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Financial inclusion of remittance recipients in Tajikistan

Woman at bank counter in Tajikistan

Oyniso Kholikova is a new customer of Eskhata Bank which operates in Tajikistan, where she lives. She didn’t trust banks before, she admits. That’s why every month, when she received money from her husband who works in Russia, she would keep it at home.

Remittances in Tajikistan

It is estimated that one in four Tajik families has at least one member working abroad. The total number of Tajik emigrants reaches almost one million. Like Oyniso’s husband, most of them send money back home to support their families. In 2011, their remittances accounted for a striking 50 per cent of the country’s GDP, totalling US$ 3 billion.

At the same time, World Bank research indicates that less than 4 per cent of the adult population in Tajikistan has a bank account and even fewer keep their savings at a bank or financial institutions. As such, annual remittance flows are larger than the deposit base of the entire banking system.

Lack of awareness about bank products and financial management are among the main reasons for people to keep their savings under the mattress.

The financial inclusion project

What convinced Oyniso that she and her family could benefit from opening a bank account was a one-on-one training she had with a financial adviser that approached her as she was collecting the monthly allowance her husband sent from Russia through Eskhata Bank.

This financial literacy training is part of a successful programme that the EBRD has been carrying out in several early transition countries (ETCs), including Georgia, Azerbaijan and most recently Tajikistan and the Kyrgyz Republic, to strengthen the financial inclusion of remittance recipients. The series of projects, which are funded by the Bank’s multi-donor ETC Fund, help to promote a culture of saving via the formal banking system and teaches potential bank customers how to plan their budget.

“After the consultation, I decided to open a deposit account,” explains Oyniso. She is one of the 2,700 Tajik participants out of more than 43,800 people engaged in the training that opened an account right after the financial training.

“I want to save 100 somoni (about US$ 20) a week to buy furniture for our house,” she says. Others told the advisers they wanted to start saving to afford university education for their children, to finally be able to buy a car and to repair their flats.

Staff of participating banks also were trained on the importance of providing financial education to remittance recipients. They were also advised on how to make their bank products more attractive for remittance receivers.

“The project is very useful for both bankers and potential clients. The main benefit is that ordinary people can take informed decisions about their saving, bringing them closer to modern and high-quality banking services,” says Nasim Abduloev, Financial Adviser at Eskhata Bank in Khujand. “We managed to attract many new customers interested in our banking services.”

Project results in Tajikistan

Twenty financial consultants, managed and trained by Developing Markets Associates (DMA), have worked to deliver financial education to remittance recipients working with five Tajik banks operating in Dushanbe, the Rasht Valley and the Khujand area.

According to the participating banks, a total of US$ 5.13 million was deposited (with an average deposit size of approximately US$ 1,800). Moreover, 55 per cent of the participants indicated that they planned to open a bank account in the near future and around 67 per cent indicated that they would use taught methods to start or increase savings.

“The initiative has covered the most important issues to support both sides of banking operations, banks and clients. It will definitely help improve relations and strengthen the banking system and will benefit all sides,” says Shirinov Andujabbor, Chairman of the National Bank of Tajikistan.

“We established a good dialogue with the local authorities on the initiative,” explains Sibel Beadle, who designed the programme and is a Senior Banker in the EBRD Financial Institutions team. “The project is easy to replicate and provides great leverage for the donor money utilised. We are currently exploring whether the same methodology can be expanded to countries outside the ETC.”

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