Up to $8.5 million loan to ECOM
The EBRD is diversifying the availability of funding to cotton farmers in Tajikistan with a finance facility of up to $8.5 million offered to ECOM, a cotton trading company, subsidiary of the Swiss-based ECOM Agricultural Corp.
ECOM Agricultural Corp is the only international commodity merchant to establish presence in Tajikistan. It sources cotton fibre directly from local farmers, grades it into international standards and exports for sale to other companies of the group. ECOM promotes the Better Cotton Initiative (BCI)* in Tajikistan.
While diversification of agriculture is a priority for Tajik authorities, cotton remains the key crop for the country’s economy, accounting for over 60 per cent of the agricultural output and supporting 75 per cent of the country’s population.
The proceed of the EBRD funds, a three-year revolving working capital facility, will be used to provide direct payments to Tajik farmers supplying cotton to ECOM. The project will enable the company to purchase, sort, process and store cotton for export. In addition it will serve as an alternative finance source to local farmers, reducing their dependence on ginners.
The facility is complementing the EBRD’s existing Tajik Agricultural Finance Framework (TAFF)**, which aims to support the restructuring of agricultural sector in Tajikistan by providing farmers with alternative finance tools through local partner banks.
The EBRD loan is supported by technical assistance from the Bank’s Business Turnaround Programme (BAS) and the Environment and Social protection Dept to help farmers improve the quality of their crop and achieve better yields.
“This project, alongside the successful TAFF, is providing the Tajik cotton sector with a long term support and a viable business structure. It offers transparent pre-financing and trade financing tools, which will benefit the Tajik cotton industry”, said Ulf Hindstrom, Head of the EBRD office in Dushanbe.
“The support of EBRD will allow Ecom to increase its purchases of Tajik cotton. Together with the farmers, Better Cotton initiative and TAFF, we have already improved the quality of the Tajik cotton and the yields” says Boris Spassky, director of Ecom Tajikistan.
To date the EBRD has committed close to $200 million to the Tajik economy in various projects in the corporate, financial, energy and infrastructure sectors.
In the agribusiness sector alone, the EBRD has directly committed more than €5.5 billion in over 380 projects across central and eastern Europe and the Commonwealth of Independent States since 1991.
*BCI promotes measurable improvements in the key environmental and social impacts of cotton cultivation worldwide to make it more economically, environmentally, and socially sustainable.
**TAFF is a $35 million framework to support the restructuring of Tajikistan’s agricultural sector. The EU is supporting the implementation of TAFF with technical assistance financing worth a total of €5.2 million.