DEVELOPMENT PROGRAMS FOR POVERTY ALLEVIATION: COMPARATIVE

STUDY OF MICROFINANCE PROGRAM IN TWO AREAS OF

A thesis presented to

the faculty of

the Center for International Studies of Ohio University

In partial fulfillment

of the requirements for the degree

Master of Arts

Ravshan Grezov

June 2008

2

This thesis titled

DEVELOPMENT PROGRAMS FOR POVERTY ALLEVIATION: COMPARATIVE STUDY OF MICROFINANCE PROGRAM IN TWO AREAS OF TAJIKISTAN

by

RAVSHAN GREZOV

has been approved for

the Center for International Studies by

______

Ann R. Tickamyer

Professor of Sociology

______

Jieli Li

Director, International Development Studies

______

Drew McDaniel

Interim Director, Center for International Studies

3

Abstract

GREZOV, RAVSHAN, M.A., June 2008, International Development Studies DEVELOPMENT PROGRAMS FOR POVERTY ALLEVIATION: COMPARATIVE STUDY OF MICROFINANCE PROGRAM IN TWO AREAS OF TAJIKISTAN (87 pp.) Director of Thesis: Ann R. Tickamyer This study analyzes the macro- and micro-level development programs for poverty alleviation in the Republic of Tajikistan. At the macro-level, this study examines the International Monetary Fund's macroeconomic stabilization programs and the World Bank's structural adjustment programs in collaboration with the Government of Tajikistan to highlight the challenges that the International Financial Institutions face in building sound economic development. At the micro-level, it analyzes a case of the UNDP program on microfinance to see if there is a statistically significant correlation between micro-loans and improved livelihoods. This research shows that poor governance and high corruption are widespread at the macro-level and thus policies should take a different approach through building strong capacities of local institutions and politicians. At the micro-level, however, the study concludes that microfinance is a more efficient and effective way to reach and empower the poor. Still there are fewer opportunities for women to control financial resources that also should be tackled through capacity building programs on the ground. In general, strong commitment of politicians at all levels of government and increased participation of civil society are vital to the success of poverty alleviation programs.

Approved:

Ann R.Tickamyer

Professor of Sociology

4

Acknowledgements

I would like to express my gratitude to my thesis advisor, Dr. Ann Tickamyer, for her continuous help and support during the writing process. I particularly enjoyed and benefited from her class “Poverty, Development and Social Welfare Policy (Inequality),” which I found very useful for this research. I would like to thank her for her timely feedback and ideas injected in this study, which made this a more interesting and enjoyable experience.

Special thanks go to Dr. Bob Walter and Dr. Risa Whitson. Dr. Walter’s class, “Theories of Underdevelopment (Seminar on Development Issues and Africa)” and Dr. Whitson’s class, “Gender and Development” provided me with valuable insight into the content of this study.

I also would like to thank my former colleagues and friends at the World Bank Tajikistan and the United Nations Development Program Tajikistan for their support, feedback, and assistance with relevant data utilized in this thesis.

5

Table of Contents Page Abstract 3 Acknowledgement 4 List of Tables 7 List of Figures 8 List of Maps 9 Acronyms 10

1. Introduction 11 1.1 Overview 11 1.2 Statement of the Problem 12 1.3 Significance of the Problem 14 1.4 Purpose 15 1.5 Structure of the Study 15 2. Literature Review 16 2.1 Literature Review on Poverty and Development 16 2.2 Literature Review on Empowerment, Microfinance and Gender Development for Poverty Alleviation 19 2.3 Literature Review on Poverty and Development in the Republic of Tajikistan 20

3. National Approaches to Poverty Alleviation and Sustainable Development: Analysis of the Contribution of International Agencies towards Building a Road out of Poverty 21 3.1 Tajikistan and Poverty: Are They Synonyms? 22 3.2 Why International Donors Give Aid to Tajikistan? 26 3.3 The International Monetary Fund and the World Bank’s Contribution to Poverty Reduction and Sustainable Development 29 3.3.1 Macroeconomic Stabilization Programs of the International Monetary Fund 30 3.3.2 Structural Adjustment Programs of the World Bank 35

3.4 The Role of the United Nations Development Program in Tajikistan 38

3.4.1 Women and Poverty Reduction 39

3.4.2 Why Are Women More Financially and Socially Vulnerable? 40

4. Fighting Poverty at Grassroots Level: Microfinance Program 43 6

4.1 Characteristics of Microfinance 43 4.2 Microfinance as Empowerment Tool 44 4.3 Comparative Study of Microfinance Program in Two Areas of Tajikistan 45 4.3.1 Research Design/Methods 46 4.3.2 Site Selection 46 4.3.3 Profile of Areas: and 47 4.3.4 Sample/Population and Analysis 49 4.3.5 Data Results and Discussion 50 4.3.5.1 Background Characteristics 51 4.3.5.2 Microfinance/Microloan 60 4.3.6 Summary and Lessons Learned 65 5. Conclusions and Recommendations 67 References 71 Appendix A. Map of the Republic of Tajikistan 76 Appendix B. List of Figures 77 Appendix C. Questionnaire for the Microloan Beneficiaries of the United Nations Development Program 83

7

List of Tables Page Table 1. Poverty and Human Development in USSR 23 Table 2. The World Bank Projects in Tajikistan 36 Table 3. Income Distribution in 2006 41 Table 4. Marital Status 51 Table 5. Household Type Within Areas (per 100 respondents) 51 Table 6. Education Level 52 Table 7. Health 53 Table 8. Food Intake/Clean Water 54 Table 9. Agricultural Income vs. Non-Agricultural Income 57 Table 10. Employment Status in Agriculture and Off-Farm 58 Table 11. Land Ownership 59 Table 12. Training on Microfinance 60

8

List of Figures Page Figure 1. Regional Distribution of the Population, the Poor, and the Extremely Poor, 2003 (adjusted for regional prices) 24 Figure 2. Share of the Population Living below Different Poverty Lines, 1999 and 2003 (national prices) 25 Figure 3. Human Development Index Trends in Tajikistan 77 Figure 4. Human Poverty Index Trends in Tajikistan 77 Figure 5. Official Development Assistance and Official Aid to the Central Asian Region (current USD) 27 Figure 6. United States Aid Allocation in Central Asia in 2001 versus 2002 (Million USD) 28 Figure 7. GDP Growth (annual percent) from 1990 to 2006 33 Figure 8. Answers to Schooling in Sughd Region 54 Figure 9. Answers to Schooling in the Rasht Valley 55 Figure 10. Working Hours in Sughd Region and the Rasht Valley 56 Figure 11. Source of Agricultural Income in Sughd Region 78 Figure 12. Source of Agricultural Income in the Rasht Valley 78 Figure 13. Value of Animals in Sughd Region 79 Figure 14. Value of Animals in the Rasht Valley 80 Figure 15. Communication Medium in Sughd Region 81 Figure 16. Communication Medium in Sughd Region 82 Figure 17. Repayment Rate in Sughd Region 61 Figure 18. Repayment Rate in the Rasht Valley 61 Figure 19. Entrepreneurial Skills/Sughd Region 62 Figure 20. Entrepreneurial Skills/Sughd Region 62 Figure 21. Control of Loan in Sughd Region 63 Figure 22. Control of Loan in the Rasht Valley 63 Figure 23. Tension/Violence in Sughd Region 64 Figure 24. Tension/Violence in Sughd Region 64 Figure 25. Living Standards in Sughd Region 65 Figure 26. Living Standards in the Rasht Valley 65

9

List of Maps Page Map 1. Map of the Republic of Tajikistan 76 Map 2. The UNDP Targeted Areas in Tajikistan 47 Map 3. Sughd Region 48 Map 4. Rasht Valley 49

10

Acronyms

ADB Asian Development Bank CAWMP Community Agriculture and Watershed Management Project EMP Education Modernization Project FSU Former GDP Gross Domestic Product GoT Government of Tajikistan HDI Human Development Index HPI Human Poverty Index IFI International Financial Institution IBRD International Bank for Reconstruction and Development IDA International Development Agency IMF International Monetary Fund JRC Jamoat Resource Center MDGs Millennium Development Goals NBT National Bank of Tajikistan NGO Non-Governmental Organization NDS National Development Strategy PMU Project Management Unit PRGF Poverty Reduction and Growth Facility PRSP Poverty Reduction Strategy Paper RLF Revolving Fund RRS Regions of Republican Subordination PSI Policy Support Instrument RT Republic of Tajikistan SDR Special Drawing Rights UN United Nations UNDAF United Nations Development Assistance Framework UNDP United Nations Development Program UNDP CP United Nations Development Program Communities Program UNFPA United Nations Fund for Population Activities UNIFEM United Nations Development Fund for Women UTO United Tajik Opposition USSR Union of Soviet Socialist Republics WB World Bank

11

1. Introduction

1.1 Overview

The existence of poverty is widespread in Tajikistan. This research examines the effectiveness of both macro- and micro-level development policies for poverty alleviation and underlines micro-level development as an important way to bring in changes in the livelihoods of the poor. In general, local politicians link poverty to many factors such as historical background of colonization, cultural and religious barriers, lack of natural resources, tyranny of geography (landlocked country), continuous natural calamities, ravaging military conflicts or civil unrest and, perhaps most debatable, the laziness of the poor. Another view focuses on the system, structure, and policies that are made by politicians and development practitioners both in governmental and non-governmental institutions. This approach highlights poor governance, corruption, and nepotism that create an environment with virtually no value to laws and regulations. Eventually, this results in inability of policies and programs to fight poverty.

This thesis is partly based on personal experience of the author who worked as a development practitioner in the Education Modernization Project funded by the World Bank and the Ministry of Education. Working on this project provided many examples and information on the activities of the World Bank in Tajikistan. Also, this study is based on his field experience at the United Nations Development Program in the Republic of Tajikistan. Taken together this provided access to information both at the macro- and micro-levels utilized in this research.

At the macro-level, the research analyzes the International Monetary Fund’s (IMF) macroeconomic stabilization programs and the World Bank’s (WB) structural adjustment programs to provide a clear picture of how these two large institutions work together with the Government of Tajikistan (GoT). It is essential to analyze their development programs towards poverty alleviation, which will show the mismanagement of programs, misallocation of resources, and poor governance in the context of Tajikistan. 12

At the micro-level, the study examines the United Nations Development Program’s (UNDP) microfinance program. One of its development programs to alleviate poverty is empowerment of the poor such as capacity building through educational training, participatory approaches during the implementation of development projects, and most importantly microfinance/microloan opportunities to the poor with a major focus on socially and financially vulnerable populations such as females. According to the findings of many microfinance institutions including the Grameen Bank, women, considered as potential agents of social change, invest more than men in their households for health care, education, and other basic needs (Sen 1999:189). Thus, this particular investment can bring about changes even in such a male-dominated society, especially in rural areas of Tajikistan. The success story of the Grameen Bank highlights the fact that, if we change the system and introduce new policies that might even be contradictory to religion or culture, in the long run they can change the attitude and behavior of the population. People can perceive the importance of new development policies and accept them.

Therefore, it is necessary to observe the macro-level policies of the government in collaboration with the IMF and WB to see how policies are implemented and why they so often go wrong. The UNDP’s contribution to development policies is the major emphasis of this study, particularly at the micro-level when it comes to the analysis of the changes in standard of living of micro-loan beneficiaries. In general, this research observes many avenues of development programs targeted at poverty alleviation with final focus on microfinance. Finally, the study proposes possible and realistic prescriptions based on the findings of macro- and micro-level development programs in the case of Tajikistan.

1.2 Statement of the Problem

Since gaining independence in 1991, Tajikistan has been confronting crises more severe than have perhaps ever occurred in its history. Several calamities such as the collapse of the Soviet system, civil war, and natural disasters in the early 1990s almost ruined both the social and economic sectors that were built during communism. Fortunately, despite 13

all of the troubles, international donors, particularly the United Nations, intervened to halt military conflicts and supply the country with humanitarian aid. It was in 2002 when the Breton Woods institutions, namely the IMF and WB, helped the GoT design a Poverty Reduction Strategy Paper (PRSP) for the period of 2002 to 2006, which aimed at increasing economic growth through structural adjustment policies. In 2007 the GoT issued PRSP 2 for the period of 2007 to 2009 that challenged the PRSP 1 with better measurable and specific goals as well as more realistic and achievable targets. Both PRSPs are known as a government’s medium term development program based on the National Development Strategy (NDS) initiated in 2005 by the president of Tajikistan for the period to 2015. The GoT is implementing NDS in compliance with the Millennium Development Goals (MDGs). Like the WB and IMF, the UNDP has been playing an active role in poverty alleviation and sustainable development as well. The UNDP encourages and helps the GoT to design development programs that can meet all eight MDGs. Not only does this research analyze the activities of the aforementioned development institutions, but it also provides criticism of international agencies and their role in the context of Tajikistan.

The first section evaluates if there is a strong relationship between development programs at the macro-level and economic development in Tajikistan. It identifies development problems such as corruption and mismanagement during the implementation of development programs at the macro-level and critically analyzes the role of the biggest international aid programs in Tajikistan. Moreover, this section covers evaluation of aid programs and their importance in mainstreaming poverty reduction in national development programs. It also highlights the role of the UNDP, particularly at the micro-level development. Hence, secondary data were obtained from the World Bank's World Development Indicators and United Nations publications to compare and contrast the development indicators over time and define structural changes.

The second part examines if there is a strong correlation between the microfinance program and improvement in livelihoods. In particular, this section tests for a statistically significant relationship between gender and control of loans, 14

tension/violence, and living standards. It observes the development problem at the micro-level and highlights the importance of one of the most popular tools in poverty eradication – microfinance. It is imperative to analyze if women control their financial resources and if loans cause tension and violence within households. At the same time, it is essential to learn why some beneficiaries failed to succeed and what went wrong and how to avoid problems in the future. In general, it is important to learn how many loan recipients succeeded or were empowered. The study compares two areas, Sughd Region () and the Rasht Valley (), to learn their problems and design better strategies as far as microfinance beneficiaries are concerned. Thus, the author collected primary data through a questionnaire designed specifically for rural beneficiaries of a UNDP microfinance program.

