Afghan exodus impacts on fragile border economy

Wahid Shah, a bus driver operating on the bustling route between Hayatabad and Peshawar city in Pakistan’s North West Frontier Province (NWFP), is worried about his business following the repatriation of Afghan refugees. "We are devastated, there are no commuters and the vehicles are becoming a burden," Shah told IRIN. He used to earn about US $15 a day making several roundtrips on the 20 km long route that connects important business and residential areas in the city. But after the repatriation of up to a million Afghans he has lost many passengers. Shah has three buses, but now he wants to sell two of them because keeping them running is increasingly difficult. However, finding buyers for his buses might prove a daunting challenge because they have already lost half of their value and there seems to be no interest in investing in a shrinking market. While Afghan refugees were seen by many as a burden on the economy, their rapid repatriation from Pakistan, particularly from NWFP has caused a sharp downturn in the local economy, with many businesses recording severe losses and facing possible closure after the massive exodus. Experts believe that it’s too early to draw conclusions, but the lack of a proper plan to remedy the situation might further aggravate the impact. As many Afghans preferred to rent houses in Peshawar’s urban residential areas instead of living in the slum-like refugee camps, their departure has affected the housing market as well as the service and manufacturing sectors of the fragile border economy. Muhammad Nisar, a property dealer in Peshawar’s posh Hayatabad township, told IRIN that more than 60 percent of people living there had left for Afghanistan. "I used to earn about US $1,000 a month, now I earn less than $500," he said. Hayatabad was a favourite suburb among Afghans. Rents that once rocketed to $200 a month for a three bedroomed small house have gone down to less than $80. "Afghans used to live on remittances sent by their relatives from abroad, the local customers simply cannot afford that," Nisar explained. Property prices have also gone down considerably. "This is the mere beginning because the traders are still staying back, their departure will result in a massive crisis," he predicted. Just a year ago many local traders in Peshawar bitterly resented Afghan refugees - to the extent that they launched a drive to oust them. The Sarhad Chamber of Commerce and Industry is now cautiously gauging the economic impact of the voluntary exodus. "There is a kind of a mixed impact," said Faqir Muhammad, secretary of the chamber. Muhammad maintained that on the positive side, local consumers might get relief from the decreasing rents and a decrease in the pressure on civic amenities and infrastructure. "On the other hand they [Afghans] had a huge investment in the local market, which will have a lasting influence on the overall economic situation," he said. In addition to their contribution as consumers of housing and transport, the Afghans community had important stakes in many industries and businesses, such as carpets, gemstones and leather products. They also provided the bulk of cheap labour in sectors such as match making, construction and even agriculture. Some businesses will not be able to continue if they have to hire local Pakistanis at higher wage rates, the chamber of commerce believes. But there is a plus side too. "Although it will increase the cost of production it will increase the chance of employment for locals," he said. Highlighting the dependence of NWFP on Afghans, Muhammad asserted that over the past two decades they had mingled to the extent that they were no longer economically segregated entities. "These are transitional effects, in one year the locals will occupy the businesses done by the Afghan refugees," he said with optimism. However, Rafique Shinwari, another trader did not share such optimism. "The flight of Afghan capital, investment and manpower will have a crippling effect on the economy of NWFP generally and Peshawar particularly," he told IRIN. Rafique’s business in Peshawar’s smuggler’s market or Karkhano Bazzar came to a standstill following the US-led military campaign in Afghanistan. The multi-billion dollar industry of illegal cross border trade is mostly controlled by Afghans and their departure would pose the most difficult challenge for the existence of such commercial activity, he said. A walk along Peshawar's bustling streets reveals far fewer Afghans at work and leisure than half a year ago. Their absence indicates a brutal phase of history might be finally over for Afghans, with political, economic and social reconstruction gaining momentum in their country after decades of bloodshed. The squalid Nasir Bagh and Jalozai Afghan refugee camps close to the city are now officially closed. Although the return of so many Afghans is a huge confidence booster for the emerging country, about a million remain in Pakistan. And many Afghan traders in and around Peshawar remain ambivalent about going home so soon. Muhammad Hakim, an Afghan trader in the same market explained that there was no banking system and that security remained volatile in his country. Hakim's children attend English medium schools and he has made a huge investment in Peshawar, which will need some time to wind-up. "We are carefully watching the situation," he said. Along with fellow traders, he visited Afghanistan's capital Kabul two months back to judge their prospects. But if people like Hakim do take the plunge, as so many others Afghan have done, Pakistani border cities like Peshawar are likely to have a bumpy economic ride for the forseeable future.