SPECIAL REPORT: Rapid remittance assessment in September 2012 Bamyan and Wardak Provinces Dependency on income from labor migration to Iran has decreased significantly over the past decade

Key Messages Figure 1. Projected food security outcomes, October to December 2012 In Bamyan and the northern districts of Wardak Province, dependency on income from labor migration to Iran has decreased significantly over the past ten years. This gradual trend has accelerated during the last three years. The reduction in the number of labor migrants going to Iran is primarily a result of increased domestic employment opportunities since 2001, Iran’s restrictions on labor in-migration, and the deteriorating economy of Iran.

A noticeable proportion of the population of Bamyan and the northern districts of Wardak Province have permanently moved to urban areas including Kabul, Hirat, and Mazar. The remaining population thus has increased access to natural resources such as arable Source: FEWS NET land, pasture, and water from irrigation. This map represents acute food insecurity outcomes relevant for emergency decision-making. It does not necessarily reflect chronic food insecurity. Visit www.fews.net/FoodInsecurityScale for more information. Given the better than normal production in 2012 which will contribute more than six months’ food supply for households, normal income from cash Figure 2. Assessed areas, rapid remittance assessment, August and September 2012 crops sales such as for potatoes, the 45 percent increase in sheep and goats prices compared to last year, food security outcomes for Bamyan and northern districts of Wardak province will be at the None or Minimal food insecurity phase (IPC Phase 1) over the coming six months.

While not expected in the most likely scenario, if Iran were to forcibly repatriate Afghan labor migrants, the impact on once-dependent provinces such as Bamyan and the northern districts of Wardak food security would impact some households, but it would not likely affect entire villages or have particularly large- scale impacts.

Source: FEWS NET Afghanistan

This report provides an update to the July 2012 FEWS NET Food Security Outlook for Afghanistan which estimated food security conditions from July to December 2012. The next Outlook report will be released in October and will cover the October 2012 to March 2013 period. FEWS NET Afghanistan FEWS NET Washington Kabul 1717 H St NW FEWS NET is a USAID-funded activity. The authors’ views expressed in this publication do not necessarily reflect the view of the United States Agency Washington DC 20006 for International Development or the United States Government. [email protected] www.fews.net/afghanistan SPECIAL REPORT: Rapid Remittance Assessment in Bamyan September 2012 and Wardak Provinces

Background

Early in the spring in March and April, the wheat harvest prospects were widely estimated to be above average over most of the country with exceptions in high elevation areas of the central highlands and the northeastern mountains. In those areas, temperatures had been well below normal during most part of the wet season since late November 2011. As a result, crops growth had been slower than normal in the central highlands and extreme northeastern mountains. Some local farmers were worried about potential grain crop failures. This situation became a source of concern, and the food security outcomes in the central highlands if the wheat harvest was poor because of the cold temperatures required further investigation.

In addition to crop and livestock production, existing livelihoods information indicated that the east-central mountainous agropastoral livelihood zone depends heavily on income from labor migration with labor income, including income from temporary migration both abroad and domestically along with remittances from labor migrants, being the largest, single source of income for poor households. The area was believed to send a large number of migrants to Iran, among other income generating strategies to produce income to buy food. Market purchases often provided more than half of a household’s food. A 2008 study by the International Labor Organization (ILO) and the U.N. High Commissioner for Refugees (UNHCR) estimated that remittances from Afghan labor migrants in Iran totaled around 500 million U.S. dollars (USD) per year and up to six percent of Afghanistan’s gross domestic product (GDP). In January 2012, new sanctions from several countries targeting Iran’s oil exports contributed to increased in Iran, large exchange rate fluctuations of the (IRR), and rising unemployment. In the early spring in March and April, anecdotal reports from the central highlands indicated that a significant reduction in the level of poor households’ income had possibly already occurred as remittances from labor migrants in Iran decreased or ceased completely.

With risk of a poor grain crop damaged by the cold and a potentially very large reduction of remittances, a rapid remittance assessment was undertaken by FEWS NET to better understand the extent of the remittance reduction, the ability of households to cope with changes to remittances, and the implications of changes this year for food security outcomes in a part of the country known for chronic food insecurity and a large number of very poor households.

