Current State of Manufacturing and Service Sectors of Afghanistan

The small and medium-sized enterprises indeed are argued to be effective tool for economic development in developing countries. These businesses play significant role in the growth rate of manufacturing and service sectors, stabilizing economy, encouraging innovation, creation of employment opportunities and revenue generation. The manufacturing and service enterprises make-up about half of Afghanistan’s gross domestic product, which is literally considerable contribution to economy. The objective of this study is to explore and analyze current state of manufacturing and service sectors with taking care of the factors that contributed positively to growth of the gross domestic product, manufacturing and service sectors, generation of employment, economic stability and industrial development. Afghanistan’s gross domestic product is estimated to have contracted by 30 - 35 percent between 2021 and 2022 and is projected to move to a low growth path of 2 and 2.4 percent for 2023-2024. The proportion of employed population in manufacturing and service sectors was relatively less in rural areas compared to urban areas, however service sector has been the growth driver and hired majority of the skilled labour force following with manufacturing sector. The manufacturing and service enterprises are vital component of nation’s economic growth and development plan since enterprises with less than 100 workers make-up 80 to 90 percent of almost entire Afghan trade, constitute 50 percent of gross domestic product and utilize 75 percent of manpower available in market.