1. WORLD TRADE: Aga Khan throws a lifeline to impoverished Tajik Ismailis: Low-interest loans and business training have given a kick-start to an economy stalled by civil war, writes Nick Holdsworth:

Financial Times ; 14-Jan-1999 02:03:47 am

The normally bustling bazaar in Khorog, capital of Gorno-Badakhshan, a remote region of Tajikistan, was closed one weekend last summer, ) although the streets of the city were thronged with thousands of people.

Shops and businesses in the city, and farms and small factories in the villages for miles around had all shut for celebrations to mark the arrival of the Aga Khan, spiritual leader of the world's 15m Shia Ismaili Moslems. He is also head of a charitable development network that has spent millions of dollars since 1995 in the region and Tajikistan as a whole on famine relief, health, education and business incubator programmes.

Three years ago, when the Aga Khan first came to meet some of the 200,000 Ismailis of Gorno-Badakhshan, the one stallholder in the bazaar had an inventory worth less than Dollars 50.

Today more than 100 traders compete to sell wares ranging from locally produced honey and eggs to soap powder, biscuits and clothing brought in from the Tajik capital Dushanbe, Osh in Kyrgyzstan and further afield.

During Soviet rule, when money and resources were poured in to ensure the region was populated as a buffer against Afghanistan, the area swiftly developed as towns, schools, hospitals and power stations were built.

Regarded with envy by many lowland Tajiks during Soviet times, the Ismailis of Gorno-Badakhshan, who had grown accustomed to a dependency culture, were particularly hard hit when Communist rule collapsed in 1991.

The Soviet break-up and the Tajikistan civil war in the first half of the 1990s brought Gorno-Badakhshan to the brink of a humanitarian disaster.

But urgent food and medical aid programmes averted widespread starvation in 1995 and two years ago a business development programme under the Aga Khan Fund for Economic Development began offering low-interest loans and small-business training to help people get back on their feet.

Since then the Enterprise Support Facility (ESF) programme has made an impressive mark on the local economy. More than 650 loans averaging Dollars 1,300 have been made to businesses, which now generate annual turnover of Dollars 6m and employ 2,000 people.

Market traders, livestock farmers, cottage craft industries, plumbers, dentists, pharmacists and cobblers have all been given the kick-start they needed in an economy stalled by war and the Communist legacy.

Run through a locally trained team of 12 managers under the guidance of Sadrudin Akbarali, ESF director, loans of Dollars 50-Dollars 5,000 are made, with interest set at 2per cent a month, half the prevailing bank rate.

"More than 95 per cent of our loans have been repaid in the past two years, most of them very quickly. If there are about 30,000 families in Gorno-Badakhshan, we can claim to have had a positive impact on something like 7 per cent of the local economy," Mr Akbarali said.

How strong that impact has been is evident in some of the businesses benefiting from the loans and training.

Kadamsho Chiniev, 43, a former local government chief engineer in Yawan, near Dushanbe, arrived home in Khorog in 1993 as a refugee from the civil war. "I had nothing but the suit I was wearing and my experience as an engineer and builder."

He set to work reconstructing the crumbling Hotel Druzhba. By the time he heard of the ESF project he knew exactly what he wanted to do next: open Khorog's biggest and best restaurant. His first loan was for Dollars 2,600 to refurbish a building suitable for the 120-seat Pamir restaurant. Later he borrowed a further Dollars 5,400 to equip and fit out the restaurant.

Designed to cater for banquets for wedding parties, birthdays and other special events, the restaurant opened in December 1997. It was the venue for the welcoming banquet for the Aga Khan given by the governor of Gorno-Badakhshan.

Mr Chiniev's annual Dollars 24,000 profit from construction and catering may dwarf Dodikhudo Zikenov's more modest business plan across town in the old Ainy cinema, but the 40-year-old former mechanic is justly proud of his success in reopening a theatre which went bust in Soviet times and had been closed for 10 years.

An ESF loan for Dollars 2,800 to buy a projector adapted for screening VHS video cassettes brought light back to Ainy's screen and today, nine months after it reopened, twice daily shows attract more than 1,500 patrons a week, paying 100 Tajik roubles (about 15 cents) a ticket.

Anwar Poonawaala, director of the Aga Khan Fund for Economic Development, which oversees business support projects in 18 countries including Kenya, the Ivory Coast, Burkina Faso, Pakistan and India, said that in Gorno-Badakhshan they had faced unique problems.

"This was totally new territory, coming into an area where people's only economic experience had been under the Soviet system."

The programme - now extended to neighbouring Garm province, the scene of fierce fighting in the civil war - had been successful because the loans had been firmly tied to business training and the provision of business plans, he said.

The ESF does not always have such an easy ride, however.

Last May an ethnic Uzbek opposition fighter based in Garm approached the facility for a loan of Dollars 12,000 to fund a guerrilla war against the government in neighbouring Uzbekistan. Embarrassed and worried ESF officials emphasised that the loans were designed to support business development and were meant to be repaid from legitimate profits.

The man eventually dropped his demands but Tajik Radio subsequently reported that he had beaten up an ESF official.

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