In a village in rural Tajikistan, Mastura Asoeva is flicking through her accounts. Perched on a stack of wooden boards in front of piles of stick bundles and clay bricks, the mother of four doesn’t look an obvious CEO, but business is good: her basket-weaving operation is growing and, for a fee, she trains women in other Tajik villages in the same skill.
Some 2,400 kilometres by road to the north-east in Maevka village, Kyrgyzstan, Taalaibek Gaipberdiev is surrounded by traditional, local carnival costumes that his company makes for lease to the growing population of the nearby capital Bishkek. It wasn’t how he planned to build his business. "Initially, I just wanted a photo studio where children could take pictures in carnival outfits, such as fairy-tale pictures, but at the end of the year our customers asked to lease out the costumes for New Year parties," he says. "I said no. But they wouldn’t leave my office." Now he has 3,000 costumes and employs 40 people in an outlet and workshop.
Meet the next generation of banking clients. Asoeva is a customer of Tajikistan microfinance lender Humo and Partners; Gaipberdiev a borrower from Kyrgyzstan’s Bai Tushum & Partners. They represent a growing constituency of people in the world’s poorer and more obscure locations who are building businesses on the back of microfinance lending. Modest in scale individually, they are a powerful force in aggregate, and steadily growing to be a driver of their national economies.
Microfinance has problems: that’s understood. There are those who feel it encourages inescapable indebtedness; that its interest rates are intolerably high; and that lenders lack governance or prudence.
But what if it wasn’t there? To find out, Euromoney travelled to two of the world’s least-visited nations, the former Soviet republics of Tajikistan and Kyrgyzstan, to meet the lenders and clients of microfinance.
Euromoney starts its trip in the Tajikistan capital Dushanbe, where a swirling Afghan dust storm has given its wide tree-lined boulevards an orange hue and closed the national airport. There’s always a local theme or need that distinguishes national microfinance industries – post-war rebuilding in Bosnia, agricultural efficiency in south Asia – and in Tajikistan, it’s the empowerment of women.
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"The mentality in this country is that assets belong to men. Women have the capacity, but they don’t have the economic opportunities"
Sulamo Khoshakova, Association of Microfinance Organizations of Tajikistan |
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In a parallel of Yugoslavia, Soviet rule kept a lid on deep ethnic tensions here that dated back centuries. When the Russians left, civil war erupted, killing around 60,000 people and making refugees of half a million. After peace was declared in 1997 what was left of the gutted economy – its GDP per capita had fallen 70% – offered little hope. Many of the remaining working-age men went to Russia, often not returning. "The men in the country unleashed the war, fought the war and left the country, and the consequences fell in a burden on women, children and old people," says Sulamo Khoshakova, director of the Association of Microfinance Organizations of Tajikistan (Amfot). Every client, banker, leader that Euromoney meets in Tajikistan is a woman.
MICROFINANCE IS YOUTHFUL HERE. International organizations came in at the end of the war, and the first 10 years of microfinance were under their remit. It’s only in the past six years that local institutions have set up under Tajik legislation. It has not always been straightforward. "Extending loans to women was complicated at the beginning," says Khoshakova. "Women were only expecting humanitarian assistance. The first steps were to make them understand these loans needed to be repaid." There were social issues too. "The mentality in this country is that assets belong to men," she adds. "Women have the capacity, but they don’t have the economic opportunities."
The message has got through: Amfot says there are 123 registered microfinance organizations in the country, 78 of which are members of the association. Shoira Sydykova, director at microfinance lender Arvand, says her institution has 15,000 clients – making up a credit portfolio of just 54 million somoni (TJS), or $11.36 million – and believes that in Tajikistan there are 160,000 micro borrowers. Loans vary in scale: $300 used to be a common starting point; these days it’s not considered sufficient to launch a business, and some loans might be as much as $5,000 (Arvand’s average is $660, with 60% of loans going to rural areas). Khoshakova estimates that 12% of able-bodied people in Tajikistan have received microfinance loans. "If there were no local microfinance organizations, most women would not have access to loans," she says. "I’m quite sure rural women would not approach banks to receive a loan. The word ‘bank’ dissuades women from approaching."
IT SEEMS APPROACHING microfinance institutions (MFIs) is less intimidating than approaching banks. Nazokat Hafizova runs a beauty salon on one of Dushanbe’s main thoroughfares. It is bustling when Euromoney visits, and the tape-recording of the interview is full with the vibrant background noise of blow-dryers and bellowed Tajik and Russian chatter. Hafizova is on her fourth loan from local microfinance lender Imon International: the first, in 2007, bought the equipment; the second the property; the third rehabilitated it; and the fourth bought additional equipment, for more sophisticated laser treatments.
Talking to Hafizova explodes one myth: that microfinance recipients have no idea about finance and approach the lenders wide-eyed. She is, no doubt, among the sharper end of the borrower pool, but one lesson of the trip is just how savvy people tend to be about what is available. "There are numerous microfinance organizations in the city," she says. "I selected Imon because it has the most attractive interest rates." Talking about the benefits of information and training Imon has provided involving income and expenditure, she notes: "It is crucial when the world is facing the financial and economic crisis." Euromoney hears more calm common sense in these interviews than at the G20 press conference in Washington two weeks earlier.
