Access to finance in Tajikistan

CENTRAL ASIA INITIATIVE
INVESTMENT AND COMPETITIVENESS
IN CENTRAL ASIA
Focus on Tajikistan
1st Working Group meeting on Access to Finance
and Remittances
Dushanbe, 12 March 2014
With the financial assistance
of the European Union

OECD Private Sector Development 2
Objectives of today’s meeting
1. To present the OECD project with Tajikistan: expected
benefits, governance, planning
2. To present the methodological framework of the OECD
assessment of access to finance policies in Tajikistan
3. To highlight the potential of using remittances for SME
development and access to finance, to present and
discuss international case studies, and to identify policy
instruments that could be relevant for Tajikistan
4. To agree on next steps until next WG meeting in June

Agenda
 Introduction to the project
 Assessment of Access to Finance policies in Tajikistan:
Methodological Framework
 Remittances as an opportunity for SME development and
access to finance
 Baseline situation in Tajikistan
 International case studies and lessons learnt
 Discussion of case studies’ relevance for Tajikistan
 Next steps

Expected benefits of the project: enhancing country
competitiveness and providing global visibility
1. Enhancing country competitiveness
• Developing targeted and practical action plans for
reforms
• Following-up on implementation and building
capacity
2. Providing global visibility
• Reviewing reform action plans with OECD countries
• Showcasing Tajikistan’s reform agenda as a model in
Eurasia

The OECD at a glance
A forum where governments can compare policy experiences and address the economic,
social and governance challenges of globalisation as well as to exploit its opportunities
34 Member countries Broad policy expertise
Horizontal policy areas
 Competitiveness and Investment
 Public Governance and Territorial
Development
 Entrepreneurship, SMEs and Local
Development
 Employment, Labour and Social Affairs
 Trade
 Education
 Tax Policy and Administration
Sector-specific policy areas
 Agriculture
 Industry
 Science and Industry
 Financial and Enterprise Affairs
Australia, Austria, Belgium, Canada, Chile, Czech
Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland,
Israel, Italy, Japan, Korea, Luxembourg, Mexico,
Netherlands, New Zealand, Norway, Poland,
Portugal, Slovak Republic, Slovenia, Spain,
Sweden, Switzerland, Turkey, United Kingdom,
United States
This map is for illustrative purposes and is without prejudice to the
status of or sovereignty over any territory covered by this map

Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova,
and Ukraine
Eastern Europe and South
Caucasus Initiative
Afghanistan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan,
Turkmenistan, and Uzbekistan
Central Asia
Initiative
The OECD Eurasia Competitiveness Programme
OECD Council Mandate covering two regions and thirteen countries
The OECD Eurasia Competitiveness Programme
was launched in 2008 and aims at contributing
to economic growth and development in eleven
countries of the former Soviet Union as well as
Afghanistan and Mongolia.
This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map

Project Steering GroupPrivate sector
representatives
Relevant ministries and
government agencies
Chairman: First Deputy Prime Minister
Deputy Chairman: Minister of Economy
OECD (including relevant
experts)
Proposed governance for the project includes 2 public-private Working
Groups reporting to a Project Steering Group
OECD Secretariat, GIZ and
Ministry of Economic Development and Trade of Tajikistan
European Commission
Chairman:DeputyChairman,SCISPM
Working Group 2
Investment and Trade
Promotion for SMEs
GIZ
Working Group 1
Access to Finance for
SMEs
Chairman:DeputyMinister,MEDT

OECD Private Sector Development 8CONFIDENTIAL – NOT FOR DISTRIBUTION
1. Provide data (e.g. data request,
questionnaires)
2. Co-operate in developing the
analysis
3. Review materials
Working Group Members
1. Co-ordinate the project
2. Analyse data and develop
materials with the support of
international experts
3. Draft key conclusions and propose
recommendations for discussion
WG Secretariat: OECD and GIZ
1. Sets overall priorities of the project
2. Reviews and comments on progress accomplished by the Working Groups
(approves proposals, recommends adjustments)
3. Decides on recommendations to be implemented
Steering Group – Chaired by the First Deputy Prime Minister
WG members collaborate with the OECD and GiZ to develop an action plan
that will be reported to the Steering Group for final endorsement

