The hidden lifeline for Afghans: remittances

“It’s hard for women to think about rights when their children are starving.” This stark observation, shared during an interview with a key informant in 2020, exposes the stark reality that families face in Afghanistan. As international sanctions and economic instability worsen under Taliban rule, millions of people are struggling with food insecurity and dwindling resources. The erosion of crucial lifelines, from humanitarian aid to cash transfers, has plunged countless households into despair, leaving women and children particularly vulnerable. This humanitarian crisis requires urgent global action to address not only survival needs, but also the systemic barriers that keep families trapped in cycles of poverty and repression.

The challenges families face in Afghanistan are similar to those faced by displaced communities around the world, where survival often depends on fragile support systems. For many, the emphasis is not on rights or long-term recovery, but on immediate survival: finding the next meal or securing basic shelter. Despite the critical need, bureaucratic inefficiency, political stagnation and restrictive policies are choking the flow of essential lifelines, leaving millions in conflict zones in a humanitarian landscape fraught with barriers and uncertainty.

Us recent research on post-conflict Sri Lanka underlines the transformative impact of remittances. Using household-level data, we found that these flows not only help families meet immediate needs but can also enable the accumulation of wealth over time, which plays a crucial role in economic recovery. Worldwide, transfers to low- and middle-income countries totaled $656 billion in 2023 – far exceeding the $256 billion in official development assistance. When disrupted by forced repatriation policies or resettlement delays, this lifeline frays, exacerbating hardship for refugees and their families.

At a time when remittances often double the size of official aid, it is critical that systemic barriers to the flow of funds are addressed. By reforming refugee resettlement processes and supporting remittance systems, policymakers can unlock their full potential and provide stability and hope to millions of displaced people.

The importance of remittances

Although remittances are often overshadowed in policy debates, they provide a hidden backbone of economic resilience for conflict-affected families. These funds go beyond meeting immediate needs; they enable families to rebuild their lives and deal with long-term uncertainties. In fragile contexts, where traditional support systems are weakened or non-existent, cash transfers fill critical gaps that official aid cannot fill.

Our research in post-conflict Sri Lanka highlights this transformative role. We found that remittances significantly increased household wealth over time, even in areas that lacked robust financial infrastructure. Families invested in education, improved housing and started small businesses – decisions that promoted economic stability and created a ripple effect of growth across entire communities.

However, the power of remittances depends on their uninterrupted flow. For displaced people, restrictive policies and bureaucratic delays can cut off this lifeline, pushing families further into poverty. Without these funds, hard-earned profits risk being eroded, leaving vulnerable populations trapped in cycles of instability.

With the right support, cash transfers could grow from a stopgap measure to a cornerstone of global recovery strategies. Policymakers must address key barriers by reducing high transaction costs, formalizing remittance channels and ensuring refugees achieve financial stability. These reforms would increase the impact of remittances and ensure that they remain an essential resource for families coping with the uncertainties of displacement.

Case Study: Afghan Refugees and US Policy

For Afghan refugees, displacement often leads to years of uncertainty, exacerbated by slow and cumbersome resettlement processes. The U.S. Special Immigrant Visa (SIV) program, created to protect those who worked alongside the U.S. armed forces, faces serious challenges backlogswith some applications taking years to process. In the same way, humanitarian parole provides only temporary relief, leaving many without access to permanent residency or stable employment. These bureaucratic hurdles are trapping thousands of Afghan refugees in limbo, preventing them from rebuilding their lives or sending crucial financial support to families back home.

The consequences are devastating. Since the return of the Taliban in 2021, financial flows to Afghanistan have fallen by 60 percent, the report said. World Bank. This collapse has cut off a crucial lifeline for families already struggling with economic instability and rising poverty. For the United States’ Afghan allies around the world, who are awaiting news of resettlement, the inability to consistently send money is exacerbating hardship for family members in Afghanistan, creating a ripple effect of poverty and instability.

The lack of policy has only worsened the situation. While the US Congress has done so increased The number of SIVs leaves systemic issues in the resettlement process unresolved. The Afghan Adjustment Act (AAA), which would provide a path to permanent residency for people paroled on humanitarian grounds, remains stalled despite bipartisan support. Without these reforms, Afghan refugees face continued legal and economic uncertainty, limiting their ability to contribute to their host communities or support families abroad.

The US has both the opportunity and the responsibility to address these gaps. Streamlining the SIV process, approving the AAA, and providing comprehensive support to Afghan refugees would not only fulfill U.S. obligations but also restore vital funding flows. These changes would demonstrate how effective refugee policies can serve both humanitarian and strategic goals, and set an example for other countries.

Policy solutions

The transformative potential of remittances in conflict-affected regions cannot be fully realized without systemic reforms. Refugees face significant barriers, from navigating resettlement processes to accessing the resources needed to support their families. Addressing these challenges requires both short- and long-term solutions.

In the short term, the United States needs to streamline refugee resettlement processes. Reducing the backlog in the SIV program and accelerating the Afghan Adjustment Act would provide stability to Afghan refugees, allowing them to secure jobs and return money home. These steps would fulfill U.S. commitments to its allies while easing economic hardship for families in Afghanistan who rely on remittances.

Long-term reforms are equally critical. Formalizing remittance channels is essential to ensure that money reaches recipients safely and efficiently. High transaction costs and dependence on informal systems, such as hawalaoften reduce the impact of remittances. Policymakers should work with financial institutions to reduce fees, expand access to banking, and implement financial literacy programs. These efforts would enable households to maximize the benefits of remittances, making them an engine of sustainable growth.

In addition to practical reforms, the United States has an opportunity to set a global standard. Our research in Sri Lanka illustrates how cash transfers can help rebuild war-affected communities, if backed by effective policies. By investing in these systems, the US can lead on both the humanitarian and economic fronts, and inspire other countries to follow suit.

As global displacement increases due to conflict and climate change, stabilizing and optimizing remittance systems is no longer optional. It is both a moral imperative and a strategic imperative, redefining how we support displaced populations and the communities they are forced to leave behind.