Question

Most of the people of Afghanistan are engaged in small businesses, but the poverty ratio reached to 56% in 2019. When the government of Afghanistan locked down the major cities, does it have impact on the poverty? (Please explain in 500 words).

Answer 1

According to the World Bank Report, Afghanistan is a high-intensity conflict among the FCS countries(Fragility or conflict-affected states). According to the report majority of the people in these states will be in the poverty trap if certain steps are not taken to prevent the spread of the deadly virus. The COVID -19, unlike the other global crisis, has induced a complete lockdown of business, industries, and organizations inducing a supply shock. Small businesses in Afghanistan are terrified and are in a dilemma as to how to provide for their families as the small shops or business was the only source of revenue. People have been observed stating that they will die of hunger before the virus. This indicates that people are finding it difficult to even have 3 square meals a day aggravating the situation of poverty as due to the shutdown the revenue is practically nothing. This supply shock induces a demand shock as due to the reduction of money in hand consumption reduces and due to the policy of social distancing people tend to avoid contact. For instance, a coffin maker stated that all though there were deaths reported people have not been purchasing the coffin as prefer to just cremate with cotton and this is also due to the fact that people are currently poverty-stricken and are falling deeper and deeper into the vicious circle of poverty. The government is taking action but due to a fall in revenue from custom unions and other sources, the government is running on a deficit. The lockdown has drastically affected the local business and firms which were providing the major exports hence affecting the government revenue again. Hence to avoid the vicious circle the government and private sector are working together so as to address and identify steps to come out of the crisis.