| Abstract |
The agricultural sector in Tajikistan – the cotton sector in particular – is the largest employer and a critical part of the country’s economy. However, its development has been hindered by outdated agribusiness management skills, poor sector organization, and limited access to financial services. Cotton farmers remain poor and heavily indebted to private loan companies that provide financial packages through ginneries at high interest rates. In order to increase its share of lending to the cotton industry, Tojiksodirotbonk (TSB) – Tajikistan’s third-largest bank – restructured its loan portfolio to more effectively target cotton farmers, providing them with financial products at more favourable rates, as well as technical assistance in addressing the major issues of inadequate collateral and unreliable harvest forecasts. TSB was able to target cotton farmers by entering into a partnership with the International Finance Corporation (IFC). In March 2007 the two organizations initiated the ‘Southern Tajikistan Cotton Lending Project’, supported by funds from the Canadian International Development Agency (CIDA). In addition to developing new financial products, the IFC-TSB partnership provided training on lending and agro-techniques to farmers, including developing a manual on cotton lending policies and procedures. It also employed the Global Positioning System (GPS) to better estimate the size of farms and crop output. A top priority was ensuring that women workers benefited from all programme activities. The rate of repayment has increased considerably and small-scale cotton farmers have gained access to competitive loans, helping them to reduce their indebtedness and enabling them to use the capital for investment and growth. |
