Microfinance in Tajikistan
According to statistics, over 60% of the total population in Tajikistan is living under the poverty line. After taking into account the percentage of people that are are under 16 and the ones that work out of the country, potential segment of the population who need access to micro loans for self-employment reaches over 500,000 people.
Micro credit programs in Tajikistan were launched between 1998-2000 by international organizations such as CARE International, Mercy Corps, ACTED, Aga-Khan Foundation, German AgroAction, Counterpart Consortium, UN Development Program and other local non-government organizations. As of January 1, 2009, financial sector of the country was represented by 12 commercial banks and 100 microfinance organizations rendering financial services to population in Tajikistan. As of December 2008, microfinance sector in Tajikistan counted approximately 94 thousand active clients, loan portfolio increased almost twice and amounted to $72 mil. USD.
In this situation, commercial banks have an advantage due to the ability to provide loans in foreign currency with lower interest rates and have access to interbank markets and ability to attract deposits. At the same time, commercial banks have issues with the group lending methodology and cannot be afford to be pro-active to attract small, rural clients. After all, the average size of micro loan is just $760 USD - a lot smaller than they are used to dealing with.
Tajikistan has substantial investment needs both in the private and public sectors. Public sector is still dependant on official financing from donors. The country has held a number of successful Consultative Group meetings in the past and the donor community is committed to providing support for poverty mitigation in the country. However, externally financed public investments are restricted to 4% of GDP (around USD 90 mil. for 2005).
Access of private sector to medium and long-term financing is extremely limited. Loans to private sectors remain among the lowest in the region with no practices of obtaining financing from international financial markets. Interest rates remain high and most bank loans are short-term (up to 3 months). Access to bank lending is limited, especially for micro and small entrepreneurs (which account for more than 90% of total enterprises) and securities market is not formed. The opportunity to increase foreign direct investments exists, especially from neighboring countries and Russia, but it all depends on regional stability and the relationship with these countries. Numbers of western investors are still very limited.
Large MFOs and certain commercial banks including MLO "HUMO and Partners" have demonstrated effective and reliable activity and were able to receive access to international financing.
