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Since May 2021, the “Value Chain Agro-Finance” project in the Republic of Tajikistan aims to enhance agri-food value chain competitiveness by providing working capital finance as well as by increasing the availability of long-term finance in Tajik Somoni for agricultural equipment and machinery.
To increase the competitiveness of Tajik agri-food products on local and regional markets, we support selected value chains. On the one hand, in producing competitive agri-food products in a sustainable way and on the other hand, we promote the use of good agricultural practice and best available techniques in processing and distribution.
KfW is providing a EUR 8.6 million grant to the Government of Tajikistan. The funds are channeled from the Ministry of Economic Development and Trade (MEDT) as loans in local currency to selected partner financial institutions (PFIs). The PFIs in turn will use these funds to finance SMEs processors, producers and suppliers. Eligible PFIs are primarily commercial banks and microfinance institutions, which provide financial services in rural areas. AFC, in consortium with CAICo Tajikistan, conducted the pre-selection, due diligence and channelled agreements with the selected PFIs.
In January 2022, Tajikistan’s Minister of Economic Development and Trade, Mr. Zavqizoda, and KfW’s Regional Office Director Central Asia, Dr. Schneider, attended a signing ceremony of channelling agreements between MEDT and five local financial institutions – Bank Arvand, MDO Finca, MDO Humo, MDO Imon International and MCO Oxus. Both mentioned the relevance of the program to Tajikistan’s goals of rapid industrialisation and the creation of jobs. The financial institutions are now receiving long-term loans to extend affordable credit to Tajik small and medium enterprises, integrated in agricultural value chains.
The value chain approach is fairly new in Tajikistan, hence financing for value chain development by banks is still in initial stages. Our experts aim to close this knowledge gap by supporting them in identifying suitable value chains, designing appropriate SME loan products, and improving their business models. A number of tailored workshops and trainings on agricultural value chain finance was already conducted in Dushanbe and Khujand. Moreover, we assist the PFIs in improving their agricultural credit technology and business models with regard to costs and risks as well as best practice Environmental and Social Management System (ESMS). This way, leading to the sustainable extension of long-term loans to the target group.
We further work with SMEs in various value chains to help them access finance more easily. AFC experts provide business planning and credit application training to the target group including the establishment of best agricultural practices.
With a long track-record of working in Tajikistan, we are currently also implementing a World Bank funded project on Grant Management. It aims at channeling a total budget of USD 10.6 m to Tajik farmers, rural SMEs, and their intermediaries, to leverage production, service delivery, income and employment in the agricultural and tourism sector in rural areas.
We are looking forward to continuing our successful work in Tajikistan!
For more information, please contact Sigitas.Bubnys [at] afci.de.