Tajikistan in the peer review process
Roundtable members to comment on draft report and draft guidelines
Project Steering Group
Tajikistan
Eurasia Competitiveness Roundtable
Policy reform plan and draft
guidelines finalised by Tajikistan
with support of the OECD and
GiZ
Policy reform plan to be peer
reviewed by Roundtable members
Finalisation of reform plans and
guidelines based on comments
provided by Roundtable members
Using remittances to improve
access to finance in Tajikistan
Reviewers
Follow up on reform implementation
Tajikistan
1 2 3
4
Tajikistan, March-October 2014
Paris, November 2014 Dushanbe, December 2014

Working Group Schedule: 3 meetings are suggested for 2014
The objective is to get ready for the Roundtable in November 2014
2013 2014
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
COUNTRYLEVEL
Working
Group,
Dushanbe
Project Steering
Group,
Dushanbe
REGIONAL
Eurasia
Competitiveness
Roundtable,
Paris
1st Roundtable
Peer review of
action plans for
reforms in the
Kyrgyz Republic
2nd Roundtable
Peer review of two
action plans for
reforms of Tajikistan
1st Meeting
Decision on focus and
set up of two thematic
working groups
2nd Meeting
Review of the initial results
and recommendations
3rd Meeting
Endorsement of final
recommendations
3 meetings will be conducted for each of the two Working
Groups
Design of draft action plans for reform

Agenda
access to finance
 Next steps

Access to finance in Tajikistan - Bank use for Private Sector
Development is limited, Micro Finance Institutions (MFIs) fill the gap
Sources: World Bank, World Development Indicators; National Bank of Tajikistan; IMF Financial Access Survey; bne:Invest in Tajikistan; AMFOT (2013) Analysis of AMFOT members
activity in 2013; http://www.microworld.org/en/news-from-the-field/article/tajikistan-microfinance-supports-independence; http://www.crif.com/site/en/News/Press-
Review/Lists/List/Attachments/1070/Tajikistan.pdf; AMFOT analysis of member activity 2008, 2010, 2012.
11%
3% 3%
1% 1%
0%
2%
4%
6%
8%
10%
12%
Account used for business purposes (% age 15+)
Kazakhstan Uzbekistan Afghanistan Kyrgyz Republic Tajikistan
Regular banking services are rarely used for business
in comparison with other countries in Central Asia
• The first Credit Information Bureau has been created in June 2013
• Currently, regulation regarding the creation of a Tajik secondary market is being drafted
• At least eight leasing companies are operating in Tajikistan
• Several pieces of legislation have been drafted or adopted (e.g., Credit Unions, Islamic Banking and Finance Law)
Reforms are taking place
At the same time, MFIs and the number of MFI clients
have increased strongly in Tajikistan
4
11
85
123 125
0
20
40
60
80
100
120
140
2002 2004 2008 2010 2012
0
50,000
100,000
150,000
200,000
250,000
NumberofMFIs
Numberofclients

OECD peer review methodology for access to finance in Tajikistan
15 policy indicators will be assessed across three policy sub-dimensions
Dimensions Sub-dimensions
1 Access to finance for SMEs
Sub-Dimensions
1.1 Legal and regulatory framework
1.2 Sources of external finance
5.3 ACAAs
Sub-dimensions Indicators
1.1 Sources of external finance for SMEs
Indicators
1.2.1 Credit guarantee schemes
Indicators Level of Reform
Indicators
1 2 3 4 5
Credit guarantee schemes
Public start-up funding
Supply-chain financing
Assessment of access to finance policies to
define priorities for reform implementation
• Legal and regulatory framework
• Cadastre
• Collateral and provisioning requirements
• Registration systems for moveable assets
• Credit information services
• Laws and procedures on distressed companies,
receivership and bankruptcy
• Creditor rights
• Sources of external finance
• Credit guarantee schemes
• Financial support services for start-ups
• Supply-chain financing instruments
• Microfinance facilities
• Credit unions
• Availability of risk capital
• Leasing
• Financial literacy

