Private Sector is Key to Afghanistan’s Economic Recovery, New UNDP Report Shows

Kabul, February 2026 - A new UNDP Afghanistan report released today, Private Sector Mapping in Afghanistan, finds that despite the recent economic contraction and years of under investment, Afghanistan's private sector holds significant untapped potential to strengthen community resilience, drive economic recovery and generate much needed employment across the country.

The report provides the most comprehensive assessment of the private sector in Afghanistan since the August 2021 transition in power. The report analyses the constraints and opportunities facing Afghan businesses across nine sectors including agriculture, manufacturing, finance, ICT, energy, extractives, construction, healthcare, and tourism. It outlines essential reforms needed to unlock investment, strengthen value chains, and enable job creation, particularly for youth and women.

Afghan businesses struggle with a range of challenges including limited access to finance, inadequate energy supply, fragmented market information, and unpredictable regulatory processes. Only 6 percent of Afghans hold a bank account, and financial flows remain dominated by informal systems. High transport costs, poor border infrastructure, and inconsistent customs procedures further erode competitiveness. Across all sectors, severe skills gaps remain due to decades of conflict and under investment, and restrictions on women and girls' education and employment.

Yet the report emphasizes that major opportunities exist. Agriculture, which contributes nearly one-third of GDP, has strong export potential in saffron, dried fruits, nuts, and high-value crops. Manufacturing industries such as textiles, food processing, pharmaceuticals, and metals could expand significantly with investment in processing capacity, renewable energy, and logistics. Afghanistan possesses substantial renewable energy potential, including an estimated 222 GW of solar and 67 GW of wind resources. Emerging growth prospects exist in ICT, where digital connectivity and fintech solutions could increase financial inclusion, particularly for women-owned and rural enterprises.

"The private sector is a lifeline for millions of Afghans," said Stephen Rodriques, UNDP Resident Representative in Afghanistan. "With the right investment, targeted incentives, and an enabling environment that includes women, the private sector can serve as a powerful engine for economic resilience, job creation, and long-term stability."

The report highlights a range of priority interventions to enable private sector growth. These include strengthening Special Economic Zones (SEZs) in Herat, Kandahar, and Mazar-e-Sharif; expanding digital and Islamic finance tools; improving trade facilitation through corridors such as Chabahar and the Lapis Lazuli corridor; and empowering public-private dialogue platforms that allow Afghan enterprises' priorities to be better reflected in economic decision-making. It also emphasizes the critical importance of women's economic participation, without which Afghanistan's recovery will remain constrained.

UNDP stresses that fostering a more conducive business ecosystem, supported by renewable energy, finance for SMEs, skills development, and regional trade integration, is essential for sustainable growth. The report underscores that enabling Afghan businesses to thrive is vital to reducing aid dependency and paving the way for a more self-reliant, prosperous future.

Download the Report

MEDIA CONTACTS

In Kabul:Matthew Duncan - Communications Specialist - [email protected]

Munisa Rashid - Communication Analyst - [email protected]
In New York:
Raul de Mora Jimenez - Communications Specialist - [email protected]