1.3 Significance of the Problem

This research is a primary step to analyze development and poverty alleviation policies at the macro-level and then at the micro-level by conducting a survey for the GoT and the UNDP Tajikistan. There was no study conducted on this issue before in Tajikistan, which makes this work distinctive in its content and at the same time fundamental for policymakers to have this information to evaluate and if necessary to reconsider their poverty reduction policies, especially when it comes to remote rural areas of Tajikistan. To do this research, the author designed questionnaires and collected data from 200 randomly selected households, loan recipients, in two areas of Tajikistan. Accordingly, the author evaluated these data to determine whether there were regional differences as well as gender disparities between recipients within the two areas. The survey also answers why Sughd Region, having received relatively less aid in the form of microcredits (2% to 3% rate per month) compared to the Rasht Valley, had better results in building sustainable livelihoods. The overall significance of this study is to find out and highlight the fact that even though there are more aid programs to build strong policies at the macro-level, they might not be beneficial to the poorest of the poor unless the whole structure is changed and the resources are directed to change the livelihoods of 15

the poor at the micro-level through all possible means such as educational and practical training, microfinance, and other capacity building and empowerment mechanisms.

1.4 Purpose

This study examines the ‘top-down’ approach to development beginning with International Financial Institutions (IFIs) and then moves to, and focuses on, development programs of the UNDP. The major goal is to examine macro-level development programs and to argue for more focus on micro-level development. Microfinance is selected as one of the tools having more effects on grassroots level making it helpful, in the long run, to build sustainable human development. Finally, the findings can be useful in the process of designing new strategies and making development policies for the UNDP and the GoT.

1.5 Structure of the Study

This research consists of two main analyses, macro- and micro-level studies, and divided into five chapters. The first chapter, introduction of the research, covers an overview of poverty and development in Tajikistan, states the main development problems and their significance, and highlights the purpose of the study and its structure. The second chapter provides literature review on poverty and development in general and in Tajikistan, and literature review on empowerment, microfinance and gender. The third chapter examines the macro- and micro-level development programs and starts with the causes of poverty in Tajikistan to build a sound understanding for further sections and provides a critical analysis of the International Financial Institutions such as the IMF and WB programs in Tajikistan. It also stresses the significance of the UNDP’s poverty alleviation programs, particularly its microfinance program and its focus on gender- related problems to identify why females are more socially and financially vulnerable in Tajikistan. The fourth chapter explores both the pros and cons of microfinance and analyzes the case of microloan/microfinance beneficiaries of the UNDP in two areas of Tajikistan to identify if micro-loans benefit the recipients and contribute to their living standards. Finally, the fifth chapter provides conclusions and recommendations. 16

2. Literature Review

2.1 Literature Review on Poverty and Development

There is a rich body of literature on poverty and development issues. However, the major objective of this literature review is not to cover all theories and field experiences about deprivation and ways to eradicate it. This review will provide a foundation for the analysis, empirical studies, and case studies that are closely linked to poverty in Tajikistan.

The 1940s and 1950s are known as a breakthrough in understanding the meaning of development because neo-classical economists such as Solow and Koopmans applying mathematical abstraction methods to economic models produced gross domestic product (GDP) an indicator of development that has been the main measurement of orthodox economic analysis and even now it is used in implementation of development policies (UNDP 1990:104). As a result, for many years, scholars focused on the income variable alone to define the prosperity of an individual country.

Indeed, there has been a tendency to think of economic growth and economic development as being the same. Then numerous scholars made a lucid explanation that these two concepts have diverse meanings. One of the first steps towards this issue was a book about Liberia, published in 1966, Growth without Development: An Economy Survey of Liberia by Robert Clover, et al. Accordingly, in the 1960s we had a better explanation of the difference between economic growth and economic development. In general, Robert Clover, et al. argued that Liberia was growing, but without structural change. Another good example could be an article published by Dudley Seers (1969) where the author tried to differentiate economic development and economic growth. According to Ian M. D. Little (1982:3-4), this article on development focused more on inequality, alleviation and elimination of poverty, and unemployment within a growing economy. On the other hand, others still emphasized the importance of income growth that in the long run may lead to poverty alleviation (see Ravallion 1998, Dollar and Kray 2001). 17

Later on, Amartya Sen (1999), one of the most prominent economists injected his ideas into the meaning of development and elimination of poverty. He has broadened the issue of poverty linking it to capabilities, which is ability of one to achieve certain basic needs. For example, health care, education services, longevity, decreasing morbidity, better nutrition, removal of labor bondage and other basic necessities that should be considered as development even if substantial economic growth has not occurred (Sen 1999:295). For example, Kerala state in India managed to dramatically improve its indicators on literacy and longevity even with meager income (Sen 1999). In other words, Sen views development in a broader context, compared to previous scholars, that distinguishes his understanding and concepts in the world of poverty and development.

Moreover, Sen (1999) highlights the importance of women as agents of social change. His work reflects the growing interest in the 1970s to the role of women in development and grassroots movements stressing women’s productive and reproductive activities that contribute to economic growth. Therefore, in many developing countries the United Nations Development Program, World Bank, United States Agency for International Development and other development institutions have been focusing on women’s participation in development programs to reach equity and efficiency. Later on, the empowerment approach came out to provide financially and socially vulnerable women with more freedom to access basic needs such as income, education, and healthcare to improve their livelihoods. “Empowering women for development should have high returns in terms of increased output, greater equity and social progress” (UN 1989:41 in N. Kabeer 1994: 2).

These influences are evident in the UNDP’s first Human Development Report in 1990 that followed Sen’s arguments in building an alternative measure of development to challenge the Gross National Product per capita measure. The document highlighted that income growth is a means to development, not the end in itself. Eventually, it led to the 18 design of the Human Development Index (HDI)1 in 1990 and the Human Poverty Index (HPI)2 in 1997.

Thus from the 1990’s, many institutions gave development a new definition. UNDP Human Development Report (1998:11) defined development as:

Human development is a process of enlarging people’s choices. Enlarging people’s choices is achieved by expanding human capabilities and functionings. At all levels of development the three essential capabilities for human development are for people to lead long and healthy lives, to be knowledgeable, and to have access to the resources needed for a decent standard of living. If these basic capabilities are not achieved, many choices are simply not available and many opportunities remain inaccessible.

The World Bank’s World Development Report (1998:21) stated:

Development is for people. Development is not solely about money or markets, or education and health - although all these are important. It is about people gaining access to resources and increasing their capacity to improve their lives and influence decisions that affect them. By promoting socially sustainable development, the World Bank strives to ensure that people, their cultures and societies, and their organizations and institutions are taken into account in the process of economic development. It also helps ensure that development improves the lives of people, especially the poor.

1 Three essential elements are valued in the HDI: knowledge measured by the adult literacy rate with two-thirds weight and the combined primary, secondary, and tertiary gross enrollment ratio with one-third weight; standard of living measured by adjusted purchasing power, real GDP per capita in US$; and longevity measured by life expectancy at birth that is directly linked to better physical condition and adequate nourishment. 2 The HPI is calculated for developing countries as HPI-1 and for high income OECD countries as HPI-2 to reflect the social and economic differences between these two groups of countries. HPI-1 is used in Tajikistan and it is made up of such components as the percentage of people who die before the age of 40; the percentage of illiterate adults; and decent standard of living that includes the average proportion of the population without access to potable water and proportion of fairly or severely malnourished children under the age of five. For HPI-2 see the following URL: http://hdr.undp.org/en/statistics/indices/hpi/ 19

2.2 Literature Review on Empowerment, Microfinance and Gender Development for Poverty Alleviation

The Grameen Bank founded by Muhammad Yunus, to promote microcredit opportunities among the poor in 1983, is undoubtedly one of the most remarkable models of empowerment of a socially and financially vulnerable group, particularly women. This is what Amartya Sen (1999) highlights in “Women’s Agency and Social Change” of his book Development as Freedom. Indeed, empowerment has been one of the main avenues of development practitioners and academics since the 1990s and some very relevant literature on that was provided in Rethinking Empowerment: Gender and development in a global/local world (Jane L. Parpart et al 2002). Another valuable document published in affiliation with the United Nations Development Program Micro-Credit, Poverty and Empowerment: Linking the Triad (Burra and Ranadive 2005) highlights the importance of empowerment through micro-credits targeted at poverty eradication, which discusses studies of many microfinance institutions.

A large body of literature examines the development and role of microfinance to fight poverty. For instance, Fighting Poverty with Microcredit: Experience in Bangladesh (Shahidur R. Khandker 1998) and Microfinance and Poverty: Questioning the Conventional Wisdom (Hege Gulli 1998) are appropriate examples to apply in the case of Tajikistan. Moreover, relevant information on microfinance and gender, which is one of the major topics of this research, can be obtained from The Economics of Microfinance (Beatriz Armendariz, et al. 2005) and Women and Credit: Researching the Past, Refiguring the Future (Lemire Beverly, et al. 2002). Because of the cultural and religious barriers closely linked to the low number of female loan borrowers, which creates an unequal society, a book by Taj I. Hashmi (2000) Women and Islam in Bangladesh: Beyond Subjection and Tyranny explains why it happens in a conservative (Muslim) society and how organizations such as the Grameen Bank found solutions to such problems. He claims that the misinterpretation of the sacred book Quran by the mullahs as well as local elites suppressed women in many traditional societies. The author underlines female education and economic self-reliance as a path to poverty 20

alleviation in Muslim communities. Religious beliefs in rural Tajikistan are almost similar to the case of Bangladesh even though they have very different histories.

2.3 Literature Review on Poverty and Development in the Republic of Tajikistan

Tajikistan was known to be one of the poorest countries in the Former Soviet Union. Upon the fall of the Soviet bloc in 1991, the republic experienced severe crises such as military conflicts and natural calamities. Therefore, Tajikistan attracted attention of many scholars and academics, particularly International Financial Institutions, who did some research on causes of poverty and ways to eradicate it.

A renowned Tajik economist, Saidmumin Kamolov (2001) in his work, Economy of Tajikistan: Challenges since Independence, covers all the economic downturns, their causes and effects on the national economy. Most importantly, he highlights the reasons for poverty including civil war, natural disasters, and the collapse of the Soviet Union. Moreover, Kamolov stresses the higher rates of poverty over the last decade and their decline with external help. Professor of Southampton University, Jane Falkingham (1999) more broadly underlines the issue of poverty and wellbeing in the Central Asian region. Particularly in A Profile of Poverty (2000) the author, J. Falkingham, went into a detailed description of poverty focusing on rural Tajikistan.

More literature on poverty and development can be obtained from publications of the United Nations Development Program, especially the National Human Development Reports of 1999, 2000 and 2003. These reports publish indicators of the HDI and HPI. Both indices of HDI and HPI are important to understand poverty and human development trends in Tajikistan. Furthermore, the documents developed by the UNDP Tajikistan (2003 and 2005) towards eradication of poverty that are based on the Millennium Development Goals are also essential in this research.

Other institutions such as the World Bank (Poverty Assessment 2005 and Fighting Poverty in Tajikistan: The World Bank Group Activities 1994-2007) and the International Monetary Fund (2002, 2004 and 2007) provided overall country poverty reduction 21

strategies. The Bank’s report is valuable for understanding the micro level, particularly in rural areas and for sectors such as education, health and sanitation, agriculture, environment, and energy. The International Monetary Fund reports describe macroeconomic stabilization policies applied towards the issues concerning the monetary reserves, balance of payments, and foreign exchange rates that work with the Ministry of Economy and Trade as well as the Ministry of Finance.

Finally, the Government of Tajikistan also had substantial input in development of national strategies for sustainable development and poverty alleviation (2002 and 2007) and the National Development Strategy (2006). These development documents produced by the state in cooperation with the WB (PRSPs) and UNDP (NDS) provide matrices where it is possible to observe the planned activities versus achieved results.

3. National Approaches to Poverty Alleviation and Sustainable Development: Analysis of the Contribution of International Agencies towards Building a Road out of Poverty

Since the collapse of the Union of Soviet Socialist Republics (USSR) in 1991, Tajikistan, like other Former Soviet Union (FSU) countries, has been undergoing a transition to a market economy. The Republic of Tajikistan (RT) undertook perhaps the most drastic neo-liberal stabilization and reform agenda during its transition period. Five years of civil war, along with natural disasters, hampered the process of implementation of development programs.

All development related documents issued by international organizations follow the NDS and PRSPs’ policies to reach the GoT’s set targets by 2015. In addition, individual development institutions have their own work plans designed to meet the NDS priority objectives. For instance, the UNDP designed its latest Country Program Action Plan (2005-2009) that was agreed and signed by the GoT. Moreover, to build cooperation and ensure responsibility and sense of ownership, the UNDP produced 22

another document, Moving Mountains, United Nations Development Assistance Framework (UNDAF) (2005-2009), for all the UN agencies to provide assistance within that framework. Thus all development agencies designed their own strategies to follow the goals set in NDS and accordingly contribute to the alleviation of poverty. Not only in designing the strategies, but also in implementing of the NDS, PRSPs, and following UNDAF, the UN agencies along with the International Financial Institutions (IMF and WB) have been contributing extensively with technical consultations, grants, and loans. This section covers the national background of the country while describing poverty levels in Tajikistan. Next, from a critical point of view, it examines macro-level development programs that have the extensive financial assistance of the IFIs and then it analyzes micro-level development programs of the UNDP.

3.1 Tajikistan and Poverty: Are They Synonyms?

The Republic of Tajikistan is landlocked3, mountainous (93,7%), heavily dependent on agriculture (around 6% of arable land), far away from developed countries with better access to markets, surrounded by politically unstable countries, and an energy-importing country because of lack of gas and oil resources. The country is known to have been the poorest state during the reign of communism and even currently it is considered the poorest among the Central Asian countries. During the FSU, poverty rates were well over 50% (Table 1). According to the Asian Development Bank (ADB), after the military conflicts of the mid-1990s, poverty rates were around 83% with the country losing around USD7 billion in monetary terms4. The World Bank’s recent report (2005) on poverty assessment calculated a 64% poverty rate.