Methodology

The rapid remittance assessment was a qualitative assessment using the methods of rapid rural appraisal (RRA) also known as participatory rural appraisal (PRA) to gain information on key trends and household-level outcomes. It does not represent a generalizable, scientific sample of the entire population of the central highlands, nor is it able to capture every individual household’s situation or the immense variation in conditions between all the villages in the central highlands. However, at the level of the livelihood zone, it can provide a general picture of remittances, other typical and atypical livelihood strategies being employed this year and over the past few years, and any livelihood adaptations being made by the residents of Bamyan and the northern districts of Wardak Province.

Participatory, guided interviews were conducted with 15 focus groups consisting of between 50 and 60 people, primarily men. Participants in the focus groups, the key informants, included local government officials, representatives of local and international non-governmental organizations (NGOs) working in particular villages, money changers, and village elders. In addition to the larger focus group interviews, in order to triangulate findings from the larger groups, additional interviews were held with 10 heads of households in the targeted villages. Phone interviews also were held with four labor migrants in Iran, in the presence of their household members to whom they remit money, to better understand the dynamics of labor migration and the decisions households make regarding remittances, other labor migration options, and other income- earning livelihood strategies.

Government officials, NGO representatives, and village elders were asked about what role remittances played in poor households’ income over the past 10 years, in order of magnitude and as compared to other potential sources of income. Also, key informants were asked how sources of income had evolved both over the entire mentioned period and with a particular focus on the last three years when Iran’s economy has encountered new challenges. In addition to the inquiry into remittances, other questions focused on livelihood strategies that had been newly adopted or coping strategies that

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SPECIAL REPORT: Rapid Remittance Assessment in Bamyan September 2012 and Wardak Provinces could be employed by poor households to counterbalance falling income from remittances. Data were also collected from household heads about the proportion of different sources of income, both for this year and over the past three years.

Local money changers who transmit remittances to rural areas through hawala transfers were interviewed to understand what the changes to the total volume of remittances per year were three years ago and so far this year. Additionally, locally used exchange rates for converting Iranian rial (IRR) to Afghan afghani (AFN) over time were gathered from money changers to understand the scale of the lost value as the IRR depreciated against the AFN.

Afghan labor migrants in Iran were interviewed by phone to understand their labor wages at present as well as over the last three years of working in Iran. Similarly, questions about the minimum living cost per labor migrant in Iran over the last three years were asked to better understand the impact of inflation in Iran was having on remittances to Afghanistan.

Though the assessment’s focus was on remittances, specifically remittances from Iran to the eastern parts of the central highlands, efforts were made to better understand 2012 crop production, the contribution of crops to household’s sources of food, other key livelihood activities, and the status of particularly vulnerable groups in Bamyan and the northern parts of Wardak Province.

Key findings

Twelve years ago, during the time of the civil war and during the persistent dry years from 1995 until 2002, remittances from Iran may have made up to 90 percent of total cash income for poor households in the eastern areas of the central highlands. Remittances were the key source of cash both for covering survival and livelihood protection needs. During this period, the vast majority of households had at least one, male member of their household as a labor migrant in Iran. However, the FEWS NET assessment team was pleasantly surprised that since 2002, there has been a tremendous decrease in labor migration to Iran as other livelihood strategies have taken on larger roles as sources of food and income for poor households.

The decline in labor migration to Iran has been encouraged, to a large degree, by increasing domestic employment opportunities offered in the post- period since 2001 including government employment in the national police, the national army, and the civil service. In addition to formal employment, domestic causal labor within Afghanistan has persistently provided seasonal employment opportunities. This includes agricultural labor along with casual labor opportunities with private employers, developmental projects within the central highlands, and urban casual labor in the major cities of Afghanistan such as Kabul, Hirat, and Mazar.

While the rate of labor migration to Iran has been declining, over the past three years, the decline has accelerated, partially due to tighter immigration restrictions imposed by Iran on Afghan labor migrants. Some political pressure for tightening restrictions on labor in-migration comes from rising unemployment and the poor economic and political conditions in Iran, driven in part by the sanctions regime.

