DUSHANBE, December 13, Asia-Plus  -- The European bank for reconstruction and Development (EBRD is stepping up its commitment to the development of Tajikistan’s economy with new loans to three local banks aimed at supporting the agricultural sector.

A ceremony of signing of agreements on providing loans to Agroinvestbonk, Tojiksodirotbonk (TSB) and Bank Eskhata was held at the Khokhi Vahdat State Complex in Dushanbe on December 12.    

The financing, provided under the new Tajik Agricultural Finance Framework (TAFF), will be on-lent to small farmers for the purchase of farming supplies, such as equipment and seeds. Many of the farmers will never have received a loan before and many of them will be women.

The funding comprises a $6 million loan to Agroinvestbonk, $3.5 million to TSB and $1.2 million to Bank Eskhata. Bank Eskhata will be provided with USD 1.2 million. These are the first syndicated loans in Tajikistan.

Agroinvestbonk is also receiving a $10 million loan for on-lending to micro, small and medium sized enterprises, many of which are likely to be located in rural areas.

The ceremony was attended by Murodali Alimardon, chairman of the National bank of Tajikistan (NBT), Sharif Rahimzoda, chairman of the State Committee for investments and Management of State-owned Property, Nematjon Bouriyev, State Adviser to the Tajik President for Economic Matters, and Masaru Honma, EBRD Director for Central Asia.   

Mr. Murodali Alimardon noted that that was a very significant moment for Tajikistan, because not only were those the first syndicated loans in the country but the technical assistance provided alongside that finance would help local commercial banks to provide a real alternative to Tajik farmers and would support our Government’s new Freedom to Farm policy.

Mr. Masaru Honma said that “affordable finance and advice are still needed in Tajikistan and the EBRD can provide both. The first signings under the new facility will encourage smaller farmers to grow the crop of their choice rather than tying themselves to unfavorable deals that have led them into debt in the past.”

Three Tajik banks that received loans under the new facility have already worked closely with the EBRD under the Tajik Micro and Small Enterprise Finance Framework launched in late 2003.  

The USD 35 million-Tajik Agricultural Finance Facility, the first of its kind in the EBRD region, is a new initiative by the Bank to support the restructuring and diversification of the Tajik agricultural sector, including the cotton sector, by funding loans to small, family and individual private farms.

Under the framework EBRD donor countries will cover the costs of training participating banks and agricultural advisers. Training and education will be provided to farmers to avoid the use of harmful environmental practices and inputs (such as banned or toxic pesticides), improving labor standards, and working towards the implementation of best farming practices (such as integrated pest management).

Donor funds will also be raised to establish a warehouse receipt program that will enhance farmers’ access to finance after harvest. Warehouse receipts are an effective and low risk financing mechanism that can be applied to agricultural commodities.

The Tajik Agricultural Finance Facility builds on the successful Tajik Micro and Small Enterprise Finance Framework through which the EBRD has provided credit lines since late 2003. As of end-September 2007, four partner banks had disbursed over 27,000 loans for a total value of over $104 million to micro and small companies in Tajikistan.