tajikistan case studies

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

Municipal and environmental infrastructure
Small and medium-sized enterprises

Agribusiness

Targeting rural poverty in Tajikistan - Annual Report 2008

With 70 per cent of the population living in rural areas and relying on agriculture for their livelihoods, cotton, known as white gold, dominates life in Tajikistan. It is a vital source of export earnings and tax revenue for the country. Cotton-related indebtedness has virtually paralysed the Tajik cotton industry and debt resolution has become the focus of assistance programmes by international financial institutions in the country. The uncertainty of crop yields and quality from one season to another, the price volatility and the varying management capabilities of farmers means that lending to individual farmers is a high-risk activity for banks.

To help relieve the situation the EBRD established the Tajik Agricultural Finance Framework (TAFF) with €25 million available to small farmers through local banks. Giving farmers access to finance allows them to plant the crop of their choice, and so diversify production and increase profitability. Over the past 10-12 years, farmers have depended mainly on local investors for financing and were not free to choose their sources of seeds, fertilisers and crops. This has proved to be ineffective and has led to high cotton-sector debt.

Many of the farmers have never received a loan before, and many of them are women who look after household plots and small farms while the men have sought employment in other countries. EBRD donor countries are covering the costs of training credit and agricultural advisers, and farmers will be trained to learn more about harmful environmental practices and to use best farming methods.

TAFF is a groundbreaking initiative that is helping to decrease rural poverty and, in time, change the structural economic circumstances that can lead to child labour. According to an International Office for Migration (IMO) report, children harvest up to 40 per cent of cotton in Tajikistan. This contributes to the continuing cycle of poverty.

The EBRD has a strong track record of supporting the Tajik micro and small business sector with over €87 million invested in microfinance projects. TAFF builds on the successful Tajik Micro and Small Enterprise Finance Framework, through which the EBRD has provided credit lines since 2003.

Municipal and environmental infrastructure

Improving road communications in Tajikistan - Donor Report 2008

Road transport is crucial to the economic and social development of Tajikistan. It is the dominant mode of freight and passenger carriage in a country with only limited rail infrastructure (serving mainly international traffic) and aviation services constrained by cost and capacity.

Despite its importance, more than 70 per cent of the national road network is considered to be in poor structural condition, and travel conditions may be further disrupted by adverse weather and difficult terrain. The deficiencies of the national network mainly reflect the lack of investment in the decade following independence. A shortage of funds also meant that there was no renovation or replacement of inefficient or outdated road maintenance equipment.

However, with support from IFIs (including the Asian Development Bank) and bilateral donors, the Tajik authorities are investing around €340 million in road rehabilitation and construction across the country. The EBRD has meanwhile approved a €2.7 million loan for the procurement of essential road maintenance equipment (front-end loaders, graders, mobile aggregate crushing plants and asphalt plants, and snow removal machines), coupled with an investment grant channelled through the early transition countries (ETC) Fund and backed by a special contribution from the Netherlands government.

Technical assistance funding of €500,000 from the ETC Fund supports project implementation and the preparation of a road maintenance management plan.

Putting water back on tap in Tajikistan - Sustainability Report 2007

Filling up buckets with water from standpipes and hauling them up stairs to apartments became a way of life for tens of thousands of people in Khujand, Tajikistan.

This was the legacy of a seriously neglected infrastructure supplying drinking water. As well as the inconvenience, families had to contend with the risk of contracting an infection from the stored drinking water, especially during hot summer months.

Responding to the critical situation, the EBRD launched the first phase of a major water supply improvement project for the city in 2004. The initiative, covering the upgrading of water supply for a third of the city’s inhabitants, was the Bank’s first such project in Central Asia and it was financed by a €0.8 million loan, along with a grant from the Swiss State Secretariat for Economic Affairs (SECO) of €1.9 million. A second phase of the project, with contributions of up to €1.5 million from the EBRD and €3.5 million from SECO, is currently being considered by the Bank to finance investments in water pipes, pumping stations and other essential infrastructure across the city. Most districts now have access to 24-hour water supplies, and it is hoped that the success of this project will act as a model for others across Tajikistan, where up to 50 per cent of the population are still without mains drinking water, and supplies for others are often sporadic.

Small and medium-sized enterprises

Empowering Tajik farmers - Annual Report 2007

In the village of Makram in the Kanibadam District of Sughd Province, Tajikistan, 28 women from the “Dousty” collective farm have just taken their first steps towards economic independence. They have applied for land ownership certificates as part of a new land reform process aimed at greater autonomy for farmers and increased crop diversity.

With financial assistance and farm business management skills provided through a ground-breaking EBRD project, the women will be able to make informed decisions that affect their lives. Sanavbar, one of the 28 women applying for the land certificates, says that when she has her own farm, she will grow more than just cotton and apricots. She plans to expand and include potatoes and tomatoes. “I will be independent and choose what harvest I want and I can pass the land on to my children,” she said.