Based on key informant interviews, compared to the last three years, there has been up to an 80 percent reduction in labor migration to Iran. In each village focus group, the village was asked to count or estimate the total number of labor migrants to Iran from the village from three years ago and currently. Villagers as well as money dealers who transfer remittance funds from Iran through the traditional hawala system confirmed the magnitude of the decline. The decline in total remittances from Iran ranged between 40 to 60 percent over the past three years. This was calculated using money changers’ own estimates of the value of remittances they handled, in Afghan afghani (AFN) terms. According to key informants, despite the sharp decline in labor migration to Iran, around one in 20 households have at least one male household member in migration in Iran. Phone interviews were conducted with labor migrants currently in Iran to better understand the relationship between daily wages in Iran, Iranian (IRR) value loss against Afghan currency (AFN), and inflation, which affects the labor migrants’ cost of living while in Iran. Since 2009, using unofficial, retail exchange rates as employed by money changers in the central highlands, the IRR has depreciated around 50 percent against the AFN. The interbank rate reflected a depreciation of the IRR against the AFN of 15 percent from August 2009 to August 2012. Over the same period though, labor migrants report a 125 percent increase in their labor wage rates, in Iranian currency terms. For example, three years ago the daily labor wage was 8,000 Iranian toman (one toman equals ten rial), which is around AFN

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SPECIAL REPORT: Rapid Remittance Assessment in Bamyan September 2012 and Wardak Provinces

400, and currently it is 18,000 toman, which is around AFN 450. The Afghan currency’s (AFN) value has been relatively stable in the past several years. For example, from August 2009 to August 2012, the value of the AFN only depreciated 3.7 percent against the USD, at official interbank exchange rates. Afghan labor migrants are then making around the same amount or a slightly higher than the amount of money than they were making three years ago for each day of labor. However, their expenses have increased significantly. Afghan labor migrants need to make enough income to cover their living costs in Iran, the costs of labor migration including transportation costs and often fees and various payments for illegal or extralegal entry into Iran, and funds to remit back to Afghanistan. Living costs in Iran have increased significantly with estimates being between well over a doubling of the cost up to a trebling of the cost. For example, one loaf of bread cost 200 toman (IRR 2,000) three year ago while in early September, it cost 600 toman (IRR 6,000). Similarly, the costs associated with being smuggled into Iran from Afghanistan have increased by around 75 percent compared to three years ago. Labor migrants to Iran report needing to work for at least six months just to be able to pay back smuggling costs.

Given the average size of Afghan households is seven people and that over half of the population is over 15 years old, Afghan households in the central highlands are able to now take advantage of an increasingly diverse set of income sources. For example, one male adult may work in Iran or in another country, and another adult male works inside Afghanistan outside of the village, while another adult male or woman handles agricultural production and animal husbandry at the household. With these different major sources of income, a household has a fairly diverse income stream and could, in a variety of usual situations without major hazard events, cover both survival and livelihood protection expenses.

For households that continue to have remittances from Iran in the various locations in Bamyan and the northern parts of Wardak Province that FEWS NET assessed, all had multiple sources of income in addition to the remittances from Iran. Nonetheless, a rapid assessment does not necessarily capture all types of households, so there, in theory, could still be some households for whom this is the predominate source of income. For these households, there would be vulnerability to a dramatic fall in income if the situation in Iran changed, especially during the first six months after labor migrants depart, as much of the income is still going to cover the costs associated with smuggling the laborer into Iran. However, the assessment team did not encounter any of these households during the assessment.

Other findings impacting on food security

In the focus groups, several questions related to food security were asked, to help inform assessment and classification of the area. The assessment team did not encounter any household in assessed villages that did not have food for the following night, either according to the household members taking part in the focus group or the other households in the village. Of course, chronic food insecurity remains a concern for rural areas of the central highlands.

The team also asked rural residents whether any household within their village was likely to have depleted their food sources within a month. The response was usually that there was not. In two of the fifteen village-level focus groups, participants identified one household in their community who was likely to not have food within a month. The participants claimed these were extremely poor households headed by widows or the very elderly. These findings were similar to those of staff from several local NGOs operating in Bamyan Province that acute food insecurity this year would be concentrated among the very poorest households who had limited numbers of adults of working age.

