Healthcare Investment Opportunities in Afghanistan and Way Ahead
Afghanistan is a landlocked country with a diverse population in the heart of south-central Asia. The country has long been a prize -sought by empire builders and government superpowers- lying along important trade routes connecting southern and eastern Asia to Europe and the Middle East. In its 7th-century conquest by the Arabs, the name Afghanistan was applied to the region.
After nearly 20 years of U.S. occupation in Afghanistan, following Biden’s formal declaration in July 2021 and the commencement of the departure of Western forces, the Taliban rapidly took over various cities by force and resumed its severe tactics. By August 15, 2021, the Taliban had seized control of all major cities, including Kabul, the capital. President Ashraf Ghani fled the nation, and the Afghan government collapsed. Recent reports indicate that the economy of the country is in tatters as funds remain scarce and civilians are resorting to selling their organs in order to feed their families.
Economy of Afghanistan
Afghanistan has entered an economic crisis as a result of recent political changes. The Taliban took control in Afghanistan in August, causing significant effects across an economy that was already experiencing serious economic hurdles. Rapid reductions in foreign grant funding, loss of access to offshore assets, and disruptions in financial links are projected to result in a significant contraction of the economy, increased poverty, and macroeconomic instability.
Afghanistan had significant economic and development issues even before the collapse of the government. Up to August 2021, Afghanistan’s economic development was modest, reflecting low confidence amid a rapidly deteriorating security situation and severe drought conditions that hampered agricultural productivity.
Political Changes Triggering Economic Changes in 2021
During the first half of 2021, inflation progressively increased. In accordance with worldwide trends, energy costs jumped by 12% in the first half of the year. As the Taliban took border checkpoints and important transit hubs, supply lines were disrupted, prices for basic household necessities, including food and petrol, skyrocketed. Following the Taliban’s takeover, inflation surged even further, reflecting devaluation, stockpiling, and interruptions in foreign commerce.
Limited information is available regarding fiscal performance since the Taliban takeover. The interim Taliban government has resumed centralised customs collections, with daily collections equal to around 50-60 percent of the 2020 average.
Untapped Resources
Despite possessing mineral resources worth $1 trillion or more, it remains one of the world’s least developed countries. Afghanistan’s difficult physical topography and landlocked position have been mentioned as reasons why the country has historically been among the least developed in the modern age — a factor hindered further by current fighting and political turmoil.
Production, Imports and Exports
The country buys more than $7 billion in products but only exports $784 million in goods, mostly fruits and nuts. It owes $2.8 billion in foreign currency. The service sector contributed the most to GDP (55.9%), followed by agriculture (23%), and industry (21.1% ).
Current Economic Spending and Economic Laws
While donor funds are used to cover the majority of the country’s current account deficit, just a minor part is allocated directly to the government budget. The remainder is allocated to non-budgetary spending and donor-designated programmes via the United Nations system and non-governmental organisations.
Even before the Taliban took power, the majority of real estate owners had merely customary titles. Surveys were uncommon. Property rights were not adequately protected. Commercial court procedures were sluggish, and the judicial system was run haphazardly by a patchwork of legal rules controlled by inexperienced judges and local elders. Corruption pervaded society, impeding economic progress. Reforms aimed at reducing corruption have stagnated. Overall, the impartial rule of law is highly shaky.
Healthcare in Afghanistan
Afghanistan’s economy, and therefore even healthcare remains destitute and highly reliant on international assistance. According to the UN Office for the Coordination of Humanitarian Affairs, it is in a humanitarian catastrophe, with 24 million people – 60 percent of the population – experiencing extreme food insecurity and one of the world’s lowest living standards (OCHA). Needs have risen to 30% more than last year, and more than 50 percent of the population suffers from extreme hunger on a daily basis. Basic health, education, and other services are under great strain, livelihoods have been devastated, and people spend 80 percent of their meagre income on food (OCHA).