3 See Annex 1. Map of Tajikistan. 4 USD7 billion is a massive amount of money if we consider the period and the government budget (which was believed to be less than USD200 million). For more information on this refer to International Crisis Group, Asia Report, 2001:1. 23

Table 1. Poverty and Human Development in USSR

Relative Prop. Of UNDP Human Life Adult per capita Population with Development Expectancy Literacy mean Per Capita Index (1991) (years)(1991) (%) (1991) income* Monthly Income below 75 rubles (1989) Russia 100 5 0.858 67 98.6 Kazakhstan 80 15 0.774 69 97.5 Kyrgyz 58 33 0.685 68 97.0 Republic Turkmenistan 57 35 0.697 66 97.7 Uzbekistan 51 44 0.664 69 97.2 Tajikistan 46 51 0.629 70 96.7 All USSR 89 11 Source: Atkinson and Micklewright. 1992 Note: *Per capita gross household income for workers and collective farm workers in 1989.

Dushanbe, the capital of Tajikistan, and its Regions of Republican Subordination (RRS), have always been better off in terms of political, social, and economic institutions compared to rural areas, where voices of the poor can barely be heard. For instance, remote areas from the capital, Gorno Badakhshan Autonomous Region (Oblast) and Khatlon, are worse off because distance from the center matters when it comes to poverty, specifically poor road conditions result in higher transportation costs to do agricultural business, communicate, have access to other basic needs such as better health care facilities and education, and, in many cases, even safe drinking water and sanitation. Khatlon and Sugd areas have higher rates of poverty because those regions are more densely populated (Figure 1).

24

Figure 1. Regional Distribution of the Population, the Poor, and the Extremely Poor, 2003 (adjusted for regional prices)

Population Poor Extremely Poor

GBAO 3% GBAO Dushanbe 9% GBAO Dushanbe Khatlon 4% 7% RRS RRS RRS 6% 3% 33% 17% 16% 23% Khatlon 40%

Khatlon Sugd Sugd Sugd 51% 24% 32% 32%

Source: Tajikistan Living Standard Survey (TLSS), 20035

Another reason for high poverty indicators across the country, particularly in remote rural areas, can be high fertility rates. This trend considerably increases scarcity and depletion of natural resources and, in the long run, can lead to environmental degradation. Today, according to the National Development Strategy (2006:7), the rate of population growth is equal to 2,2% with the country’s population of 7,163,506. If we apply the population doubling time 6 , in approximately 33 years the population will double in Tajikistan. This level in birth rates can be explained not only because of lack of income, but also as a result of certain unique factors: first, culture and traditions; second, lack of knowledge of family planning; finally, during 70 years of Soviet supremacy, all FSU countries were highly encouraged and motivated (with medals of honor, gifts, money, employment opportunities, prestige, and other incentives) to increase population aiming at an increase in military forces and manpower. Now, upon the fall of communism, Tajikistan confronts a demographic problem that exacerbates poverty indicators.

Moreover, several other factors that keep Tajikistan in a chronic poverty are:

5 The updated data from Tajikistan Living Standard Survey will be ready in the second half of 2008. 6 D/P where D (doubling time) is 72 and P (annual percentage of population growth) is 2,2%, i.e. 72/2,2=32,7 25

¾ Geographical location because most of the poor population live in remote rural areas where land to cultivate crops is scarce; ¾ Seasonal (fluctuating) poverty, exacerbated by draughts, floods, mudslides, landslides, and other natural disasters, harms agricultural business and eventually hampers the economic growth of rural areas; ¾ Gender issues today play one of the most important roles, which, because of cultural and religious standards, provide females with fewer opportunities to improve literacy since, especially in low income households and in rural areas, preferences are mostly given to males7.

Figure 2. Share of the Population Living below Different Poverty Lines, 1999 and 2003 (national prices)

100 90 $1.08 at 2000 PPP 80 $2.15 at 2000 PPP 70 $1.08 at 1996 PPP 60 $2.15 at 1996 PPP 50 Food basket 40 Nutritional norm 30

percent of population TR 10,000 20 TR 20,000 10 - 1999 2003

Source: Poverty Assessment. World Bank Tajikistan, 2005.

Poverty measures are complicated because Tajikistan has not developed its own poverty line and IFIs measure it applying various other poverty lines (Figure 2). Most importantly the rural population may have income not registered by the State Statistical Agency of the RT let alone by IFIs.

The UNDP provides indices such as HDI and HPI that cover more developmental variables compared to gross domestic product. Although, according to statistical

7 A good example is provided by Amartya Sen (1999) linking lack of female education to poverty. 26

agencies, Tajikistan exercises relatively higher HDI (Annex 2, Figure 3) and lower HPI (Annex 2, Figure 4), it should not necessarily mean that poverty rates are also significantly declining. IFIs and UNDP receive statistical data from local agencies that are known to be inaccurate and biased. For example, when an international agency (WB or other institutions) attaches conditions (or conditionality) such as an increase in attendance rates of schoolchildren by a certain percent upon which an individual recipient country can be eligible to receive another installment (tranche) of funds, it will simply encourage policymakers to make up data to receive funds from the development institutions. As a result, inaccurate data significantly changes the development indicators such as HDI, HPI and other indices. Tajikistan has always been known to have an HDI higher than the ranking by per capita income. However, the de facto rates of longevity and literacy are very different since the country went through severe economic and social collapse.

Finally, all the above mentioned reasons and factors make scholars, politicians, and economic analysts refer to Tajikistan as one of the poorest countries. Although many donors and development organizations provided funds and implemented poverty reduction programs, not all of them worked well. Therefore, it is necessary to examine the reasons behind the external financial assistance, development programs of some of the biggest institutions and then eventually define some of the development problems.

3.2 Why International Donors Give Aid to Tajikistan?

Tajikistan, upon gaining its independence in 1991, was one of the largest recipients of aid in the Central Asian Region (Figure 5). Such assistance can be attributed to poverty that has been the highest in the region, which attracted more overseas donors to contribute to the development process and poverty eradication. However, by providing funds, foreign donors attach their own conditionalities that can be advantageous for donors, not only in terms of economic profits, for example trade, but also for geopolitical reasons (Philip McMichael 2004:47). 27

Figure 5. Official Development Assistance and Official Aid to the Central Asian Region (current USD)

YR2006

YR2005

YR2004

YR2003

YR2002

YR2001

YR2000 Uzbekistan YR1999 Turkmenistan

YR1998 Tajikistan Kyrgyz Republic YR1997 Kazakhstan YR1996

YR1995

YR1994

YR1993

YR1992

YR1991

0 100000000 200000000 300000000 400000000

Source: World Development Indicators, May 2008. Geopolitical interests in this region have vastly increased after the September 11 terrorist attacks in the United States. For example, the French, by increasing their grant programs in Tajikistan, received a military base in return. The same example goes for a military base of the Unites States not only in Tajikistan but in its neighboring countries such as Kyrgyzstan and Uzbekistan, where the government of the United States increased its aid programs and received military bases in exchange. Moreover, Uzbekistan, by 28

voting for the war against Al-Qaida and later on against Iraq in the United Nations Resolution, and by being an ally to the US, managed to triple its aid. The United States allocated around USD120 million to Uzbekistan’s economy (Bovard 2002). However, the GoT voted against the war upon the Russian Federation’s request; accordingly, it failed to receive the amount of aid from the United States that Uzbekistan received (Figure 6).

Figure 6. United States Aid Allocation in Central Asia in 2001 versus 2002 (Million USD)

90 80 70 60 50 Before 09/11 40 After 09/11 30 20 10 0 n n a sta istan ist istan kh k n za me zbek Taji rk Ka Kyrgyzstan u U T

Source: Looney, R. 2002. The Role of Foreign Aid in the War on Terrorism Strategic Insight.

The Russian Federation is another example of geopolitical interests in Tajikistan. For instance, in the beginning of 2000 the largest Russian companies—“RAO EES Russia” and “RusAl”—planned to invest more than USD2 billion to build hydroelectric stations and an aluminum plant. In response, the Russian Federation aimed at opening a military base in Tajikistan. Moreover, China has recently invested in electricity and road construction in Tajikistan, which benefits the Western Chinese to transport their commodities to the Central Asian region. Although 40% of the investment (USD1 billion in total, or 36 percent of 2006 GDP) is in the form of grants, the remaining percentages 29

are loans and in the long run they will probably place Tajikistan in a debt trap (IMF 2007:6).

Rarely does external assistance come to Tajikistan without self-interest. However, there are some exceptions in the case of countries such as Norway and Sweden who are running aid programs through Non-Governmental Organizations (NGOs) including several UN agencies and most of them are in the form of grants. In return, Norway and Sweden want to build up economic and friendly political relationships with Tajikistan, which is to a large extent for mutual benefit.

Eventually, even if there are some exceptions, the end goal of all such assistance is very much linked to what and how much profit an individual foreign donor can gain out of ‘aid’8. On the other hand, aid also comes from the IFIs who also tie conditions, which is observed next.

3.3 The International Monetary Fund and the World Bank’s Contribution to Poverty Reduction and Sustainable Development

It was in 1993 when the GoT, during a sharp socioeconomic recession exacerbated by internal conflicts, decided to join the IMF and WB (International Development Agency (IDA)). Both institutions have cross-conditionalities and if an individual state is willing to work with the WB, it should also be a member of the IMF and vice versa. So far, IFIs gave only USD827,000 in the form of grants and USD87 million as concessional loans9.

The IFIs considered Tajikistan under the Highly Indebted Poor Countries initiative and helped the GoT design its own PRSP, which was first published in 2002 and covered the following issues: “1) to encourage equitable, labour-intensive economic growth, with an emphasis on exports, 2) to support efficient and fair provision of basic social services, 3) to target support to the poorest groups of the population, and 4) to improve governance and security.”

8 More information on international finance that is mostly accompanied by political or military motivations is available in the book Aid and Power: The World Bank and Policy-Based Lending, by Mosley, et al. 1995. 9 For more information see www.tajik-gateway.org 30

However, the authors of the PRSP (2002) recognized their own pitfalls and highlighted them in PRSP 2 “(1) the process of the drafting and implementation of the PRSP was somewhat isolated from other activities; (2) the fundamental principles and methodology of the PRSP were not defined clearly enough; and (3) there was not enough coordination and harmonization of donor activities” (PRSP 2 2007:13). These are not the only problems or challenges on the ground that policies could confront. Therefore, it is essential to analyze IMF programs and later on WB programs to learn the extent of their cross-conditionalities and involvement in the development process as well as poverty reduction and also their weaknesses.

3.3.1 Macroeconomic Stabilization Programs of the International Monetary Fund

So far the IMF implemented: 1) Stand-By Program in 1996; 2) Emergency Post Conflict Assistance for Tajikistan in 1997-98; 3) Enhanced Structural Adjustment Facility in 1998-2001; and 4) Poverty Reduction and Growth Facility in 2002-2005. Because of the short-term duration and lack of literature on the second IMF implemented program, three of those programs are discussed in this subsection10.

Stand-By Program of 1996 required the GoT to be strict in terms of fixed monetary and fiscal policies. The GoT borrowed Special Drawing Rights (SDR) of 15 million (around USD22 million) upon the Fund’s consent in May 1996. The major aim of this credit was to reduce the rate of inflation and balance of payments deficit. Moreover, the IMF highly encouraged privatization of small and medium-scale enterprises.

By borrowing money from the Fund, Tajikistan, according to the World Development Indicators, managed to reduce inflation from well over 2000% which was registered in 1995 to 40,5% at the end of 1996. Was this effective? The outcome is clear-cut when in 1997 the inflation increased again to 163.6%. In other words, “In the short run, a country can live beyond its means by borrowing, but eventually a day of

10 Emergency Post Conflict Assistance for Tajikistan in 1997-98 was implemented upon the Peace Accord signed by the GoT and the UTO in Moscow, Russia in June 27, 1997. 31

reckoning comes, and there is a crisis” (Stiglitz 2002:27). However, not only the Fund but the GoT is also responsible for its poor indicators. The IMF, knowing that Tajikistan was still conducting military operations against the United Tajik Opposition (UTO), provided funding for macroeconomic stabilization. The GoT could then use this borrowed money for the national armed forces rather than decreasing its inflation rate that resulted in a sudden increase in inflation of 1997.

The last point of this program could be privatization that ‘opened doors to corruption’11. In other words, during the mid-1990s, privatization bore an anecdotal word in Russian – “prikhvatizaciya,” which is “the grabbing of state and other formally privatised property” (Juhani and Rupinder 2000). Indeed that was what occurred in Tajikistan where “…formal privatisation of large enterprises has been very slow, although large parts of the state sector have effectively collapsed as many assets were stolen” (Richard Pomfret 2003:8). Why did it happen? Tajikistan was not ready to implement neo-liberal policies imposed by the IFIs, not only owing to its internal troubles, but also because of its lack of capacity and experience of how to perform such policies.

Enhanced Structural Adjustment Facility in 1998-200112 was introduced by the Fund under which the IMF advised the GoT to sell strategically important state-owned assets. Among them ‘TADAZ’ (Tajik Aluminum Smelter currently renamed to “Talco”) as well as ‘Pakhtai Tojik’ (Cotton Plant) are the biggest enterprises. Fortunately, the GoT did not follow the Fund’s advice in this regard because these two sectors, aluminum and cotton, account for well over 70% of Tajikistan’s exports. Otherwise, there could be serious consequences for following the IMF policies. The government would be less powerful, with less control over its strategic assets, and eventually corruption would increase and exacerbate Tajikistan’s already fragile economy.

11 See also Black, Kraakman, and Tarassova (1999) for more information on the disadvantages of privatization that led to high rates of corruption. 12 See ESAF - Policy Framework Paper, 1998-2001. Available at: http://www.imf.org/external/country/TJK/index.htm 32

Poverty Reduction and Growth Facility (PRGF) in 2002-200513 mainly assisted the RT in terms of several of its PRSP goals concerning the IMF side, which were: 1) sustainable economic growth; 2) low rates of inflation; 3) improved structural reforms; 4) debt management; and 5) steady exchange rate.

By and large, there is a notion of counterfactual meaning ‘what if’ that is widely applied by economic analysts to evaluate the programs run by the Fund in developing countries. In other words, if there were no IMF programs, would Tajikistan be better off in terms of its macroeconomic indicators? From personal observation local economists and political analysts were agnostic about this question. Tajikistan could have borrowed loans from other multilateral institutions with fewer conditions instead of borrowing them from the IMF. Moreover, with its increase in foreign direct investment after the military conflicts the country could probably be at the same level of economic development.

