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IFC, the private sector arm of the World Bank, and Tojiksodirotbonk the third-largest joint stock commercial bank in Tajikistan, have signed a cooperation agreement to introduce new cotton lending products that will help southern Tajikistan’s smaller farms grow through better access to capital, while empowering women farmers.

IFC experts will work with Tojiksodirotbonk staff to introduce a cotton lending product on a commercially viable basis for small and mid-sized farmers in the Khatlon oblast.

Efforts also will include broadening the scope of the bank’s loan products to finance long-fibred cotton in Kurgan Tyube, and expanding the loan programme beyond Kurgan Tyube.

In addition to developing new financial products, the agreement involves training aimed at building internal bank capabilities to meet the needs of smaller farms. IFC will provide training on the specifics of lending to smaller farms, borrower supervision, and lending review.

IFC and Tojiksodirotbonk will also develop a manual of cotton lending policies and procedures for local farmers.  A top priority is ensuring the integration of women farm workers – who represent as high as 80% of farm employees on some of the Dekan farms – into all project activities.

At the signing, Abdouakhad Ashourov, chairman of Tojiksodirotbonk’s board, said, “There is strong market demand and government support for such lending products. By combining our regional expertise in lending to larger farms with IFC’s expertise in developing financial products for small businesses, we can create a quality cotton lending product dedicated specifically to the growth of Tajikistan’s smaller farms.”

The agricultural sector, and cotton production in particular, remains the largest employer in southern Tajikistan and a critical part of the country’s economy. But industry development is hindered by outdated agribusiness management skills, poor sector organisation, and limited access to finance. The new project will address these gaps to enhance sector development as a whole, while providing strong benefits for individual farm-based businesses.

Shahbaz Mavaddat, IFC director for Southern Europe and Central Asia, adds, “I am very pleased that IFC is supporting Tojiksodirotbonk’s efforts to expand its lending operations to the cotton sector in southern Tajikistan. This cooperation agreement builds upon IFC’s ongoing work to support the country’s financial and agricultural sectors.”

The project is part of the IFC Southern Tajikistan Cotton Lending Program and is supported by the government of Canada through the Canadian International Development Agency.