Oiling the wheels of a Tajik small business

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Backed by a variety of donors, including the US and Swiss governments, the EBRD is helping small businesses in early transition countries (ETCs) like Tajikistan prosper.

Nestled in the rolling hills of Yavan in southern Tajikistan, local company ATO is a market leader in processing cotton seeds for edible oil, a staple in Central Asian diets. ATO faces a problem common to many businesses in transition countries. The company, which employs 80 people, has to invest more money to expand its operations but finds it difficult to borrow in the local currency. Loans are usually denominated in foreign currency and repayments can be subject to fluctuations.

EBRD funding

Responding to ATO’s needs, the EBRD loaned TJS 1.72 million (about US$ 362,000) to the company. This is the Bank’s first local currency loan extended directly to a local enterprise in an early transition country (ETC). It has been possible due to the ETC Local Lending Currency programme, which is backed by the US and Swiss governments, the multi-donor ETC Fund and the EBRD Shareholder Special Fund.

ATO will use the financing to improve the quality of its products and purchase new equipment to maximise extraction of cottonseed oil. It also works directly with another two EBRD clients in Tajikistan, thus establishing an advanced supply chain. About 60 per cent of ATO’s cotton seeds are provided by international cotton trader ECOM, which received a US$ 6.5 million EBRD loan in 2010 to source cotton fibre directly from local farmers. ECOM is an active supporter of the Better Cotton Initiative which aims at making cotton cultivation more economically, environmentally and socially sustainable.

For bottling cottonseed oil, ATO uses PET plastic of international quality standards supplied by Tajik producer Alfapet. This is another EBRD client which expanded its business and started a second production line back in 2009 with the Bank’s financing.

 
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