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The First MicroFinance Bank Tajikistan

Beekeepers in Tajikistan are prime examples of small cottage industries that can scale up rapidly with greater access to financing. Apiculture is useful because of the number of products it yields including honey, wax and excess pollen (which can be used in health supplements).Beekeepers in Tajikistan are prime examples of small cottage industries that can scale up rapidly with greater access to financing. Apiculture is useful because of the number of products it yields including honey, wax and excess pollen (which can be used in health supplements).Tajikistan is one of the least developed of the 15 former Soviet republics partially due to limited employment possibilities in the country.

Around 350,000 households are estimated to be living under the poverty line, out of which it is estimated that 127,000 households had access to microfinance services at the end of December 2010.

The microfinance sector faced challenges through much of 2009 and the total national microfinance portfolio declined due to a fall in disbursements and weakening portfolio quality. The sector has returned to health since mid-2010 and the portfolio value has even recovered to pre-crisis levels in the order of US$ 108 million.

The First MicroFinance Bank Tajikistan (FMFB-T), which commenced operations as a microfinance bank in July 2004, spent much of the last year consolidating and, at the end of the year, started to rebuild the ground that it had lost during the economic crisis. At the end of 2010, FMFB-T had 12,535 outstanding loans with a total value of US$ 25.4 million. The bank also held 7,072 individual deposits worth US$ 4.9 million at the end of the year. FMFB-T came back to sustainability in mid-2010, after having experienced a deficit in 2009.

FMFB-T is currently one of two microfinance banks in the country, along with numerous microfinance institutions. The bank is the country’s second largest provider of microfinance services. FMFB-T’s mandate is to provide a comprehensive range of financial services to low-income families throughout Tajikistan.

In addition to the head office in Dushanbe, the bank also has branches in Khorog, Gharm, Khujand and Kulyab. The branches are supported by a network of 36 banking service centres serving semi-urban and rural areas.

In 2010, FMFB-T began the process of refurbishing its network of branches and banking service centres. Historically, microfinance institutions invested little into the infrastructure and appearance of the branch and service centre network. FMFB-T has seen that improving the facilities shows respect for its staff and clients, it portrays the professionalism that it wants its brand to be associated with as well as a sense of permanence. For this reason, FMFB-T will be upgrading its entire network over the next two years.

Many of FMFB-T’s clients are supported by remittances. More than 800,000 (out of a population of only seven million) Tajiks work in Russia or Kazakhstan at any given time.

Considering the importance of remittance services for the country, and the fact that only one percent of those remittances go to housing, education, health or asset building, FMFB-T has decided to particularly focus on remittances.

In 2010, FMFB-T increased its capacity to offer remittance services with 29 of its outlets now providing this service. This will ease access to money transfers for the clients.

FMFB-T is also trying to stream clients into creating assets by getting them to improve their homes and save the money they get from remittances. FMFB-T has successfully completed a remittance-linked housing project in collaboration with Habitat for Humanity with a grant from the International Fund for Agricultural Development. The project is aimed at linking remittance inflows to investment in housing refurbishment in the Rasht Valley. During the project, 30 households received a loan to improve their dwellings with a savings component and with repayments coming through remittance inflows.

The decrease in inflows from remittances activities in 2009, and its profound impact on the local Tajik economy, also highlighted the importance of encouraging clients to save and maintain a cushion to absorb economic shocks. To do this, FMFB-T will be conducting surveys to better understand client needs. This will help the bank adjust and redesign its current savings and deposit products to make it easier and more appealing for clients to save.

2008 2009 2010
Microfinance Loans Disbursed: Value (US$ '000s) 45,915 22,849 30,975
Microfinance Loans Disbursed: Number 20,309 10,522 12,045
Microfinance Portfolio Outstanding: Value (US$ '000s) 32,532 20,51 25,369
Microfinance Portfolio Outstanding: Number 19,335 11,704 12,535
Average Microfinance Loan Size (US$ unit) 1,683 1,759 2,024
Percentage of Women Borrowers 23% 26% 28%
Portfolio at Risk (%) 0.6% 5.3% 2.1%
Number of IndividualSavers 6,450 6,448 7,072
Value of IndividualDeposits
(US$ ‘000)
3,378 4,424 4,876
Number of Staff 358 417 417

Find out more:
Case Study: Remittances
AKDN in Tajikistan

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