Trust in Transition: Afghanistan’s Hawala System in Crisis and Recovery

Afghanistan’s hawala system plays a critical and evolving role in the country’s financial ecosystem. Since August 2021 its role has only expanded as trust in the banking system faltered. Although hawala faces local competition and international skepticism due to transparency concerns, it remains a vital financial tool. 

Given that hawaladars are generally open to further formalization, acknowledging the role these networks play can help to move the country toward a more inclusive, safe, and resilient financial system for all Afghans. The paper recommends that development funders, humanitarian organizations, and other stakeholders deepen engagement with hawala networks, support regulation and supervision efforts, invest in capacity building, and explore innovative partnerships as effective parts of broader financial inclusion initiatives.