Poor Delivery Systems
As a result of years of poverty and violence, Afghanistan’s healthcare system has deteriorated, and it is often recognised as one of the world’s poorest healthcare delivery systems. Basic infrastructure and utilities are missing, implying a poor level of living. Afghanistan is defined as having “poor human development” and is ranked as one of the world’s poorest countries in the United Nations Development Programme’s Human Development Index. Due to the country’s low economy and lack of technological know-how, the Afghan government attempted to rebuild the healthcare system in the post-Taliban period, mostly with foreign funding.
However, with the Taliban regaining power and establishing control of the entire country in September 2021, there is a deterioration in healthcare services. Furthermore, depending on the Taliban’s relationship with donor countries, the flow of foreign aid may be impeded, as most countries have never recognised the Taliban administration of 1996–2001 as a legitimate authority.
Foreign Aid
There are initiatives to offer foreign help in the form of donations from other countries and the deployment of various non-governmental organisations (NGOs) such as Médecins Sans Frontières MSF (also known as Doctors Without Borders) and other Aid Agencies. Countries pledged funds for the Afghanistan Humanitarian Response Plan during the most recent High-Level Pledging Event, “Supporting the Humanitarian Response in Afghanistan,” sponsored by the Government of Qatar, the United Kingdom, and Germany in Doha, Qatar (HRP). The humanitarian appeal for 2022 is now 13.2% funded.
Healthcare Financing in Afghanistan
There are five basic health care financing instruments: government funding, social health insurance, community-based health insurance, private health insurance and private out of pocket.
In Afghanistan, the current situation is as following: –
National Health Service: Afghanistan has a national health service managed by the MoPH and financed by donors and the Government. It delivers health care goods and services based on the two packages, basic package of health services (BPHS) and essential package of hospital services (EPHS). By law, BPHS and EPHS services are fully subsidised by the government with the support of international donors. However, the 2011-12 National Health Accounts (NHA) found that 38 percent of household OOP expenditures were made at public facilities, about 30 percent for inpatient services and 11 percent for outpatient services. Furthermore, with the expansion and availability of public services, households continue to use and pay for private services. Of the 62 percent of OOP spending on private facilities, 36 percent is spent in Afghanistan and 26 percent is spent outside of the country. Afghans spend an estimated $300 million a year on medical treatment abroad, mostly in Pakistan, India and Turkey
Out Of Pocket Expenditure (OOPE): Households provide the largest source of funds for health care in Afghanistan, approximately 75 percent of the Total Health Expenditure (THE).
Social Health Insurance: Currently, there is no operational social health insurance. There was previous experience with social health insurance for civil servants and the formal sector during the 1960s and 1970s.
Community-based health insurance: There is no community-based health insurance currently implemented in Afghanistan.
Private health insurance: The role of private health insurance in Afghanistan is limited. A few insurance companies are newly established but there has not been any activity on health insurance products.
Investments into the Healthcare Sector
The Government of Afghanistan actively supports investment in the private sector as a means to creating a prosperous market economy in Afghanistan. Some recent investments into the healthcare sector are described below:
– Flash Appeal
The UN Office for the Coordination of Humanitarian Affairs (OCHA) issued a Flash Appeal on September 7, 2021, to raise $606 million for priority multi-sectoral assistance to help 11 million people survive as food runs out and the country’s basic services are on the verge of collapse.
A total of $413 million had already been budgeted for in 2021 HRP (Humanitarian Response
Plan) Requirements, with $193 million required in the last four months of the year to handle new developing demands and changes in operational expenses. Germany was the most generous contributor, contributing just under $240 million (21.2 percent of the total), followed by the United States of America with just over $190 million (16.8%), and the United Kingdom with just under $137 million (12.1 percent )
-High-level Pledging Event, 2022
In a high-level conference sponsored by the State of Qatar on March 31, 2022, delegates from the World Health Organization (WHO), UNICEF, funders, Afghanistan officials, and other humanitarian partners discussed interim health goals for Afghanistan for the following 18-24 months. The UN-coordinated aid mission in Afghanistan, which is the largest but not the only one, has sought $ 4.4 billion in investment, which is three times the amount requested in 2021.
