The EBRD promotes the use of local currency to help develop economies in transition.
In Tajikistan employment opportunities are so low that as many as one million Tajiks have decided to work abroad and send their savings home to help support their families.
This is why the development of micro and small-sized enterprises to drive job creation is so vital for the country.
Sustaining private sector’s growth
Micro-businesses like Nafisa Haitova’s Café Mirzo in Khujand, the country’s second-largest city, encourage more sustainable growth in Tajikistan’s private sector. Nafisa started her business in 2003, selling food from a tent. Today, thanks to hard work and substantial loans, she owns a restaurant which employs 15 people.
However just a few years ago Nafisa was close to financial disaster. The loans she obtained were in US dollars but her business operates exclusively in somoni, the local currency. This is a common situation in a country with a weak capital market such as Tajikistan.
In 2008-09 when the financial crisis hit, the somoni lost a third of its value against the US dollar and for Nafisa and all small borrowers, loan repayments became really difficult.
ETC Local Currency Lending Programme
To address this systemic problem, in 2011 the EBRD established the Early Transition Countries (ETC) Local Currency Lending Programme. Supported by the Early Transition Countries Fund and the Shareholder Special Fund and with funds from Switzerland and the United States, the programme is helping Tajik micro and small businesses to access affordable financing in somoni and to shield them from the risks associated with exchange rate depreciation.
Arvand, a local micro-credit institution where Nafisa is a client, received the equivalent of US$ 1 million from the programme and is lending somoni to more than 1,400 businesses. Nafisa can repay her loan without worries and plan the future growth of her businesses with confidence.
The ETC Local Currency Lending Programme has also reached Armenia, Georgia, the Kyrgyz Republic, Moldova and will continue to expand in 2012.