If we apply another approach so-called “actual versus target,” then analyzing the macro-level data, we can state that IMF did not actually do much harm and may have helped in some cases; however, it also did not do much good when it comes to micro- level indicators. Looking at the growth rates of GDP (Figure 7), particularly from 1998 to 2006, Tajikistan achieved better GDP indicators of around 8% on average. This is not, to a large extent, IMF’s input, but the end of military conflicts in 1997 that brought about political stabilization followed by foreign direct investment and other forms of financial inflows. Thus, we cannot claim that IMF programs resulted in macroeconomic stability in Tajikistan.

13 See IMF Press Release No. 02/54. Available at: http://www.imf.org/external/country/TJK/index.htm 33

Figure 7. GDP Growth (annual percent) from 1990 to 2006

15 10 5 0 ‐5 ‐10 ‐15 ‐20 ‐25 ‐30 ‐35

Source: World Development Indicators, May 2008. Today there is no IMF program running in Tajikistan, but the Fund is willing to introduce another program known as PSI (Policy Support Instrument) which is similar to PRGF, but with no funding. The PSI is meant for the less developed countries that no longer need the Fund’s financial assistance, but are interested in advisory services of the IMF and letting other donors and international development banks know that the Fund supports macroeconomic policies of the country in question. PSI is still under consideration in Tajikistan because the Fund’s debt strategy may not agree with the GoT, especially the last loan borrowed from China.

Moreover, the latest scandal between the IMF and GoT known as “Misreporting Case of Tajikistan” came to public in the beginning of April 2008. The National Bank of Tajikistan (NBT) provided inaccurate information about its last five disbursements under PRGF program between 2002 and 2006.

The NBT pledged a large part of its reserves as collateral for loans from foreign banks to Kredit Invest, the private intermediary that finances cotton investors. Until that time, these pledges, which began in 2001 and continued throughout the period of the last program, had gone unreported to the IMF (and donors more generally). With usable reserves therefore sharply reduced, this leaves the NBT and Tajikistan more vulnerable to 34

potential external shocks, such as a further increase in international oil prices, or a decline in workers’ incomes from abroad14.

Overall, GoT has five cases of misreporting and “accounting scandal” to the IMF, but the last case was so serious that the Fund required the GoT to repay SDR29.4 million (about USD47.4 million) of loans in six installments beginning September 2008 till February 200915. In response, the GoT set a timetable to repay the loans and changed the whole cabinet of NBT. The Chairman of the National Bank of Tajikistan was dismissed from his post, but surprisingly he was appointed as a Vice Prime Minister of the Republic of Tajikistan. There are different assumptions of how the GoT will repay the loans. Although the IMF does not advise the country to increase taxes for loan repayments, Tajik political analyst Saymuddin Dustov stated that “the Tajik government would likely try to squeeze more taxes out of an already hard-pressed population, in order to cover the new IMF obligation16.” Other political analysts believe that the main reason for the IMF to pressure the GoT is because of geopolitical reasons. Mikhail Delyagin, the director of Russia’s Globalization Institute, stated that “it is absolutely probable that the recent IMF statement is merely a means of pressure on Tajikistan in order to turn [the country’s] loyalty toward Washington, rather than Moscow” (Ibid).

In general, the Fund could perform better had it implemented its neo-liberal policies taking into consideration local characteristics of Tajikistan rather than applying “one-size-fits-all” policies. First, short-term loans usually work only for a short time replacing domestic resources. Later, such loans may hurt the domestic economy by placing an individual state in debt. In Tajikistan’s case, long-term loans could be more relevant to improve economic development. Second, the IMF before implementing so- called ‘Washington Consensus’17 policies could have initially built the capacity of local politicians and economists. Third, knowing that the GoT would probably borrow money to invest in military in 1996, the IMF could have reconsidered its lending policies.

14 Available at: http://www.internationalmonetaryfund.org/External/country/TJK/rr/pdf/2008/040108.pdf 15 Available at: http://www.imf.org/external/np/sec/pr/2008/pr0843.htm 16 Available at: http://www.eurasianet.org/departments/insight/articles/eav031008.shtml 17 See Williamson, J. 2000. 35

Fourth, knowing that the NBT provides inaccurate information, in several instances the Fund could have attached stricter policies on audit and coordination of information. Ultimately, it can be argued that economic policies applied in Tajikistan with or without the IMF could probably achieve the same results. The GoT could have borrowed loans from international donors rather than the Fund.

3.3.2 Structural Adjustment Programs of the World Bank

The WB’s programs, known as structural adjustment policies, are directed to the development of the social sector such as health care, education, water supply, sanitation, agriculture, etc. Overall, the major objectives of the Bank in helping the GoT achieve its targets reflected in the PRSPs are: 1) poverty eradication; 2) post-conflict rehabilitation; 3) economic growth; 4) investment in human resources; and 5) agricultural productivity.

It is interesting to pay attention to the way all funds are disbursed when it comes to the Bank’s policies to make local agencies and especially ministries establish Project Management Units (PMUs) to administer and lead projects in the field. For example, every ministry such as Ministry of Health, Ministry of Education, Ministry of Agriculture, and other social sector related ministries are supposed to establish an office within their agency to implement projects on the ground.

Let us bring a single case of one of the Bank’s projects, the Education Modernization Project (EMP) (see Table 2 for the WB’s projects). Earlier known as a Project Implementation Unit of the World Bank in Education, now EMP like other PMUs has been receiving a massive inflow of structural adjustment loans from the WB. The last amount of loan officially approved in 2003 for a period of 5 years was in the amount of USD24,19 million, out of which the WB pledged USD20 million and the GoT was in charge of the remaining amount, i.e. USD4,19 million. The EMP covers: 1) building and rehabilitation of primary, secondary, and tertiary schools; 2) publication of textbooks; 3) training of teachers; and 4) empowerment of parent and teacher associations.

36

Table 2. The World Bank Projects in Tajikistan

Project Name IBRD/IDA Status Approval Date In US$ millions

Tajikistan Youth Social and Economic Opportunity Grant 0 Active 11-SEP-2007

Strengthening the National Statistical System 1 Active 31-MAY-2006

Public Sector Reform TA 5 Active 06-JUL-2006

Pamir Private Power Project 10 Active 27-JUN-2002

Municipal Infrastructure Development Project 15 Active 19-JAN-2006 Land Registration & Cadastre System for Sustainable 10 Active 21-APR-2005

Agriculture Project (LRCSP)

Ferghana Valley Water Resources Management Project 13 Active 26-JUL-2005

Energy Loss Reduction Project 18 Active 30-JUN-2005 Education for All, Fast Track Initiative Catalytic Fund for 0 Active 30-NOV-2005

Tajikistan

Education Modernization Project 20 Active 15-MAY-2003

Dushanbe Water Supply Project 17 Active 18-JUN-2002

Dashtidzhum Biodiversity Conservation (MSP) 0 Active 02-AUG-2004

Cotton Sector Recovery Project 15 Active 30-MAY-2007

Community Agriculture & Watershed Management Project 10.8 Active 15-JUN-2004 Community Agriculture & Watershed Management GEF 0 Active 15-JUN-2004

Project

Community & Basic Health Project 10 Active 15-DEC-2005 Avian Influenza and Human Pandemic Preparedness and 5 Active 29-JUN-2006

Response Project

Additional Financing for the Dushanbe Water Supply Project 5 Active 19-DEC-2006

Source: www.worldbank.org/tj May, 2008.

The EMP is not only controlled by the Bank but also by the Ministry of Education which has power to make decisions and often makes them on illicit grounds. For instance, the Ministry of Education was able to select the location where the aforementioned activities should be implemented. Currently it is running in Dushanbe and in 6 remote towns, such as 3 towns of Kulob district where the president of Tajikistan and several vice-ministers of education come from, as well as 3 towns of RRS, particularly Faizobod, where the former Minister of Education was born (See Annex 1. Map of the Republic of Tajikistan). In other words, it is not only about military conflicts running in the past in those war-torn areas, but it is more likely about the origin of an individual high-ranking official making or influencing decisions. The same goes for other sectors; in other words, EMP is only one example of all Bank’s PMUs. 37

Another point of concern is the level of corruption in the PMUs. An example from personal experience in the field is in rehabilitating secondary schools in rural areas. If we compare the amount of money spent by PMU and the ensuing quality of renovations versus a similar type of school rehabilitated by a stronger institution such as UNDP CP (Communities Program) then it is clear that with the same amount of money the UNDP could rehabilitate more than one school and with better quality.

The WB in Tajikistan knows about such inefficiency, mismanagement, and misallocation of its own resources. Then why does it not reconsider its policies and announce tenders for local and international NGOs who can produce much better results compared to corrupt PMUs? Perhaps, the answer lies in “program delivery18” that until recently did not pay attention to sustainability of development programs. There is competition among International NGOs, donors, and other development institutions to show off how much funding they managed to allocate. Even though in many donor coordination meetings, they stress the importance of quality over quantity and also sustainability of projects, in fact, the picture is different, which gives high figures but less quality if monitoring and evaluation are conducted.

Final remarks should be made on the IFI’s approaches to poverty eradication and sustainable development. As seen, the IMF has not been effective in terms of overall economic performance when it comes to ‘actual vs. target’ approach or planned activities versus targets. However, the WB lending a massive amount in the social sector did actually contribute to poverty alleviation even though it also inflamed corruption. The Bank always emphasizes sustainability of its projects during meetings with PMUs. Yet, PMUs lack strong capacity to manage such development projects including working skills with international donors in the field. Therefore, recently the Bank has decided to reallocate its funding of some projects to some institutions. For example, Community Agriculture and Water Management Project (CAWMP) was given to the UNDP CP so that the latter not only implements the CAWMP, but also ‘teaches’ the PMU CAWMP of

18 Development agencies pay particular attention to how many programs were implemented (delivered) by an individual implementing institution known as “program delivery.” 38

the Ministry of Agriculture how to work in the field. Indeed, the UNDP, having more than 10 years of field experience in Tajikistan, is one of the major players in the effort to reach the Millennium Development Goals and eradicate poverty and assure sustainable development across Tajikistan.

3.4 The Role of the United Nations Development Program in Tajikistan

The UNDP through its Communities Program has been implementing development programs across its area offices in Tajikistan located in Aini, Gharm, Khujand, Kulob and Shaartuz (Annex 1). All 5 area offices are involved in four essential components to build better livelihoods for people in remote rural areas. Those are: 1) construction and rehabilitation of social and economic infrastructure; 2) microfinance; 3) capacity building (conduction of training and seminars); and 4) governance and decentralization. This section briefly analyzes the activities of the UNDP at the micro-level then focuses on microfinance and gender-related issues.

The UNDP development programs can be split into two phases. The first phase, Rehabilitation, Reconstruction, and Development Program, was introduced in 1996 to support the transition from war to peace. It focused on the immediate needs for rehabilitation of basic social infrastructure and services, reintegration of ex-combatants and the promotion of peace and stability. Second, the UNDP established the Communities Program that focused more on local governance, capacity building, and participation of civil society in the implementation of development projects to ensure sustainability that helped create a sense of ownership of beneficiaries. Later, programs on creation of income generating and employment opportunities followed. Several communities were set up in each district at the village level called Jamoat Development Committee that later was renamed Jamoat Resource Center (JRC). These JRCs were established to work with development programs at grassroots levels.

The UNDP supports the implementation of Poverty Reduction Strategy Paper and National Development Strategy of the GoT and the United Nations Development Assistance Framework that address socioeconomic initiatives. Microfinance is one of 39

those development programs that proved to generate income in poor households and build sustainable livelihoods in remote rural areas. So far the UNDP has covered all five areas, 90 JRCs in over 30 districts of RT. Since 2001 the UNDP has provided USD2,1 million to support the poor affected by military conflicts (UNDP Microfinance Development Strategy 2007:1). The loan portfolio of Revolving Funds (RLFs) has increased to USD2,8 million from the income generated from interest payments (Ibid).

3.4.1 Women and Poverty Reduction

The question arises: how many of the beneficiaries are women? The UNDP, which provides 47% RLFs in the country, estimated 42,000 families with well over 200,000 members benefited from micro-loans. Of them, only around 30% were females (Ibid). “All RLFs were equipped and trained to effectively fulfill the tasks required of them, and an essential amount of funds (USD900,000) was allocated for the institutional capacity building of JRCs to manage RLFs” (Ibid). The UNDP aims to increase women client participation in microfinance activities and plans to cover 75,000 relatively poor households with USD3,5 million credit portfolio where 40% will be females19.

There are several factors that contribute to the slow progress in achieving a gender balance as far as microfinance is concerned. As already noted above, economic and social problems together with traditional and conservative societies in rural areas inhibit the microloan opportunities for women. Bangladesh, which practices the same religion—Islam—as Tajikistan, had the same case with participation of females, and it managed to increase women loan recipients and challenge the traditional views of society.

The unprecedented high rate of women's participation in the Grameen Bank activities of Bangladesh may be attributable to the following factors: excessive pressure of population and poverty, frequent outbreak of natural calamities rendering many women with dependent children homeless and helpless, a high divorce rate among poor couples living below the poverty line and, above all, recent change in the societal attitude toward

19 This information was obtained from UNDP Communities Program planned activities for the year 2007. 40

women's involvement in outdoor activities. This also reflects the desire by women to have fewer children and to live longer and retain more teeth. Even Muslim husbands are now glad to have fewer children and more money. Thus, the Grameen Bank has brought an extraordinary opportunity of women's emancipation in Bangladesh (Wahid 1994:4).

Currently, the UNDP together with other international donors are focusing more on gender sensitive issues and also advocate the capacity building of communities and their empowerment at grassroots level. There are many factors that leave women economically and socially vulnerable in Tajikistan.

3.4.2 Why are Women Financially and Socially More Vulnerable?

Military conflicts from 1992 to 1997 exacerbated the social and economic climate across the country. The consequences were disastrous: “more than 50,000 people were killed, 25,000 women widowed, and 55,000 children orphaned” (ADB 2006:12). In the aftermath of war, women were the most vulnerable to internal shocks. The number of female-headed households (widows) increased dramatically and left them in search of employment to achieve food security. Even today, particularly in remote rural areas where abject poverty is prevalent, it is difficult for women to be employed in a patriarchal society. This is partly because of cultural and religious barriers that arise when local mullahs and elites misinterpret the holy book, the Quran, for personal gain20. Therefore, this section identifies one of the main development problems in Tajikistan—rural women’s livelihoods—and outlines the main factors that generate this crisis.

