EBRD, EU launch €42m credit facility in Tajikistan

The EU, EBRD and a third institution are financing smaller farming businesses to replace Soviet-era equipment and diversify into new agricultural sectors like honey and dairy.

The European Bank for Reconstruction and Development, the EU and an unnamed development bank have launched a €42 million support programme to help farming businesses in Tajikistan replace obsolete machinery and diversify farming practices.

The EBRD will provide up to €20 million to the project, with the EU making €9 million available for investment grants and a risk-sharing facility, and €800,000 going towards technical assistance. The remaining project financing will be provided by the unnamed bank. Eighty percent of the programme’s financing will be distributed outside Dushanbe, the country’s capital.

A first tranche has already been provided to microfinance institution Arvand. The EBRD said it would lend 15.7 million Tajikistani somoni ($2 million; €1.8 million) to Arvand, a major agribusiness lender. Farmers tend to borrow in foreign currency because there is a lack of affordable medium-term local currency financing.

Later, financing will be used to help farmers expand into other industries, such as fruit, honey, animal husbandry and dairy. About 50 percent of the working population are engaged in agriculture, but the sector, heavily reliant on wheat, barley, onions and garlic, only accounts for a quarter of GDP.

“With the right investments in processing, packaging and quality standards, Tajikistan’s agricultural production has significant potential to expand, securing livelihoods and boosting exports,” said head of EBRD operations in Tajikistan, Richard Jones.

Shoira Sadykova, Arvand’s General Director, said that the institution believed in financing farmers in difficult times for the economy.

“We strongly believe that even in difficult times for our country’s economy we should continue to disburse loans and focus on agriculture to support its post-crisis development,” he said. “Arvand has been the first to participate in many new initiatives in the sector … our experience and our strong, long-term partnerships with clients, as well as the fact that 60 per cent of our offices are in rural areas, will be key to the successful implementation of this programme.”

The EBRD has invested over $670 million in Tajikistan to date.