Afghan small businesses struggle to hold on as economy slumps
“We no longer make men’s shoes. All the men are unemployed,” explains Abdul Bashir, 55, owner of the workshop. He’s made shoes his entire adult life – through civil war, periods of communist and Islamist rule, a ruinous flood of cheap Chinese shoes and two decades of conflict between the Taliban and state-backed Afghan forces. -United.
Now, eight months after the Taliban took over the country, he and other small business owners face their worst crisis yet. Everywhere, sales are down drastically. The new rulers have promised some relief, including a partial forgiveness of back taxes and a slight reduction in income tax. But many doubt that symbolic gestures will reverse their plummeting fortunes.
“Cutting taxes won’t help us if we can’t sell anything, pay rent or keep our workers paid,” said Bashir, whose company is one of about 120,000 small businesses in Kabul, ranging from salons of beauty to manufacturers of clay ovens. “We eat up all our income,” he lamented.
But the Taliban authorities are pursuing more radical changes. With nearly all foreign aid, banking and financial transactions halted, officials say they hope to boost domestic revenue by ending decades of corruption, modernizing government financial systems and creating the trust among local business owners.
Najeeb Ahmadjan, a government tax and tax administration official, personifies this vision. If successful, he said, their efforts should help ease the country’s economic crisis – and prove to Afghans and the world that the new leaders are both capable and committed.
“Before the arrival of the Islamic emirate, there was much more economic activity and international support. But there was also a lot of corruption,” Ahmadjan said, using the Taliban name for his government. “Now there’s a lot less support, but a lot less corruption, and a lot more commitment from the top. Government employees feel more energized and public taxpayers feel more confident.
In market stalls, workshops and one-room offices across the capital, the consensus seems to be that the Taliban have good intentions but have yet to figure out how to help small businesses, let alone run a large one. struggling economy. Some traders expressed their frustration and anger. Others had almost given up in desperation.
In a block of metal-roofed furniture showrooms filled with beds, desks and chests of drawers, owner Yasin Hamidullah said he had sold just one piece in the past month, a large wardrobe which he dropped for $60. He had just borrowed money to pay his monthly rent of $150, mainly to have a safe place to store his unsold inventory.
“When we had foreign customers, we could barely meet the demand. Now they are all gone and no one is coming to buy,” Hamidullah said. He decided not to pay his last $250 income tax bill, expecting to get the promised tax relief, but it never materialized. “I feel cheated,” he said. “I’m still paying the same tax I paid five years ago – and we’re not selling anything.”
Several miles away, in a maze of auto parts stores with mufflers and mirrors hanging from the ceilings, Samir Ahady faces another problem. The shelves of his store are filled with car batteries from Japan and Thailand. Since the Taliban raised customs fees, he said, his cost per battery has gone from $90 to $100, while his sales have plummeted.
“I have noticed positive changes. Taxes are faster and easier to pay,” Ahady said. “But the prices are all higher, people don’t have jobs and they can’t afford to have their cars repaired.”
“My income has dropped by 80% and my whole life has changed,” he added. “No more family picnics, no more meat for dinner, beggars everywhere. The future is totally uncertain.
Noor Ulhaq Omeri, who heads the association of small businesses and artisans in the capital, has a more patient approach to the new authorities. He has repeatedly met with Taliban officials and offered various forms of tax relief. Most have been turned down so far, but there is still hope.
“For many years the system was bad and there was a lot of corruption. You had to pay bribes for everything,” said Omeri, 55. “The new authorities seem determined to solve this problem, and we welcome that, but they have been far from governing for a long time. They can be honest, but there is a distance. People want to cooperate, but they are always suspicious.
Across the capital, at 22 neighborhood tax offices, daily interactions between small business owners and new government officials are beginning to close that gap. In Khushal Khan, a busy mixed-income neighborhood, the director of the tax office, Obaidullah Omarkhel, has only been on the job for six weeks.
One recent morning, Omarkhel sat at his desk, which was empty except for a stack of large, detailed maps of the neighborhood. Every few minutes another taxpayer would walk in hesitantly with a sheaf of papers in his hand. Omarkhel carefully reviewed the papers, then signed them and returned them with a few quips, sending the client to a nearby office to pay.
“I want to make sure I don’t make any mistakes,” Omarkhel said. “We want to encourage people to pay, not force them.”
While acknowledging the country’s long struggle with official corruption, he said he reassures his clients that things are different now. “I tell them the past is over,” he said. “I’m here now, and it’s my responsibility.”