The EBRD project – the Tajik Agricultural Finance Framework – is a new initiative set up in 2007 to support the restructuring and diversification of Tajikistan’s agricultural industry, including the cotton sector, by funding loans to small, family and individual private farms. The EBRD is providing €24 million in new loans to Tajik banks, which will be used to support agriculture with wide-reaching training schemes and small loans for farming basics like seeds and fertilisers. The broad aims are to boost crop diversification and ecologically friendly farming and to limit the use of child labour.

The cotton harvest, which supports 75 per cent of the Tajik population, that is 7.1 million people, has fallen from 1 million tonnes a year before the break-up of the Soviet Union to only 450,000 tonnes in 2006. The EBRD scheme will provide alternative access to finance for farmers previously tied to cotton, thereby supporting the “freedom to farm” concept.

Although the economy is highly dependent on cotton and demand for other crops is mostly limited to local consumption, there is, for example, a large new tomato paste plant in central Tajikistan that needs at least 33,000 tonnes of tomatoes a year. In addition, export opportunities for dried onions have inspired many farmers to grow onions as part of their crop rotation.

Many of the farmers receiving loans under the facility will never have received a loan before and many of them, like Sanavbar, will be women. These will be the first syndicated loans in Tajikistan. Murodali Alimardon, Governor of the National Bank of Tajikistan, said “this is a very significant moment for Tajikistan, because not only are these the first syndicated loans in the country but the technical assistance provided alongside this finance will help our commercial banks to provide a real alternative to Tajik farmers and will support our government’s new freedom to farm policy”.

Agroinvestbank, TSOB and Bank Eskhata, the three partners under the new facility, have already worked closely with the EBRD under the Tajik Micro and Small Enterprise Finance Framework launched in late 2003, and to date have dispersed over €80 million in small loans.

Lending to small businesses - Annual Report 2007

Gultoraev Makhmudzhon lives in the city of Kurgan-Tyube in south-west Tajikistan. He worked as a taxi driver until after the civil war when he decided to learn how to produce “sunduks,” traditional Tajik chests in which gifts for married couples are kept. After a two-year apprenticeship under his brother-in-law, he decided to start his own business. However, with each passing year, competition in the city increased and he struggled to keep up with production. He needed money to purchase equipment and raw materials at wholesale prices. At around this time, loan officers from Agroinvestbank were informing businessmen in the local markets about the possibility of receiving loans to develop their businesses.

At first Makhmudzhon was hesitant as he had never worked with a bank before and was fearful of bureaucracy. But in May 2006 he decided to take a chance and approached Agroinvestbank, which is supported by the Tajikistan Micro and Small Enterprise Finance Facility. After an appraisal of his business, Agroinvestbank lent him €1,360.Makhmudzhon was astonished by how quickly the money arrived and the effect it had on his business – his production doubled. “Thanks to the money from Agroinvestbank my business just keeps growing,” says Makhmudzhon.

He now employs about 15 people who can earn up to €205 over the busy wedding season that runs from summer to autumn. People from all over the oblast go to him to buy their sunduks.

After repaying his first loan he applied for another to buy new equipment and was quickly approved for a further €4,220. Makhmudzhon enthuses: “I really enjoy the good relationship I have with Agroinvestbank. They are great to work with. I hope this cooperation goes on forever!”

Cottonseed oil is back in Tajikistan’s national dish - Donor Report 2007

With the end of the Soviet Union, the newly independent Central Asian republic of Tajikistan saw almost its entire manufacturing sector collapse. This included the production of cottonseed oil, an irreplaceable ingredient for the country’s national rice dish, the plov.

Three years ago, local entrepreneur Tofik Akhmedov had the idea to restart cottonseed oil production in the northern Tajik town of Khujand. He bought an old ex-Soviet property where the refinery was to be built, imported equipment from the United States, bought cotton seeds, hired staff and started production. In 2005, he founded Komron Agro Holding to refine cottonseed oil.

However, Komron Agro had enough money for just 8,000 tonnes of cotton seeds a year, meaning the plant operated at 30 per cent of its capacity, but thanks to an EBRD loan of US$ 1.4 million (€1.1 million), agreed in April 2006, Mr Akhmedov has been able to buy 24,000 tonnes of cotton seeds that will keep the refinery working throughout the 10-month season. The loan was granted after the Bank undertook a thorough technical and legal due diligence of Komron, an essential step to determine the company’s creditworthiness and to guide its future business plan. Komron’s due diligence and technical assessment were funded through the EBRD ETC Fund, under the Direct Lending Facility.

Thanks to this assistance, Komron Agro Holding now employs 180 staff and has doubled its cottonseed oil production to 3,000 tonnes per season. This has also indirectly improved the living standards of the 30 farms that supply Mr Akhmedov with the seeds, because more reliable contracts have meant more cash to spend for each family and the village.

Following the success of the first advertising campaign, which saw sales go up by 20 per cent, Mr Akhmedov is set to expand his business further; he is currently assisting companies in the south of Tajikistan to build up cottonseed oil refineries. So the future of the plov – complete with its essential ingredient of cottonseed oil – is safe.