Improving People’s Lives in Tajikistan

Challenge

Landlocked and largely mountainous, with a population of about 8 million (50 percent of which is below age 24) and a GNI per capita of US$880 in 2012 (Atlas methodology), Tajikistan is the poorest country in Europe and Central Asia (ECA). Tajikistan is Central Asia’s least accessible, most isolated country, with only limited regional and international connectivity. High mountain ranges make internal communication difficult, especially in the winter. Tajikistan is also highly prone to climatic and natural disasters and is the most climate vulnerable country in ECA. Between 1997 and 2011, losses related to disasters exceeded US$353 million and have posed challenges to economic progress, social development, and poverty reduction. Following the 1991–97 civil war, Tajikistan endured a significant exodus of human resources and a degradation of economic infrastructure and the quality of human capital. Many reforms were delayed until the early 2000s and have only recently started to get under way. Despite a rapid economic recovery with GDP growth averaging 7–8 percent in 2000–13 and a significant drop in poverty from 81 to 36 percent in 1999–2012, the indicators of non-monetary poverty in Tajikistan remain high, with access to education, heating and sanitation being the main contributors to non-monetary poverty. As growth and income are driven largely by external factors such as migration and remittances, Tajikistan is vulnerable to external shocks as evidenced by the current economic slowdown. One of the country’s largest challenges is therefore to diversify the economy and create sustainable domestic jobs, primarily by stimulating private enterprise and improving the education system.

Approach

Given the multiple vulnerabilities and risks to inclusive growth, stability, and sustainable development, both external and internal, the World Bank’s approach has been to use concessional International Development Association (IDA) resources to mobilize partnership and trust funds to help Tajikistan to: (1) maintain sound economic management and policy; (2) promote private sector–led growth; (3) rehabilitate critical infrastructure, especially in energy; (4) create productive jobs, including for returning migrants in the agriculture and other sectors; and (5) support human development and social inclusion by reforming social services and rehabilitating infrastructure in public health and education. Furthermore, the Bank is helping Tajikistan to mitigate the long-term risks of climatic and natural disasters and, given the existing connectivity bottlenecks, gain access to: (a) regional markets through transport corridors and export of surplus electricity generation; and (b) global information and knowledge through infrastructure improvements (including telecommunications), thus diversifying economic opportunities.

Results

• In 2008, the Government established a National Testing Center (NTC) as a first step toward establishing a national education assessment system to promote better access to and quality of education.
• Between 2009 and 2014, the WBG, through the Russia Education Aid for Development Project (US$4.1 million) and Education Modernization Project (IDA, US$2 million), in cooperation with Open Society Foundations (US$1.5 million), supported institutional capacity of the NTC and design and introduction of the Unified University Entrance Examinations (UEE) to standardize testing practices and procedures and give students more equitable access to higher education. In July 2014, the UEE was implemented for the first time.
• The new registration procedures allowed 52,500 applicants, including 17,500 females, to register for the UEE exam in the first year, 30 percent more than in 2013. Forty-one percent of 2014 enrollees were girls compared to 34 percent in 2013.
• Between 2006 and 2016, nine provincial towns gained improved access to, and reliability and quality of, basic municipal services due to the IDA-financed Municipal Infrastructure Development Project.
• The following specific results have been achieved: i) 1,766 improved community water points, ii) 19,248 new piped household water connections, iii) 38,805 rehabilitated piped household water connections, iv) improved solid waste collection for 90 percent of the population in Farkhor and Vose, and v) improved sanitation solutions for 3,737 people in Farkhor and Vose.
• The project’s Citizen Engagement program, a key pillar of success and measure of sustainability under the project, has led to proper operation and management of sanitation investments through new Sanitation Zone Management Committees, comprised of community members who also promote improved hygiene and collect user fees.
• Transparency and financial viability of target water utilities in Kurgan-Tyube, Dangara, Kulyab, Farkhor, and Vose have been enhanced due to the introduction of a modern billing and collection system, with 100 percent of bills issued and collected automatically.
• A total of 221,544 people have benefited from improved water sources, out of which 53 percent were women. 
• The first Credit Information Bureau of Tajikistan (CIBT), established with support from the WBG in 2010, helped strengthen the financial infrastructure and improve access to financing for small and medium-sized enterprises (SMEs).The CIBT draws from a database of individual credit histories and entities created as a result of cooperation with over 80 organizations from all regions of the country.
• The Law on Credit Histories was adopted in March 2009, an amendment to the licensing law was passed in October 2009, and the implementation of credit bureau regulations took place in February 2010. .
• Between 2010 and 2016, over 1.3 million contracts were uploaded into the system to provide credit information on over 970,000 clients, individuals and SMEs.
• As of now, more than 800 users, including banks and microfinance institutions, are active users of the CIBT system, with around 70,000 requests per month. 
• Tajikistan’s rating in the Getting Credit indicator of the  Doing Business Report went from zero in 2014 to 6 in 2015 and to 7 in 2016.

World Bank Group Contribution

Tajikistan became a member of IFC in 1994. Since 1997, IFC has invested US$151 million, including US$11.5 million mobilized from partners, to support 40 private sector projects in the financial sector, hydro power, retail, tourism and manufacturing sectors. As of June 30, 2015, IFC’s committed portfolio stood at US$67 million, which includes investments in telecommunications, financial markets, food, retail and agribusiness sectors. IFC is also implementing advisory services projects focused on the legal and regulatory infrastructure of SMEs, credit bureau development, leasing, agricultural finance, and infrastructure development through public-private partnerships (PPPs).

Partners

The World Bank Group in Tajikistan is a respected member of diverse donor community that includes both traditional Development Assistance Committee (DAC) and non-traditional emerging donors, including Russia and China, all members of the Development Coordination Council in place since 2009. The WBG is using its convening power and successfully mobilizes resources from diverse partners to implement many projects, including in such priority sectors as energy (Central Asia South Asia Regional Electricity Transmission and Trade Project - CASA1000), rural development and irrigation (Second Public Employment for Sustainable Agriculture and Water Resources Management Project, Ferghana Valley project), and health care and education (Japan, Russia). The World Bank has been maintaining a close partnership and coordination with key donors, including the Asian Development Bank, European Union, UK’s Department of International Development, and Swiss State Secretariat for Economic Affairs. In addition to the development partners, the WBG is working closely with diverse local partners, including the Government, nongovernmental organizations, and citizen and youth organizations.

Moving Forward

The WBG will continue its partnership with Tajikistan in line with the Country Partnership Strategy (CPS) (2015–18) under implementation to help reduce extreme poverty and promote shared prosperity by expanding opportunities for the private sector and excluded groups, with a view to supporting the transition to a new growth model. The CPS is tailored to respond to the challenges of the country’s vulnerability to multiple risks, weak domestic drivers of growth, underdeveloped social systems and infrastructure, and constrained regional connectivity. The WBG’s support through the CPS is being provided through targeted interventions organized around three broad areas of engagement or pillars, as follows:

• Strengthen the role of the private sector as an enabler of growth and job creation
• Promote social inclusion to improve delivery of basic social services (social protection, water and sanitation, primary health care) while expanding access to higher education for youth from poor families and to land rights for women, thus increasing opportunities for productive employment
• Support regional connectivity to expand access to regional markets and global information and knowledge through infrastructure improvements (including telecommunications), thus diversifying economic opportunities.

CPS activities under each of these three pillars would also be shaped by applying three cross-cutting themes: gender, governance, and climate change.

Beneficiaries