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Milestone for pioneering EBRD climate credit line in Tajikistan

By Axel  Reiserer

Milestone for pioneering EBRD climate credit line in Tajikistan

Changing climate patterns affect glaciers and rainfall, affecting water supply

Fourth financial institution joins programme to help businesses and households adapt to climate change

Climadapt, the EBRD’s US$10 million pilot programme for promoting adaptation to climate change, has passed a milestone with the addition of a new partner financial institution, MDO Arvand.

A year ago, Tajikistan became the first country where the EBRD rolled out Climadapt in cooperation with international donors. Since then, four local financial institutions have joined the programme, and US$ 5 million – half of the allocated funding – has been disbursed to support climate resilience technologies in Tajikistan. Loans to firms and households are provided in the local currency, somoni, protecting borrowers from foreign exchange risk.

MDO Arvand is the third-largest deposit-taking microfinance institution in the country, with branches mainly in the north, and joined the Climadapt program in July 2017 as the fourth Tajik financial institution to provide finance for climate resilience technologies. MDO Arvand has received a US$ 1 million loan, half of which was financed by the EBRD. The other half of the loan was provided by the Pilot Program for Climate Resilience, which is funded by the multilateral Climate Investment Funds and administered by the EBRD. Technical assistance within the project is financed by donor funds from the government of the United Kingdom and the multi-donor EBRD Early Transition Countries Fund*.

Climadapt has achieved steady growth in its first year and the facility’s financing has been made more affordable thanks to contributions from international donors. As a result, over 2,000 borrowers – households, farmers, and micro, small and medium-sized enterprises in Tajikistan – have taken out loans for climate resilience technologies, such as drip irrigation, greenhouses, energy-efficient windows and boilers, heat insulation, rainwater harvesting and water storage, solar panels and equipment modernisation.

In addition, with technical assistance from donors, the programme arranged training in financing climate resilience technologies for the Tajik partner financial institutions Eskhata Bank, IMON and HUMO. More than 500 loan officers have received classroom training and on-the-job training.

Climadapt also organised six technology workshops for over 250 prospective clients, as well as for representatives of financial institutions and civil society, in various regions of Tajikistan. Participants visited demonstration sites to see climate resilience technologies and learn about their practical benefits. Raising awareness through workshops, and through traditional and social media, is part of the Climadapt strategy to promote modern technologies that can improve efficiency in water and energy use and reduce soil erosion.

As the next step, the Climadapt programme will seek to address gender gaps in access to financing in Tajikistan. It aims to help female entrepreneurs and households led by women to obtain easier access to financing for these technologies.

To date, the EBRD has invested about €600 million (US$ 700 million equivalent) into various sectors of Tajikistan’s economy.

* The Early Transition Countries Fund is a multi-donor vehicle with 14 contributors: Canada, Finland, Germany, Ireland, Japan, Korea, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Taipei China and the United Kingdom.

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