Tajikistan. Where is it? Somewhere amongst the “-stan” countries, Tajikistan is probably better known for being neighbors with Afghanistan and Uzbekistan than by its own right. The result is a tendency for the unfamiliar outsider to culturally lump it with the bigger “-stans”. At least that was how I mentally understood it until I spent the past week in Dushanbe, Tajikistan’s capital.

On the surface, Dushanbe wasn’t surprising. Gray, communist era building dominated the city’s landscape along neatly planned avenues. A large park plopped in the city center with a grandiose statue to Amir Ismail Samani of the Samanid Empire. Most shops carried merchandise produced in either Russia or China – food products from Russia and all other goods from China. The only thing that I missed seeing were propaganda slogans and posters promoting the dictator.

Samani Statue in Dushanbe's City Center

What surprised me about Tajikistan was the underlying poverty in the country. Informal conversations and online research taught me that the average household in Tajikistan earns 250 – 300 Somoni ( ~$60USD) a month, which means that many families live on less than $2 a day. Goods aren’t cheap either – a loaf of bread costs 1 somoni (~$0.25USD) as does a bus ride.  It took me by surprise, because nothing about the city’s appearance would’ve hinted at such poverty levels. In India, the poverty is in your face – children in rags run barefoot through the streets; ramshackle slums of plastic lean-tos next to railway lines. In Tajikistan, the poverty hides under a clean and orderly veneer, a remnant of Soviet indoctrination* and infrastructure development. During the Soviet era, there was funding for public works projects, but after its independence, all the development projects stopped. As a result, Dushanbe looks like it’s a city stuck in the 80’s with everything from cars to hair styles from that era.

According to everyone I spoke with, much of the wealth that comes into the country is through remittances. Out of the 7 million Tajiks, an estimated 1 million Tajik men work in Russia and send back remittances that are supposed to account for 35-40% of the GDP. The other major source of wealth is from foreign donors and international agencies. It seemed like everything was sponsored by some foreign entity – e.g., Dushanbe’s new airport is under construction with support from the French government. There is a Hyatt hotel in Dushanbe, which exists primarily to house international donor agency staff. I wouldn’t be surprised if international funding made up a large portion of the remaining GDP.

The problem with Tajikistan is that it lacks any real wealth generating industries. While there is a lot of subsistence farming, Tajikistan is 90% mountain ranges and not naturally endowed with much fertile land for agricultural crops. The locals kept telling me that Tajikistan was second to Uzbekistan in cotton production for the Soviet Union, but in comparison to nearby India, Tajikistan’s cotton production is miniscule and not competitive. Tajikistan’s Ferghana Valley also produces some excellent fruits, but that one short fruit season hardly seems like the answers to its economic problems. Foundations in the areas are promoting agricultural projects amongst young unemployed Tajiks in rural areas. I had a conversation with a program manager from the Eurasian Foundation about a project funding potato farming, which failed to take off because the domestic markets sourced cheaper potatoes from Russia or China. I’m not an agricultural development specialist, but personally, it seems unlikely that domestic produce can compete with large scale commercial agricultural production from Russia or China. At most, Tajikistan can hope to build a value add industry around processing produce (e.g., potato chip production, tomato sauce processing, etc.)

Aside from farming, I was told that most people found employment in small scale trading, meaning selling goods in the local bazaars. Since there’s virtually no export trade and only import trade, these trading activities aren’t resulting in wealth creation for the country. Currently, there are over 130 micro credit related entities, which provide loans of ~$500 USD to these small scale entrepreneurs.

Tajikistan also lacks any form of service industry that could generate wealth. Most Tajiks don’t speak English, but they do speak Russian, which creates the potential of developing an outsourced service industry catering to the Russian market. Given the growing markets in Russia and Kazakhstan, the potential to leverage Tajikistan’s cheaper labor force is high. The only glitch in this solution is that the country has an extreme shortage of human resources. Any skilled labor immediately leaves the country in search of greener pastures and so there is a significant problem in retaining strong human resources. It seems to me that this should be the moment for government intervention and incentive policies that would make it possible to build human resource capacity in the country. Policies like Singapore’s presidential scholar program that sends students abroad in return for a committed number of years of employment might be one way to address the human resource scarcity.

Although my time there was limited and my understanding of the situation superficial, I find the economic development problem in Tajikistan a fascinating one. I suspect that Tajikistan’s economic problem is highly policy oriented. Unlike India, where development in many parts of the country needs to start from scratch with infrastructure building, Tajikistan appears to have much of the machinery, but no mechanism to get it started. Tajikistan was an eye-opener for me. Apparently, poverty and development problems come in all shapes and hues.

