopted by certain
Afghan microfinance organizations for small loans.
» Honey sector: producers require access to bee Increasing access to finance may also enable acquisition
medicine. of equipment and other facilities through leasing
mechanisms.

4.5 Enhance digitalization 4.6 Facilitate market research
initiatives and business expansion
Affordable and accessible internet, ICT equipment Across various sectors, respondents emphasized the
and digital literacy are key for improving the survival importance of marketing and business development
chances of women’s businesses in Afghanistan, skills to support women entrepreneurs in accessing
especially considering the current restrictions on international markets and expanding their businesses.
women’s mobility. Digital technologies offer women Local platforms can provide businesswomen with
the opportunity to access international markets without research and know-how on market opportunities and
intermediaries or encountering discrimination from the trends. These platforms could offer tailored information
de facto authorities. Moreover, digital payment systems services to collect and analyse data targeted at women
can help women avoid high fees charged by hawalas. entrepreneurs, identify competitive advantages, and
Importantly, women entrepreneurs who have access pinpoint market gaps. Consideration should be given to
to the necessary equipment and infrastructure have implementing acceleration and incubation programmes
attributed the continuation of their business activities to to support business expansion and capitalize on broader
digital initiatives. market opportunities. Collaborating with business
organizations, local platforms can facilitate networking
Local community groups can help women-led opportunities and access to crucial information for
businesses to pool resources and provide a venue where women entrepreneur members and non-members.
women can access the internet and computers. Local
platforms, situated within local Chambers of Commerce
and Investment, can serve as hubs for women to receive 4.7 Support licensing processes
training in digital literacy, marketing, and digital financial
training and tools.
Official recognition through a business license is critical
The reluctance of large traders and wholesalers to for conducting business activities in Afghanistan,
engage with women entrepreneurs poses a significant gaining tax benefits, accessing finance and, not least,
challenge for women exporters across various sectors reducing the occurrence of intimidations from the de
(carpet weaving, honey producers, valuable stones, facto authorities. Local platforms and groupings can
saffron, dried fruits and nuts, handicrafts, and clothing). streamline licensing processes by registering multiple
This reluctance leaves women vulnerable, compelling businesses under a unified cooperative. This approach
them to sell their products at reduced prices. Moreover, would significantly reduce license fees and address
the requirement for women to be accompanied by a challenges related to understanding and navigating the
mahram when travelling outside the home increases licensing requirements.
transaction costs, particularly transportation expenses.
Establishing an e-trade platform could alleviate the 4.8 Create safe and
dependence on intermediaries, like large traders and
reduce transport costs. However, the success of such a
suitable workplaces
platform would depend on robust digitalization efforts
and targeted training, supported by local initiatives and The absence of safe work environments impacts
infrastructure. business activities for many women entrepreneurs
engaged in activities outside their homes. Establishing
shared workspaces for women entrepreneurs can
address some safety and security concerns, as well
as enhance cost-effectiveness. By strengthening the
already established safe spaces, women-led businesses
will be better able to thrive.

I Woman farming in Afghanistan. © UNDP Afghanistan
5.
Conclusion
Following August 2021, the business activity of women entrepreneurs and women-led enterprises, like that
of other enterprises, was significantly reduced. The main challenge facing the private sector is a decline in
demand and a shortage of financial resources, along with reduced exports. Businesses of all sizes are grappling
with diminished demand, weakened purchasing power, and high input costs, compounded by a dysfunctional
banking system, all contributing to declining revenues. Traditional sources of finance, including personal
savings and loans from family and friends, have dried up, placing enterprises under considerable strain to meet
their working capital requirements and sustain operations.
These developments have had a disproportionate Women entrepreneurs and women-led businesses play
impact on women entrepreneurs and women-led a pivotal role in Afghanistan’s transition from an aid-
businesses, which face the dual burden of economic dependent to a private sector-led economy. Key export
recession and gender-based discriminatory policies that sectors where women entrepreneurs and workers
restrict women’s economic participation. Discrimination are prominent actors, including handicrafts (carpets)
has especially affected women in export sectors where and food processing (dried fruits, nuts, and honey)
they must engage with men traders and wholesalers. are also key for increasing income levels. Within this
Mobility restrictions have further limited the ability of framework, addressing the challenges faced by women,
women entrepreneurs and women-led businesses to in addition to meeting their immediate needs to remain
access markets and business networks, and to exhibit in business, can significantly contribute to the country’s
their products. Moreover, safety concerns continue poverty alleviation goals, enable the creation of new
to pose significant constraints on women’s business employment opportunities, boost local economic
activities, despite a general improvement in security growth, and improve human development outcomes.
after August 2021.