OECD structures the policy development path of each policy indicator
from 1 to 5 to measure the level of policy development
Policy indicator levels:
• Level 1: There is no framework (e.g. law, institution, project, initiative etc.) in place to cover the area
concerned.
• Level 2: There is a draft or pilot framework and there are some signs of government activity to address the
area concerned.
• Level 3: A solid framework is in place for this specific policy area.
• Level 4: Level 3 + some concrete indications of effective policy implementation of the framework.
• Level 5: Level 4 + some significant record of concrete and effective policy implementation of the framework.
This level comes closest to good practices as identified by OECD standards.
Level of Reform
1 2 3 4 5
No microcredit facilities
(neither small credit
lines nor microfinance
sector) in the country.
Microcredit facilities
(either small credit lines
or microfinance) exist at
the level of pilot projects
with limited impact.
Microfinance sector
present and operating
throughout the country.
Facilities mainly state or
donor funded. Limited
range of microfinance
products.
Microfinance facilities
self-sustainable. Special
facilities for targeted
groups such as youth and
women entrepreneurs.
Legal and regulatory
framework for
microfinance industry
under preparation.
Level 4 plus wide range of
microfinance products.
Appropriate legal and
regulatory framework in place
for microfinance
Example indicator: Microfinance Facilities

The assessment of the Kyrgyz Republic identified a need to further strengthen
several access to finance-related policy areas
3
2
3 3 3 3
2
1
2
4
3
2
4
1
0
1
2
3
4
5
1.1.1 Cadastre 1.1.2
Collateral and
provisioning
requirements
1.1.3
Registration
systems for
moveable
assets
1.1.4 Credit
information
services
1.1.5 Laws and
procedures on
distressed
companies,
receivership
and
bankruptcy
1.1.6 Creditor
rights
1.2.1 Credit
guarantee
schemes
1.2.2 Financial
support
services for
start-ups
(vouchers,
grants, etc.)
1.2.3 Supply-
chain
financing
instruments
(warehouse
receipts,
contract
farming, etc.)
1.2.4
Microfinance
Facilities
1.2.5 Credit
Unions
1.2.6
Availability of
Risk Capital
(e.g. venture
capital, private
equity funds)
1.2.7 Leasing 1.3.1 Financial
literacy
1.1 Effective Regulatory Framework 1.2 Access to External Finance 1.3 Other
factors that
affect demand
and supply of
finance
EXAMPLE
OF RESULTS
Source: OECD Peer Review Assessment of the Kyrgyz Republic (2013)
• Review current collateral and provisioning requirements
• Streamline procedures for registration of moveable assets
• Expand the activities of the existing guarantee funds and develop a regulatory framework for risk capital
• Enhance financial literacy through targeted support programmes on business planning and financial management
Example recommendations

Agenda
access to finance
 Next steps

Remittances are a significant source of Tajikistan’s external revenue
Their share to GDP is higher than FDI, Exports and Aid combined
Bilateral Aid
FDI
Remittances
Exports
0%
10%
20%
30%
40%
50%
60%
70%
2003 2004 2005 2006 2007 2008 2009 2010 2011
Remittances and other sources of external revenue as a share of Tajikistan’s GDP
• Remittances amounted to more than 3.6 billion US Dollars in 2012
• 87% of which are channelled through low cost formal channels
• An estimated 10-30% of remittances correspond to small export revenue
Sources: World Bank, World Development Indicators, National Bank of Tajikistan
Share of
Tajikistan’s
GDP

Growing remittances are rarely used for private sector development,
where access to finance barriers persist
•Remittances are a very high and reliable inflow, despite their seasonality
•Aggregate remittance savings are almost as high as domestic credit to the private sector
Sources: Buckley and Hofmann (2012), World Bank: Tajik Living Standards Monitoring Survey, World Development Indicators; * Calculation based on WDI
data and ILO (2010) Migrant remittances to Tajikistan the potential for savings, economic investment and existing financial products to attract remittances
Lending to the private sector as a share of GDP is
small compared to other countries in Eurasia
13%
20%
37% 38%
43%
52%
0%
10%
20%
30%
40%
50%
60%
Tajikistan Azerbaijan Kazakhstan Moldova Armenia Mongolia
Growing remittances inflows are not translated into
higher shares of credit to the private sector
0%
10%
20%
30%
40%
50%
60%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Remittances: 46%
Domestic credit to the
private sector: 13%
Of which: long term savings: 5%*
Savings from remittances: 11%*
Share of
Tajikistan’s GDP

The potential of remittances policies has already been identified, but
further policies could be implemented
Access to finance
Situation in Tajikistan • Very large inflows of remittances, that are reliable on the long term, but little usage for
access to finance
• The National Labor Migration Strategy aims to improve the use of remittances in the
economy
• GIZ works on financial literacy, development of the microfinance sector & product
development
• Several donors provide advice and support to the banking system and MFI sector
What could be further
done?
Potential impacts of using remittances for access to finance extend to
skills and knowledge, and access to foreign markets
?

