How Refugee Networks Are Draining Pakistan’s Economy.

The Afghan Economic Web; How Refugee Networks Are Draining Pakistan’s Economy

For over four decades, Pakistan has shouldered the world’s longest and most unregulated refugee crisis. What began as a humanitarian gesture in the 1980s has now transformed into a multidimensional economic, social, and security crisis — one that is silently bleeding Pakistan’s financial system and threatening its national stability.

1. The Hidden Economic Grip

According to recent intelligence assessments, nearly one-fourth of Pakistan’s circulating currency — approximately ₨3 trillion — is currently held by Afghan nationals living within the country. This concentration of liquidity outside state control poses a serious risk to monetary stability.

With such vast sums in hand, Afghan networks can buy dollars in bulk, manipulate the currency market, and trigger artificial depreciation of the Pakistani rupee. At the same time, they continue to smuggle U.S. dollars across the border, strengthening the Afghan economy at Pakistan’s expense.

In effect, Pakistan’s currency and trade mechanisms are being used to sustain Afghanistan’s parallel financial system.

2. A Case of Economic Parasitism

Since August 2021, when the Taliban took over Kabul, the Afghan economy has been largely isolated from global banking. Its daily operational demand for foreign exchange ranges between $10–15 million. Roughly half of this demand is being met through illegal dollar outflows from Pakistan — a clear indicator of economic dependency and cross-border money laundering.

Afghan traders purchase goods in afghani, sell them in Pakistani markets for rupees, convert those into dollars, and smuggle them back to Afghanistan. This constant loop drains Pakistan’s foreign exchange reserves and pushes the rupee into freefall.

What appears as “trade” on paper is, in reality, a cycle of systematic economic exploitation.

3. The Role of Corruption and ID Fraud

The crisis is compounded by institutional negligence. Pakistan’s National Database and Registration Authority (NADRA) has reportedly issued hundreds of thousands of fake identity cards to Afghan nationals over the years. With these forged CNICs, many Afghans have:

• Purchased property and commercial spaces,

• Established businesses under Pakistani names, and

• Entered national trade networks without taxation or verification.

The result is a vast shadow economy, immune to regulation and taxation, undermining Pakistan’s legal business environment.

Blocking fake identity cards is not a discriminatory act — it is a national security imperative.

4. The Security Nexus

The economic dimension is inseparable from the security threat. Afghanistan today harbors several anti-Pakistan militant organizations, including:

• Tehreek-e-Taliban Pakistan (TTP)

• Daesh Khorasan (ISIS-K)

• Balochistan Liberation Army (BLA)

These groups use Afghan territory to coordinate cross-border attacks and smuggling operations. In return, they are allowed safe passage and access to Afghanistan’s thriving black markets for modern weaponry — remnants of the U.S. and NATO withdrawal.

Thus, Afghanistan’s instability has been deliberately converted into a tool of economic and hybrid warfare against Pakistan.

5. Social and Criminal Fallout

Beyond economics and security, the uncontrolled Afghan influx has fueled a long list of social ills within Pakistan:

• Drug trafficking and human smuggling

• Illegal arms trade

• Prostitution and organized crime

• Extortion and money laundering

Afghan-run networks now dominate several informal markets — from textiles to electronics — while employing Pakistanis as low-paid laborers. The socio-economic imbalance has deepened resentment and eroded Pakistan’s urban security fabric.

6. Time for a Decisive National Policy

Pakistan can no longer afford ambiguity. The country must move from reaction to resolution. A comprehensive Afghan repatriation and economic protection plan is urgently needed, based on the following pillars:

1. Data Cleansing:

Immediate cancellation of fake CNICs and audit of NADRA’s refugee records.

2. Border Regulation:

Enforcement of biometric controls at all entry and exit points, coupled with strict currency monitoring.

3. Phased Repatriation:

In collaboration with UNHCR and international partners, design a humane but firm return strategy for unregistered Afghan nationals.

4. Economic Containment:

Ban unverified foreign nationals from property ownership and high-value trade activities.

5. Public Awareness Campaign:

Inform the Pakistani public that refugee management is not an act of cruelty, but of national survival and sovereignty.

7. Conclusion: Compassion Without Compromise

Pakistan has shown unparalleled generosity toward Afghan refugees for decades, but compassion must not come at the cost of economic collapse and national insecurity.

The time has come to redefine this relationship — not with hatred, but with clarity, justice, and strategic foresight. A nation that cannot safeguard its borders, currency, and institutions cannot ensure welfare for its own citizens.

Pakistan’s future depends on decisive action — now, not later.

By Syed Ali Raza Naqvi Bukhari

Unity of Peace, Economic Reform, and Global Unity

Founder & Chairman of Tehreek Istehkam Pakistan, and author of “Law of God” and “Social Democratic System.”

Advocates for truth, social justice, and reform in all sectors of society.