First, income poverty is widespread among female-headed households whose number has increased since the civil war. Employed women normally earn less than men. In general, “Women are 56 per cent of the registered unemployed and earn on average 1,5 times lower monthly salary than men21.” Although, the latest gross domestic

20 Taj I. Hashmi. 2000. Women and Islam in Bangladesh: Beyond Subjection and Tyranny explains why it happens in a Muslim society. He claims that the misinterpretation of the sacred book Quran by the mullahs as well as local elites suppressed women in many traditional societies. The author underlines female’s education and economic self-reliance as a path to poverty alleviation in Muslim communities. Therefore, this case of Bangladesh, particularly in terms of religion can be very close to rural Tajikistan even though they have different historical backgrounds. 21 Hotkina, Z. and Rabieva, G. 2003. Tajikistan: On the Way to Gender Equality, UNDP, UNFPA, and UNIFEM, Dushanbe. 41

product indicator shows 8% growth on average from 1998 to 2005 (Figure 7), it does not necessarily benefit women, which to some extent shows growth without development. The case of Tajikistan shows that the increase in income boosted inequality. For instance, the income distribution table (Table 3) illustrates a division of population into quintiles and deciles, indicating who received a certain percentage of income from the lowest income (3 units) to the highest (41 units). In other words, the lowest 10% of income share has only 3% of all income while the highest 20% enjoys 41%. This high inequality brought about a considerable income gap between males and females, which contributes to feminization of poverty. For that reason, reforms are imperative to increase income opportunities and create sustainable livelihoods for women in remote rural areas.

Table 3. Income Distribution in 2006

Series Units Income share held by highest 20% 41 Income share held by highest 10% 26 Income share held by fourth 20% 22 Income share held by third 20% 17 Income share held by second 20% 12 Income share held by lowest 20% 8 Income share held by lowest 10% 3 Source: http://genderstats.worldbank.org/dataonline/

Second, an agriculture (land distribution) problem is widespread within the country. The economy in rural areas is largely based on agriculture produce where land is distributed unevenly. There are more male landowners compared to female. For example, according to Oxfam (2006:2), 96% of women were registered as landless in Vose district located in the south of the country. This case is similar in other parts of Tajikistan. Because of lack of land, rural women are forced to work all day during summer in cotton fields to sustain their families. Moreover, to generate more income, women take their children to help them pick cotton. In 2003 the International Organization for Migration Educational Reforms Support Unit Pulse, research titled “Children in the Cotton Fields” calculated around 40% of children were working in cotton fields and receiving a meager salary (Ibid). Child labor causes a decline in 42

attendance rates in primary and secondary schools and in the long run results in illiteracy. Therefore, it is another problem within gender issues that requires urgent reform.

Third, customs and traditions, which are generally dictated by local elites, in rural areas have negative effects on livelihoods of women. For example, there are fewer girls attending schools, compared to boys, and they have more household responsibilities. Moreover, early marriage is common in rural areas where girls are forced to get married even at an early age of 15. Oxfam (2006:2) found that early marriage in remote rural areas is significantly correlated to both customs and lack of income. Families that cannot afford to educate their girls because of lack of clothes and textbooks not only make them do household activities, but also force them into an early marriage. Also, early marriage and polygamy have increased with approximately 25,000 widowed women as a result of civil war (ADB 2006:12). Although the law prohibits having more than one wife, in rural areas, polygamy is widely practiced where local mullahs encourage men to have more than one wife. Eventually, the misunderstanding and misinterpretation of religious views reinforce already existing poverty. The hope is that this can be changed through empowerment of women.

Finally, women are more financially and socially vulnerable than men. They have less access to land, employment opportunities, literacy, healthcare facilities, and most importantly financial resources. The last point, financial resources, is known as economic poverty and can be tackled with empowerment of women, in particular, microfinance opportunities. Evidence from many countries shows that microfinance can be a necessary tool to eliminate the aforementioned problems. Actually, there are many assumptions that the UNDP takes into consideration, but the implementation of microfinance programs is an arduous task for both implementers and recipients.

43

4. Fighting Poverty at Grassroots Level: Microfinance Program

Microfinance as an empowerment tool has been gaining popularity across the developing and the developed countries. Therefore, the UNDP working with the poor at the micro- level, decided to run microfinance programs within its area offices in Tajikistan. This section covers the arguments for and against microfinance and finally focuses on its empowerment quality.

4.1 Characteristics of Microfinance

After almost three decades of microfinance activities across the globe, its performance generally demonstrated a linear model with its upward trajectory. It provided “financial services to the poor who are otherwise excluded by mainstream finance systems” (Brace 2007:4). Despite this, there is a debate that not only can microfinance benefit its recipients but also it can harm their livelihoods. These are known as advantages and disadvantages of microfinance.

First, disadvantages of microfinance were highlighted by many scholars who argue that microfinance is not a panacea to fight poverty, and in some cases, it has damaging effects. According to the studies conducted by Hulme and Mosley microfinance shows that “most contemporary schemes are less effective than they might be” (1996:134). Moreover, Rogaly (1996:109-110) identifies in his research the following characteristics that made the poorest worse-off:

¾ “they encourage a single sector approach to the allocation of the resources to fight poverty, ¾ microcredit is irrelevant to the poorest people, ¾ an over-simplistic notion of poverty is used, ¾ there is an over-emphasis on scale, ¾ there is inadequate learning and change taking place.” 44

Furthermore, Wright (2000:6) argues that microfinance projects “fail to reach the poorest, generally have limited effect on income…drive women into greater dependence on their husbands and fail to provide additional services desperately needed by the poor.”

Second, advantages of microfinance that were identified by the United Nations Capital Development Fund (2004) are the following:

¾ “…helps very poor households meet basic needs and protects against risks, ¾ is associated with improvements in household economic welfare, ¾ helps to empower women by supporting women’s economic participation and so promotes gender equity.”

There are many arguments for and against microfinance that describe both positive and negative consequences to loan beneficiaries. Despite many arguments against microfinance, in general, it has positive effects on households. For example, the majority of Grameen Bank’s loan beneficiaries have benefited from microfinance. Its microfinance model is being implemented throughout the developing and even developed world to help the relatively deprived population. Thus, the next section explores microfinance as an instrument to empower the poor and especially socially and financially vulnerable women.

4.2 Microfinance as Empowerment Tool

Development practitioners and academics have been highlighting microfinance as an empowerment tool since the 1990s by providing a large body of literature that examines the significance of microfinance to fight poverty. In other words, they believe in microcredits as an investment in capabilities of loan beneficiaries that leads to increasing choices and opportunities and in the long run empowers the recipients (Ranjula Bali Swain 2006:69). Moreover, it has been proven that female recipients’ ability to raise financial resources brings more income and well-being into their households and results in better food security, healthcare and education of their children (Hulme and Mosley 1996; Mayoux 1997). Moreover, the World Bank considers “women’s active 45

participation in the market economy as a sign of empowerment” (Lairap-Fonderson 2002:183).

It is almost always problematic to define empowerment. Empowerment is understood as improving self-esteem (Dowla 2006) and “relative mobility, economic security, ability to make various purchases on her own, freedom from domination and violence within her family, political and legal awareness, and participation in public protests and political campaigning” (Schuler and Hashemi in Bernasek 2003:374). Grameen Bank members consider those recipients who have access to loans as being empowered (Bernasek 2003).

Today the empowerment goal is one of the most pressing issues in the development discourse, and microfinance is one of the instruments to reach that target. Therefore, the United Nations Development Program also joins the debate on microfinance as a mechanism of empowerment and improvement of livelihoods. The UNDP implements microfinance programs to provide income generation opportunities, to close the gap between households’ actual and required finance, and most importantly, to meet strategic gender needs through empowerment of women. Therefore, to learn more about the UNDP loan beneficiaries, the final section is devoted to a comparative case study conducted in summer 2007 in two areas of the UNDP Tajikistan to analyze if microfinance programs result in improvement of living standards and empowerment of poor people and especially of poor women.

4.3 Comparative Study of Microfinance Program in Two Areas of Tajikistan

The case of microfinance is perhaps the best means to assess the impact of development programs at the household (micro-) level. This section is to a large extent based on primary data randomly collected in summer 2007 in two areas of Tajikistan. A questionnaire (Annex 3) was designed to target the UNDP microloan beneficiaries to ask questions on topics of loan use such as improvement of entrepreneurial skills, access vs. control of income within families, effects of loans on tension and violence within households, empowerment (loan repayment; learning, implementing, and benefiting from 46

loan; and improving livelihoods) and other questions that are helpful in the debate on microfinance as an empowerment tool. A major element of this survey is to test whether loan acquisitions are correlated to higher living standards in the two regions and whether women’s experience differs from men’s and compares men and women within each area. To answer these questions this part analyzes both social and economic aspects of the respondents in the two areas.

4.3.1 Research Design/Methods

A Program Analyst of the UNDP Communities Program in Khujand Area Office (Sughd Region) and a Development Economist of the UNDP Communities Program in Gharm Area Office (Rasht Valley) were engaged in implementation of this survey. There was a constant correspondence via e-mail and videoconference with both surveyors during the survey process to explain the details of this research. Both surveyors randomly selected 50 males and 50 females in each area from a list of UNDP loan beneficiaries. They explained the objectives of this research to all loan recipients and after their consent they distributed a questionnaire, specifically designed for this research. The questionnaire was available both in Russian and . The former language is used in some areas of Sughd Region and the latter is predominantly used in the Rasht Valley. Both quantitative and qualitative data were collected. The survey was self-administered in a personal in-home manner with guaranteed confidentiality. The names of loan beneficiaries were not registered during the survey to provide anonymity of all respondents. Loan beneficiaries answered questions in their homes, because in remote rural areas other means of communication were not developed and many households lacked them (for instance, telephone and electronic mails). Data are examined separately for the two regions and they are described below.

4.3.2 Site Selection

The locations of the surveys are displayed below (Map 2). Both areas are remote with different geographical and historical backgrounds. Khujand Area Office (Sughd Region) of the UNDP is located in the North part of Tajikistan and Gharm Area Office 47

(Rasht Valley) of the UNDP is situated between central and eastern parts. Two hundred respondents were selected on random bases from three Jamoats in Sughd region: Bobojon , Jabbor Rasulov, and (Map 3) and 7 Jamoats in the Rasht Valley: Askalon, , Kalai , Navobod, , and Tagoba (Map 4).

Map 2. The UNDP Targeted Areas in Tajikistan

Khujand Area Office Gharm Area Office

4.3.3 Profile of Areas: Sughd Region and Rasht Valley

Sughd Region is heavily dependent on electricity (70%) and gas (100%) from its neighboring country – Uzbekistan (UNDP Communities Program Bulletin 2006). The irrigation system is still functioning on the old Soviet infrastructure and a frequent 48

breakage of pumps always harms the agriculture sector. Moreover, it is impossible to access Khujand (capital of Sughd Region) from the capital Dushanbe for approximately half a year because of snow on the mountains. Other times require traveling either by plane or through Uzbekistan. Uzbekistan, however, requires visa and taxes all the produce that is transported from Khujand to Dushanbe and vice versa. This results in higher transportation costs and eventually higher prices of goods and services.

Map 3. Sughd Region

Source: UNDP Tajikistan, 2007. Rasht Valley is considered to be the most war-torn area in Tajikistan. It has similar problems as in Sughd Region such as poor road conditions, irrigation, infrastructure, and agriculture. Almost 90% of the Rasht Valley’s population depends on agriculture. Because of poverty and lack of centralized support, most agriculture is subsistence agriculture. Rural households and even up to a third of households in rural 49

areas and semi-urban settlements depend on food crop and livestock production from small gardens and household plots to meet their food requirements.

Map 4. Rasht Valley

RASHT

1-Tagoba Jamoat GY ZS TANN 2-Obi Mehnat Jamoat 9 KY R

3-Navobod Jamoat 3 7

4-Rahimzoda Jamoat su yzyl 1 K 6 4 K H A I T 1 2 JERGATOL8 5-Kaznok Jamoat 1 5 1 RASHT 1 4 6-Kalai Surkh Jamoat 1 Djafr 1 5 3 7 2 5 9 7-Gharm Jamoat 3 KHYDJBORAK 1 TOJIKOBOD 2 2 4 8 8-Hijborak Jamoat 6 6 NUROBOD 3 5 1 3 9-Askalon Jamoat 4 1 10- Jamoat 2

11-Kalanak Jamoat

12-Jafr Jamoat

13- Jamoat

14- Jamoat Source: UNDP Tajikistan, 2007.

4.3.4 Sample/Population and Analysis

The survey research collected data from 100 loan recipients in each targeted areas 50 men and 50 women in each region for a total of 200 respondents. The sample size was determined by two criteria: to have sufficient numbers of cases for an accurate analysis 50

and to be feasible to complete the research with the sources available. This study is focusing on the questionnaire designed specifically for the Microfinance/Microloan beneficiaries of the UNDP and responses of all loan recipients from both areas are examined. There is no control group in this research because of the lack of data on population having access to loans from other microfinance institutions.

Data were analyzed using descriptive statistics including frequencies and crosstabulations and are displayed in tables and charts. Several joint frequency distributions are analyzed with the chi square (χ2) statistic to define if the variables of gender and control of loans, tension/violence, and living standards (only those were significant) were statistically significant at 0.05 level. All analyses are performed separately in the two regions and examine differences between women and men within each region to determine gender disparities.

4.3.5 Data Results and Discussion

The UNDP authorized local JRCs to be responsible for prioritizing beneficiaries and disbursing loans based on needs. Most of the loan recipients were over 30 years old and considered deprived of access to financial resources. Some of the main criteria to get a loan were the following:

¾ Recipients from large families, ¾ Female headed households (families that mainly depend on her income), ¾ Households with lower income, ¾ Refugees who lost their houses during civil war, ¾ Newly established families.