*Apparently there was a Soviet tradition known as “Subbotnik”, from the word for Saturday, where citizens come out to sweep the streets and tidy up public spaces on Saturdays. Walking down Dushanbe’s main Avenue Rudaki on Saturday, I saw men shoveling mud out of the gutters and cleaning a public garden.

This article was originally published by the Wall Street Journal on February 24, 2010, “Budget 2010: Will Rural India Get a Fair Deal”. Within the article, Ms. K. Seeta Prabhu of the UNDP in New Delhi raises a number of extremely relevant concerns about the rural poor of India:

• 42% of rural farmers live under the poverty line
• Small acreage farmers compose 84% of total farmers
• Low agricultural productivity
• Lack of permanent shelter
• Lack of electricity and highly inefficient energy usage
• Lack of employment opportunities outside of agriculture

The situation described demands attention. In response, Ms. Prabhu recommends that the government should take action by injecting massive amounts of stimulus money into large public work projects to build crop warehouses and public toilets, to usher in another “Green Revolution”, to incentivize the installation of bio-plant stoves, etc. The litany of public projects that Ms. Prabhu wants the local governments to undertake is daunting. I find no fault with the problems identified and the end objectives cited, but I do doubt the realistic feasibility of the list of public projects. These proposed solutions are in fact not new; they have been discussed by the development community for some time. The problem doesn’t lie in the solution ideas themselves, but in the implementation – what has been coined as the “last mile challenge”. It’s agreed that these solutions need to happen, but how?

In my opinion, the government is not the agent of choice for solving this implementation problem and promoting large public works projects is certainly not going to address the rural poor’s needs. Ms. Prabhu herself points out that past governmental initiatives to create employment have failed:

“The implementation of the National Rural Employment Guarantee Program has offered some succor but due to various constraints, the promised 100 days of employment have been provided only in the state of Rajasthan. In fact, the performance of the program is quite low in the states of Bihar, Orissa and Jharkhand, which have large numbers of the rural poor.”

The NREG program is a perfect example of how the government failed to reach the last mile. A Villgro associate recently visited with farmers in the impoverished state of Assam and asked them why they were not in the NREG program, which could have more than doubled their current annual income (~Rs8,400 or $170USD). The Assamese farmers said that they weren’t aware that such a program existed. The local governments in charge of the NREG hadn’t publicized the program and so, those funds disappear off into a vacuum and failed to reach the rural poor. How then, will more public programs and government projects help the rural poor climb out of poverty?

Instead of encouraging more public works programs, Ms. Prabhu would do better to promote additional funding for the existing social entreprises who have made immense progress in helping the rural poor increase their income. In Out of Poverty, Paul Polak specifically discusses how rural innovations such as the treadle pump have helped increase the crop yield and income of small acreage farmers far more more than the first “Green Revolution”. Millions of rural farmers have used drip irrigation systems, treadle pumps, and other agricultural innovations developed by social enterprises to grow off-season crops which generate more income or to grow crops during the dry seasons.

There are also other entreprises that are addressing the other problems faced by the rural poor. In fact, Villgro has incubated a number of enterprises that address each of the problems cited by Ms. Prabhu. Innovations such as the Venus Burner help to make energy more efficient; the Pin Pulverizer is a small grinder that allows farmers to mill their grains before they spoil; Desicrew and other rural BPOs are creating lasting employment for women and youth. The list of rural innovations that are practical solutions addressing the needs of the poor continues to grow and their impact has been dramatic.  Although the implementation is still difficult, social enterprises have devised ingenious methods for distributing and marketing to that last mile. But most importantly, because the profitability and survival of these social enterprises is dependent on the adoption of the product or service, there is a guarantee that these solutions will actually reach the rural poor.

As the rural poor begin to increase their income through growing multiple crops per year (aided by drip irrigation), cost savings on more efficient energy and other activities, they can begin to invest their additional income to build the infrastructures that they value. Education, health, and permanent shelters are the next logical investments that the poor make, but they have to increase their income first in order to get there. If addressing the needs of the rural poor is the aim, Ms. Prabhu would be better served to support budget allocation of funds to existing social enterprises and the development of rural innovations rather than additional government stimulus and public works programs that fail to actually reach that last mile. The rural poor need practical solutions that place chapattis on their plates and rupees in their pockets, not grand social infrastructure schemes and empty government programs. After all, it’s only a fair deal if the rural poor actually benefits from it.