The role of CBO in MSME development

1. The role of CBO in MSME development Communities Programme UNDP Tajikistan Issik-Kul, Kyrghyzstan 16-18 November

2. Brief description: • UNDP Communities Programme has started its activity in Tajikistan in 1996 as Rehabilitation, Reconstruction & Development Programme. UNDP supports smooth transition of Tajikistan from civil war aftermath into peace and social and economic stability with a flexible mechanism for UN and donor partners to support essential peace-building interventions.

3. Issues addressed: • Local Governance:This component of the programme will support the efforts of the Government of Tajikistan to improve participatory processes in reviewing, implementing and monitoring its Poverty Reduction Strategy (PRS), particularly through enhancing opportunities for community participation in local development; • Poverty Initiatives: UNDP is contributing to poverty reduction by providing inputs and technical assistance for revival of rural economy and improves the capacity of rural people to grow, process and market local products; • Water management: Sustainable water usage is being promoted through provision of potable water, irrigation water and sanitation campaign to the most vulnerable communities, changing the community behaviour to use water rationally; • Civic Awareness: Participation, knowledge and appreciation of the inputs which affect the vibrancy of rural communities is essential to effective local development and sustainability

4. Main intervention: • Through Area Offices in Gharm, Khujand, Kulyab and Shartuz efforts have concentrated on addressing the immediate needs of rebuilding basic social infrastructure and services, the creation of income and employment opportunities, reintegration of ex-combatants and the promotion of peace and stability.

5. Programme Objective: • Support the process of political and economic stabilization in Tajikistan through development and conflict prevention activities aimed at reducing poverty, strengthening local economic development and governance, and supporting the practical implementation of the government's policy reforms at the local level

6. Programme Activities: • About 800 projects on rehabilitation of social and economic infrastructure, organisation and strengthening of CBOs, income and employment generation were implemented with total amount of USD 27 million.

7. Programme Partners: • Civil society participation has been encouraged during all stages of implementation through locally established development committees and this approach has made the programme a partner for 14 donors. • Local private and state construction companies selected through transparent tender bidding, which conduct rehabilitation of social and economic infrastructure; • Local NGOs who conduct trainings to strengthen the CBOs to prioritize the development needs of target communities; • Local authorities, which provide assistance in solution of daily project issues, whenever required.

8. Results achieved to date on programme: • Reintegration of 4,000 ex-combatants into home communities; • In Northern Tajikistan, over 400,000 inhabitants given access to safe drinking water; • Job and income opportunities created for 40,000 persons; • Over 14 million USD pumped into local economies through public and private contracting companies

9. Results achieved on income generating initiatives: • Several donor agencies as USAID, SIDA, IOM and others have provided funding for income generation activities; • More than 1,5 thousand hectares of land received improved irrigation through rehabilitation and improved management of irrigation/drainage systems in Sughd and Khatlon region; • 72 Jamoat Development Committees (JDC) have been established to foster community representation, participation and ownership in all aspects of development assistance and they are entrepreneurial in nature and democratic in composition; • It is through JDCs that micro-credit and SME development implemented and loan portfolio effectively managed and they received intensive trainings on management of microfinance and on prioritization, planning and implementation of community driven development initiatives; • More than half of JDCs have Revolving Funds with an average loan portfolio of USD 30,000 each have been entrusted by UNDP CP to the JDC to support agricultural, livestock production, SME development through provision of incentive loans; • More than 3,000 families received to date group liability and private loans for agriculture and livestock production;

10. Results achieved to date:(continuation) • According to survey conducted by UNDP CP the level of labour migration has decreased to 15% in average in the region, while the number of cattle increased to additional 2,000 heads because of offspring and the production of wheat increased to 600 tons compared to years before, vegetables were produced in additional area of 100 hectares, 100 tons of dried fruit produced 20 units of agriculture machinery were repaired; • There are no so far the cases of default and delinquency in these JDCs; • All JDCs after a year of the project implementation are self sufficient and cover their operation cost by themselves; • JDCs have prioritized and implemented a number of community projects such as gas supply of local school, water supply, construction of small market and renovation of school roof etc. • Target beneficiaries have become more confident for the future and the JDCs have obtained trust of people because of being open, transparent and accountable mechanism. • The loan Portfolio of each JDC has increased from initial USD 30,000 to an average USD 45,000-50,000, which remains in the Jamoats and supports the community to eventually prioritize and address its needs;

11. Experience and lessons learned: • The uniqueness of UNDP CP approach in providing the microfinance assistance to rural areas is that the loan portfolio are managed by inhabitants themselves and the surplus received from interest will remain in jamoats for future community development activities • If the approach is integrated, i.e. support farmers financially and technically, it is possible to put on feet even the worst unreliable insolvent client; • We got convinced that if the financial resources are available and skills are developed, the people themselves are able to increase productions and satisfy their food demands. • Non - permanent trainings and capacity building activities are insufficient and need to be continued over the span of project. • Apart from providing loans and skills, specific farming and agricultural recommendations, advice and information play an important role in improvement of credit efficiency for farmers; • Even the vulnerable families unable to payback loans received loans as the scheme was based on group guarantee according to which and in case of failure of one member of the group others cover his liability;

12. JDCs-Strengths: • JDCs are represented by all communities within the Jamoat concerned; • JDCs are officially registered as CBOs, and are trained and equipped, and therefore are capable to manage local development; • JDC work on Jamoat level – lowest administrative body in Tajikistan and closely coordinate to address local needs; • JDCs manage Revolving Funds to disburse micro-loans to vulnerable community groups for running agriculture related activities (low %, durable period); • JDCs are self-financing; • JDCs closely coordinate with each other on monthly basis

13. JDCs-Constraints/Opportunities: • Adoption of the Law on Micro-Finance:Revolving Fund is to be separated from the JDC and registered as a financial institution, however able continuously support community driven development activities in Jamoat; • Adoption of the Law on Self Governance-more responsibilities, including infrastructure rehabilitation will be given to local authorities (Jamoats); • Tax Policy;

14. JDCs in transformation: • Separation of Revolving Funds from JDCs; • Transformation of JDCs into Jamoat Resource and Advocacy Centers (JRACs); • Transformation of Revolving Funds into separate Micro Loan Organization and establishment of financial interaction for sustainability of JRACs; • Adoption of new Charters with the greater focus on awareness issues and business related services; • More focus on Advocacy and Civic Awareness Issues; • Further Capacity Building Initiatives to facilitate transformation process.

15. Thank you!!!