At the end of the Pledging conference, the United States led the list of promises, giving slightly over $512 million in help for 2022. Co-hosts the United Kingdom, with over $374 million, Germany, with little under $220 million, and Qatar, with $25 million, were among the other donors. Only 13% of the required funds for the 2022 Humanitarian Response Plan have been raised thus far.
There were a total of 41 assistance declarations, with 15 of them earmarked for the Afghanistan Humanitarian Fund. Spain and Iceland, for example, have committed to financing Afghanistan through 2023 and beyond.
-UNICEF Funding of $2 billion, 2022
UNICEF is continuing to meet the humanitarian imperative by prioritising life-saving initiatives in response to the high needs of vulnerable Afghan children and their families. This would help with the urgent scaling-up of Water, Sanitation and Hygiene (WASH), health, nutrition, education, and child protection services by preventing critical systems from collapsing and protecting hard-won gains, including as the protection of women’s and girls’ rights. UNICEF is currently raising and soliciting $2 billion in financing for 15.3 million people in Afghanistan.
– Médecins Sans Frontières (MSF)/ Doctors Without Borders
Médecins Sans Frontières is a private, international association. The association is made up mainly of doctors and health sector workers who provide medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare.
MSF runs five projects in five Afghan provinces: Helmand, Herat, Kandahar, Khost, and Kunduz. In 2020, MSF teams provided 112,000 emergency room consultations, assisted 37,000 births, and undertook 5,600 major surgical interventions.
MSF has invested deeply into the healthcare fabric of Afghanistan, opening up and expanding hospitals, clinics and pharmacies, even in the midst of the Taliban takeover of August, 2021. MSF has pledged that it will pay for additional staff to be recruited and are also paying the salaries for staff working in the COVID-19 ward of Afghanistan’s hospitals.
-Other UN Funding
On 19th December 2021, Under-Secretary-General for Humanitarian Affairs Martin Griffiths welcomed the decision by the World Bank’s Afghanistan Reconstruction Trust Fund to transfer $280 million by the end of December to the UN Children’s Fund (UNICEF) and the World Food Programme (WFP).
Healthcare Investment Opportunities in Afghanistan
Afghanistan had seen, in the past, major investments into its steel, textile, marble, plastic and saffron industries and also into its telecommunications sector, but the current situation does not provide a conducive environment for trade and investments. Despite forecasts for high-return healthcare investments being unfavourable and meek due to the high-poverty levels of the population, there has been investment into the healthcare sector in the past- notably by the International Finance Corporation (IFC) that invested $4.5 million in 2009 in the Afghan Centre of Multi professional Education and Trainings (ACOMET) Family Hospital to expand access to healthcare and medical training in Kabul.
Current Investment Opportunities
Currently, there are no favourable profitable investment opportunities in Healthcare in Afghanistan in view of the ongoing crisis and economic instability, but with the situation in Afghanistan, however, it is imperative for governments and large funding organizations to organize, maintain and make sustainable efforts to donate to and invest in the healthcare sector of the country as a goodwill initiative.
Goodwill Investment Required from Donors
The US and other donor countries must offer more significant financial assistance to countries like Pakistan, where huge numbers of Afghan refugees are migrating to and are already staying. They should pay special attention to ensuring that Afghan women and girls have access to healthcare, particularly reproductive and sexual health services, as well as work permits. Female Afghan refugees should be allowed to enter and integrate into the social and economic fabric of society by donor states.
The intersecting problems in Afghanistan have produced a dangerous scenario, one from which some donors and governments are beginning to withdraw. Ultimately it is the Taliban’s efforts that have resulted in the current state of Afghanistan, but nonetheless, the US shares a large share of the blame for some of Afghanistan’s present issues. The United States must attempt to restore the Afghanistan assets that it has currently blocked, and along with donors and international organisations, they can help by demonstrating a genuine and long-term commitment to the Afghan people.
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