In Sughd Region the age of loan recipients ranged from 19 to 68 years old where loan recipients on average received USD150, but in the Rasht Valley the age of beneficiaries ranged from 27 to 77 years old where the beneficiaries received on average USD300. The latter received higher amount of loans than the former because the Rasht Valley was recognized as a war-torn place with higher numbers of people affected by 51

military conflicts. Nevertheless, both areas had the same criteria on interest rates and duration of loans, which were from 2% to 3% interest rates per month with a period ranging from 6 to 12 months (short and long term loans).

4.3.5.1 Background Characteristics

In Sughd Region among 100 respondents, 3 were widowed, 4 divorced and the rest married. In the Rasht Valley among 100 loan recipients 7 were widowed, 2 divorced, 1 single and the rest married (Table 4).

Table 4. Marital Status

Areas Sughd Region Rasht Valley Males Females Males Females N % N % N % N % Marital Status Single 0 0 0 0 0 0 1 2 Married 49 98 44 88 49 98 41 82 Widowed 1 2 2 4 1 2 6 12 Divorced 0 0 4 8 0 0 2 4 Total 50 100 50 100 50 100 50 100

It is interesting to observe the number of family members, number of female headed households (those families who depend on their mother’s income) and number of people with disabilities in the two areas. It is clear that out of 100 respondents there were more children per household, female headed households, and disabled children in the Rasht Valley compared to 100 respondents in Sughd Region (Table 5).

Table 5. Household Type Within Areas (per 100 respondents)

Areas Sughd Region Rasht Valley N % N % Number of Dependent Children per Minimum 0 0 2 2 Household Average 2 2 6 6 Maximum 5 5 11 11 Female Headed Household 15 15 22 22 Number of Disabled People in Household 5 5 10 10

52

Education levels in the two areas differ significantly in many ways. Among the randomly chosen respondents there were more women and men in Sughd Region who had university degrees while in the Rasht Valley only males hold university/college degrees (Table 6). Moreover, 7 out of 100 of the recipients had incomplete primary education in the Rasht Valley while it was 0 in Sughd Region. The majority of respondents (32% of males and 60% of females) in the Rasht Valley did not go on with their education after their secondary school education. Conservatism and early marriage can be the major reasons for that. Therefore, many girls drop out at an early age to get married, take care of their younger siblings, and do other household-related activities while boys are engaged in taking care of cattle, fetching wood and carrying clean drinking water.

Table 6. Education Level

Areas Sughd Region Rasht Valley Male Female Male Female Level of education N % N % N % N % Incomplete Primary 0 0 0 0 5 10 2 4 Education Complete primary 1 2 5 10 3 6 6 12 education Incomplete secondary 1 2 4 8 1 2 5 10 education Complete secondary 15 30 17 34 16 32 30 60 education Incomplete vocational 0 0 4 8 3 6 1 2 school Complete vocational 14 28 5 10 8 16 6 12 school Incomplete 1 2 3 6 4 8 0 0 university/college degree (bachelors/masters equivalent) Complete 18 36 12 24 10 20 0 0 university/college degree (bachelors/masters equivalent) Total 50 100 50 100 50 100 50 100

53

Other basic social needs such as health and education within households were also different. For instance, there was less access to healthcare facilities in the Rasht Valley even though many children were immunized compared to those children in Sughd Region. Plus, diarrhea was used as a proxy for sanitation and accordingly there were more respondents among parents and children who had poor hygiene in Rasht than in Sughd. Even if a health center was in place, the distance from houses was greater in the Rasht Valley than in Sughd Region (Table 7).

Table 7. Health

Areas Sughd Region Rasht Valley Male Female Male Female N % N % N % N % Immunized 38 90,47 38 77,55 45 95,74 41 89,13 Immunization of Not 4 9,52 11 22,44 2 4,25 5 10,86 children immunized Total 42 100 49 100 47 100 46 100 How often do you 0 34 85 46 92 0 0 2 6,89 have diarrhea each 1 3 7,5 4 8 22 73,33 16 55,17 year (on average) 2 3 7,5 0 0 7 23,33 8 27,58 4 0 0 0 0 1 3,33 3 10,34 Total 40 100 50 100 30 100 29 100 How often do your 0 37 92,5 49 98 0 0 3 7,5 children have 1 0 0 0 0 12 31,57 10 25 diarrhea each year 2 2 5 0 0 18 47,36 14 35 (on average) 3 1 2,5 1 2 7 18,42 9 22,5 4 0 0 0 0 1 2,63 4 10 Total 40 100 50 100 38 100 40 100 Access to medical No access 0 0 0 0 3 7,69 4 10,81 services (in <10 40 95,23 44 88 22 56,41 19 51,35 kilometers) 10-20 2 4,76 4 8 10 25,64 6 16,21 >20 0 0 2 4 4 10,25 8 21,62 Total 42 100 50 100 39 100 37 100

The respondents had the same problem with food intake and access to safe drinking water. There was less food intake in Rasht than in Sughd among households (Table 8). However, the Rasht Valley had more spring water that the local population considered to be clean. In Sughd, as mentioned earlier, a frequent breakage of pumps resulted in lack of safe drinking water. 54

Table 8. Food Intake/Clean Water

Areas Sughd Region Rasht Valley Male Female Male Female N % N % N % N % Number of meals a day 1 2 4,76 0 0 2 4,65 4 8,88 on average 2 3 7,14 2 4 8 18,60 13 28,88 3 29 69,04 44 88 31 72,09 27 60 4 8 19,04 4 8 2 4,65 1 2,22 Total 42 100 50 100 43 100 45 100 Access to safe drinking Yes 33 66 30 60 37 82,22 36 75 water No 17 34 20 40 8 17,77 12 25 Total 50 100 50 100 45 100 48 100

One of the perceptions of the local politicians is that in the Rasht Valley, compared to Sughd Region, parents normally give preference to their sons to get secondary education, and they also do not allow their daughters to get a degree in the capital. The following figures reflect the majority of respondents who have school-age children.

Figure 8. Answers to Schooling in Sughd Region (continued on page 55)

55

Figure 9. Answers to Schooling in the Rasht Valley

56

There was little evidence to support the argument that sons were given more preference than daughters in obtaining a secondary education. There were responses against girls getting a college degree, particularly in the Rasht Valley. On the basis of the question on why people refuse to send their daughters to college or university, the respondents explained the main reasons such as income level of the households. Thus, particularly in the Rasht Valley it is not conservatism alone, but also low levels of income within households. In fact, the majority in both areas answered that they could not afford higher education for their children. Moreover, they were worried about safety of their children in the capital.

Many Tajik politicians argue that one of the reasons for better development indicators in Sughd Region is not only because of higher levels of education but, in general, people in Sughd work more than in Rasht. There was some evidence to support this claim as shown below. Figure 10 displays that 72% of males and 50% of females in Sughd Region and 64% of males and 26% of females in the Rasht Valley were working from 7 to 8 hours a day. In addition, both areas had almost equal number of respondents who worked from 9 to 10 hours a day. This is because of the higher employment rates in Sughd than that of Rasht where unemployment indicators are still high. Also, note that respondents’ household work is not included in these figures. For example, Aga Khan Rural Support Programme-India conducted a study in three districts of Gujarat state, which are similar to the rural Tajikistan, especially the Rasht Valley. They found that rural women were more devoted to housekeeping of 18 to 19 hours a day (Bilgi 1998). Therefore, it is difficult to conclude that one area works more than the other one.

Figure 10. Working Hours in Sughd Region and the Rasht Valley

57

Both gender and regional differences can be observed in average agricultural income and non-agricultural income. In Sughd Region both indicators were relatively higher than Rasht’s agricultural and non-agricultural income (Table 9). In the agriculture sector, the majority of females (40%) in Sughd were involved in livestock and very few of them were involved in cash crop (2%) (Annex 2, Figure 11). In the Rasht Valley, the majority of females were involved in cash crops (30%) and very few were involved in agriculture (4%) and other agricultural activities (2%) (Annex 2, Figure 12). The majority (47%) of males in Sughd were also involved in livestock and only 11% were involved in food crops compared to Rasht’s males where 25% were involved in agriculture/livestock and 15% in horticulture (Annex 2, Figures 11 and 12).

Table 9. Agricultural Income vs. Non-Agricultural Income

Areas Sughd Region Rasht Valley Male Female Male Female

Agricultural N N N e N e Income/Non- g g Agricultural Income Minimu Average Maximu Minimu Average Maximu Minimu Avera Maximu Minimu Avera Maximu Agricultural income: average monthly household income in

USD per household 50 0$ 60,76$ 200$ 50 0$ 59,89$ 150$ 50 10$ 44,57$ 150$ 50 6$ 31,65$ 140$ Average monthly household income in USD per household 50 50 0$ 84,46$ 500$ 50 5$ 76,06$ 200$ 50 15$ 50,48$ 150$ 50 9$ 32,04$ 130$

Employment status also varied between the regions and genders. Table 10 shows 77% of males and 66% of females in Sughd were self-employed in the agriculture sector and 18% of males and 32% of females were tenants. A very small percentage were both tenants and self-employed. As far as employment off-farm is concerned, 20% of males and 43% of females were officially registered as unemployed, but almost 80% of males and 57% of females in Sughd were employed holding different professions indicated in the questionnaire such as economists, engineers, teachers, bookkeepers, shop assistants, drivers, farmers, plumbers, carpenters, and cleaners. In the Rasht Valley, however, 46% 58

of males and 48% of females were self-employed, 49% of males and 52% of females were tenants with 5% of males who were both self-employed and tenants. Moreover, 10% of males and 45% of females were registered as unemployed off-farm and 90% of males and 55% of females were employed as medical doctors, teachers, farmers, shop assistants, drivers, beekeepers, and cleaners. Table 10 shows higher employment rate among males in the Rasht Valley because some of those unemployed respondents refused to answer and indicate their employment sector, which resulted in missing values.

Table 10. Employment Status in Agriculture and Off-Farm

Areas Sughd Region Rasht Valley Male Female Male Female N % N % N % N % Employment Self-employed 34 77,27 25 65,79 18 46,15 14 48,28 status in Tenant 8 18,18 12 31,58 19 48,72 15 51,72 agriculture Both Self- 2 4,55 1 2,63 2 5,13 0 0 sector employed and tenant Total 44 100 38 100 39 100 29 100 Employment Employed 39 79,59 28 57,14 37 90,24 23 54,76 status off- Unemployed 10 20,41 21 42,86 4 9,76 19 45,24 farm Total 49 100 49 100 41 100 42 100

Land ownership is also different between the two areas. In Sughd there were more number of female land owners compared to males, and in general, there were more land owners in Sughd in terms of hectare compared to the landowners in the Rasht Valley (Table 11). This is also because of the landscape of the mountainous terrain in the Rasht Valley. There were more female respondents who leased more hectares of land than males in both areas.

59

Table 11. Land Ownership

Areas Sughd Region Rasht Valley Male Female Male Female N % N % N % N % Amount of 0 12 29,27 17 36,96 0 0 7 15,56 land owned <1 19 46,34 25 54,35 40 88,89 32 71,11 in hectare Between 1 and 2 4 9,76 3 6,52 3 6,67 4 8,89 (ha.) >2 6 14,63 1 2,17 2 4,44 2 4,44 Total 41 100 46 100 45 100 45 100 Amount of 0 29 78,38 35 76,09 3 13,64 8 42,11 land leased <1 8 21,62 11 23,91 12 54,54 8 42,11 in hectare Between 1 and 2 0 0 0 0 6 27,27 1 5,26 (ha.) >2 0 0 0 0 1 4,55 2 10,52 Total 37 100 46 100 22 100 19 100

On the other hand, Sughd Region is behind in value of animals where the Rasht Valley’s loan recipients (both males and females) have higher values for domestic animals (Annex 2, Figures 13 and 14). There were very few responses on remittances from within or abroad but in general Sughd loan beneficiaries (7 responses) received from their extended families on average USD1300 and Rasht recipients (26 responses) received around USD1000 per year. In terms of technology and communication the recipients of Sughd Region enjoyed more communication means such as cell phone, TV-set, radio, Satellite dish, personal computer compared to the Rasht Valley’s recipients where the majority had TV- set with only a very few people enjoying other forms of communications (Annex 2, Figures 15 and 16). In general, loan beneficiaries in Sughd Region have more resources and have more opportunities to access basic needs compared to the Rasht Valley’s loan recipients. The aforementioned characteristics may also affect the behavior of microfinance beneficiaries in both areas and between genders within the two areas. Therefore, the next section analyzes the microfinance component of the UNDP microloan recipients.

60

4.3.5.2 Microfinance/Microloan The second section of the questionnaire is devoted to microfinance/microloan where the majority of loan recipients in both areas had around 2 years of experience in microfinance. Most of the loan recipients did not face any difficulties in obtaining loans apart from waiting for a long time to get a loan, and half of them in both areas complained about the low level of loans and high interest rates. Moreover, there was no indication of corruption (offering money, domestic animals, crops, etc. in return for loans) within the Jamoat Resource Centers during the disbursement of loans. Capacity building, in this case training on how to use the loan in different sectors such as small and medium enterprise, agriculture, horticulture, bee-keeping, potato growing, cattle breeding, and other relevant topics, were provided to loan beneficiaries. The majority in both areas were satisfied with training and benefited from it in practice. However, not everyone participated in training workshops.

Table 12. Training on Microfinance

Areas Sughd Region Rasht Valley Male Female Male Female N % N % N % N %

Were you Yes 43 86 46 95,83 46 97,87 47 100 provided No 7 14 2 4,17 1 2,13 0 0 training on how Total 50 100 48 100 47 100 47 100 to use the loan If yes, was the Yes 43 100 46 100 47 100 45 97,83 training helpful No 0 0 0 0 0 0 1 2,17 Total 43 100 46 100 47 100 46 100

The lack of participation in training occurred because of the following reasons:

¾ Transaction cost. Because training was conducted in towns, those from remote areas lack time and money to spend to access training courses to build their capacities. 61

¾ Opportunity cost. Most of the beneficiaries were farmers and they valued spending more time in their fields working to make ends meet rather than spending their time on training.

One of the most important components of microfinance is the repayment rate. This can also be used as one of the proxies for empowerment. The majority of the loan recipients managed to repay on time and only those who answered questions on loan repayment were analyzed below (Figures 17 and 18). However, in Sughd only two female recipients answered that they had unforeseen family expenses, while in Rasht 6 beneficiaries could not repay on time. These include 2 loan beneficiaries (1 male and 1 female) who could not repay because of the poor harvest; 2 females also could not meet the deadline because of sickness and family expenses; and 2 who decided to spend their loans on the wedding expenses of their children. Eventually, one of these had to sell her cattle to repay the loans.

