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Washington, D.C., July 19, 2004—
The International Finance Corporation, the private sector arm of the World Bank Group, signed a $500,000 loan that will help cotton and wheat farmers to increase yields and reduce debt in Tajikistan, Central Asia’s poorest country. The loan will triple the size of the pilot project launched in 2002.
In 2002, with assistance from IFC and the Government of the Swiss Confederation, acting through the State Secretariat for Economic Affairs (seco), 365 Tajik farmers incorporated to form SugAgroServ (SAS), the first joint stock company entirely owned by farmers in Tajikistan. The company’s initial working capital was provided by paid-in capital from the founding farmer-shareholders, a grant from seco and a $250,000 loan from IFC. SAS serves farmers in the Sugd province of Northern Tajikistan, providing seasonal working capital loans, farming inputs for retail sale, and cotton marketing services. The availability of SAS services has, in less than two years of profitable operations, helped to improve clients’ cotton yields and profitability. The company is faced with enormous demand among farmers seeking to become clients and shareholders of SAS.
Initial SAS capital financed, in whole or in part, production from 1,500 hectares of land in 2003, mainly cotton crops. With the further IFC loan of $500,000 and an additional seco grant, SAS is expected to wholly finance approximately 3,500 hectares annually. Additionally, some 1,000 new farmers are expected to become shareholders in SAS.
Khosrow K. Zamani, IFC’s Director for Southern Europe and Central Asia, expressed satisfaction with the progress made on this agricultural project. “New to IFC and new to Tajikistan, this is a groundbreaking private sector model empowering Tajik farmers to take control over their commercial activities,” Mr. Zamani said. “This pilot project is being implemented on a more substantial scale after only two years. IFC is pursuing the expansion recognizing that the SAS model could be replicated in other parts of Tajikistan and in similar frontier markets around the world.”
IFC also provides SAS with technical assistance managed by IFC’s Private Enterprise Partnership (PEP) and funded by seco for five years. PEP delivers donor- and IFC-funded technical assistance to help lay the groundwork for sustainable private sector investment, to support the growth of small and medium enterprises, and to improve the business enabling environment throughout the former Soviet Union. PEP’s technical assistance program established SAS and has supplied interim management during the company’s start-up phase. It also manages demonstration fields and training programs for farmers on production, irrigation, fertilization and financial management. By 2007, SAS is expected to operate independently, with no further donor support or technical assistance.
Early development and preparatory technical assistance for this innovative project was provided through a grant from Government of Sweden.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
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