The EBRD fosters a dedicated lending facility to boost agricultural finance and knowledge
Employing more than half of the population and accounting for about a quarter of Tajikistan’s GDP, agriculture plays a vital role in the country’s economy and society.
However finance to farmers is mainly provided in-kind by intermediaries that buy out the harvest at very low prices, leading to huge losses and the accumulation of debts that, for example, in the cotton sector reach more than half of the loan provided.
Sound banking, sound farming
Through its Tajik Agricultural Finance Framework (TAFF), the EBRD provides a credit line to local banks and microfinance institutions for on-lending to small and medium farms to fund their seasonal working capital requirements.
The TAFF is complemented by technical assistance activities to ensure the project has a long-lasting impact. Such activities are financed by donor grants provided by the Early Transition Countries Fund, to which the UK, the US Treasury, Luxembourg and the European Union contributes. For example, donor funding paid for more than 164 loan officers and agricultural advisers in partner financial institutions to be trained in sound agricultural lending.
Further, the EBRD has been widening the scope of these activities since the second phase of TAFF got under way in 2010. Two new components support farmers directly on the ground and promote environmentally and socially sound agricultural practices, as well as the marketing of their products with training and advice, for example, on irrigation techniques, eliminating toxic pesticides and adequate crop rotations. This helps improve their yields for cotton and other major crops.