The European Bank for Reconstruction and Development is lending 15.7 million Tajikistani somoni ($2.0 million; €1.8 million) to Tajik microfinance institution Arvand, the country’s second largest and a major agribusiness lender.
The loan will be used to lend to micro and small enterprises, and is part of a larger financing package with an agricultural component, according to the bank.
The $2 million credit extension is intended to tackle difficulties for enterprises accessing credit in Tajikistani somoni, which the bank says is a major challenge for small businesses.
Tajikistan’s agricultural sector accounts for 20 percent of GDP and 53 percent of employment. The government has committed to an agricultural reform programme, which includes resolving its cotton debt crisis, accelerating land reforms, improving access to rural finance and increasing diversification in the agricultural sector.
Arvand has been an EBRD client for ten years, and received a loan of $1,000 billion from the EBRD in 2010, according to its website. The lender has a crop cultivation loan unit, and issues loans for dairy and meat cattle businesses, to buy farming equipment and for ecological improvements.
“With our loans we are making a contribution to alleviate the high dollarisation of the Tajik economy and the scarce access to local currency funding. We hope that the EBRD loan to Arvand will encourage other international lenders to provide longer-term funding in local currency to viable financial institutions in Tajikistan to support further growth of the Tajik private sector,” said Richard Jones, head of the EBRD’s office in the country
Arvand general director Shoira Sadykova said that the bank aimed to stand by its customers during the current crisis and that there was a strong need for local currency funding.
Since the start of its operations in Tajikistan in 1992, the EBRD has invested more than €600 million in over 100 projects. It completed its Tajik Agricultural Finance Framework investment in 2013, lending $72 million to the sector.