To better understand new social safety nets in Bamyan province, the assessment team visited the provincial office of the Ministry of Labor, Social Affairs, Martyrs, and Disabled. In Bamyan province, the Ministry is providing 43,000 households who have lost a household member in the war with survivor benefits equivalent to AFN 1,500 per month, a little less than USD 30 per month at August exchange rates. People who have died fighting in the war are locally referred to as martyrs. 3,500 disabled persons are receiving up to AFN 1,500 per month in Bamyan Province, as well. The disability benefits are on a sliding scale to account for partial disabilities and not provide disincentives for continued work, when possible. For example, some of the disabled receive only half the full benefit at AFN 750 per month. These social safety nets provide many recipient households with enough income to buy up to six months of staple food. For example, the annual survivor benefit would total AFN 18,000 per household. At August 2012 Nili market prices for wheat flour, this could provide over 600 kilograms (kg) of wheat flour, enough for more than half a year of staple food for most households.

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SPECIAL REPORT: Rapid Remittance Assessment in Bamyan September 2012 and Wardak Provinces

Beside social safety nets, other developmental programming in the central highlands is expanding livelihood options. The Agha Khan Development Network is offering up to a USD 1,000 loan to eligible households to invest in the livestock sector, a typical livelihood activity and income source in the central highlands. This size of loan is significantly larger than microcredit, and can allow for a much wider range of activities and investment.

This year, the above-normal precipitation during 2011/12 October to May wet season resulted in good pasture and water conditions for livestock. Subsequently, along with good harvests in other regions, sheep and goat prices in August were 45 percent above last year’s prices. This is going to help poor households who sell livestock in order to procure adequate food supplies before entering the winter and the lean season that starts in December in the central highlands.

Based on information from local officials of the Ministry of Agriculture, Irrigation, and Livestock (MAIL) and the assessment team’s direct observation, the 2012 cereal harvest in the central highlands will generally be higher than average, but there has been some delay in the harvest time. Usually higher elevations harvest by September, but this year, some harvest may be delayed into October. Some households estimate that this year their own production may be below average. However, previous livelihoods information from the central highlands indicated that poor households depend on their own wheat production for about four months’ worth of supply. However, during the assessment, most key informants posited that for poor households, their own production of wheat often covered six months of needs in a typical year.

Labor migration and temporary migration patterns have changed in the central highlands. In Bamyan and the northern districts of Wardak Province, a significant number of households have left permanently for economic opportunities in the larger cities including Kabul, Hirat, and Mazar. Local money changers confirmed that in Bamyan Province, a significant amount of money was sent from Bamyan through the hawala network to locations in Kabul, Hirat, and Mazar, often in order to purchase properties in these cities as whole households planned to permanently migrate. In other cases, remittances are coming from urban areas back into the central highlands. However, with the significant movement of whole households, resource availability within many areas has improved. With greater availability than in the past of natural resources such as arable land, pasture, and irrigation water for the remaining, local population residing in Bamyan and the northern parts of Wardak Province, households have been able to intensify their typical, already used livelihood strategies. For example, households are able to plant more land for grain, fodder, and cash crops, graze more livestock, and access more irrigation water to support their grain and potato crops.

Food security outlook for the east-central mountainous agropastoral livelihood zone

The likely above normal grain production in 2012 being harvested in September and October will likely contribute more than six months of staple food, even for poor households in the east-central mountainous agro pastoral livelihood zone. Income from cash crop sales including potatoes is likely to be near average. However, there had already been a 45 percent increase in the sheep and goats prices by August compared to last year. Livestock prices are likely to increase further and peak in late October for the Eid Qurban (Eid al-Adha) celebrations. Households in the central highlands typically only buy staple foods a few times per year as they are often isolated from markets by poor road conditions in winter and by high snowfall limiting trade. For this reason, households with livestock to sell or other sources of income are likely to stock staples between now and November, reflecting both the availability of cash income and the still relatively stable price of staple foods, especially wheat and wheat flour. With diversified sources of incomes for most of the households and more natural resources available due to the reduction in population size, along with ongoing governmental social safety nets in addition to informal, traditional support for the poorest such as zakat, food security outcomes for the east-central mountainous agropastoral livelihood zone will remain None or Minimal (IPC Phase 1) over the remainder of the fall through November and the coming lean season from December 2012 until April 2013.

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