UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Project of Tajikistan Project number: 180274 Project title: Industrial modernization and upgrading of carpet-weaving, embroidery and traditional textile sectors in Tajikistan: Phase II Thematic area code HC22 Competitive Trade Capacities and Corporate Responsibility Starting date: February 2019 Duration: 36 months Project site: Dushanbe, Tajikistan and other regions to be identified by the counterpart Government co-ordinating agency: Ministry of Industry and New Technologies of the Republic of Tajikistan Counterpart: Ministry of Industry and New Technologies of the Republic of Tajikistan Executing agency: UNIDO Project Inputs: - Project costs USD1,061,947 - Support costs (13 USD 138,053 percent): - Total project costs: USD 1,200,000 Brief description: Based on the letter of H.E. Mr. Shavkat Bobozoda, Minister of Industry and New Technologies of the Republic of Tajikistan, to the Director General dated 11 December 2014, expressing the request for UNIDO’s technical assistance in the implementation of the “Programme on development of carpet weaving in the Republic of Tajikistan for the period 2014-2020”, UNIDO has developed and successfully implemented (2015-2017) a technical cooperation project entitled “Industrial modernization and competitiveness improvement of carpet-weaving and embroidery/textile sectors in Tajikistan”. A two-year pilot project (or Phase I) with a budget of USD 1,200,000 aimed to increase the productivity and competitiveness of Tajik enterprises in the carpet weaving and embroidering sectors by identifying regional and international export markets, improving the technological cycle and industrial modernization, introducing innovative marketing tools, and strengthening national expertise to provide required technical support and services to local enterprises on a sustainable basis. Within the framework of the pilot project, fully fledged enterprise diagnosis of carpet weaving and embroidery manufacturers was carried out, activities were conducted to train experts throughout the production and market access cycle, including product design, personnel management, financial management of enterprises, marketing of finished products. As a result of the technical support of the project, the products of Tajik enterprises under a joint brand “LA'AL Textiles”, including carpet weaving, home textile, and Adras products, were presented at more than 16 national and international exhibitions, while commercial contracts were signed with leading hotels and retail chains in Tajikistan for the supply of Tajik products. Furthermore, over the duration of 2 years, new jobs were created at the beneficiary enterprises and technical support institutions. As a result of the UNIDO Project, the beneficiary companies established business contracts for production of carpets and home textiles with international hotel chains (such as Serena hotel in Dushanbe), restaurants, international retail shops (such as Auchan and JYSK), supermarkets and other partners. The Ministry of the Industry and New Technologies of Tajikistan indicated strong support and appreciation of the project results and achievements in the short time frame, and requested UNIDO to 1 extend the project aiming to ensure the sustainability of achieved results and further facilitate industrial development of carpet weaving, embroidery and traditional textile sectors of Tajikistan (as per the letter of the Ministry of Industry and New Technologies of Tajikistan dated 5 September 2017). Based on mentioned above, as well as with reference to the preliminary funding interest expressed by the Government of the Russian Federation, the project was proposed to be extended to its Phase II to provide technical assistance to extended number of pilot beneficiaries in carpet weaving, traditional textile, embroidery sectors in expanded geographical coverage, thereby also focusing on enhanced support to technical support institutions to ensure long term sustainability of the project impact. 2 Table of Contents A. Context ................................................................................................................................4 A.1. Background .................................................................................................................... 4 A.2. Textile, Carpet Weaving and Embroidery Sectors ......................................................... 8 A.3. Professional and technical support institutions ............................................................ 14 A.4. Main challenges and opportunities of the national textile and carpet sectors .............. 16 A.5. National Development Framework .............................................................................. 16 B. Reasons for UNIDO Assistance ........................................................................................17 B.1. Origin of the request ..................................................................................................... 17 B.2. Expected target beneficiaries and eligibility criteria .................................................... 19 B.3. Counterpart organizations ............................................................................................ 20 C. The project ........................................................................................................................21 C.1. Objective of the project ................................................................................................ 21 C.2. The UNIDO approach .................................................................................................. 21 C.3. RBM code and thematic area code ............................................................................... 22 C.4. Expected outcomes ....................................................................................................... 22 C.5. Outputs and activities ................................................................................................... 23 C.6. Communication and visibility ...................................................................................... 24 C.7. Gender mainstreaming strategy .................................................................................... 25 C.8. Sustainability of the project.......................................................................................... 25 C.6. Timeline of the activities .............................................................................................. 26 C.7. Country level coherence ............................................................................................... 27 C.8. Risks ............................................................................................................................. 27 D. Inputs.................................................................................................................................27 D.1. Counterpart inputs ........................................................................................................ 27 D.2. UNIDO inputs .............................................................................................................. 28 E. Budget .................................................................................................................................28 E.1. Project breakdown by budget lines, outputs and year of implementation .................... 28 F. Monitoring, reporting and evaluation ............................................................................29 G. Prior obligations and prerequisites ................................................................................29 H. Legal context ....................................................................................................................30 ANNEX 1. Logical Framework Analysis ..........................................................................31 ANNEX 2. Key achievements of the Project’s Phase I and way forward .........................33 3 A. Context A.1. Background Macro-Economic Context The current economic structure of Tajikistan was shaped by its role in the integrated Soviet economy. Tajikistan’s role as a cotton-producing area remains one of the country’s priorities until today. Aluminium production was also introduced in Tajikistan during the Soviet period, with the construction of an aluminium smelter at the Tajik-Uzbek border in 1972. As Tajikistan produces no aluminium ore, it had to be shipped from other Soviet republics using the wide-reaching Soviet rail network. At the end of the civil war in 1997, agriculture was the highest contributor to the GDP amounting to 39 percent, the industry contributed 32 percent and services – 29 percent. In 2003, GDP structure changed and industry grew to 37 percent of GDP, while services and agriculture contributed 36 percent and 27 percent, respectively. Since then, services have taken over as the main source of GDP, followed by industry and agriculture. In 2013, the economy expanded by 7.5 percent (year-on- year). The growth rate of GDP for 2017 is projected to fall to 4.5 percent, down from an average of 6.8 percent since 2010. Agriculture output grew by 12.1 percent mainly on the back of high crop production. Industrial production grew by 6.6 percent, mostly driven by an expansion in woodworking, chemicals, and food processing, and the output of extractive industry nearly doubled. Remittance inflows from migrant workers working abroad (mainly from Russia) helped maintain retail trade and