Annex 1:
Sectors with export potential
for Afghanistan 22
In the past two decades, the main commodities that As in the dried fruits and nuts sector, exports of
Afghanistan exported were dried fruits and nuts, saffron reached their peak in 2020 at 45.4 million USD,
carpets, saffron and valuable stones. Amidst the Covid-19 accounting for 5.8% of Afghanistan’s total exports.
pandemic and prior to the shift in power, exports of Afghanistan is the 3rd largest exporter of saffron in the
dried fruits and nuts reached their peak in 2020 at 313 world, only behind Iran and Spain and its share of saffron
million USD accounting for 44.2% of Afghanistan’s total exports globally was as high as 18.94% in 2020. Afghan
exports. In the same year, Afghanistan was the 17th saffron is reputed to be among the best in the world
largest exporter of dried fruits and nuts in the world (Afghan Embassy Ottawa, 2021). The Herat Province
with the main destination of exports being India (12 produces large proportion of Afghanistan’s saffron, and
million USD), Pakistan (9.05 million USD), China (1.42 it has replaced opium cultivation in this region because
million USD), United States (996,000 USD), and Canada it fetches higher prices in foreign markets.
(724,000 USD) in 2020.
Finally, beekeeping and honey production in
Carpets vied with dried fruits and nuts as the country’s Afghanistan is a growing sector with export potential
most important export, though production for exports and presents important livelihood opportunities. In
has been volatile. During its peak in 2005 carpets addition to honey, beekeeping can produce other
constituted 56.2% of Afghanistan’s total exports. Carpet valuable products with export potential such as wax,
exports started to drop in 2008 and picked up again in pollen, and venom. Honey, in addition to being a highly
2013. However, there has been an almost steady decline nutritious food product, is used in the perfume industry
since 2016. and in traditional medicine. In 2020, Afghanistan’s high-
quality honey was exported to Saudi Arabia, Kuwait and
UAE, and has further growth potential.
Figure 8: Afghanistan Dried Fruits and Nuts Export, Million USD, 1999-2022-1H
313
299 293 302
245 246
212
181 180
165
137 143
129
117 117 112
106
84 87
58 57
16 23
9
22
For carpet weaving and dried fruits sectors trade data sectors trade data was taken from the Afghanistan Statistical Yearbook. However, for honey and saffron this data was
not fully available. After the change in classification of trade items published by Afghanistan Statistical Yearbook, saffron trade data only became available after 2018. Due to
restrictions in data, BACI dataset, the CEPII database of international trade at the product-level, used as proxy.

Figure 9: Share of Dried Fruits and Nuts Export in Exports, %, 2004-2022-1H
56,2
54,3
44,8 44 44,2
40,5 40,7
37,8 37,3 38,6
34,4 35,8 34,9 34,5
33,5 33,8
30,9
29
19,3
84
Figure 10: Afghanistan Hand-made Carpet Export (Source: NSIA Year Book 2022)
220 216 100

200 90
184
180 80
160 150 70
145
140
60
120
98 50
100 86 89
40
80 67 70
30
60 49 44
19 38 20
40 31
25 22 24
4 18 17 15 10
20 1 1 0
0 0
Share of carpet export Amount of export carpet export, Million USD
Figure 11: Afghanistan Saffron Export, Thousand USD, 2006-2022-1H

45.400
29.351
27.018
25.608
14.445
10.781
7.983
7.135
5.609 5.564
4.636 3.993
416
4 24 132 84

Figure 12: Saffron’s Export Share in Afghanistan’s Export, %, 2006-2022-1H
5,84
3,40
2,93 2,92
2,06
1,39 1,39 1,3

1,12 0,98 0,93
0,70
0.11
0 0,01 0,02 0,02
Figure 13: Afghanistan Honey Export, Thousand USD, 1998-2022-H1
15
13
10 10
4 5 5
3 3
2
0 0 0 0 0 0 0 0 0 0 0 0 0 0

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Cover photo: Afghan women walking field in Bamyan. © UNDP Afghanistan

Lack of access to finance ............................................................................................................................................................................... 6

Decrease in demand for local products .................................................................................................................................................. 7

Decrease in exports for women-led businesses .................................................................................................................................. 8

Discrimination against women preventing access to suppliers and markets ........................................................................... 8

Need for licensing............................................................................................................................................................................................ 8

Concerns for safety and security................................................................................................................................................................ 8

Supply-side challenges and needs............................................................................................................................................................ 9

Skills, equipment, and networking needs............................................................................................................................................... 9

Absence of formal payment channels...................................................................................................................................................... 9

1.1 The Afghan economic situation......................................................................................................................................................... 12

1.3 Private sector............................................................................................................................................................................................ 14

2. Challenges for women entrepreneurs in Afghanistan................................................................................................................... 15

2.1 Access to finance...................................................................................................................................................................................... 16

2.2 Sources of finance................................................................................................................................................................................... 16

2.3 Reasons for limited access to finance.............................................................................................................................................. 17

2.4 Addressing barriers to loan access.................................................................................................................................................... 18

2.5 Payment systems..................................................................................................................................................................................... 18

2.6 Reduced market demand..................................................................................................................................................................... 19

2.7 Export restrictions ..................................................................................................................................................................................20

2.8 Supply side challenges in different sectors .................................................................................................................................. 21

4 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

3.1 Restrictions on women’s mobility ....................................................................................................................................................23

3.2 Reluctance of businessmen to interact with women ...............................................................................................................23

3.3 Barriers to Employment........................................................................................................................................................................25

3.4 Safety for women entrepreneurs......................................................................................................................................................26

3.5 Registration and licensing....................................................................................................................................................................27

3.6 Networking and information access ...............................................................................................................................................28

4.2 Provide vocational training and information-sharing ..............................................................................................................29

4.3 Support acquisition of equipment, inputs and infrastructure...............................................................................................30

4.4 Improve access to finance....................................................................................................................................................................30

4.5 Enhance digitalization initiatives....................................................................................................................................................... 31

4.6 Facilitate market research and business expansion................................................................................................................... 31

4.7 Support licensing processes................................................................................................................................................................ 31

4.8 Create safe and suitable workplaces................................................................................................................................................ 31

Annex 1: Sectors with export potential for Afghanistan..................................................................................................................33

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 5

6 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

» Very few interviewed women entrepreneurs were Decrease in demand

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 7

8 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

Supply-side challenges » During the 2022 in-depth interviews, more than

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 9

10 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 11

12 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 13

1.3 Private sector

14 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 15

16 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 17

2.4 Addressing barriers

18 RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan

2.6 Reduced market demand

RESEARCH PAPER | Listening to Women Entrepreneurs in Afghanistan 19