This is the fourth in a series on how the Aga Khan Development Network is building capacity from local governance to regional economic growth. In Tajikistan, with the U.S. Agency for International Development (USAID), AKDN launched a Global Development Alliance (GDA) entitled Economic and Social Connections: A Multi-Input Area Development Financing Facility for Tajikistan (ESCoMIAD). The Alliance aims to improve the quality of life for communities along the Tajik border with Afghanistan. See also parts one, two, and three of this series.
Growing from the Ground Up
An economic engine model was not an obvious outgrowth of the local mahalla committees – essentially village organizations – found in Tajikistan and other Central Asian countries. Yet with support from the Mountain Societies Development Support Programme (MSDSP) of the Aga Khan Foundation (AKF), these self-help groups have fostered a mindset of getting things done. Group members contributed to village development funds, which as in the lean years after Tajikistan’s civil war, continue to form the basis for local action.
Here we see how shared interest groups and small enterprises that grew from that dynamic local front have led to larger market connections through lead firms, a next step in economic growth.
Lead firms, in ESCoMIAD’s experience, are small and medium-sized enterprises that can stabilize demand for products made by the Common Interest Groups and small businesses that have emerged in the past decade. (For more on CIGs see part 3.) In practice, though, “lead firm” is a term broad enough to cover everything from businesses and seed producers to veterinarian associations and transportation providers in Gorno-Badakhshan Autonomous Oblast (GBAO) and Khatlon where ESCoMIAD works.
MSDSP began working with lead firms on market demand in 2014, earlier in the same year ESCoMIAD started. In the last two years, the groundwork has really begun to pay off.
Connecting Producers with Demand
In a way comparable to the effect that Common Interests Groups have on scaling up the capacity of community-based savings groups, lead firms boost the strength of CIGs and other enterprises to reach even larger markets on a sustainable basis. That means ensuring that small farms, for example, can produce steadily enough to meet a grocery chain’s need for consistent supply and quality.
“It’s starting to happen,” says Nekruz Asmatilloev, Market Development Specialist with MSDSP, of the connections among CIGs and lead firms. Before, AKF was most focused on improving production, with less concern for market demand. Pooling different producers’ capacities for a more robust value chain, though, creates a better system for end-line processors and consumers.
A Lead in Marketing Tasty Products
One of the first lead firms that ESCoMIAD worked with is composed entirely of women. Green Nature, a woman-led firm with at least 8 permanent staff and another dozen seasonal staff, connects 1,000 fruit suppliers across GBAO for producing and distributing its food products. Green Nature’s 1,000 smallholders are spread along the border region in Shugnan, Rushan and Vanj districts.
Led by Bahor Marodalieva, Green Nature currently runs an export-focused operation that sells mulberry fruit bars to wholesalers that deal with international markets. For domestic markets in Tajikistan, the firm is diversifying into mulberry-based juices and teas, tasty by-products of the process used for making mulberry bars. ESCoMIAD provided $20,000 for developing the juice operation, working with Green Nature to develop a business plan and obtain suitable equipment for juice and jam production and packaging. ESCoMIAD also provides ongoing support that integrates the venture’s value chain. Green Nature will also grow its capacity for promotion and marketing of new products with targeted technical assistance.
Bahor forecasts significant growth in the juice market, and anticipates the need to increase her supply from 71 tons in 2016 to an estimated 90 tons per year once markets take up the new product offerings.
“This process of connecting the supply of smallholders and small-scale producers more closely to the needs of the business came about organically from Bahor’s initiative,” says Amin Virani, Manager, MIAD Program with AKF. Green Nature has made links with importers in Russia and Latvia, primarily grocery stores and confectioner shops. It has also made inroads in European trade fairs leading to her products being sold in other Eastern European countries and certified for trade in Germany and Italy.
MSDSP supports Green Nature by brokering mutually beneficial agreements with suppliers, proposing simple techniques that improve smallholders’ yields, and suggesting efficiencies in product collection and distribution. The company ensures quality packaging for the markets they have researched. MSDSP also plans to provide marketing and technical assistance for achieving longer shelf life and market adaptability.
Leading in Tourism
Another example of building links among suppliers for growing demand is Pamir Express and Logistics, a lead firm created by MSDSP itself. Seeing a need for safe, quality and reliable transportation and facilities for food and lodging along Tajikistan’s Dushanbe corridor to Khorog, AKF and MSDSP planned an organization to meet that demand. Pamir Express and Logistics would eventually dedicate mini-passenger vans (or bring together drivers and suitable vehicles) to establish regular transport service for tourists, development professionals and locals traveling from the capital to Khorog.
The initial focus, though, are several rest stops and service centers. MSDSP opened a first Pamir Welcome Center of this type in Khorog in 2016. The next is a rest stop and service station located near the halfway point on the long route, the only one of its kind along the two-day drive. “It will combine high-quality food, a comfortable setting, wifi and toilet facilities. And it will act as an information center for travelers,” says Najmiddin Gulomiddinov, Technical Expert for Market Development with MSDSP. “Cultivating local suppliers of food, furniture, handcrafted goods and services for rest-stop customers is critical to making a leading example of this type of tourism infrastructure.” The rest stop is expected to open by mid-2017.
The firm is also collaborating with the Tajikistan National Park Service to establish a third Pamir Welcome Center for visitors arriving from Kyrgyz Republic in Murgab District. “This information and equipment rental-focused center is set in a yurt to draw upon the rich culture of Tajikistan,” emphasized Asadsho Zoolshoev, Director of the Pamir Eco-Cultural Tourism Association. Murgab is located at a major junction on the Pamir highway from Osh, in southern Kyrgyz Republic.
Leading from Local to Markets
All these demand-oriented efforts stem from the community mobilization that AKF has supported for over two decades. It turns out that helping people achieve their local priorities is a good starting point for growing an economy.
“This is very much an outgrowth of the work of community mobilization. Our work will continue to benefit people from remote villages who are most often marginalized,” says Bakhtiyor Azizmamadov, Director of Programs with MSDSP.
As the civic engagement of local governance catalyzes enterprise growth, the lessons for Central Asia are growing too.