Figure 17. Repayment Rate in Sughd Region Figure 18. Repayment Rate in the Rasht Valley

Another significant factor (one of the proxies for empowerment) is to know if loan recipients learned and improved their entrepreneurial skills from microfinance. The figures below show that the majority of the respondents believed that microfinance improved their experience with business skills. 62

Figure 19. Entrepreneurial Skills/Sughd Region Figure 20. Entrepreneurial kills/Rasht Valley

As mentioned earlier, the majority of loan recipients used their loans for agriculture purposes. The loan recipients were mainly involved in agriculture activities such as livestock-breeding, potato growing, and bee-keeping. More recipients in Rasht were involved in small business development compared to Sughd. This is partly because of the Rasht Valley’s geographical location, terrain and weather conditions. In the northern part of Tajikistan, Sughd Region, there is more arable land to cultivate crops than in Rasht. Therefore, because of the mountainous terrain in the Rasht Valley, it is not cost effective to cultivate such crops as wheat and rye which require spacious areas similar to the northern areas.

Moreover, going back to the issue of empowerment, it should be noted that one of the goals of the microloan/microfinance is to help the loan recipients to access and control financial resources. Although all 200 males and females in both areas managed to access loans, very few of the female loan recipients could control their financial resources. The study shows that 41 out of 48 female respondents (85%) in Sughd did not control their loans because of their husbands. Similarly, 39 out of 43 female loan recipients (91%) in Rasht could not control even if they accessed loans. Only 7 (6 of them were widowed and 1 single) out of 50 female recipients could manage to control their loans in the Rasht Valley. The reasons are culture, traditions, conservatism and 63

other factors mentioned earlier. Note that after the receipt of loans chi square at 0.05 level shows a statistically significant relationship between gender and control of loans in Sughd Region. However, chi square was not significant (NS) at 0.05 level in the Rasht Valley because of the missing values. It implies that the majority of females have no control of their loans.

Figure 21. Control of Loan in Sughd Region Figure 22. Control of Loan in the Rasht Valley

2 2 Note: χ = 46.3 p < .000. Note: χ = .464 NS, p = .496. Another important point is home violence and tension, between female borrowers and their husbands that may increase upon the receipt of loans. In Sughd only 8 women claimed that the tension increased after they received loans, but other female respondents refused to answer because of fear of their husbands. Conversely, the survey in the Rasht Valley brought disturbing results with 42% of women answering ‘yes’ to increase in domestic violence and tension after receiving loans. Other female respondents in the Rasht Valley were afraid to answer and some of them even refused to answer. Not only had their spouses controlled the loans but also they used those credits for their own purposes and that caused more tension within households. Furthermore, note that the chi square of the relationship between gender and tension/violence within families in Sughd Region is highly significant meaning that the receipt of loans are contributing to tension and violence, but it shows in the Rasht Valley (with many missing values) that it is not significant at the 0.05 level. 64

Figure 23. Tension/Violence in Sughd Region Figure 24. Tension/Violence in the Rasht Valley

2 2 Note: χ = 8.71 p = .003. Note: χ = .643 NS, p = .423.

Finally, the last proxy for empowerment in the questionnaire was if the respondents felt empowered or if their entrepreneurial skills improved and the recipients eventually benefited from loans that affected and improved their living standards. In Sughd Region 100% of men and 92% of women answered positively that they considered loans to benefit and improve their livelihoods. The remaining 2 loan recipients failed to meet the deadline and depended on money remittances from their extended families who work as labor migrants in the Russian Federation. In the Rasht Valley 43 males and 42 females benefited from credits. The one, who spent the loan for the wedding, sold her cattle to repay the loan. Plus, 3 more respondents refused to answer. Moreover, chi square test was also applied with the associated level of significance to test if there is a relationship between gender and living standard (life improvement) with the loan acquisition. For Sughd Region the chi square is statistically significant, but for the Rasht Valley chi square is not significant (NS) at the 0.05 level. It implies that the majority of loan recipients benefited from micro-loans in Sughd Region compared to the loan recipients in the Rasht Valley.

65

Figure 25. Living Standards in Sughd Region Figure 26. Living Standards in the Rasht Valley

2 2 Note: χ = 4.17 p = .041. Note: χ = 1.25 NS, p = .263.

4.3.6 Summary and Lessons Learned

This study covered 200 households in two areas of Tajikistan. The background characteristics of the two areas provided useful information on social and economic issues. The Rasht Valley was lagging behind in many aspects such as health, education, agricultural and non-agricultural income, and other basic needs. The reasons were mountainous terrain and weather conditions as well as conservatism and culture. Conversely, Sughd Region had more loan beneficiaries with better access to health, education, and other social and economic opportunities.

Regional differences were described to help explain socio-economic conditions as well as behavior and attitudes of the population as far as microfinance is concerned. In general, Sughd Region was better off in many areas such as geographical location that defined its better productivity of agricultural produce as well as amount of land available for households; weather conditions that had fewer floods, landslides, mudslides, and other natural calamities than in the Rasht Valley; and better access to communication means, education and healthcare facilities. The Rasht Valley had very few advantages, especially in terms of the number of domestic animals per household. Moreover, this valley is popular for its honey, fruits (apple, pear, pomegranate, and walnut) and 66

vegetables (potato and onion). However, the Rasht Valley was behind in education and health sectors.

Gender differences within the two areas are examined both in the section on background characteristics and microfinance/microloan. It is clear that female and male loan recipients in Sughd Region were more educated and could better control their loans compared to those loan recipients in the Rasht Valley. This is because of the lower levels of education, lack of control of financial resources by women and also many other reasons explained above. However, tension and violence along with control of loans within families in the two regions showed that to some extent women are more emancipated in Sughd Region than in the Rasht Valley. Therefore, programs such as microfinance are implemented to empower all socially and financially vulnerable people, in particular women.

By and large, microfinance is aimed at empowerment of the poor. Empowerment is a multidimensional concept difficult to define, which differs across time and space. In this study, to define empowerment of loan recipients several proxies were used such as access to loans, training on how to use the loans and make use of training, timely repayment, control of the loan, home violence/tension, and eventually standard of living as a result of the loan. In general, most of the indicators showed positive consequences of microloan/microfinance process in both areas with the exception of control of the loan and tension/violence within several households. Finally, the major point was if the microfinance/microloan recipients felt empowered and if their living standards increased because of the loans. Almost 96% in Sughd and 85% in the Rasht Valley answered positively. Although the chi square did not show significant correlation between living standards and loan recipients after use of loans in the Rasht Valley (with 3 missing values), it did show a significant relationship between the living standards and use of credits by loan recipients in Sughd Region. 67

After the results were defined and problems encountered, actions should be designed here that both Jamoats (municipalities) and the UNDP must undertake in the process of the implementation of the microfinance program.

Therefore, three lessons should be drawn to suggest for the implementing agencies. First, more programs on capacity building should be implemented where priorities are given to women in both areas because of the high number of men controlling women’s loans. At the same time, men should also be involved during those training workshops to understand the importance of the problem and how to solve it. The UNDP can fund local NGOs to conduct such training in rural areas of Tajikistan.

Second, to decrease tension and home violence, particularly in the Rasht Valley, urgent actions must be taken in the form of local and nationwide campaigns, especially among young generation, such as mobilization in training, seminar, and visibility campaigns (stands, boards with posters, placards, leaflets, magazines, newspapers, radio, television, and other forms of mass media). Not only the Rasht Valley but also the whole country should stand against home violence, which will give more opportunities for women to benefit from development programs.

Finally, a strong monitoring and evaluation system should be implemented by Jamoats at the local level to investigate the main reasons and problems and tackle them in advance. Eventually, use those cases of risks as an example during training that NGOs provide before the loan disbursement.

5. Conclusions and Recommendations

The study of macro- and micro-level analysis of major development institutions towards national approaches to poverty alleviation and sustainable development provides evidence of their significance in building better environment for positive economic growth in the case of IFIs and also the importance of the UNDP in attempting to make MDGs feasible. 68

The Fund’s macroeconomic stabilization programs proved to be necessary to some extent but not a sufficient condition in the case of Tajikistan. The neo-liberal policies with short term-loans could not bring favorable results as aimed. However, it did not do much harm as well. As seen, most of the problems were from poor governance, corruption and mismanagement of the Fund’s loans. Therefore, more technical assistance in the form of building capacities of local institutions and politicians should be provided first before the implementation of macroeconomic stabilization programs.

The Bank’s structural adjustment programs that are mainly social sector oriented mostly targeted such areas of concern as agriculture, education, health, sanitation, and other social sectors. There are still problems with PMUs. The GoT should take serious actions to run the programs in an efficient and effective way in cooperation with the World Bank and put efforts into the fight against corruption at both micro- and macro- levels.

The UNDP’s long experience in development particularly at the micro-level in remote rural areas, especially the microloan/microfinance programs, brought about favorable outcomes. Because poverty in Tajikistan is mainly rural, a tribute should be paid for the UNDP’s work towards the alleviation of poverty in rural areas. Moreover, not only does it manage to help the poor in rural areas, but also the UNDP tries to collaborate with all other development agencies in making the MDGs work in practice.

Microfinance has proven to develop the recipients’ capacities in both areas economically and socially to sustain their families. Better empowered and well informed on microfinance, targeted beneficiaries can contribute to implementation of poverty alleviation strategies in an effective and sustainable manner.

Nonetheless, the results drawn from this research showed a significantly low percentage of control of resources by female borrowers and high tension and home violence between wives and husbands in the Rasht Valley. Urgent action should be taken to change this following the aforementioned recommendations. Also more male leaders should be involved in gender sensitive programs such as local elites and heads of 69

government, cities, towns, villages, municipalities. In the majority of gender-related programs “…working with men, particularly with powerful men in community leadership roles, is essential to success of gender mainstreaming initiatives” (Senorina Wendoh and Tina Wallace in Fenella Porter and Caroline Sweetman 2005:9).

Moreover, there were also problems with the local elites and mullahs who are reluctant to give power to socially and financially vulnerable women particularly in remote rural areas. Thus, reforms targeted at females have a difficult struggle to achieve the targets. It may take several decades to change the behavior and attitude of agencies and people. Empowerment itself is a long process and thus it may take longer time than development practitioners and academics expect. Therefore, not only is capital important but also the time variable must be cautiously measured during the implementation of gender sensitive programs such as microfinance.

Perhaps, it is also useful to refer to Gary Barker (2005:133) who focuses on gender issues and his recommendations are useful in this case such as “the need to include gender and discussions about masculinities in the classroom,” “the need to include gender in the workplace and in workforce training,” “focus on changing peer group and community norms” and “making gender visible for young men” as discussed in the previous section.

To conclude, macro-level programs would fail most of the time in countries with poor governance and high corruption; however, micro-level programs such as microfinance are more visible and beneficial to the deprived population. Even though macro-level programs are meaningful, micro-level programs have more positive effects for the poor. In general, access to income for the relatively poor, commitment of politicians to poverty reduction, as well as males and females’ efficient and effective participation in society are all equally important to build social and economic development in urban and rural areas of Tajikistan. On a large scale, empowerment through microfinance may not be a magic bullet to fight poverty; at a micro-level, it is a 70

prerequisite to provide necessary and effective tools to gradually build sustainable livelihoods and to empower women so that they achieve equality in society.

71

References

Armendariz, B. et al. 2005. The Economics of Microfinance. The MIT Press. Asian Development Bank - Key Indicators. 2004. Retrieved September 2007 (www.adb.org/statistics). Asian Development Bank. 2006. Country Gender Assessment in Tajikistan: Mainstreaming Gender in Poverty Reduction Strategies. ADB - The Philippines. Bali S. R. 2006. Can Microfinance Empower Women? Self-Help Groups in India. Department of Economics, Uppsala University. Barker, G. 2005. Dying to be Men: Youth, Masculinities and Social Exclusion. Routledge, London. Bernasek, A. 2003. Banking on social change: Grameen bank lending to women. International Journal of Politics, Culture and Society, Vol 16, No. 3 Spring 2003. Beverly, L. et al. 2002. Women and Credit: Researching the Past, Refiguring the Future. Oxford: Berg Press. Bilgi, Meena. 1998. “Entering Women’s World Through Men’s Eyes.” Pp. 93-99 in The Myth of Community: Gender Issues in Participatory Development edited by Irene Guijt and Meera Kaul Shah. London: Intermediate Technology Publications. Black, B., Kraakman, R. and Tarassova, A. 1999. Russian Privatisation and Corporate Governance: What went wrong?, Stanford Law School, John M. Olin Programme in Law and Economics, Working Paper No 178, September, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=181348 Brace M. The Mechanics of Social Change. 2007. Retrieved September, 2007 (www.publish.csiro.au/?act=view_file&file_id=EC133p8.pdf). Burra and Ranadive, J. 2005. Micro-Credit, Poverty and Empowerment: Linking the Triad. SAGE Publications. Clover, R. et al. 1966. Growth without Development: An Economy Survey of Liberia. Evanston, Ill: Northwestern University Press. Dollar, D. and Kraay, A. 2001. “Growth is Good for the Poor.” World Bank Paper. Washington DC. Retrieved April, 2008 (http://www.worldbank.org/research/growth/pdfiles/growthgoodforpoor.pdf). 72

Dowla, A. 2006. In credit we trust: Building social capital by Grameen Bank in Bangladesh. The Journal of Socio-Economics 35(1), 102-122. Retrieved on March 10, 2007 from Ebsco Host Database (AN 19687921)).

