21st Session of the Consultative Council on Improvement of the Investment Climate under the President

Your Excellency, Mr. Kohir Rasulzoda, Prime-Minister of the Republic of Tajikistan,

Your Excellency, First Deputy Prime Minister

Distinguished Members of the Consultative Council

Asalomu Aleykum

On behalf of the United Nations Country Team in Tajikistan, thank you for this opportunity to share our thoughts on industrial development in Tajikistan.

Let me start out by congratulating you. Despite a horrendously difficult year due to COVID-19, Tajikistan’s economy grew by 4.5% in 2020. Compared to many other countries in the world that have suffered a deep downturn which resulted in a significant fall in global output, Tajikistan’s economy performed quite well.  This is something to be celebrated.

Around 10% of that growth came from industrial production.  This is not bad at all and certainly contributes to the wealth of Tajikistan. But, the first thing that I would like to point out today is that our goals for industrial development should go beyond the size of the industrial output.

For example, in a country where every year approximately half a million people seek jobs in other countries as migrants, a key objective of industrial growth should be to generate jobs – decent jobs in Tajikistan itself. What do we mean by decent jobs?

• jobs that are inclusive and provide decent wages to everyone
• jobs that are safe, resilient to risks and economic downturn;
• jobs that are productive and suitable for the 21st century;
• jobs that contribute to other development outcomes such as gender equality.

On gender equality: looking around the room today, I notice that we have very few women among the Consultative Council. I know that the Government has a special program to support women entrepreneurs but we need to much more actively seek them out and bring them to fora such as this.

Currently, less than 37% of working-age women in Tajikistan are in the labor force. In Kazakhstan, this figure is 60%. I believe there is still much room to grow in this area.

Gender equality is just one of the topics. As we seek to increase industrial output, let’s also measure how industrial growth is contributing to the country’s larger development results, including the creation of jobs or promoting gender equality.

Ladies and gentlemen:

It goes without saying that a strong industry needs a skilled workforce. This is my second point.

Skilled workers today, no longer mean people who are trained in one specific vocation. Yes, we do need welders. Yes, we do need machine operators. But, the most important skill of the 21st century is the skill to be able to think creatively and critically, and in this way to contribute to a modern and forward-looking country with a competitive and knowledge-based economy.

In turn, this requires us to review our educational system, ensure we build strong linkages between industry, private sector, arts, sciences, and education so there are a robust dialogue and understanding among them, not only of the needs of the current economy but the aspirations for the economy of the future.

My third point is on digitalization:

With more and more production processes and services becoming digital, Tajikistan needs to invest much more in the digital skills of its population. Covid has demonstrated to all of us the urgency to move in this direction. This includes everything from simple computer literacy for the general public to the much more advanced digital skills of coding and software development that many Tajik companies desperately need to grow their business.

This leads to another issue: the digital divide. In preparation for this meeting, I looked at the figures for internet penetration and was impressed to see a significant increase since 2019. But, despite an increase of over 311,000 new internet users over this period, internet penetration still stands at 26%. That’s the only 1/4th of the population. For education, for health, for business, and certainly for industrial growth – it is critically important that we bridge the digital divide and bring everyone closer to the internet.  Once again, Covid demonstrated all too well how important this is.

Ladies and gentlemen,

My fourth point centers around SMEs.

SMEs are a very important part of a country’s industrial development. They are not only the backbone of the economy but also the main source of jobs. The growth of small businesses especially in the industry is, therefore, critical for Tajikistan.

I know that a lot is already being done to support SMEs and that there is already a dedicated national program for this. But I would still like to emphasize a few points where improvements are needed.

Most importantly, SMEs and the private sector in general, need affordable financing. Although the lending rate of banks has fallen slightly in 2020, the interest rate in local currency is close to 23%[1] which is still quite high and discourages small businesses. Moreover, the insurance market is relatively small and not diversified enough to provide insurance products for businesses to minimize their investment risks.  To promote industrial growth through small businesses, special attention will need to be paid to deepening the financial sector and providing access to affordable financing and insurance schemes.    

Talking about insurance, I would like to briefly mention disaster readiness as well. Coming out of a year marked by a pandemic, it’s important that we work with the private sector so they become disaster smart and disaster resilient. In addition to everything else, there is a need to support companies in developing business continuity plans and becoming much more disaster aware.

The last point I would like to bring to your attention today is climate change.

I know that 2020 was very hard. Due to Covid, we are all tired of hearing about doom and gloom. But the reality is that Covid is probably nothing compared to the global environmental crisis that we are going through. I don’t need to go through all the figures around temperature increases and burning forests etc to remind us that climate change is hitting us hard. But the thing that I want to emphasize, as does the UN Secretary-General at every meeting that he goes to, that unless we take urgent and decisive action to stop and reverse climate change, things will only get worse.

Tajikistan is among the most climate-aware, most climate-sensitive countries in the world. His Excellency the President is a champion of the environment, especially the protection of water sources. All of you in this room understand the impact of melting glaciers or unpredictable weather patterns on your lives and livelihoods. More than many other people, Tajiks know very well that environmental destruction and climate change are not just about the pandas and the bees, it is about the survival of human beings.

And for that reason, in this meeting on industrial development, I appeal to all of you – representatives of the Government, of the private sector, all stakeholders - to make sure you choose a green path for your industry and your economy. 

The green economy is no longer just an aspiration. It is a must for our survival. And there is no country, no economy that is too small that they cannot do more. It is critical that the word green permeates through all aspects of your industrial development.

Let me give you one example: Dushanbe is experiencing a construction boom. The city accounted for over 27% of the construction investment in 2020.[2] Large parts of the city are being renewed. This is a huge opportunity to promote eco-friendly construction. Anything from stronger insulation, use of renewable energy in heating, efficient waste management, and an eco-friendly public transport system will go a long way in greening the new face of Dushanbe.

Another example is tourism. On the one hand: tourism is still almost untapped. There is so much more to do to promote Tajikistan as a tourist destination. At the same time, there are ample opportunities to “green” tourism and make this a country for eco-tourism.

These are just two examples of the many others in different industries that will not only reduce your carbon emissions but also create new growth opportunities and green jobs.

Ladies and gentlemen,

Let me end with a few words about what the UN can offer in this regard:

• UN can connect Tajikistan to expertise and best practices, including south-south cooperation. We have accumulated a wealth of experiences from countries that have successfully industrialized. In Tajikistan, UN Agencies are already supporting various initiatives to promote green growth and jobs through low-cost technologies, introducing resource-efficient practices, and capacity development. These initiatives can be further scaled up.

• UN can help Tajikistan to explore alternative financing options for a greener industrial development. State funding alone is not enough to achieve the ambitious targets of the National Development Strategy and the SDGs. We have recently launched the Financing SDGs in Tajikistan project which provides a good platform for further collaboration between us. UN can assist Tajikistan to tap into innovative sources of finance such as blended financing, venture capital, debt-swaps, social impact investments, and financing through public-private partnerships.

• Finally, today, I reach out to the Private Sector to invite you to a dialogue with the UN to talk about all these issues within the framework of the Sustainable Development Goals.

Once again, thank you very much for this invitation to share our views on industrial development. The UN remains very committed to working with you on all the topics I mentioned today.

Tesekkur!

[1] National Bank of Tajikistan 2020

[2] Agency of Statistics: Socioeconomic Report, December 2020.