Passport Series: Part 2: Tajikistan Microfinance

The country of Tajikistan has a thriving microfinance sector. Microcredit programs were first implemented in Tajikistan around 1998-2000 when the country entered a relatively peaceful period, for the first time in about a decade. There are around 100 microfinance institutions (MFIs) in Tajikistan and 43 different organizations reporting their data to the Microfinance Information Exchange (MIX). MIX documents that in 2009 there were $110.8 million USD in microloans in the country given to 109,932 individuals.

The following two charts show the increase of microloan borrowers and the increase in overall loan portfolio for MFIs reporting to MIX. The charts depict that the market has been increasing, even through recent global economic downturns.

With this tremendous growth in MFIs in Tajikistan, there is some concern of over indebtedness of borrowers and great interest in mergers among some of these MFIs.

Sam Kendall, Kiva Fellow 12th class stationed in Tajikistan examined and wrote about the issue of mergers. He dedicated many fine evening hours to researching this issue while in country. A report to AMFOT [Association of Micro-Finance Organizations of Tajikistan], in Russian, is not a discussion on IF mergers should happen; it’s a discussion on HOW they should happen. Sam noticed that most people involved in Tajikistan’s microfinance industry are not against mergers, acquisitions, or consolidations, and actually some vocally support them. The real question in the Tajik community seems to be, “How do we do it?”

Many MFI’s in Tajikistan have stated social missions and combining those is extremely complicated. Additionally, during a merger, there are typical employee concerns, legal issues with loan contracts and government over site. All of this proposes a potential complex situation in an area that never imagined it would have this problem.

Currently, organizations in Tajikistan work together. They share client lists to try and minimize over indebtedness, and share a black list, of those who committed fraud. This is a step towards dealing with issues that develop from having such a large number of organizations. Nevertheless, to further protect those involved in the microfinance industry mergers have begun.

Women in Tajikistan represent an interesting demographic. They tend to be highly empowered, educated and participate openly in the workforce, education sector, and government. Additionally, women are also expected to marry and raise a family. Some of the most educated women often leave their jobs when they become pregnant to stay at home and raise their children until they are grown. Despite their many roles, Tajik women still hold a strong presence in the microfinance industry! Two stories below profile women in microfinance and the struggles they face juggling all of their responsibilities.

Nargiz is a female borrower who lives in the city of Qurgan-Tube. She is 42 years old, married, and has one child. Her husband is in the Russian Federation where many Tajik citizens find work in order to send funds back to their families in Tajikistan.

Of the over 7 million citizens of Tajikistan, between 600,000 and 1.5 million are living and working in Russia to send money home. These remittances make up a large section of the economy. In 2008, it was estimated that half of Tajikistan’s GDP came from remittances, mainly from Russia. In our last post of this series, we highlighted the economy of Tajikistan. The combination of the high participation in microfinance and the elevated levels of migration for work, constructs an interesting situation. These two competing methods of generating income often make decisions between running a small business and finding migrating a reality. A blog post from a recent Kiva fellow explains the dilemma that she has seen on the ground.

Kiva has been working in Tajikistan for more than four years. Over the years, we sent numerous fellows and have provided over $9.5 million USD in loans to entrepreneurs in the country. Kiva has three Field Partners in Tajikistan and they are: MLO Humo and Partners, MLF Microinvest, a partner of ACDI/VOCA, and IMON International.

Many innovative programs develop among MFIs in Tajikistan! With 100 MFIs competing in the market, differentiation is important. Check out this article about IMON’s program to decrease transaction costs by creating “banking on the go” stations.

Kiva is proud to be a part of helping you fund loans in Tajikistan! Next time you loan to an entrepreneur, consider lending to a small business owner in Tajikistan!

Stay tuned for our final post highlighting the many Tajik borrowers that are in the business of baking traditional Lepeshka bread!