Iran, Afghanistan to shift from barter trade to formal banking system
Iran's plan to transform its trade with Afghanistan from traditional barter based on the rial and afghani into an official banking platform represents a key strategy to reduce reliance on third-party currencies and facilitate commercial exchanges, the head of the Iran-Afghanistan Joint Chamber of Commerce said on Tuesday.
Mahmoud Siadat said banking deadlock and reliance on intermediary systems and third-party currencies represent one of the main obstacles to expanding trade between the two countries.
"Although in the short term we have no choice but to maintain trade flows through temporary initiatives such as traditional barter methods or using the capacity of exchange offices, our medium- and long-term strategy at the Joint Chamber is completely different," Siadat said in an interview with Fars news agency.
"Our goal and main program is to upgrade the currency barter model based on the rial and afghani from an informal, traditional agreement into an official banking and financial platform," he added. "We are pursuing several steps and key infrastructure to achieve this goal."
Siadat said the first priority is to establish an intermediary switch and clearing house between the two countries, describing it as the most essential measure for facilitating direct settlements.
"This mechanism would allow traders on both sides to conduct transactions without the need for third-party currencies like the dollar, solely through domestic settlement systems – a step that would significantly reduce transaction costs and increase the speed of capital turnover," he added.
Siadat also emphasized the need to establish technical connectivity between the commercial banks of both countries. "The major infrastructure that supports this official banking platform is the establishment of technical and secure connectivity between the commercial banks of the two countries," he said.
"The most important outcome of this connectivity will be the creation of 'payment guarantee' mechanisms, which will minimize the persistent concern and risk traders face in currency transfers and provide a secure environment for trade," Siadat explained.
The chamber head also highlighted the infrastructure's role in developing the digital economy. "One of our important goals is to connect the online retail platforms of the two countries to each other," he said.
"This connectivity is vital for informal home-based businesses and small- and medium-sized enterprises, which carry significant weight in job creation in both countries, and can open new markets for them," Siadat added.
"The Joint Chamber's vision for the future of trade with Afghanistan is the application of new technologies," he said. "We seek to shape a portfolio of Iran's services and programs in the digital economy sector for the Afghan market."
"In this context, intensive consultations have begun with responsible institutions and leading technology companies, and we hope such coordination will soon reach an operational and favorable point and transform the structure of economic cooperation between the two countries," Siadat said.
Afghanistan is currently Iran's fifth-largest trading partner, with bilateral trade reaching $2.7 billion in the last Iranian year (ended March 21), according to Iran's commercial attaché in Kabul.
The two countries are now aiming to boost economic exchanges to $10 billion annually within the next three years, according to Iran's commercial attaché in Kabul.
Hossein Roustaei said on Monday that the two countries are now aiming to boost annual economic exchanges to $10 billion within the next three years.