Washington D.C., March 3, 2003
—The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, announced today an investment of up to $3 million to finance the expansion of the garment company Javoni, a Tajik-Italian-American joint venture in northern Tajikistan. This is the largest foreign-local textile joint venture in the country.
Javoni employs over one thousand people in the northern town of Khojand. With the IFC investment, Javoni’s workforce is expected to triple to about 3,500 staff in the next several years, and its garment production is expected to increase from 1.4 million to 4.1 million pieces a year.
Javoni is majority owned by Carrera Group, a global leader in the manufacturing and sales of casual garments, which in the past few years has been in a successful joint venture with Abreshim SA, the largest textile company in Tajikistan, partly state-owned. Javoni produces casual garments sold through Carrera into Europe and the United States.
Tajikistan, a country with a young history as a nation, and GDP per capita of $166, is the least developed republic of the former Soviet Union. Its economy is slowly recovering from the civil conflict that affected the country in the 1990’s, and the government is endeavoring to improve opportunities for its people through implementation of one of the most far-reaching economic reform programs in Central Asia.
In the last two years, IFC has been taking a proactive role in Tajikistan by providing much needed financing to the incipient private sector; helping balance the shareholding between foreign and local interests and, in its role as an honest broker, improving transparency between the private and public sectors.
"IFC’s investment in Javoni will have a strong demonstration effect encouraging much-needed foreign direct investment in Tajikistan. Javoni is a plant operating close to European efficiency standards, which is notable considering the young history of Tajikistan and the difficult challenges it faces as a country in the very early stages of developing its economy,” said IFC's vice president Assaad Jabre.
Amal Fabian, Director General of Javoni also noted, “The IFC investment in Javoni will contribute to an increase of annual Tajik exports of 2.3 percent, and will add about $15 million a year to Tajikistan’s economy.”
Khosrow Zamani, IFC’s director for Central Asia, added “IFC’s transaction will support technology transfer in the local garment manufacturing, and give strong support to the country’s major comparative advantage, the production of high-quality cotton. It also shows IFC’s integrated approach to investment, which not only includes financing but also technical advice and creating linkages between large companies and local small and medium enterprises.”
An essential part of the IFC investment in Javoni is strengthening these links with smaller local entrepreneurs with the assistance of advisory services. Javoni will purchase, at market prices, part of its cotton supply from IFC’s pilot Farmers’ Ownership Model (FOM) project, which was launched in April 2002 with the assistance of IFC’s Private Enterprise Partnership (PEP). PEP provides extensive advisory services including for agribusiness and corporate governance.
Today, FOM is a private company owned by farmers and is already financing the cotton crops of over 350 farm families. PEP’s staff is present full time on-site advising farmers on growing and selling their cotton more efficiently. The Swiss Secretariat of Economic Affairs has been funding PEP’s services in Tajikistan. Through this project, Javoni is also seeking PEP's services to help improve its corporate governance practices and potentially set up a textile training center in Tajikistan.
IFC’s mission (
) 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, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2002, IFC committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s committed portfolio at the end of FY02 was $15.1 billion for our own account and $6.5 billion held for participants in loan syndications.