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The Regulation of Informal Trade Credit (Ograyi) in Afghanistan

Published online by Cambridge University Press:  08 June 2021

Nafay Choudhury
Nafay Choudhury*
Affiliation:
Institute for Global Law and Policy, Harvard Law School, Cambridge
*
E-mail: nc585@cam.ac.uk
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Abstract

This article explores the creation, circulation, and regulation of informal trade credit or “ograyi” in Afghanistan. The practice of ograyi allows businesses to access short-term credit, from either their suppliers or third parties, to acquire specified goods. This paper provides an account of the non-legal practices that regulate ograyi transactions. Ograyi vitally depends on the development of trust between parties. Clientelism helps to maintain stable relationships that can offset market unpredictability. Widespread market norms and practices establish the general behaviour of participants. Parties also renegotiate the terms of the contract if circumstances make it impossible for the creditor to repay the loan in the agreed timeframe. Furthermore, bank credit remains largely unavailable or unappealing to many businesses, and the legal system provides limited recourse in the case of contractual breach. Thus, the non-legal practices regulating ograyi serve as a substitute for legal coercion.

Keywords

informal trade creditlawAfghanistantrustbankingeconomy
Type
Research Article
Information
Asian Journal of Law and Society , Volume 10 , Issue 3 , October 2023 , pp. 347 - 375
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of Asian Journal of Law and Society

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