Agenda
access to finance
 Next steps

Migration and remittances – policy instruments focus on financial
inclusion, SME development advisory and investment advice
Financial inclusion: Improve the transfer of remittances into savings
 Establish co-operation between Money Transfer Organisations (MTOs) and Micro
Finance Institutions (MFIs)
 The people’s network, Mexico
 Create remittance-specific products and build financial knowledge  The people’s network, Mexico
SME development support: Encourage migrant entrepreneurship
 Actively encourage returning migrants to start up their own business
 PARE 1+1, Moldova
 Paisano invierte en tu tierra, Mexico
 Match investments by migrants with public money
 Help SMEs tap into the diaspora market and/or profit from migrants’ expert
knowledge
 Provide services, such as business consultancies, information services, training in
small-scale business management and financial support, etc
Investment advice: Inform on investment opportunities for migrants
 Create an agency contacting migrants and informing them about investment
opportunities
 Mexico
 Connect migrants and high potential SMEs/local investment opportunities  Mexico
Financial literacy: All policy instruments should be complemented by efforts to increase
remittance receivers’ and senders’ financial literacy and knowledge.
Three case studies will be investigated:
Mexico, Moldova and Turkey.

Mexico – the world’s second biggest receiver of remittances
Sources: World Bank. 2010. Migration and Remittances Factbook 2011: Second Edition. Terrazas, Aaron. 2010. “Mexican Immigrants in the United States.” Migrationpolicy.org. http://www.migrationpolicy.org/article/mexican-
immigrants-united-states-0. World Bank. 2013. World Development Indicators 2013. Washington, D.C.,: World Bank. http://elibrary.worldbank.org/doi/book/10.1596/978-0-8213-9824-1. Özden, Çağlar. 2013. “Low Hanging Fruit
on the Development Tree: Patterns of Global Migration & Opportunities” presented at INTERNATIONAL COOPERATION AND GLOBAL PUBLIC GOODS: Patterns of Global Migration and Opportunities for Policy Makers, World Bank;
World Development Indicators
• 13 million Mexicans live abroad, 11 % of
the population
• Largest destination country is the US,
Mexico-USA is the biggest migration
corridor
• Mostly, but not solely low-skilled
employment: 14% of migrants are high-
skilled workers
Background: A large number of migrants…
CASE STUDY
…that remits a substantial amount
• Mexico is the second largest recipient of
remittances in absolute terms
• In 2012, the country received
remittances of 23 billion USD
$5,000.00
$10,000.00
$15,000.00
$20,000.00
$25,000.00
$30,000.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
CurrentUSDMillions
After growing for decades, remittances to Mexico have
stabilised at high levels

Remittances are first transferred to savings, in addition,
programmes aim to promote entrepreneurship and investment
Source: Ministry of Economy of Mexico, Information brochure “Sácale provecho a tus remesas” (2012), Instituto de los Mexicanos en el Exterior; De la Torre, Augusto, Juan
Carlos Gozzi, and Sergio Luis Schmukler. 2007. “Innovative Experiences in Access to Finance: Market Friendly Roles for the Visible Hand ?” Policy Research Working Paper
Series 4326. The World Bank
CASE STUDY
• Compatriot, invest in your country:
Financial support and advisory services supporting
the creation and strengthening of agribusinesses or
the export of typical Mexican products to diaspora
markets
• Investment promotion to rural property:
Advising migrants on how to and where to invest in
farming co-operatives
Investments in agriculture
• 3x1 Programme for migrants:
Matching public money with migrant investments in
the development of livestock agricultural projects,
infrastructure, manufacturing or others
• Business initiation programme for migrants:
Facilitating productive options for Mexicans abroad
who wish to start , build or reactivate a micro, small or
medium business in Mexico
Creation of businesses
• The peoples’ network:
Facilitate the transfer of remittances into savings/investment accounts at Microfinance Institutions and banks by creating a network
that is connected to large Money Transfer Organisations and banks abroad.
The basis: Financial inclusion of remittance senders and receivers
2
1

