The World Bank’s Board of Executive Directors approved today $50 million in grant financing from the International Development Association for the Tajikistan Financial and Private Sector Development Project, which aims to support the Government of Tajikistan on strengthening its financial sector, boosting the private sector and stimulating economic growth.
The Project Development Objective is to strengthen deposit insurance, promote bank lending to micro, small, and medium-sized enterprises (MSMEs), and boost their integration in value chains. By addressing key gaps in the capacity of the Individual Deposit Insurance Fund’s (IDIF), a non-profit entity which protects the rights and the interests of depositors, the project will enhance trust in the banking system and increase confidence among depositors. This will, in turn, lead to greater mobilization of funds, enabling banks to provide more loans to MSMEs, boosting entrepreneurship and creating job opportunities. The project will introduce the Partial Risk Sharing Facility, which will encourage banks to provide more loans to MSMEs. With the Supplier and Export Development Program (SEDP), the project will help MSMEs to increase market linkages to large local and multinational corporations, boosting MSMEs’ productivity and integration into regional value chains.
“In order to steer the country towards a more inclusive growth path, it is important to create a stronger, more resilient private sector and a financial system. said Ozan Sevimli, World Bank Country Manager for Tajikistan. “Among other critical investments, the new project aims to stimulate lending to viable businesses by providing a partial credit guarantee under an individual and portfolio model, which is expected to benefit 5,000 MSMEs under the Partial Risk Sharing Facility. This will encourage entrepreneurial growth and contribute to the overall economic vitality of Tajikistan.”
While the industrial sector in Tajikistan has been experiencing growth, it is predominantly dominated by state-owned enterprises (SOEs) that have low productivity. To address this challenge, the project will focus on promoting private sector development, particularly in high value-added sectors, such as agribusiness, textile, tourism. The project will also introduce new operating policies to promote a low-carbon office environment and stimulate investments in low-carbon and climate-resilient digital technologies, thus helping reduce business costs and encourage innovation.
Under its charge to boost the private sector development, the project will focus on building MSMEs capacity, promoting supplier integration and export-oriented growth. The project aims to equip MSMEs with the necessary skills, enabling them to meet international standards for exporting their products. The project will bring businesses closer to their suppliers, enhancing the productivity and efficiency. As a result, every business involved in the project – from those providing raw materials to those selling their final product- will benefit.
Currently, the World Bank is financing 26 projects in Tajikistan, totaling $1.6 billion. Since 1996, the World Bank has provided over $2.8 billion in IDA grants, highly concessional credits, and trust funds for Tajikistan. The World Bank remains committed to supporting the country’s efforts to improve lives and meet the aspirations of its young and growing population.
Source: The Mirage