Economy

What next for Afghanistan's economy? – BBC News

Published

3 years ago

August 16, 2021

Harry Miller

Afghanistan’s economy is “shaped by fragility and aid dependence”.

That is the troubling overview set out by the World Bank several months before the Taliban takeover.

Economic prospects look even more precarious now, as future financial assistance is under a cloud of uncertainty.

Afghanistan does have substantial mineral resources, but the political situation has impeded their exploitation.

The aid dependency is striking. In 2019, World Bank figures show development aid was equivalent to 22% of gross national income (which is not the same as GDP, but close to it).

That is a high figure, but it is down a long way from the 49% the World Bank reported 10 years earlier.

Now those aid flows are under a cloud of profound uncertainty. German Foreign Minister Heike Maas told the broadcaster ZDF last week: “We will not give another cent if the Taliban takes over the country and introduces Sharia law.”

Other aid donors are sure to be watching developments closely.

Corruption woes

The fragility the World Bank refers to is illustrated by the very high levels of spending on security before the Taliban takeover: 29% of GDP, compared with an average of 3% for low-income countries.

Security and severe problems with corruption are behind another persistent problem in Afghanistan: very weak foreign business investment.

According to United Nations data, there were no announcements in the last two years of new “greenfield” investments, which involve a foreign business setting up an operation from scratch. Since 2014, there have been a total of four.

To take two other countries from the South Asia region, both with somewhat smaller populations, Nepal has managed 10 times as many and Sri Lanka 50 times more over the same period.

The World Bank describes Afghanistan’s private sector as narrow. Employment is concentrated in low-productivity agriculture: 60% of households get some income from farming.

The country also has a large illicit economy. There is illegal mining and, of course, opium production and related activities such as smuggling. The drugs trade has been an important source of revenue for the Taliban.

Mineral wealth

All that said, the Afghan economy has grown since the US invasion in 2001.

The figures for Afghanistan are not reliable, but what they show, according to the World Bank, is average annual growth of more than 9% in the 10 years from 2003.

After that, it slowed (which may well reflect the lower levels of aid) to an average rate of 2.5% between 2015 and 2020.

The country does have significant natural resources, which would, in the context of better security and less corruption, be attractive to international business.

There are several types of mineral available in substantial quantities, including copper, cobalt, coal and iron ore. There is also oil and gas and precious stones.

One with particularly striking potential is lithium, a metal that is used in batteries for mobile devices and electric cars. The latter application is going to be especially important as the motor industry makes the transition to zero-carbon forms of transport.

Back in 2010, a top US general told the New York Times that Afghanistan’s mineral potential was “stunning” – with “a lot of ifs, of course”.

The paper also reported that an internal US Defence Department memo had said the country could become “the Saudi Arabia of lithium”.

Yet this undoubted potential is nowhere near being exploited – and the Afghan people have seen very little, if any, benefit from it.

Foreign powers

There have been many reports that China is keen to be involved. It seems to have better relations with the Taliban than Western powers do, so may have an advantage if the new regime does hold on to power.

However, Chinese firms did win contracts to develop operations in copper and oil. But little happened.

It is to be expected that China would be interested. The opportunities appear to be very substantial and the two countries do share a short border.

But any Chinese agency – official or a business – would want to be confident of succeeding. They will be reluctant to commit unless they feel the security and corruption problems will be well enough contained to enable them to extract worthwhile quantities of these industrial commodities.

A key question for any hard-nosed potential investors – from China or anywhere else – will be whether the Taliban is likely to be any more able than the previous Afghan government to create the kind of environment they need.

In the immediate future, there is also a great deal of uncertainty about financial stability. Crowds of people have been trying to withdraw their money from the banks.

The Pakistan-based Afghan Islamic Press reported a Taliban spokesman as offering assurances to bank owners, money changers, traders and shopkeepers that their lives and property would be protected.

That there are even questions about the physical safety of financial operators is shocking. They do need to be confident if Afghanistan’s financial system is to function. But it also needs customers to feel their money is safe. That won’t happen quickly.

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Business

A timeline of events in the bread price-fixing scandal

Published

19 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

19 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

1 day ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

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