DUSHANBE, June 30, 2008, Asia-Plus — Under the Tajik Agricultural Finance Framework (TAFF) project sponsored by the European Bank for Reconstruction and Development (EBRD), the Khujand-based open joint-stock company (OJSC), Eskhata Bank, has provided 4.7 million somonis (equivalent to some $1.4 million) in loans to farming units in the northern Sughd province, press release issued by Eskhata Bank said.
To develop the cotton sector alone, 1.7 million somonis ($495,500) have been provided by the bank since the beginning of this year, press release said. The loans have been provided under contracts concluded with 43 farming units with a total area of 1,168 hectares. These farming units have to date received the first tranche totaling 1.1 million somonis to carry out cotton-sowing campaign.
The TAFF project supports the restructuring of Tajikistan’s agricultural sector by providing revolving credit lines to Tajik financial intermediaries (banks and non-bank financial institutions) who will on-lend funds to farmers for seasonal finance. The objective is to provide alternative finance to small farmers and support the freedom to farm concept whilst employing best farming practice particularly with respect to environmental and labor issues. Through coordination with other donor programs, farm yields are expected to increase thereby improving profitability. In parallel the EBRD supports the establishment of a Warehouse Receipts Program.
The project is expected to address the structure of the market by fostering enhanced competition and expansion of the market by providing alternative, untied sources of finance which will stimulate competition between buyers and encourage development of input suppliers and associated farm service providers. It will also increase private ownership through stimulating the break-up of the remaining large farms.
The total facility is up to USD 35 million in revolving credit lines. Up to USD 10 million are provided by EBRD which leverages up to USD 20 million in commercial and/or official co-financing. A further USD 5 million is provided in risk participation on the sub-loan portfolio.
Established in November 1993, a privately owned Eskhata Bank, with headquarters in Khujand, has eight branches in various regions of the country. The bank got operating license in 1994. In December 2005, European Bank for Reconstruction and Development (EBRD) took equity in Eskhata Bank that allowed Eskhata to continue to comply with the National Bank of Tajikistan’s minimum capital requirements, which have been revised upwards to $5 million.
As of May 1 2008, an authorized capital stock of Eskhata Bank has amounted to 13.4805 million somonis (equivalent to some $3.9 million) and its regulative capital has amounted to 31.4745 somonis ($9.2 million).
