The First Microfinance Bank Tajikistan (FMFB-T) was established in 2003 as the first fully licensed commercial bank in the country to have microfinance as its principal focus. This license has allowed it to expand activities to small and medium enterprises. FMFB-T is now one of the leading providers of financial services in the country, serving around 20,000 clients with a loan portfolio exceeding US$ 30 million, and nearly 70,000 depositors.
Tajikistan is one of the poorest countries in the world, with the lowest per capita GDP of the 15 former Soviet republics and over 30 percent of the population living below the national poverty line. Due to the lack of employment opportunities in the country, more than one million Tajiks work abroad, primarily in Russia, and support their families with remittances which represent about 50 percent of GDP. Highly dependent on Russia, the Tajik economy was negatively impacted in recent years by sanctions and the worsening economic environment in Russia.
Operating in Tajikistan since 1992, AKDN draws on a strong base of experience in working with mountain societies. It works in all regions of the country and employs over 3,500 people. Programmes range from economic development by establishing new enterprises, to opening schools and health centres.
FMFB-T offers a broad range of services and is actively engaged in research, product development and innovation as part of its focus on improving the quality of life of its clients, over 60 percent of whom live in rural and remote areas. For example, it developed remittances-linked financial products designed to encourage clients to allocate an increased portion of remittances to fundamental requirements such as housing, education, health or asset building. As part of its commitment to the country, FMFB worked with the Grameen Foundation to develop a Progress Out of Poverty (PPI) scorecard for Tajikistan, widely used in microfinance to measure poverty outreach.
FMFB has taken measures during the crisis to improve efficiency while keeping branches open and interest rates stable despite the higher cost of funding. In the current environment, saving is even more critical: FMFB’s ‘Homeland’ product, supported by a grant from Canada’s DFATD to promote remittance-linked savings by offering a higher interest rate, is intended to promote a culture of saving, with workshops about the product held in Moscow, where most migrants are located, as well as in-country to raise financial awareness. Escomiad, a Multi-Input Area Development Financing Facility for Tajikistan established by AKF and USAID, is helping catalyse FMFB’s portfolio of loans to SMEs to help create jobs and promote economic growth. FMFB is one of the very few organisations offering housing finance, which focuses on non-urban areas and is supported by a loan from KfW, which allows FMFB to provide longer-term loans at subsidised rates to promote energy-efficient housing upgrades.