Good fundamentals: Remittances are connected to bank
accounts and tailored financial products are provided
Source: De la Torre, Augusto, Juan Carlos Gozzi, and Sergio Luis Schmukler. 2007. “Innovative Experiences in Access to Finance: Market Friendly Roles for the Visible Hand ?” Policy
Research Working Paper Series 4326. The World Bank. Taber et al. (2004) Integrating the Poor into the Mainstream Financial System: The BANSEFI and SAGARPA Programs in Mexico;
BANSEFI (2010) The Importance of the receiving network: L@Red de la Gente – The Value of being close. Presentation at Directo a México Conference, Atlanta, GA. BANSEFI
• Coverage of rural areas by banks was low,
many loosely regulated or unregulated
financial institutions filled the gap
• Support programme to strengthen credit
and saving unions:
- New regulatory and supervisory framework
- Capacity building of existing MFIs
- Creation of a shared technological platform
- Provision of centralised back-office software
and services
• National Savings and Financial Services
Bank (BANSEFI) as driver of the process
First step: Strengthening MFIs Second step: Linking MFIs and remittances
• On top of existing MFI, BANSEFI developed
and implemented a commercial alliance - a
network of savings and credit institutions
• The network was then linked to Money
Transfer Organisations, facilitating the
transfer of remittances through
• the “traditional” sending of remittances
• directly depositing remittances to an
account
• Development of accounts that link
different savings and investment
products, migrants can allocate different
proportions to savings or investments
CASE STUDY 1

Example programme: Compatriot invest in your land
Focus is on SME advisory and co-financing of agribusiness investments
CASE STUDY
Description of the programme
• Target group:
Farmers in Mexico or abroad that want to
invest in Mexico using remittances
• Content of the programme:
 Targeted co-financing for storage,
cooling, packaging, processing and
marketing
 Assistance in the creation of business
plans or export certification, especially
for the US nostalgia market for Mexican
products
• Strong emphasis on outreach:
Through Mexican associations in US cities as
well as information provided in Mexico
• Many migrants come from rural under-
developed areas
• Agriculture provides around 15% of
employment
• However, the sector lacks financing
• In addition, a substantial market of
Mexicans in the US emerged, demanding
Mexican nostalgia products
Rationale
Source: Ministry of Economy of Mexico, Information brochure “Sácale provecho a tus remesas” (2012), Instituto de los Mexicanos en el Exterior
2

Lessons learnt and questions for Tajikistan
Source: OECD analysis
CASE STUDYCASE STUDYCASE STUDY
• Complementarity:
Leverage existing programmes and
institutions
• Focus on the fundamentals:
Combine entrepreneurship programmes
with efforts to increase migrants’
participation in the financial sector
• Communication:
Reach out to and inform migrants
abroad about programmes at home
• Service-oriented:
Provide convenient services and a simple
choice to migrants
Key success factors
• What kind of programmes and services
are already existing in Tajikistan and
abroad?
• How can migrants’ participation in the
financial sector be further facilitated?
• Are there any migrant associations
abroad? How strong are migrants’ ties to
Tajikistan?
• How can services be provided as
convenient as possible (abroad/local –
urban/rural)?
Example questions for Tajikistan

Moldova has experienced high levels of migration and remittances,
policy instruments aim to translate remittances to investments
Sources: Source: Ibabanji (2012) Program on attracting remittances into the economy “PARE 1+1”. Presentation at the ETF seminar “Migration and Skills”, 6 – 7
March 2012, Torino; UN in Moldova Magazine (2012) Building Future at Home, “Program on attracting Remittances into the economy ‘’PARE 1+1’’for 2010-2015,
High migration and remittances inflows…
CASE STUDY
…a small percentage used for investment
• Number of migrants: around 300,000
persons, or 25 % of the economically active
population
• Remittances level: 23% of GDP
• Remittances are the major source of financial
inflows
• 45% of migrants go to the EU, the same
number is migrating to CIS countries
• Remittances use: mostly used for basic
household consumption, consumer durables,
purchase of housing, and debt repayment.
• Less than 7 % are used to finance business
investments, 5 % are deposited into savings
accounts
General problems include:
• Lack of awareness regarding business
development opportunities
• Weak entrepreneurial skills
• Lack of incentives for SME establishment
and development
• Limited access of migrants and remittance
beneficiaries to financial resources

