The problems of access to the bank loans for small and medium enterprises were discussed at a round table hosted by IWPR Tajikistan in Dushanbe.
The representatives of relevant state structures, including the National Bank of Tajikistan (NBT), the Ministry of Finance and commercial banks, independent experts and journalists attended the event.
Marat Mamadshoev, Chief Editor at IWPR Tajikistan, in his opening speech drew attention to the fact that CABAR.asia earlier published articles about the problems of access to the bank loans for small and medium enterprises.
Mentioned articles stated that interest rates of the loans from commercial banks are too high for businessmen. The procedure for obtaining soft targeted loans from the budget sources is difficult.
Marat Mamadshoev reminded that Tajik President Emomali Rahmon had repeatedly spoken about the need to reduce interest rates; later, a working group was created at the NBT to study this issue.
Sukhaili Abdulvahhobov, chief specialist of the Banking Analysis division of the NBT Banking Supervision Department, noted that this group’s work resulted in a gradual decrease in loans interest rates.
According to his data, the weighted average interest rate on loans in national currency over the past year was reduced by 3.3 percentage points, in foreign currency – by 1.4 percentage points. Thus, by the end of 2019, the average weighted rate of loans in national currency amounted to 22.7% and to 15.9% in foreign currency.
Sukhaili Abdulvahhobov emphasized that during the last year, loans amounted to 9.6 billion somoni (about $986 million); compared with 2018, this figure increased by 1.9 billion somoni (about $200 million).
The volume of nonperforming loans in 2016 amounted to 46.8%, by the end of 2019 this figure dropped to 25.6%.
According to the financial regulator’s representative, the NBT will continue to work on reducing interest rates and simplifying documentation related to this process.
In addition, it is planned to create a state bank under the Entrepreneurship Support Fund. According to Abdulvahhobov, this process has already been launched; the authorized body already prepares the relevant documents that soon will be transferred to the National Bank of Tajikistan to begin the process of obtaining a license.
Bejan Kholiknazarov, the head of the credit department of the First MicroFinance Bank, noted that over the past two years, this bank has reduced rates: for 6% in national currency and for 10% in foreign currency.
According to him, interest rates depend on the business risks profile: the lower the risk, the lower the rate. Now, the First MicroFinance Bank can provide loans for small and medium enterprises amounting from $10 thousand up to $200 thousand.
During the discussion, several participants of the event held a demand against entrepreneurs. In their opinion, entrepreneurs themselves are often not very literate and cannot provide the necessary financial documentation to receive soft loans.
Participants also drew attention to the fact that entrepreneurs often do not spend the received loans for the intended purposes, that is, they receive a loan for business development, and spend it on consumption.
Participants also noted that, on the other hand, this fact indicates the lack of proper monitoring by banks.
Meanwhile, economist Bahrom Sharifov believes that the National Bank is following a “tight money policy”. He explained that the NBT’s refinancing rate today is almost 13%, that is, as he said, the regulator carries out short-term lending at a high interest rate to commercial banks.
Bahrom Sharifov also emphasized the need to develop a securities market.
“Why are we not speaking about the securities market? In the Western world, all investments are attracted through the development of the securities market, while there is no interest during the spending of the funds. The securities are being capitalized; when the company begins to generate a profit, dividends are paid,” said Bahrom Sharifov.
He believes that securities market tools will allow the development of long-term financing.
“What investment project can be implemented in just one year? A minimum of three to ten years is required. And securities allow such long-term investments,” said Bahrom Sharifov.
He also considers the refinancing rate set by the National Bank of Tajikistan as overrated.
“The National Bank issues loans to the banks with short-term liquidity at 16% interest,” Bahrom Sharifov said.
Doctor of Economic Sciences, Professor Khojimuhammad Umarov once again stated that the level of monetization of the economy is very low. In his opinion, this limits business opportunities.
“In total, there are 6755 small enterprises in Tajikistan. Considering the inflow of foreign products into the republic, which we could produce here, we would be able to create 100 thousand enterprises. However, it requires money,” he said.
Umarov believes that academic community could help reforming the banking system. Now, according to him, banks reject the scientists’ advice. Umarov thinks this is wrong, since empiric people work in the banks, who “have no time” to study the other countries’ experience.
“Every [party involved in this process] has their own interests. The only organization that speaks objectively is academic science, which summarizes everything and draws out the main idea,” added Bahrom Sharipov.