Falkingham, J. 1999. “Welfare on Transition: Trends in Poverty and Well-being in Central Asia.” Case/20. London: London School of Economics. Falkingham, J. 2000. “A Profile of Poverty in Tajikistan.” ESRC Centre for the Analysis of Social Exclusion Discussion Paper, No. 39, London: London School of Economics. Government of Tajikistan. 2002. Poverty Reduction Strategy Paper. Dushanbe. Retrieved April, 2008 (www.poverty2.forumone.com/files/Tajikistan_PRSP.pdf) Government of Tajikistan. 2003. Progress Toward the Millennium Development Goals in Tajikistan. Dushanbe, Tajikistan. Retrieved April, 2008 (www.untj.org). Government of Tajikistan. 2006. National Development Strategy. Dushanbe. Retrieved September, 2007 (www.untj.org). Government of Tajikistan. 2006. National Development Strategy. Dushanbe. Retrieved September, 2007 (www.untj.org). Gulli, H. 1998. Microfinance and Poverty: Questioning the Conventional Wisdom. New Jersey: Rutgers University Press. Hashmi, T. I. 2000. Women and Islam in Bangladesh: Beyond Subjection and Tyranny. London: Macmillan Press. Hotkina, Z. and Rabieva, G. 2003. Tajikistan: On the Way to Gender Equality. Dushanbe. Hulme, D. and Mosley, P. 1996. Finance Against Poverty. London: Routledge. International Crisis Group. 2001. Asia Report No. 30. ‘Tajikistan: an uncertain peace’, Osh/Brussels, p. 1, Retrieved September, 2007 (http://www.icg.org/home/index.cfm?id=1438&l=1) International Monetary Fund and International Development Agency. 2002. “Republic of Tajikistan. Joint Staff Assessment of the Poverty Reduction Strategy Paper.” International Monetary Fund. 2004. “Republic of Tajikistan: Poverty Reduction Strategy Paper Progress Report.” IMF Country Report No. 04/280. International Monetary Fund. 2007. “Republic of Tajikistan: 2006 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Tajikistan.” IMF Country Report No. 07/144 73

Juhani, L. and Rupinder, S. 2000. Discussion Papers No. 8, Bank of Finland Institute for Economies in Transition, p. 32. Kabeer, N. 1994. Reversed Realities. New York: Verso. Kamolov, S. 2001. Economy of Tajikistan: Challenges since Independence. Dushanbe. Khandker, S. R. 1998. Fighting Poverty with Microcredit: Experience in Bangladesh. Published for the World Bank by Oxford University Press. Lairap-Fonderson, J. 2002. “The disciplinary power of micro credit: examples from Kenya and Cameroon.” Pp. 182-198 in Rethinking Empowerment: Gender and Development in a Global/Local World edited by Jane L. Parpart, Shirin M. Rai and Kathleen Staudt. New York: Routledge. Little, Ian M. D. 1982. Economic Development. New-York: Basic Books, Inc., Publishers. Looney, R. 2002. The Role of Foreign Aid in the War on Terrorism, Strategic Insight. Mayoux L. 1997. “The Magic Ingredient? Microfinance and Women’s Empowerment”, A Briefing Paper prepared for the Micro Credit Summit, Washington. McMichael, Phillip. Development and Social Change: A Global Perspective, 3rd ed. London: Pine Forge Press, 2004. Mosley, P., Harrigan, J. and Toye, J. 1995. 2nd Edition, Aid and Power: The World Bank and Policy-Based Lending; Vol. I, Routledge. Oxfam. 2006. Community Situation Indicators. Livelihoods of Rural Women in Tajikistan. Dushanbe. Parpart, J.L. et al. 2002. Rethinking Empowerment: Gender and Development in a Global/Local World. London: Zed. Pomfret, R. 2003. Paper for the Lucerne Conference of the CIS-7 Initiative, University of Adelaide, Australia, p. 8, 20th-22nd January. Porter, Fenella, and Caroline Sweetman. 2005. “Editorial.” Pp. 2-9 in Mainstreaming Gender and Development: A Critical Review edited by Fenella Porter and Caroline Sweetman. Oxford: Oxfam. Rajabov, A. 2006. The Impact of Foreign Aid on Economic Development: The Case of Transition and Central Asian Economies, M.Sc. Dissertation, The University of Manchester, United Kingdom. Ravallion, M. 1998. “Poverty Lines in Theory and Practice.” Living Standards Measurement Survey Working Paper No. 133. World Bank, Washington, DC. 74

Rogaly, B. 1996. Micro-finance evangelism, "destitute women" and the hard-selling of a new anti-poverty formula. Development in Practice 6: 100-112. Sachs, J. 2005. The End of Poverty: How We can Make it Happen in Our Lifetime. Penguin Press, NY. Sen, A. 1999. Development as Freedom. Oxford University Press. Seers, D. 1969. “The Meaning of Development.” International Development Review. Vol. 11, No. 4. Stiglitz, J. 2002. Globalization and its Discontents, Allen Lane, London Sweetman, Caroline, ed. 2001. Men’s Involvement in gender and development policy and practice. Oxford: Oxfam. UNCDF Brandsma J., Burjorjee D. 2004. Microfinance in the Arab States. Building inclusive financial sectors. UNDP. 1990. Human Development Report 1990. New York: Oxford University Press. UNDP. 1997. Human Development Report 1997. New York: Oxford University Press UNDP. 1998. Human Development Report 1998. New York: Oxford University Press UNDP. 1999. National Human Development Report. UNDP Tajikistan. UNDP. 2000. National Human Development Report. UNDP Tajikistan. UNDP. 2003. National Human Development Report. UNDP Tajikistan. UNDP. 2006. UNDP Communities Program Bulletin 2006. UNDP Tajikistan. UNDP. 2007. Microfinance Development Strategy. UNDP Tajikistan. UNDP. 2003. The United Nations Framework for Development Assistance to Tajikistan 2005 – 2009. UNDP. 2005. Investing in Sustainable Development: Millennium Development Goals Needs Assessment. Dushanbe, Tajikistan. UNDP. 2005. Country Program Action Plan 2005-2009. The Government of the Republic of Tajikistan and the United Nations Development Programme. Dushanbe, Tajikistan Wahid, N.M. 1994. “The Grameen Bank and Poverty Alleviation in Bangladesh: Theory, Evidence and Limitations.” American Journal of Economics and Sociology, Vol. 53, No. 1. (Jan., 1994), pp. 1-15. Williamson, J. 2000. ‘What Should the World Bank Think About the Washington Consensus?’ World Bank Research Observer. Washington, DC: The International Bank for Reconstruction and Development, Vol. 15, No. 2, pp. 252-253, August. World Bank. 1998. World Development Report 1998, Oxford University Press. 75

World Bank. The Consultative Group to Assist the Poor (CGAP). 2003. Microfinance Poverty Assessment Tool. Retrieved May, 2007 (www.un.org/Depts/dhl/events/microcredit/toc/toc5.pdf). World Bank Development Indicators Database. Retrieved May, 2008 (http://devdata.wordbank.org/dataonline/). World Bank. 2005. ‘Republic of Tajikistan Poverty Assessment Update’. Report No: 30853-TJ. World Bank. 2007. ‘Fighting Poverty in Tajikistan: The World Bank Group Activities 1994- 2007’ Dushanbe, Tajikistan Wright, G. 2000. Microfinance Systems: Designing Quality Financial Services for the Poor. Zed Books, London.

76

Appendix A. Map of the Republic of Tajikistan

Map 1. Map of the Republic of Tajikistan

77

Appendix B. List of Figures Figure 3. Human Development Index Trends in Tajikistan

0.7

0.68

0.66

0.64 Percent 0.62

Year 1985 0.6 1990 1995 2000 0.58 2003

Source: United Nations Development Program. HDR 2005:221

Figure 4. Human Poverty Index Trends in Tajikistan

40

35

30

25 1997 20 1998 1999 15

10

5

0 HPI

Source: NHDR 1999 and 2000. Note: No data available from 1999 onwards.

78

Figure 11. Source of Agricultural Income in Sughd Region

Trade

Agriculture

Agriculture, Livestock

Agriculture, Poultry,…

Food crop, Livestock

Livestock

Cash crop

Food crop

0 102030

FEMALE MALE

Figure 12. Source of Agricultural Income in the Rasht Valley

Other

Agriculture

Agriculture,…

Livestock

Horticulture

Cash crop

Food crop

0 5 10 15 FEMALE MALE

79

Figure 13. Value of Animals in USD in Sughd Region

12

10

8

6

4

2

0 0 200 300 400 500 600 800 1000 1200 1500 1700 MALE

FEMAL E

80

Figure 14. Value of Animals in USD in the Rasht Valley

8

7

6

5

4

3

2

1

0 30 150 300 450 600 900 1500

MALE

FEMALE

81

Figure 15. Communication Medium in Sughd Region

Cell phone, Radio, TV set, Sattelite dish,…

Telephone, cell phone, radio, TV set

Telephone, radio, TV set

Cell phone, TV set, Personal Computer,…

Cell phone, TV set, Personal Computer

Cell phone, radio, TV set

Radio, TV set

Cell phone, TV set

TV set FEMAL Cell phone E 0 5 10 15 20

82

Figure 16. Communication Medium in the Rasht Valley

Radio

Cell phone, Radio, TV set,…

Telephone, cell phone, radio,…

Telephone, radio, TV set

Cell phone, radio, TV set

Radio, TV set

Cell phone, TV set

TV set

Cell phone FEMAL E Telephone

MALE 0 5 10 15 20 25 30

83

Appendix C. Questionnaire for the Microloan Beneficiaries of the United Nations Development Program

QUESTIONNAIRE

FOR THE MICROLOAN BENEFICIARIES OF THE UNITED NATIONS DEVELOPMENT PROGRAMME

This questionnaire is designed to assess the impact of micro-loans on beneficiaries. It is part of the academic research that is focused on microfinance as a tool for poverty alleviation. The survey is anonymous and strictly confidential.

SECTION I.

1. Social Status

1.1 Year of Birth: ______

1.2 Gender: † Female † Male

1.3 Marital Status: † Single † Married † Widowed † Divorced

2. Human Capital

2.1 Family structure (individual household):

2.1.1 Number of dependent children per household: ______

2.1.2 Is it a female-headed household (family that mainly depends on her income): † Yes † No

2.1.3 Number of people with disability: ______

2.2 Education:

† Incomplete primary education † Complete primary education

† Incomplete secondary education † Complete secondary education

† Incomplete vocational school † Complete vocational school

† Incomplete university/college degree † Complete university/college degree

(bachelors/masters equivalent) (bachelors/masters equivalent)

† Doctoral level degree (“Kandidatsky” or “Doktorsky”)

2.3 Income:

2.3.1 Agricultural income:

84

2.3.1.1 Average monthly household income in USD per household: ______

2.3.1.2 Source of agricultural income: † Food crop † Cash crop † Horticulture † Livestock † Forestry † Other: ______

2.3.1.3 Employment status in agriculture sector: † Self-employed † Tenant

2.3.1.4 How would you evaluate the last year’s crop yield compared to the previous year?

† Successful (relatively higher agricultural output) because of:

† Availability of fertilizers, soil nutrients

† Good year for the crops

† Other: ______

† Unsuccessful because of:

† Lack of fertilizers, soil nutrients

† Natural disaster (drought, flood, avalanche, etc.)

† Other: ______

2.3.2 Nonagricultural income:

2.3.2.1 Average monthly household income in USD per household: ______

2.3.2.2 Employment status off-farm: † Employed † Unemployed

2.3.2.3 Type of job (e.g. medical doctor, teacher, driver, carpenter, etc.): ______

2.3.3 How many hours on average do you work per day:______

2.3.4 Transfers:

2.3.4.1 Remittances in USD from migrant member of family on average per year (national/abroad): a. National (within country):______b. Abroad (from other countries):______

2.4 Liabilities

2.4.1 Debts with:

† Formal Sector: † Informal Sector:

† Banks † Commercial Moneylenders

85

† Credit Unions † ROSCAs

† Cooperatives † Family

† Government Programs † Friends

† Other:______† Other:______

2.4.2 Amount of debts in USD:______

3. Assets

3.1 Land:

3.1.1 Amount of land owned in hectare (ha.): † 0 † < 1 † Between 1 and 2 † > 2

3.1.2 Amount of land leased in hectare (ha.): † 0 † < 1 † Between 1 and 2 † > 2

3.1.3 Access to irrigation: † Yes † No

3.2 Other assets:

3.2.1 Value of animals in USD: ______

3.2.2 Communication medium: † Telephone † Cell Phone † Radio

† TV set † Satellite Dish † Personal Computer

† Internet † Other:______

4. Health

4.1 Immunization of children: † Yes † No

4.2 How often do you have diarrhea each year (on average): ______

4.3 How often do your children have diarrhea each year (on average): ______

4.4 Access to medical services (in kilometers): † No Access † < 10 † Between 10 and 20 † > 20

5. Food/water

5.1 Number of meals a day on average (0, 1, 2, 3 or more): ______

5.3 Access to safe drinking water: † Yes † No

86

6. Schooling

6.1 Does/do your son(s) attend school: † Yes † No

6.2 If you answered No, please explain here why:______

______

6.3 Does/do your daughter(s) attend school: † Yes † No

6.4 If you answered No, please explain here why:______

______

6.5 Who would you give more preference to attend school:

† Son † Daughter † Both son and daughter

6.6 If it is only son or daughter, please explain here why: ______

______

6.7 Would you send your daughter to study at the university: † Yes † No

6.8 If you answered No, please explain here why:______

______

SECTION II.

Microfinance/Microloan

1. When did you start receiving loans (in years): † < 1 † Between 1 and 2 † > 2 2. What was the amount of loan (in USD): ______3. Were there any challenges in obtaining the loan? Please explain here:______4. Were you provided training on how to use the loan: † Yes † No 5. If yes, was the training helpful: † Yes † No 6. If you received a loan more than once, did you manage to repay on time: † Yes † No 7. If you answered No, did you have difficulties in repaying because of:

87

† Sickness † Poor harvest † Family expenses (marriage, funeral, etc.) † Out of town

† Other ______

8. Does your husband control the loan (income): † Yes † No

9. Has the tension/violence between you and your husband increased upon the receiving of loans:

† Yes † No

10. In which sector did you use the loan:

† Agriculture † Horticulture † Small and Medium Enterprise

† Other (even if you gave it to one of your family members or friends please explain here why): ______

______

11. Do you think your entrepreneurial skills have been improved: † Yes † No

12. If yes please explain here how: ______

13. Did you give any possessions (money, animal, crop, etc.) in exchange for your loan? Please explain here:______14. Has your standard of living improved since receiving the loan: † Yes † No

Please explain how:______

______

THANK YOU!