PARE 1+1 programme: Focus on strengthening entrepreneurial skills and
knowledge and matching remittances investments with public money
It consists of four pillars:
1. Information and Communication:
- consultation and information
2. Training and Entrepreneurial Support:
- training courses
3. Business Financing/1+1 Rule:
- investments by migrants are matched with
an equivalent subsidy by PARE 1+1
4. Post-financing Monitoring and Program
Evaluation
Policy instrument: PARE 1+1 programme
CASE STUDY
Main results
Objective: mobilization of human and financial resources of the Moldovan migrant workers in order to sustain the
economic development of the Republic of Moldova by stimulating the establishment and development of SMEs.
• Creation of 153 start-ups in the following sectors:
• 313 companies assisted
• They provide 1600 jobs
• Attraction of >4 million Euro
• This is 2.5 times the value of programme investments
42 %
29 %
30 %
Agriculture
Production
Services
Sources: Source: Ibabanji (2012) Program on attracting remittances into the economy “PARE 1+1”. Presentation at the ETF seminar “Migration and Skills”, 6 – 7 March 2012, Torino; UN in Moldova
Magazine (2012) Building Future at Home, “Program on attracting Remittances into the economy ‘’PARE 1+1’’for 2010-2015,

Lessons learnt and questions for TajikistanCASE STUDYCASE STUDY
• Communication:
- Motivate migrants through success stories
- Communication with the diaspora is critical
• Governance:
Involvement of the local public administration
in the implementation of the programme
• Financial support:
Match remittances investment with public
funds
• Improving business climate:
Important to create an enabling environment
for SMEs - Moldova ranks 81st globally, up
from 93 (2013)
Lessons learnt
• Which communication channels to the
diaspora exist?
• Could support services first focus on
urban areas or pilot regions?
• Are public or donor funds available for
co-financing?
• Is the general business climate
supportive enough for migrant
entrepreneurial activity?
Source: OECD analysis, 2014 Review of Pare 1+1: “Program on attracting Remittances into the economy ‘’PARE 1+1’’for 2010-2015, report elaborated in Chisinau 2014. World
Bank, and International Finance Corporation. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Doing Business 2013. Washington, D. C:

In the 1970’s Turkey witnessed large levels of state-supported
labor migration
Sources: World Bank. 2013. World Development Indicators 2013. Washington, D.C.,: World Bank. http://elibrary.worldbank.org/doi/book/10.1596/978-0-8213-9824-1. Içduygu, A.
(2005), "Migration, Remittances and their Impact on Economic Development in Turkey", in OECD, Migration, Remittances and Development, OECD Publishing
• For decades Turkey has been one of the
top 10 remittance recipients among
developing countries
• By 1980, 2.3 million Turkish citizens had
emigrated, around 5% of the population.
• They remitted more than 2 billion USD,
which corresponded to 3% of the GDP
Background Migration was seen as a development tool
• Most of the migration originated from
rural underdeveloped areas and went to
Europe
• Migration was intended to be temporary
• Goal was to develop sending regions of
migrants
• Migrants kept strong ties to Turkey,
created diaspora organisations
CASE STUDY

Turkey’s focus on state-driven top-down remittance policy
instruments resulted in limited success
Source: Içduygu, A. (2005), "Migration, Remittances and their Impact on Economic Development in Turkey", in OECD, Migration, Remittances and Development, OECD Publishing;
Faist, Thomas, and Eyüp Özveren, ed. 2004. Transnational Social Spaces: Agents, Networks, and Institutions. Harzig, Christiane, Danielle Juteau Lee, and Irina Schmitt. 2006. The Social
Construction of Diversity: Recasting the Master Narrative of Industrial Nations. Oxford. Koc, Ismet, and Isil Onan. 2004. “International Migrants’ Remittances and Welfare Status of the
Left-Behind Families in Turkey.” International Migration Review 38 (1): 78–112 Köksal, Nazli Elif. 2006. “Determinants and Impact on the Turkish Economy of Remittances.” MATISSE.
• Creation of Worker’s Joint Stock
Companies (>600 companies)
• Aim: invest in the industrialisation of
underdeveloped regions
• Created with capital from shareholders
working in Europe (at least 50% of
migrants as shareholders)
• OR: created with savings from migrants
abroad, local shareholders (min. 50%) and
state investments
• Establishment of the State Industry and
Workers’ Investment Bank
• To support Worker’s Joint Stock Companies
 Inadequate project identification:
Goals of companies were not in line
with economic considerations
 Bad financial and technical planning
and management
 Lack of good governance
 Inadequacy of communications
 Mismatch between financial resources
and workers’ entrepreneurial abilities
Result:
Only 20-30 companies remain up to now
Policy instrument Lessons learnt
CASE STUDY

