Access to finance in Tajikistan

CENTRAL ASIA INITIATIVE

INVESTMENT AND COMPETITIVENESSIN CENTRAL ASIAFocus on Tajikistan

1st Working Group meeting on Access to Finance and RemittancesDushanbe, 12 March 2014

With the financial assistance of the European Union

http://en.wikipedia.org/wiki/File:Flag_of_Europe.svg

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 ProgrammeOECD 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 MinisterDeputy 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

OECD Secretariat, GIZ and Ministry of Economic Development and Trade of Tajikistan

European Commission

Chairman: Deputy Chairman, SCISPM

Working Group 2Investment and Trade Promotion for SMEs

GIZ

Working Group 1Access to Finance for

SMEs

Chairman: Deputy Minister, 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 project2. 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 GroupTajikistan

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 2014Paris, November 2014 Dushanbe, December 2014


Working Group Schedule: 3 meetings are suggested for 2014The 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

COUNTR

Y LEVE

L

Working Group,

Dushanbe

Project Steering Group,

Dushanbe

REGIONA

L

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




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.

Account used for business purposes (% age 15+)0%

2%

4%

6%

8%

10%

12%11%

3% 3%

1% 1%

Kazakhstan Uzbekistan AfghanistanKyrgyz 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

2002 2004 2008 2010 20120

20

40

60

80

100

120

140

411

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123 125

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100,000

150,000

200,000

250,000

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http://www.microworld.org/en/news-from-the-field/article/tajikistan-microfinance-supports-independence

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




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 Reform1 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

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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




Next steps


Remittances are a significant source of Tajikistan’s external revenueTheir share to GDP is higher than FDI, Exports and Aid combined

2003 2004 2005 2006 2007 2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

Bilateral Aid

FDI

Re-mit-

tances

Exports

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

Tajikistan Azerbaijan Kazakhstan Moldova Armenia Mongolia0%

10%

20%

30%

40%

50%

60%

13%

20%

37% 38%

43%

52%

Growing remittances inflows are not translated into higher shares of credit to the private sector

2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

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 financeSituation 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




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 PARE 1+1, Moldova Paisano invierte en tu tierra, Mexico

Help SMEs tap into the diaspora market and/or profit from migrants’ expert knowledge

Paisano invierte en tu tierra, Mexico

Provide services, such as business consultancies, information services, training in small-scale business management and financial support, etc

PARE 1+1, Moldova Paisano invierte en tu tierra, Mexico

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

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $5,000,000,000.00

$10,000,000,000.00

$15,000,000,000.00

$20,000,000,000.00

$25,000,000,000.00

$30,000,000,000.00

After growing for decades, remittances to Mexico have stabilised at high levels

http://www.migrationpolicy.org/article/mexican-immigrants-united-states-0

http://elibrary.worldbank.org/doi/book/10.1596/978-0-8213-9824-1


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 http://www.bansefi.gob.mx/redgente/Paginas/Quees.aspx accessed 28 February 2014.

• 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

http://www.bansefi.gob.mx/redgente/Paginas/Quees.aspx

http://www.bansefi.gob.mx/redgente/Paginas/Quees.aspx


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: World Bank : International Finance Corporation.


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

http://elibrary.worldbank.org/doi/book/10.1596/978-0-8213-9824-1


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 Eyup 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




Next steps


Suggested areas to be further investigated: Focus should be on financial inclusion or SME development adviceSUMMARY

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




Next steps


How to further assess policy gapsMain components and suggested work plan for Working Group members

Horizontal Assessment

Remittances policy instrument

ComponentsExpected 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 2014The 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

COUNTR

Y LEVE

L

Working Group,

Dushanbe

Project Steering Group,

Dushanbe

REGIONA

L

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 LECOMTEProject Manager and Policy Analyst,OECD Eurasia Competitiveness Programmee-mail: [email protected]

Sebastian KUPFERSCHMIDPolicy Analyst, OECD Eurasia Competitiveness Programmee-mail: [email protected]

Martin POSPISILPolicy Analyst, OECD Eurasia Competitiveness Programmee-mail: [email protected]

mailto:[email protected]





Access to finance in Tajikistan

Devices & Hardware

Transcript of Access to finance in Tajikistan