Tuesday 27th September 2016
GBA recently welcomed our first member in Central Asia, IMON International, headquartered in Khujand, Tajikistan. Established in 1999 as a small micro-lending organization, today the Company has become one of the leading financial institutions in Tajikistan in terms of loan portfolio, client base and coverage. With the support of IFC, a member of the World Bank Group, the bank has begun expanding into the SME space as well, with a special focus on women entrepreneurs. In this interview Gulbakhor Makhkamova, Chief Executive Officer, spoke with the Global Banking Alliance for Women about the Company’s decision to join the Alliance, its hopes for the planned Women’s Market program, and the role the bank plays in supporting women.
GBA: What is the business environment like for women in Tajikistan? Are women well-represented in entrepreneurship?
Gulbakhor: Women’s entrepreneurship is relatively new in Tajikistan. In the early 1990s, after independence, we moved from a planned economy to a market economy. The socio-economic conditions became very difficult. Most government enterprises stopped functioning, and the rate of unemployment in particular among women rose. Many people lost their jobs and started to set up small businesses. So a majority of business owners were forced into entrepreneurship by these conditions, not by their own choice. Even women with very high education levels such as doctors and teachers had to start being small traders. Nowadays we have 300,000 micro-businesses in Tajikistan, and about 25 percent to 30 percent are women owned. In our SME portfolio about 23 percent are women.
GBA: What are the barriers in Tajikistan to women accessing finance from banks?
Gulbakhor: Currently, IMON has more than 120,000 customers, and 40 percent of them are women. This is relatively the same as the general representation of women in business. The main barrier to them getting funds from banks is that many women are operating in the informal sector. There was a reform in the country that facilitated the business registration process, but most women entrepreneurs do not hasten to register their businesses because they are concerned about tax duties and inspections.
Many MFIs provide mostly consumer loans, as it is difficult to assess the risk of micro-businesses. Therefore, interest rates are very high, and terms are short. The other barriers are low levels of financial and business literacy and issues with collateral, as only a small proportion of women have assets. Additionally, in comparison with men, women have less confidence about going to a bank. That is a key challenge – to build them up.
GBA: What does IMON do currently to support SMEs, and what will be new for women business owners in particular with your new Women’s Market program?
Gulbakhor: Currently, we provide a wide range of services, including guarantees, foreign exchange services – all range of services for SMEs. In order to reach women SME owners and start-ups, we started collaborating with the Credit Guarantee Fund of Tajikistan, which creates new opportunities for SMEs. In addition, we render non-financial services because women need more knowledge, information, networking and confidence building. We work closely with the National Association of Business Women of Tajikistan (NABWT) and jointly deliver business training and consultations for women, particularly from rural areas.
In partnership with the International Labor Organization (ILO), we developed a specific program and a module, “Get Ahead!”, that covers not just business issues, but also focuses on development of leadership skills, empowering women, building confidence, communication and planning. In our business courses, we incorporate a gender component also. We collaborate with a NABWT Business incubator that provides women with advisory services on financial, economic and legal issues. We help organize conferences and roundtables, exchange visits to other regions and countries, as well as strengthening a network of women entrepreneurs.
IMON is a core partner in the “woman entrepreneur of the year” award, “Farah,” which identifies and rewards the most successful women entrepreneurs of Tajikistan. Semifinalists and the winner of the contest become role models for other women, especially for women who own start-ups.
All these activities and initiatives help to empower women and to build their capacity. In general, all financial and non-financial services are provided to increase the share of women in our portfolio.
In the GBA All-Stars Academy, I realized that there is a business model that can be successfully implemented by other institutions. All the programs should be aligned with a central business strategy. That is why we became a member of GBA: It is an opportunity to learn more, to network and to refine our business model.
GBA: Many women business owners would be categorized as “start-ups.” Does IMON have a strategy for start-ups?
Gulbakhor: Since 2008, IMON has actively supported women- and youth-owned start-ups. Our start-ups program was quite complex, encompassing finance and non-financial services. We assisted women in developing business plans, which they then presented to investors and IMON. The businesses that got high scores on their pitches got financing as well as mentoring services. Annually we allocated long-term loans of about US$2 million to finance approximately 800 women per year. In early 2016, our economy became tense due to a financial crisis in Russia, so we were faced with portfolio quality deterioration. Because of this, we have temporarily stopped the program. However, it was a very successful program, and we intend to redesign it, make it less costly and continue to offer a special credit line for women.
GBA: IFC has been supporting IMON in lending to small businesses, and since 2014, together with OPEC Fund for International Development (OFID) and Proparco, has provided US$16.5 million. How will these funds be used to facilitate lending to women entrepreneurs, specifically?
Gulbakhor: We received these funds in three tranches, and 24 percent of them were used to support women. They helped women to have a chance at long-term loans, mostly for investment purposes and purchasing equipment.
GBA. This credit fund plus the guarantee fund enabled you to lend to women?
Gulbakhor: Cooperation with guarantee funds requires extra expenses from the institution, but in most cases, the value that it creates covers these expenses. For example, with the guarantee we can soften collateral requirements, meaning that women can receive large loan amounts with a comparatively small collateral base. In other words, with the guarantee we can finance new sectors of the economy that previously were risky from our viewpoint. Overall, cooperation with guarantee funds facilitates financial inclusion and creates a safety buffer for financial institutions.
GBA: I understand you are planning to focus on SMEs with your women’s program. Are you also looking at other segments, beyond SMEs?
Gulbakhor: We will focus on business owners exclusively. We would like to support women in moving from the informal sector to the formal sector, as now more than 50 percent of women are in the informal sector. We are designing a specific approach to facilitate their movement from one business level to another, registering their businesses so that they will be able to get better financing.
GBA: What challenges do you foresee regarding staff buy-in for the Women’s Market program?
Gulbakhor: Actually we do not think we will have difficulties with this. IMON was established by NABWT, so serving women is an integral part of our strategy and culture. I saw that in some of the bigger banks in the GBA there is a Women’s Market division. IMON does not have that. However, all of our staff is interested in this.
GBA: How did you first hear about the GBA? Why did you decide to join?
Gulbakhor: I first heard about the GBA from our shareholder FMO, which made a film about me as a role model in the financial sector. They mentioned that I should participate in the All-Stars Academy in The Hague. The course was wonderful – very productive and informative. I joined the GBA shortly after completion of the course.
We are going to attend the GBA Annual Summit, and I really would like to use this network to learn more, to get some experience and exchange information with others, as well as to build a business model. I have been working at IMON for many years, but it was always difficult to integrate non-financial services from a business perspective. Generally, I hope that through this network, we will learn how to build a strong business model.