Lessons learnt and questions for Tajikistan
Source: Içduygu, A. (2005), "Migration, Remittances and their Impact on Economic Development in Turkey", in OECD, Migration, Remittances and
Development, OECD Publishing; OECD analysis
CASE STUDY
Main lesson: Policies have to be based on economic evidence, a strong investment
incentive should be present to limit misuse
• Focus on political instead of economic
goals – Worker’s Joint Stock Companies
had to operate according to political
considerations instead of economic
needs
• Business skills were not sufficient for
large companies based on contributions
from numerous remittance senders
Problematic areas
• How can a supportive environment be
created in which businesses set their own
goals?
• How can efforts focus on creating small,
easy manageable independent
companies?

Agenda
access to finance
 Next steps

Suggested areas to be further investigated: Focus should be on
financial inclusion or SME development advice
SUMMARY
Financial literacy has to be complementary to any instrument applied
 Complementarity:
Leverage existing programmes and institutions
 Service-orientation:
Provide convenient services and a simple choice to
migrants
Focus area 1: Financial inclusion
• How can migrants’ participation in the financial
sector be further facilitated?
• How can services be provided as convenient as
possible (abroad/local – urban/rural)?
 Creation of entrepreneurial skills:
Provide advice and training in entrepreneurial skills
to migrant entrepreneurs
 Financial support:
Match targeted remittances investment with public
funds
Focus area 2: SME development advice
• How can efforts focus on creating small, easy
manageable independent companies?
• Is the general business climate supportive enough
for migrant entrepreneurial activity?
 Communication:
Reach out to and inform migrants abroad about
investment opportunities at home
Focus area 3: Remittances investment information
• How can a supportive environment be created in
which investors and businesses set their own goals?

Agenda
access to finance
 Next steps

How to further assess policy gaps
Main components and suggested work plan for Working Group members
Horizontal Assessment
Remittances policy
instrument
Components
Expected contributions
from WG members Timeline
Availability for content discussions by
phone or in Dushanbe
Provision of information on access to
finance regulations
Availability for content discussions
by phone or in Dushanbe
Provision of data and strategies
Feed-back on if/how good policy
practices from other countries could be
applicable to Tajikistan
From
now on to
next WG
meeting in
June 2014
Fact-finding mission to Dushanbe to be organised in April 2014

Working Group Schedule: Two more meetings are suggested for 2014
The objective is to get ready for the Roundtable in November 2014
2013 2014
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
COUNTRYLEVEL
Working
Group,
Dushanbe
Project Steering
Group,
Dushanbe
REGIONAL
Eurasia
Competitiveness
Roundtable,
Paris
1st Roundtable
Peer review of
action plans for
reforms in the
Kyrgyz Republic
2nd Roundtable
Peer review of two
action plans for
reforms of Tajikistan
1st Meeting
Decision on focus and
set up of two thematic
working groups
2nd Meeting
Review of the initial results
and recommendations
3rd Meeting
Endorsement of final
recommendations
3 meetings will be conducted for each of the two Working
Groups
Design of draft action plans for reform

Points of decision
1. To agree on the project schedule
2. To agree on the focus area of the Working Group
3. To agree on the assignment of responsibilities and
expected contributions from Working Group members

OECD contact details
Grégory LECOMTE
Project Manager and Policy Analyst,
OECD Eurasia Competitiveness Programme
e-mail: gregory.lecomte@oecd.org
Sebastian KUPFERSCHMID
Policy Analyst,
OECD Eurasia Competitiveness
Programme
e-mail: sebastian.kupferschmid@oecd.org
Martin POSPISIL
Policy Analyst,
OECD Eurasia Competitiveness
Programme
e-mail: martin.pospisil@oecd.org

Access to finance in Tajikistan

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Access to finance in Tajikistan