LocationsIn Afghanistan, Why the Private Sector Is Important to Support
February 15, 2026
An MSMEs entrepreneur selling her products to a customer.
As part of the United Nations Development Programme (UNDP) Afghanistan communications team, I have traveled to many provinces and seen some things that will always stay with me: women, even while facing many restrictions, still want to work, contribute, and support their families.
In 2025, during my visit to Kunduz for the REVIVE project launch, we sat with women from local communities. Every one of them spoke with hope and determination, asking for support to start or grow small businesses. This aligns with UNDP’s commitment to empowering women and promoting inclusive economic opportunities, ensuring that women’s voices and aspirations are central to our programming. I felt the same spirit in Herat, where women entrepreneurs are doing everything, they can keep their businesses alive and build a better future.
Products by Banowan Food-Processing Company in Herat, locally sourced and processed into noodles, tea, and dried fruit, now distributed across western Afghanistan.
One example of how private sector support translates into real impact is the saffron processing business founded by Shabita, a university graduate from Herat. After the change in government and increasing limitations on women, she turned her family’s knowledge of saffron cultivation and processing into an enterprise, starting with a personal investment of 200,000 AFS (EUR 2,390). Her business engages in saffron cultivation, processing, sorting, and packaging, purchasing saffron from rural women farmers and expanding women’s economic participation. Products are packaged to standardized quality, enabling access to international markets, and her products have been showcased at trade exhibitions in Afghanistan and abroad.
Shabita’s story illustrates how targeted support and capacity building from UNDP and partners can transform local knowledge into internationally competitive businesses, contributing directly to sustainable livelihoods and gender equality goals. In March 2023, she was selected by UNDP, under the EU-funded “Protection of community-based livelihoods and local economic activities in Afghanistan” project, to receive a EUR 23,870 grant to scale her business operations. With this support, she purchased saffron processing machinery and packaging equipment, hired 20 women employees in her workshop, and engaged additional rural women growers. As a result, her processing capacity and efficiency improved significantly. She achieved a 30% increase in income, created new jobs for women in Herat, and is now working toward export certification and greater market access.
Shabita’s saffron business in Herat, supporting rural women farmers and creating jobs while bringing locally processed saffron closer to international markets.
Since August 2021, Afghanistan has experienced sharp declines in trade and output. This has hurt the livelihoods and well-being of millions of Afghans. While modest GDP growth later returned, with improvements in revenue collection, currency stability, and security, many people continue to face severe economic challenges. In this context, the private sector is emerging as a critical pathway toward resilience and recovery. UNDP’s interventions are designed to address these challenges by fostering a resilient private sector, enhancing local capacities, and supporting market access and job creation. In this context, the private sector is emerging as a critical pathway toward resilience and recovery.
According to the latest UNDP Afghanistan report, Private Sector Mapping in Afghanistan, micro-, small-, and medium-sized enterprises (MSMEs) continue generating output and employment, supporting livelihoods for millions, including women. UNDP Private Sector Mapping provides actionable insights for policy makers, donors and stakeholders, guiding targeted investments, and identifying priority sectors for growth. Efforts are underway to reinvigorate private sector activity, boost trade and investment, accelerate growth and job creation, and strengthen household livelihood resilience.
Herat, Afghanistan
These efforts identify obstacles to business growth, market access, and sustainability; assess labour trends, skills gaps, and workforce mobility; and examine industrial parks as hubs for business support and market access.
Afghanistan’s private sector shows strong economic potential across key industries. Agriculture contributes nearly one-third of GDP and has over $350 million in untapped export potential, especially in saffron, dried fruits, and nuts. The textile industry is valued at $400–500 million, while food and beverage exports reached $12.6 million in 2022, with further room to grow. The metals sector holds $1.09 billion in untapped export potential. Extractive industries are significant, with an estimated $1 trillion in natural resource wealth, including 30 million tonnes of copper, 1.7 billion tonnes of iron ore, and proven reserves of 1.6 billion barrels of oil and 16 trillion cubic feet of natural gas.
UNDP’s ongoing work focuses on leveraging these opportunities through innovative partnerships, technical assistance, and support for MSMEs, ensuring that economic gains are inclusive and benefit vulnerable groups. There are also major opportunities in the energy, finance, and digital sectors. Only 40 percent of the population is connected to the national electricity grid, yet the country has vast renewable energy potential, including 222,000 MW of solar and 67,000 MW of wind capacity. In finance, approximately 7% of women have access to bank accounts or formal financial services compared to 20% of men, while approximately 50 percent mobile penetration and over $5 billion circulating annually through informal Hawala networks demonstrate strong potential for digital financial growth. Banking liquidity could potentially expand from $2 billion to $10 billion. Healthcare remains under-resourced, with four hospital beds and three doctors per 10,000 people, yet medicinal plant exports already reached $20 million, highlighting another growing sector.
By supporting innovation, digital transformation and financial inclusion, UNDP aim is to catalyze new sectors and bridge gaps in service delivery, ultimately promoting inclusive economic growth.
We invite all stakeholders, national and international investors, the Government, and the international community to continue supporting initiatives that strengthen Afghanistan’s private sector and help unlock sustainable economic growth in the country. Continued collaboration and investment from donors and partners are essential for scaling impact, driving progress and ensuring that Afghanistan’s private sector realizes its full potential.Munisa Rashid, Communication Analyst, UNDP Afghanistan