Dushanbe, October 15, 2002—The International
Finance Corporation (IFC) and the United States Agency for International
Development (USAID) together with the National Bank of Tajikistan (NBT)
today launched the Microfinance Legislation Development Project. The
project will assist the NBT to develop a new legal framework for microfinance
in Tajikistan. This initiative, funded by USAID and implemented by
IFC, will work with the government of Tajikistan to develop a stable and
consistent legislative base for microfinance activities. A key aim
of the new legislation will be to enable non-government organizations,
currently providing finance to new and small local enterprises, to convert
into more sustainable financial institutions.
Several microfinance non-government organizations are operating in Tajikistan,
including a number funded by USAID. These institutions provide a
critical source of loan financing for small businesses and are a proven
means of addressing poverty. Recognizing the important role of microfinance
in raising incomes, the Poverty Reduction Strategy of Tajikistan lists
development of financial institutions and supply of credit as one of priorities
for poverty reduction in the country. However, many microcredit NGOs
still operate under the protective umbrella of international aid agencies
due to uncertainties in the legislation. The development and subsequent
passage of suitable legislation should allow for an independent local market
for microfinance institutions to grow in the region.
It is expected that the initial IFC/USAID work will be followed by extensive
Asian Development Bank and World Bank training and support that would further
strengthen this important source of finance to help drive local economic
“This Project will lead microfinance in the right direction in Tajikistan.
Without the proper legislation, microfinance institutions will not
fulfill their potential in supporting the development of a vibrant and
growing micro and small business sector,” said Assaad Jabre, Vice President,
Operations of IFC, at a press conference on Tuesday in Dushanbe.
“Well-managed microfinance institutions can—and should—be commercially
viable so that financial services can be provided to the underserved over
the long term, resulting in a substantial and sustainable increase in the
volume and range of financial services for microenterprises,” he added.
Ken Gross, Deputy Chief of Mission of the US Embassy in Tajikistan, applauded
the new program, which will enable already existing US-funded microfinance
providers to operate independently in Tajikistan and build upon work already
“IFC and USAID will coordinate their efforts with key donor stakeholders
to the work, including Asian Development Bank, Soros Foundation Open Society
Institute, IBRD and UNDP, which have already significantly contributed
to creating a legislative framework in Tajikistan and plan to continue
working on complimentary reforms,” Gross said.
The Project will also collaborate with and build on the work of other local
USAID funded projects, particularly those working in the areas of bank
supervision training and tax code reform.
The Project will build on the work already conducted by USAID and IFC in
the region, which included the creation and ultimate passage of microfinance
legislation in the Kyrgyz Republic in July, 2002 and a study tour for Tajikistan
central bankers to the Kyrgyz Republic. Project work will be focused
initially on Tajikistan. However, the scope of the initiative also
includes legislative framework development in Uzbekistan for microfinance,
and follow on training for the National Bank of Kyrgyzstan.
USAID is the government agency providing U.S economic and humanitarian
assistance worldwide for more than 40 years.
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through the close of the last fiscal year on June 30, 2002, IFC
committed more than $34 billion of its own funds and arranged $21 billion
in syndications for 2,825 companies in 140 developing countries. IFC’s
committed portfolio at the end of FY02 was $15.1 billion for our own account
and $6.5 billion held for participants in loan syndications.
In Tajikistan to date IFC has committed investment of more then $22 million
in 6 projects: one in mining, one in power generation and four under the
Small Enterprise Fund—Tojik Sodirot Bank, Holland Supermarket, Telecom
Technologies Internet Expansion Project, and Farmer Ownership Model. IFC
has provided over $2.4 million in TA projects through its donor-supported
Technical Assistance Trust Fund Program to support development of Tajikistan’s
private sector. IFC also has an extensive technical assistance initiative
in Tajikistan through the Swiss – IFC Central Asia Partnership. Technical
assistance which is jointly funded by Swiss State Secretariat for Economic
Affairs (SECO) and IFC. The Partnership is providing extensive agricultural
technical assistance to the Farmer Ownership Model and implementing a project
to create a favorable equipment leasing market in Tajikistan.