Tajikistan's New Entrepreneurs

Mavjuda formed a women's loan group and, with profits from her business, is sending her children to better schools. Photo: Mercy Corps

Inside the largest clothing market in Khujand, Tajikistan, the neat arrangement of costumed mannequins in Mavjuda Tajibaeva's boutique provides some indication of her entrepreneurial success. But what the embroidered dresses, colorful shawls and Western business wear don't reveal is how this 39-year-old former nurse turned an opportunity at a better life into a thriving livelihood.

Mavjuda, a wife and mother of three, used to earn a steady wage as a senior hospital nurse. But the political and economic turmoil that followed Tajikistan's 1991 independence shrunk the nation's economy - already the smallest of the former Soviet states - by 60 percent. Mavjuda's public-sector wage of US$2 a month couldn't keep up with hyperinflation - the price of goods jumped sixteen-fold in 1993 - so she joined the vast majority of Tajiks whose salary wasn't enough to cover essential needs.

To try to make ends meet, she started buying children's clothes from a tailor in the market town of Istarayshan and selling them at a large market in Khujand, the country's second-largest city. She had modest success, but needed additional capital to expand her product line and negotiate volume discounts from wholesalers.

Big banks weren't about to lend a hand. Mavjuda lived with the parents of her husband - who was among the swelling ranks of unemployed - and had no property of her own to offer as collateral. What's more, traditional banks didn't make the kind of small loan that she needed.

Then one of her friends suggested applying for a micro credit program offered by Mercy Corps and the National Association of Business Women in Tajikistan. The program provides group and individual "micro loans" as small as US$30, business advice and technical assistance to fledgling entrepreneurs.

"We believe that loaning money to entrepreneurs and small enterprises - even those that don't have collateral - can help these businesses increase their profits and accelerate the country's economic recovery," says Nargis Karimova, marketing and product development manager for the microcredit program.

Today, nearly 10,000 people have borrowed an average of US$340 to help finance business enterprises from bakeries to salons to tailoring shops. Nine in ten earn less than US$1 a day, and six in ten are women. The likelihood they'll repay the loan is extremely high: more than 97 percent of Mercy Corps' clients do.

Women working together

Mavjuda liked what she learned about the program at an orientation session in 2001, and set out to find other female entrepreneurs to join her lending group. Group loans that require little or no collateral are popular among microfinance institutions all over the world. The underlying philosophy is that a self-selected group of borrowers will screen out unworthy peers and bad business ideas, and, most importantly, enforce financial discipline among its members. Only if each member repays her share will the group be able to borrow additional money.

Mavjuda eventually formed a loan group called "Vera" with five other businesswoman who sold either clothes or food products. Each member received an initial loan of 190 Somoni (about US$60).

With the proceeds, Mavjuda acquired attractive clothing lines - and new clients. She went from selling low-priced children’s garb she brought back by bus from Istaravshan to selling more-expensive women’s garments - traditional dresses, business wear, everyday fashions - imported from Bishkek, Kyrgyzstan. After some time, she was making enough money to fix up her apartment and send her kids to a better school.

In October 2005, Mavjuda received her biggest loan yet - 3,600 Somoni, about US$1,125 - thanks in part to an expansion of Mercy Corps' microcredit program, now known as Imon. Only a few months before, Imon received a $1 million loan from the European Bank for Reconstruction and Development. With her latest loan, Mavjuda purchased a shop in the Nuri Khujand Trade Center, a market erected in 2003 near the city's central Panshanbe market. Like other group loans, this one required no collateral.

Since she started borrowing in 2001, Mavjuda has always made her payments on time. Her business now sells about US$3,000 in clothing a month - not bad for a country whose average yearly income still hovers below $1,000. Mavjuda is extremely grateful that at a time of despair, Mercy Corps trusted her to make good on her business dreams. Despite the new range of financing options available to her as a successful businesswoman in a maturing microfinance market, she will remain loyal to Mercy Corps.

"Mercy Corps helped me in the most difficult period of my life," says Mavjuda. "Because of these loans, I am now independent and able to give my children the education they deserve."