TAFF: Small loans that make a difference

Mr. Azizov, the head of a 2ha farm "Sadullo" in Vahdat applied for an individual farm loan. The repayment schedule for his loan was based on the agricultural cycle of his crops and suited the harvesting season perfectly.

Mr. Azizov's farm was not that profitable earlier. He planted different crops like potatoes, wheat, cucumbers and tomatoes. However, the fertilizers needed for a successful cropping season were too expensive for him. At his friend's house Mr. Azizov heard of the TAFF lending unit at Agroinvestbank Vahdat and decided to apply for a loan to buy the fertilizers. After a careful analysis of his agronomic and financial capacity carried out by the bank's loan officer and agronomist, Mr. Azizov was granted a loan in amount of TJS 1,700 within a few days. As a result, Mr. Azizov harvested 3 tons of potatoes and 35 centners of wheat. The yield of these and other crops for 2008 was above the Tajik average. Mr. Azizov plans to cooperate with the bank in the future and take another loan for his farm.

TAFF loan helps restore the farmer's household

Mr. Usmanov received a loan for his Dekhan farm from Bank Eskhata in 2008. Due to this loan, his 74 ha farm was provided with the necessary fertilizers and seeds.

Mr. Usmanov has taken over the Dekhan farm in 2006. At that time the farm was heavily indebted and Mr.Usmanov had to invest in the farm at his own expense. He sold the parts of his property in order to buy the necessary equipment. Already in 2007 the farm's debts were settled and the business started to recover. However, Mr. Usmanov still needed funds to buy seeds and fertilizers for his 74 ha farm. Since he ran out of his private resources to finance that, he applied for a loan at Bank Eskhata. His colleagues told him about the Tajik Agricultural Finance Framework initiative. After a detailed analysis, the Bank assigned Mr. Usmanov a loan in the amount of USD 18 000. Due to the loan, Mr. Usmanov has managed to make profit and to successfully restore his business.

TAFF to disburse first IGL to Nuri Kand

The consumer cooperative "Nuri Kand" created with the help of ACTED in the region of Kanibadam was the first group to receive a TAFF Institutional Group Loan.

Out of 52 members, 26 have already received a loan from Agroinvestbank for the purchase of fertilizers and seeds. Contrary to traditional group lending based on the joint and several liabilities of borrowers, IGL relies on a guarantee scheme provided to a TAFF partner institution by an association, a consumer co-operative or joint-stock company.

Better Cotton Initiative in Yavan started

TAFF is committed to provide much more than credit to agriculture. It also wants to be a major player in the restructuring of Tajik agriculture by using crop finance as a catalyst for change and by rebuilding efficient and transparent value chains.

In Yavan (Khatlon) TAFF together with the international cotton merchant ECOM has developed a pilot project as a precursor to formally introducing the “Better Cotton Initiative”, involving 14 farmers cultivating 1,200 ha of cotton. The farmers are receiving loans for purchasing seeds and fertilizers while they also get hands-on field technical assistance in order to improve the quality and volume of their cotton crop. Extension service AIN with coaching of TAFF agronomists is offering this training. The technical assistance is being financed by the EBRD BAS Progamme as well as ECOM. Also farmers have to pay for the assistance they receive.

The 2009 Yavan initiative has been expanded in 2010, under the TAFF II “Value Chain Finance” programme. The pilot project now works with a total of 81 farmers, spread over three districts in Khatlon Region and a second Local Extension service provider (ATAC) has been appointed to cover the increased demand for technical assistance. Technical assistance  and preliminary groundwork for introducing BCI to Tajikistan is provided and/or funded by the EU, the EBRD, GTZ and ICCO – an exemplary donor cooperation.

The farmers participating in the project are given the option of selling their cotton to ECOM under clear and transparent terms. Farmers also have faciliated access to finance through TAFF PiIs, are offered agricutural inputs (fertilizers) at competitive prices and receive season long agricutural technical advice at a marginal cost, The objective of the program is to foster linkages between the Value Chain stakeholders, to improve production, marketing outcomes and to reduce lending risk for particpating Banks., Four TAFF II PI are particpating in this VCF program, namely MFI HUMO, AgroInvestank, Eskhata Bank and Tojiksodirotbank.

The VCF program will be further expanded in 2011 and 2012. Another objective of the programme is the gradual introduction of BCI principles.The cotton produced under Better Cotton Initiative criteria will be fully traceable - from the field to the final consumers of the Tajik cotton. This cotton will be processed and manufactured in Bangladesh and eventually sold to an UK based retail company. Implementation of BCI principles will potentially open very attractive opportunities for Tajik farmers and will  support Tajik agricultural sector reforms